40-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017 Commission File Number 333-105024

CASCADES INC.

(Exact name of Registrant as specified in its charter)

Quebec, Canada

(Province or other jurisdiction of incorporation or organization)

2600

(Primary Standard Industrial Classification Code Number)

98-0140192

(I.R.S. Employer Identification Number)

404 Marie-Victorin Blvd.

Kingsey Falls, Quebec

Canada J0A 1B0

(819) 363-5100

(Address and telephone number of Registrant’s principal executive offices)

Cascades USA Inc.

148 Hudson River Road

Waterford, NY 12188

(518) 238-1900

(Name, address (including zip code) and telephone number (including area code)
of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

None.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None.

For annual reports, indicate by check mark the information filed with this Form:

x Annual information form x Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

94,987,958 shares of common stock outstanding as of December 31, 2017

Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the file number assigned to the Registrant in connection with such Rule.

Yes ¨ 82- No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.*

Yes ¨ No x

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company  ¨

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 ¨

* The registrant is currently not required to file reports, including this report, under Section 13 or 15(d) of the Securities Exchange Act of 1934 but is voluntarily filing this report with the Securities and Exchange Commission.

Annual Audited Consolidated Financial Statements

For the Annual Audited Consolidated Financial Statements for the years ended December 31, 2017 and 2016, including the Independent Auditor’s Report with respect thereto, of Cascades Inc. (the “Registrant” or “Cascades” or the “Corporation”), see the excerpt of Cascades’ 2017 Annual Report attached hereto as Exhibit 13.2.

Management’s Discussion and Analysis

For management’s discussion and analysis of the operating results and financial position of Cascades for the years ended December 31, 2017 and 2016 (“Management’s Discussion and Analysis”), see the excerpt of Cascades’ 2017 Annual Report attached hereto as Exhibit 13.3.

Disclosure Controls and Procedures

Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Registrant in the reports that the Registrant files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified under Canadian securities laws and specified in the United States Securities and Exchange Commission’s (the “SEC”) rules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including the President and Chief Executive Officer and the Vice-President and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

The Registrant conducted an evaluation (under the supervision and with the participation of the Registrant’s management, including the Chief Executive Officer and Chief Financial Officer) as of December 31, 2017, pursuant to Rule 13a-15 promulgated under the Exchange Act and under National Instrument 52-109 adopted by the Canadian Securities regulatory authorities, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on this evaluation, the Registrant’s Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of December 31, 2017.

It should be noted that while the Registrant’s Chief Executive Officer and Chief Financial Officer believe that the Registrant’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Registrant’s disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Management’s Report on Internal Control over Financial Reporting

Management’s Report to the shareholders of Cascades Inc. on internal control over financial reporting for the fiscal year ended December 31, 2017 is included in Exhibit 13.2 to this Annual Report on Form 40-F.

Management conducted an assessment of the effectiveness of the Corporation’s internal control over financial reporting, as at December 31, 2017 based on the framework and criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO Framework). Based on this evaluation, management has concluded that the Corporation’s internal control over financial reporting was effective as at December 31, 2017.

It should be noted that while the Registrant’s Chief Executive Officer and Chief Financial Officer believe that the Registrant’s internal control over financial reporting provide a reasonable level of assurance that they are effective, they do not expect that the Registrant’s internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Changes in Internal Controls Over Financial Reporting

There was no change in the Registrant’s internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, its internal controls over financial reporting.

Code of Ethics

The Corporation has adopted a Code of Ethics and Business Conduct that applies to all directors, officers and employees, including the Corporation’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. For a discussion of the Corporation’s Code of Ethics, see Cascades’ Annual Information Form for the year ended December 31, 2017 (“AIF”) attached hereto as Exhibit 13.1. There were neither amendments to nor waivers, including implicit waivers, from any provision of the Code of Ethics and Business Conduct during the year ended December 31, 2017 that applied to the Corporation’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics and Business Conduct is available on the Corporation’s website at www.cascades.com.

Audit Committee

The Registrant has a separately designated standing audit committee (the “Audit and Finance Committee”) as defined in Section 3(a)(58) (A) of the Exchange Act. The Audit and Finance Committee is composed entirely of directors who are “independent”, as such term is defined in the listing standards of the New York Stock Exchange. All members of the Audit and Finance Committee are financially literate and there are two “audit committee financial experts”. In considering criteria for the determination of financial literacy, the Board of Directors considers 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 the breadth and complexity of the issues that can reasonably be expected to be raised by the Registrant’s financial statements. In determining whether Audit and Finance Committee members are “audit committee financial experts”, the Board of Directors and the Audit and Finance Committee have considered the attributes set forth in Form 40-F. The “audit committee financial experts” are Laurence G. Sellyn and Michelle Cormier. The other members of the Audit and Finance Committee are Georges Kobrynsky, Sylvie Vachon and Martin Couture.

Principal Accountant Fees and Services

The aggregate fees for professional services rendered by our Independent Auditor, PricewaterhouseCoopers LLP, for the Corporation for the 2017 and 2016 fiscal years are shown in the table below:

Fees in Canadian dollars	Year ended  December 31, 2016		Year ended  December 31, 2017
Audit Fees	$	1,607,759	$	1,715,891
Audit-Related Fees	$	445,473	$	672,135
Tax Fees	$	210,741	$	117,149
All Other Fees		N/A	$	619,668
Total	$	2,263,973	$	3,124,843

The nature of each category of fees is described below:

Audit Fees: Includes professional services provided by the Independent Auditor in connection with statutory and regulatory filings and audit of the annual financial statements of the Corporation.

Audit-Related Fees: Includes professional services provided by the Independent Auditor in connection with auditing as well as consultations on accounting and regulatory matters.

Tax Fees: Includes professional services rendered by the Independent Auditor for compliance to income tax laws.

All Other Fees: Professional services consisting primarily of transaction support services.

Audit and Non-Audit Services Pre-Approval Policy

The Corporation’s Audit and Finance Committee has adopted a Pre-approval Policy and Procedures for services provided by the Corporation’s Independent Auditor, PricewaterhouseCoopers LLP, which sets forth the procedures and the conditions pursuant to which permissible services proposed to be performed by the Independent Auditor are pre-approved. Under the terms of the policy, services that involve annual fees of less than $25,000 up to an annual limit of $50,000 are pre-approved. The Audit and Finance Committee has delegated to the Chairman of the Audit and Finance Committee pre-approval authority for any services not previously approved by the Audit and Finance Committee that involve the payment of unbudgeted fees up to a maximum of $100,000 per mandate. Services that involve fees of more than $100,000 require pre-approval of all the members of the Audit and Finance Committee. All of the non-audit services set forth above were approved under this pre-approval policy.

Services Approved by the Audit and Finance Committee

For the year ended December 31, 2017, the services described above requiring pre-approval were approved by the Audit and Finance Committee pursuant to paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements as of December 31, 2017.

Tabular Disclosure of Contractual Obligations

For a tabular disclosure and discussion of contractual obligations, see the section entitled “Contractual Obligations and Other Commitments” in Management’s Discussion and Analysis attached hereto as Exhibit 13.3.

Forward-Looking Statements

Certain statements in this Annual Report on Form 40-F or in documents incorporated by reference herein including statements regarding future results and performance, are forward-looking statements (as such term is defined under the United States 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 Cascades’ products, the prices and availability of raw materials and energy costs, Cascades’ exposure to significant competition, including competition with firms that may enjoy cost advantages or economies of scale, political, social and exchange rate risks due to its international operations, compliance costs associated with environmental laws and regulations, including unforeseen expenditures as a result of environmental liabilities, casualty of other losses that are not fully covered by insurance, labor disputes, work stoppages or increased labor costs, difficulty recouping its investments in joint ventures of other companies that Cascades does not control, difficulties associated with acquiring companies, or integrating acquired companies, as part of Cascades’ growth strategy, the impairment of Cascades’ goodwill or other intangible assets, changes in the control of Cascades‘ equity capital, changes in strategy or management brought about by its existing shareholders or similar changes relating to its control and management, Cascades’ inability to retain key personnel or attract and retain other talented employees, and fluctuations in currency exchange rates. Reference is made to the section entitled “Risk Factors” of the AIF and to the section entitled “Risk Factors” in Management’s Discussion and Analysis (which is incorporated by reference in the AIF), each of which are attached hereto as Exhibits 13.1 and 13.3, respectively.

Consequently, all of the forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results on developments anticipated by the Corporation will be realized. The Corporation undertakes no obligation to update or revise any forward-looking statements, except as required by applicable law.

Website Information

Notwithstanding any reference to the Registrant’s website in the AIF or in the documents attached as Exhibits hereto, the information contained in the Registrant’s website or any other website referred to in the Registrant’s website is not a part of this Form 40-F and, therefore, is not filed with the SEC.

Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an Annual Report on Form 40-F arises; or transactions in said securities.

Consent to Service of Process

Any change to the name or address of the Registrant and/or to the name or address of the Registrant’s agent for service shall be communicated promptly to the Commission by amendment to the Form F-X referencing the file number of the Registrant.

Signatures

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

CASCADES INC.

By:	/s/ Allan Hogg
Name:	Allan Hogg
Title:	Vice-President and Chief Financial Officer
Date:	March 29, 2018

Exhibit Index

Exhibit Number	Description of Exhibit (and document from which incorporated by reference, if applicable)	Note
3.1	Articles of Amalgamation of Cascades Inc. filed with the Inspector General of Financial Institutions of Quebec on January 10, 2004	(A)
3.2	Articles of Amendment of Cascades Inc. filed with the Registrar of Companies of Quebec on July 27, 2011	(B)
3.3	By-law No. 2011-1 of Cascades Inc., adopted by the Board of Directors of Cascades Inc. on March 14, 2011 and ratified by the Shareholders on May 12, 2011	(B)
4.1	Indenture, dated as of June 19, 2014, among Cascades Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(C)
4.2	First Supplemental Indenture, dated as of March 16, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(C)
4.3	Second Supplemental Indenture, dated as of September 23, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(D)
4.4	Third Supplemental Indenture, dated December 9, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(D)
4.5	Fourth Supplemental Indenture, dated September 30, 2016, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(E)
4.6	Fifth Supplemental Indenture, dated March 29, 2017, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantor named therein and Wells Fargo Bank, National Association, as Trustee	(F)
4.7	Sixth Supplemental Indenture, dated December 14, 2017, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantor named therein and Wells Fargo Bank, National Association, as Trustee	(F)
4.8	Indenture, dated as of June 19, 2014, among Cascades Inc., the Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee	(C)
4.9	First Supplemental Indenture, dated as of March 16, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee	(C)
4.10	Second Supplemental Indenture, dated as of September 23, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee	(D)
4.11	Third Supplemental Indenture, dated as of December 9, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee	(D)
4.12	Fourth Supplemental Indenture, dated as of September 30, 2016, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee	(E)
4.13	Fifth Supplemental Indenture, dated as of March 29, 2017, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantor named therein and Computershare Trust Company of Canada, as Trustee	(F)
4.14	Sixth Supplemental Indenture, dated as of December 14, 2017, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantor named therein and Computershare Trust Company of Canada, as Trustee	(F)

4.15	Indenture dated May 19, 2015, among Cascades Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(D)
4.16	First Supplemental Indenture, dated September 23, 2015, to the Indenture dated May 19, 2015, among Cascades Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(D)
4.17	Second Supplemental Indenture, dated December 9, 2015, to the Indenture dated May 19, 2015, among Cascades Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(D)
4.18	Third Supplemental Indenture, dated September 30, 2016, to the Indenture dated May 19, 2015, among Cascades Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee	(E)
4.19	Fourth Supplemental Indenture, dated March 29, 2017, to the Indenture dated May 19, 2015, among Cascades Inc., the Subsidiary Guarantor named therein and Wells Fargo Bank, National Association, as Trustee	(F)
4.20	Fifth Supplemental Indenture, dated December 14, 2017, to the Indenture dated May 19, 2015, among Cascades Inc., the Subsidiary Guarantor named therein and Wells Fargo Bank, National Association, as Trustee	(F)
10.1	Third Amended and Restated Credit Agreement, dated June 1, 2017, among Cascades Inc. and Cascades USA Inc., National Bank of Canada, as administrative agent, The Bank of Nova Scotia, as collateral agent and syndication agent, and a syndicate of lenders named therein, as lenders	(F)
13.1	Annual Information Form for the year ended December 31, 2017	(F)
13.2	Audited Consolidated Financial Statements for the year ended December 31, 2017 together with Management’s Report and the Independent Auditor’s Report	(F)
13.3	Management’s Discussion and Analysis for the year ended December 31, 2017	(F)
23.1	Consent of Independent Auditor	(F)
31.1	CEO Section 302 Certification	(F)
31.2	CFO Section 302 Certification	(F)
32.1	CEO and CFO Certification pursuant to Rule 13(a)-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).	(F)
101	Interactive Data File	(F)

(A) Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 24, 2005 and incorporated herein by reference.

(B) Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 29, 2012 and incorporated herein by reference.

(C) Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 27, 2015 and incorporated herein by reference.

(D) Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 30, 2016 and incorporated herein by reference.

(E) Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 30, 2017 and incorporated herein by reference.

(F) Filed herewith.

EX-4.6

Exhibit 4.6

FIFTH SUPPLEMENTAL INDENTURE

dated as of March 29, 2017

to the

INDENTURE

dated as of June 19, 2014

among

CASCADES INC.,

THE SUBSIDIARY GUARANTORS named therein, and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

FIFTH SUPPLEMENTAL INDENTURE

FIFTH SUPPLEMENTAL INDENTURE (this “Fifth Supplemental Indenture”), dated as of March 29, 2017, among Cascades CS+ USA Inc., a Delaware corporation (the “Guaranteeing Subsidiary”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “Company”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.

WITNESSETH:

WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of its 5.50% Senior Notes due 2022 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Fifth Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

ARTICLE I

DEFINITIONS

Section 1.1           Defined Terms. As used in this Fifth Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Fifth Supplemental Indenture refer to this Fifth Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

Section 2.1           Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.

1

Section 2.2           Subsidiary Guarantee. The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Fifth Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.

ARTICLE III

MISCELLANEOUS

Section 3.1           Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.

Section 3.2           Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Fifth Supplemental Indenture or the Indenture or any provision herein or therein contained.

Section 3.3           Governing Law. This Fifth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 3.4           Severability. In case any provision in this Fifth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

Section 3.5           Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

Section 3.6           Ratification of Indenture; Fifth Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Fifth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

Section 3.7           The Trustee. The Trustee makes no representation or warranty as to the validity or sufficiency of this Fifth Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

Section 3.8           Counterparts. The parties hereto may sign any number of copies of this Fifth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Fifth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fifth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fifth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

2

Section 3.9           Execution and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.

Section 3.10         Headings. The headings of the Articles and the Sections in this Fifth Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

Section 3.11         FATCA. This Fifth Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed as of the date first above written.

CASCADES INC.
By:	/s/ Robert F. Hall
	Name:	Robert F. Hall
	Title:	Chief Legal Officer
		and Corporate Secretary
CASCADES CS+ USA INC.,
as the Guaranteeing Subsidiary
By:	/s/ Pascal Aguettaz
	Name:	Pascal Aguettaz
	Title:	President

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Yana Kislenko
	Name:	Yana Kislenko
	Title:	Vice President

EX-4.7

Exhibit 4.7

SIXTH SUPPLEMENTAL INDENTURE

dated as of December 14, 2017

to the

INDENTURE

dated as of June 19, 2014

among

CASCADES INC.,

THE SUBSIDIARY GUARANTORS named therein, and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

SIXTH SUPPLEMENTAL INDENTURE

SIXTH SUPPLEMENTAL INDENTURE (this “Sixth Supplemental Indenture”), dated as of December 14, 2017, among MCBXCCC Packaging Inc., an Ontario corporation (the “Guaranteeing Subsidiary”), Cascades Inc., a corporation organized under the laws of the Province of Québec, Canada (the “Company”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.

WITNESSETH:

WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of its 5.50% Senior Notes due 2022 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Sixth Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

ARTICLE I

DEFINITIONS

Section 1.1           Defined Terms. As used in this Sixth Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Sixth Supplemental Indenture refer to this Sixth Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

Section 2.1           Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.

1

Section 2.2           Subsidiary Guarantee. The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Sixth Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.

ARTICLE III

MISCELLANEOUS

Section 3.1           Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.

Section 3.2           Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Sixth Supplemental Indenture or the Indenture or any provision herein or therein contained.

Section 3.3           Governing Law. This Sixth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 3.4           Severability. In case any provision in this Sixth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

Section 3.5           Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

Section 3.6           Ratification of Indenture; Sixth Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Sixth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

Section 3.7           The Trustee. The Trustee makes no representation or warranty as to the validity or sufficiency of this Sixth Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

Section 3.8           Counterparts. The parties hereto may sign any number of copies of this Sixth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Sixth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Sixth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Sixth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

2

Section 3.9           Execution and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.

Section 3.10         Headings. The headings of the Articles and the Sections in this Sixth Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

Section 3.11         FATCA. This Sixth Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.

[The remainder of this page is intentionally left blank.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed as of the date first above written.

CASCADES INC.
By:	/s/ Robert F. Hall
	Name:	Robert F. Hall
	Title:	Chief Legal Officer
		and Corporate Secretary
MCBXCCC PACKAGING INC.,
as the Guaranteeing Subsidiary
By:	/s/ Charles Malo
	Name:	Charles Malo
	Title:	President

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Melissa A. Hancock
	Name:	Melissa A. Hancock
	Title:	Vice President

EX-4.13

Exhibit 4.13

FIFTH SUPPLEMENTAL INDENTURE

dated as of March 29, 2017

to the

INDENTURE

dated as of June 19, 2014

among

CASCADES INC.,

THE SUBSIDIARY GUARANTORS named therein, and

COMPUTERSHARE TRUST COMPANY OF CANADA,

as Trustee

FIFTH SUPPLEMENTAL INDENTURE

FIFTH SUPPLEMENTAL INDENTURE (this “Fifth Supplemental Indenture”), dated as of March 29, 2017, between Cascades CS+ USA Inc., a Delaware corporation (the “Guaranteeing Subsidiary”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “Company”), and Computershare Trust Company of Canada, as Trustee under the Indenture referred to below.

WITNESSETH:

WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of its 5.50% Senior Notes due 2021 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Fifth Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

ARTICLE I

DEFINITIONS

Section 1.1           Defined Terms. As used in this Fifth Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Fifth Supplemental Indenture refer to this Fifth Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

Section 2.1           Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.

1

Section 2.2           Subsidiary Guarantee. The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Fifth Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.

ARTICLE III

MISCELLANEOUS

Section 3.1           Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.

Section 3.2           Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Fifth Supplemental Indenture or the Indenture or any provision herein or therein contained.

Section 3.3           Governing Law. This Fifth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the Province of Quebec.

Section 3.4           Severability. In case any provision in this Fifth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

Section 3.5           Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

Section 3.6           Ratification of Indenture; Fifth Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Fifth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter certified and delivered shall be bound hereby.

Section 3.7           The Trustee. The Trustee makes no representation or warranty as to the validity or sufficiency of this Fifth Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

Section 3.8           Counterparts. The parties hereto may sign any number of copies of this Fifth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Fifth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fifth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fifth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

2

Section 3.9           Execution and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.

Section 3.10           Headings. The headings of the Articles and the Sections in this Fifth Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

Section 3.11           Language. The parties hereto have required that this Indenture and all documents and notices related hereto and/or resulting herefrom be drawn up in English only. Les parties aux présentes ont exigé que la présente convention ainsi que tous les documents et avis qui s’y rattachent et/ou qui en découleront soient rédigés en langue anglaise seulement.

[The remainder of this page is intentionally left blank.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed as of the date first above written.

CASCADES INC.
By:	/s/ Robert F. Hall
	Name:	Robert F. Hall
	Title:	Chief Legal Officer
		and Corporate Secretary
CASCADES CS+ USA INC.,
as the Guaranteeing Subsidiary
By:	/s/ Pascal Aguettaz
	Name:	Pascal Aguettaz
	Title:	President

COMPUTERSHARE TRUST
COMPANY OF CANADA,
as Trustee and not in its personal capacity
By:	/s/ Sophie Brault
	Name:	Sophie Brault
	Title:	Manager
By:	/s/ Christel Ah-Knee
	Name:	Christel Ah-Knee
	Title:	Professional, Corporate
		Trust Services

EX-4.14

Exhibit 4.14

SIXTH SUPPLEMENTAL INDENTURE

dated as of December 14, 2017

to the

INDENTURE

dated as of June 19, 2014

among

CASCADES INC.,

THE SUBSIDIARY GUARANTORS named therein, and

COMPUTERSHARE TRUST COMPANY OF CANADA,

as Trustee

SIXTH SUPPLEMENTAL INDENTURE

SIXTH SUPPLEMENTAL INDENTURE (this “Sixth Supplemental Indenture”), dated as of December 14, 2017, among MCBXCCC Packaging Inc., an Ontario corporation (the “Guaranteeing Subsidiary”), Cascades Inc., a corporation organized under the laws of the Province of Québec, Canada (the “Company”), and Computershare Trust Company of Canada, as Trustee under the Indenture referred to below.

WITNESSETH:

WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of its 5.50% Senior Notes due 2021 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Sixth Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

ARTICLE I

DEFINITIONS

Section 1.1           Defined Terms. As used in this Sixth Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Sixth Supplemental Indenture refer to this Sixth Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

Section 2.1           Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.

1

Section 2.2           Subsidiary Guarantee. The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Sixth Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.

ARTICLE III

MISCELLANEOUS

Section 3.1           Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.

Section 3.2           Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Sixth Supplemental Indenture or the Indenture or any provision herein or therein contained.

Section 3.3           Governing Law. This Sixth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the Province of Québec.

Section 3.4           Severability. In case any provision in this Sixth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

Section 3.5           Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

Section 3.6           Ratification of Indenture; Sixth Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Sixth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter certified and delivered shall be bound hereby.

Section 3.7           The Trustee. The Trustee makes no representation or warranty as to the validity or sufficiency of this Sixth Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

Section 3.8           Counterparts. The parties hereto may sign any number of copies of this Sixth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Sixth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Sixth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Sixth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

2

Section 3.9           Execution and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.

Section 3.10         Headings. The headings of the Articles and the Sections in this Sixth Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

Section 3.11         Language. The parties hereto have required that this Sixth Supplemental Indenture and all documents and notices related hereto and/or resulting herefrom be drawn up in English only. Les parties aux présentes ont exigé que la présente convention ainsi que tous les documents et avis qui s’y rattachent et/ou qui en découleront soient rédigés en langue anglaise seulement.

[The remainder of this page is intentionally left blank.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed as of the date first above written.

CASCADES INC.
By:	/s/ Robert F. Hall
	Name:	Robert F. Hall
	Title:	Chief Legal Officer
		and Corporate Secretary
MCBXCCC PACKAGING INC.,
as the Guaranteeing Subsidiary
By:	/s/ Charles Malo
	Name:	Charles Malo
	Title:	President

COMPUTERSHARE TRUST COMPANY OF CANADA,
as Trustee and not in its personal capacity
By:	/s/ Sophie Brault
	Name:	Sophie Brault
	Title:	Manager
By:	/s/ Candice Beyokol
	Name:	Candice Beyokol
	Title:	Professional, Corporate
		Trust Services

EX-4.19

Exhibit 4.19

FOURTH SUPPLEMENTAL INDENTURE

dated as of March 29, 2017

to the

INDENTURE

dated as of May 19, 2015

among

CASCADES INC.,

THE SUBSIDIARY GUARANTORS named therein, and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

FOURTH SUPPLEMENTAL INDENTURE

FOURTH SUPPLEMENTAL INDENTURE (this “Fourth Supplemental Indenture”), dated as of March 29, 2017, among Cascades CS+ USA Inc., a Delaware corporation (the “Guaranteeing Subsidiary”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “Company”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.

WITNESSETH:

WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of May 19, 2015 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of its 5.75% Senior Notes due 2023 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Fourth Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Defined Terms. As used in this Fourth Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Fourth Supplemental Indenture refer to this Fourth Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

SECTION 2.1. Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.

SECTION 2.2. Subsidiary Guarantee. The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Fourth Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.

1

ARTICLE III

MISCELLANEOUS

SECTION 3.1. Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.

SECTION 3.2. Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Fourth Supplemental Indenture or the Indenture or any provision herein or therein contained.

SECTION 3.3. Governing Law. This Fourth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 3.4. Severability. In case any provision in this Fourth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

SECTION 3.5. Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

SECTION 3.6. Ratification of Indenture; Fourth Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Fourth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

SECTION 3.7. The Trustee. The Trustee makes no representation or warranty as to the validity or sufficiency of this Fourth Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

SECTION 3.8. Counterparts. The parties hereto may sign any number of copies of this Fourth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Fourth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fourth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fourth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

SECTION 3.9. Execution and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.

2

SECTION 3.10. Headings. The headings of the Articles and the Sections in this Fourth Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

SECTION 3.11. FATCA. This Fourth Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.

[The remainder of this page is intentionally left blank.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed as of the date first above written.

CASCADES INC.
By:	/s/ Robert F. Hall
	Name:	Robert F. Hall
	Title:	Chief Legal Officer
		and Corporate Secretary
CASCADES CS+ USA INC.,
as the Guaranteeing Subsidiary
By:	/s/ Pascal Aguettaz
	Name:	Pascal Aguettaz
	Title:	President

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Yana Kislenko
	Name:	Yana Kislenko
	Title:	Vice President

EX-4.20

Exhibit 4.20

FIFTH SUPPLEMENTAL INDENTURE

dated as of December 14, 2017

to the

INDENTURE

dated as of May 19, 2015

among

CASCADES INC.,

THE SUBSIDIARY GUARANTORS named therein, and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

FIFTH SUPPLEMENTAL INDENTURE

FIFTH SUPPLEMENTAL INDENTURE (this “Fifth Supplemental Indenture”), dated as of December 14, 2017, among MCBXCCC Packaging Inc., an Ontario corporation (the “Guaranteeing Subsidiary”), Cascades Inc., a corporation organized under the laws of the Province of Québec, Canada (the “Company”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.

WITNESSETH:

WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of May 19, 2015 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of its 5.75% Senior Notes due 2023 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Fith Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1.          Defined Terms. As used in this Fifth Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Fifth Supplemental Indenture refer to this Fifth Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

SECTION 2.1.          Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.

1

SECTION 2.2.          Subsidiary Guarantee. The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Fifth Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.

ARTICLE III

MISCELLANEOUS

SECTION 3.1.          Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.

SECTION 3.2.          Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Fifth Supplemental Indenture or the Indenture or any provision herein or therein contained.

SECTION 3.3.          Governing Law. This Fifth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 3.4.          Severability. In case any provision in this Fifth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

SECTION 3.5.          Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

SECTION 3.6.          Ratification of Indenture; Fifth Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Fifth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

SECTION 3.7.          The Trustee. The Trustee makes no representation or warranty as to the validity or sufficiency of this Fifth Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

SECTION 3.8.          Counterparts. The parties hereto may sign any number of copies of this Fifth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Fifth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fifth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fifth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

2

SECTION 3.9.          Execution and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.

SECTION 3.10.         Headings. The headings of the Articles and the Sections in this Fifth Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

SECTION 3.11.         FATCA. This Fifth Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.

[The remainder of this page is intentionally left blank.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed as of the date first above written.

CASCADES INC.
By:	/s/ Robert F. Hall
	Name:	Robert F. Hall
	Title:	Chief Legal Officer
		and Corporate Secretary
MCBXCCC PACKAGING INC.,
as the Guaranteeing Subsidiary
By:	/s/ Charles Malo
	Name:	Charles Malo
	Title:	President

WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as Trustee
By:	/s/ Melissa A. Hancock
	Name:	Melissa A. Hancock
	Title:	Vice President

EX-10.1

Exhibit 10.1

Execution Copy

Cdn. $750,000,000

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

dated as of June 1, 2017

Among

Cascades Inc.
Cascades USA Inc.
(as Borrowers)

- and -

National Bank Financial Inc.
The Bank of Nova Scotia
(as Co-Lead Arrangers and Joint Bookrunners)

- and -

National Bank of Canada
(as Administrative Agent)

- and -

The Bank of Nova Scotia
(as Collateral Agent and Syndication Agent)

- and -

Canadian Imperial Bank of Commerce
Fédération des Caisses Desjardins du Québec
Wells Fargo Bank, National Association, Canadian Branch
(as Co-Documentation Agents)

- and -

The Lenders
from Time to Time Party Hereto

McCarthy Tétrault LLP

Table of Contents

		Page
Article 1 - Interpretation		1
1.1	Amendment and Restatement	1
1.2	Definitions	1
1.3	Designated Subsidiaries	13
1.4	Additional Borrowers	13
1.5	Currency Conversions	14
1.6	GAAP, Calculations and Historical Adjustments	14
1.7	Time	14
1.8	Headings and Table of Contents	14
1.9	Governing Law and Jurisdiction	14
1.10	Previous Agreements	15
1.11	Inconsistency	15
Article 2 - The Facility		15
2.1	Amount of the Facility	15
2.2	Reallocation among Tranches	15
2.3	Purpose, Nature and Availability of the Facility	15
2.4	Borrowing Options	16
2.5	Borrowing Base Limitations	16
2.6	Borrowings Proportionate to Commitments	16
2.7	Notice of Borrowings	16
2.8	Swingline Utilizations	17
2.9	Funding	18
2.10	Lender’s Failure to Fund	18
2.11	Conversions and Renewals	18
2.12	Limitations on Lender’s Obligation to Fund	19
2.13	Increase of the Facility	19
2.14	Extension of the Facility Maturity Date	20
Article 3 - Acceptances		21
3.1	Period and Amounts	21
3.2	Disbursement	21
3.3	Power of Attorney	21
3.4	Depository Bills	21
3.5	Availability	22
Article 4 - Libor Loans		22
4.1	Amounts and Periods	22
4.2	Changed Circumstances	22
4.3	Conversion Prior to Maturity	23

Article 5 - Letters of Credit		23
5.1	Availability	23
5.2	Maturity of Letters of Credit	23
5.3	Borrowings	23
5.4	Payments under Letters of Credit	24
5.5	Indemnity	24
5.6	I.C.C. Rules	24
Article 6 - Fees And Interest		24
6.1	Letter of Credit Fees	24
6.2	Administrative Charges with respect to Letters of Credit	25
6.3	Standby Fee	25
6.4	Acceptance Fees	25
6.5	Other Fees	25
6.6	Interest on Prime Rate Loans	25
6.7	Interest on US Base Rate Loans	25
6.8	Interest on Libor Loans	25
6.9	Calculation of Interest Rates	26
6.10	Interest on Arrears	26
Article 7 - Repayment, Prepayment and Reduction		26
7.1	Repayment of the Facility	26
7.2	Mandatory Prepayments	26
7.3	Optional Prepayments	27
7.4	Exchange Rate Fluctuations	27
7.5	Reduction of the Facility	27
Article 8 – Place of Payment, Currency and Taxes		27
8.1	Payments to the Administrative Agent	27
8.2	Manner of Payments	28
8.3	Currency	28
8.4	Judgment Currency	28
8.5	Payments Net of Taxes	28
Article 9 - Conditions Precedent		29
9.1	Conditions Precedent to the Effectiveness of this Agreement	29
9.2	Conditions Precedent to all Borrowings	29
9.3	Waiver of Conditions Precedent	29
9.4	Early Termination of this Agreement	29
9.5	Borrowings under the Initial Credit Agreement	29

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Article 10 - Security		30
10.1	Guarantees	30
10.2	Security over Current Assets	30
10.3	Security over Charged Fixed Assets	30
10.4	Insurance	31
10.5	Security for Hedging Agreements and Credit Card Obligations	31
10.6	Validity and Contents of Security Documents	32
10.7	Release of the Security	33
Article 11 - Representations and Warranties		33
11.1	Corporate Existence and Capacity	33
11.2	Authorization and Validity	33
11.3	No Breach	33
11.4	Approvals	33
11.5	Compliance with Laws and Permits	34
11.6	Title to Assets	34
11.7	Litigation	34
11.8	No Default	34
11.9	Solvency	34
11.10	Taxes	34
11.11	ERISA and Pension Plans	34
11.12	Margin Stock Restrictions	34
11.13	Investment Company Act	35
11.14	Restriction on Payments	35
11.15	Corporate Structure and Location of Assets	35
11.16	Financial Statements and Financial Year	35
11.17	No Material Change	35
11.18	True and Complete Disclosure	35
Article 12 - Affirmative Covenants		36
12.1	General Covenants	36
12.2	Use of Proceeds and Compliance with Indenture Limitations	36
12.3	Know Your Customer Laws	37
12.4	Further Assurances	37
12.5	Representations and Warranties	37
Article 13 - Negative Covenants		37
13.1	Negative Pledge	37
13.2	Indebtedness	37
13.3	Limitations on Fundamental Changes	38
13.4	Investments	40
13.5	Distributions	40
13.6	Transactions with Related Parties	40

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Article 14 - Financial Ratios		41
14.1	Funded Debt to Capitalization Ratio	41
14.2	Interest Coverage Ratio	41
Article 15 - Reporting Requirements		41
15.1	Annual Reporting	41
15.2	Quarterly Reports	41
15.3	ERISA	42
15.4	Reporting from Time to Time	42
15.5	Hedging Agreements, Securitization and Factoring	42
Article 16 - Events of Default and Remedies		43
16.1	Events of Default	43
16.2	Remedies	44
Article 17 - Equality Among Lenders		44
17.1	Distribution among Lenders	44
17.2	Other Security	44
17.3	Direct Payment to a Lender	45
17.4	Adjustments	45
Article 18 - The Agents and The Lenders		45
18.1	Appointment of the Agents	45
18.2	Restrictions on the Powers of the Lenders	45
18.3	Security Documents	45
18.4	Action by the Agents	45
18.5	Enforcement Measures	46
18.6	Indemnification	46
18.7	Reliance on Reports	46
18.8	Liability of the Agents	46
18.9	Liability of Lenders	46
18.10	Rights of an Agent as Lender	46
18.11	Sharing of Information	47
18.12	Competition	47
18.13	Successor Agent	47
Article 19 - Decisions, Waivers and Amendments		47
19.1	Amendments and Waivers by the Majority Lenders	47
19.2	Amendments and Waivers by Unanimous Approval	48
19.3	Amendments requiring the consent of the Affected Party	48
19.4	Dissenting and Affected Lenders	48
19.5	Defaulting Lenders	49

- iv -

19.6	Bail-In Provisions	51
Article 20 - Miscellaneous		52
20.1	Books and Accounts	52
20.2	Determination	52
20.3	Prohibition on Assignment by Borrowers	52
20.4	Assignments and Participations	52
20.5	Designated Lenders	53
20.6	Notes	54
20.7	No Waiver	54
20.8	Irrevocability of Notices of Borrowings	54
20.9	Set-off	54
20.10	Indemnification	54
20.11	Mitigation of costs	55
20.12	Corrections of Errors	55
20.13	Communications	56
20.14	Counterparts	56
20.15	Waiver of Jury Trial	56
Article 21 – Notices		56
21.1	Sending of Notices	56
21.2	Receipt of Notices	56

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THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This Agreement is made as of June 1, 2017 among Cascades Inc., a corporation incorporated under the laws of the province of Quebec (“Cascades”), Cascades USA Inc., a corporation incorporated under the laws of the State of Delaware (“Cascades US”) (each a “Borrower” and, collectively the “Borrowers”), National Bank of Canada, a Canadian bank, as administrative agent, The Bank of Nova Scotia, a Canadian bank, as collateral agent, and each of the financial institutions having executed this Agreement as Lender.

Recitals

A. Pursuant to a credit agreement dated as of December 29, 2006 (as amended and restated as of February 10, 2011, as again amended and restated as of July 7, 2015 and as further amended pursuant to requests for amendments dated November 23, 2015 and June 23, 2016, the “Initial Credit Agreement”), the Lenders agreed to make available to the Borrowers a Facility in a principal amount of $750,000,000 for general corporate purposes.

B. Cascades US is a wholly-owned Subsidiary of Cascades.

C. The Borrowers and the Lenders wish to amend and restate the Initial Credit Agreement for the purposes of, (i) extending the Facility Maturity Date to July 7, 2021, (ii) providing for an option to add additional borrowers, (iii) modifying the definition of the Borrowing Base, and (iv) updating and making consequential changes to other provisions.

Therefore, the parties agree as follows:

Article 1 - Interpretation

1.1 Amendment and Restatement

The Initial Credit Agreement is hereby amended and restated in its entirety, without novation of the Initial Credit Agreement and without derogation of the rights and obligations of the parties thereunder (save as amended hereunder). However, from the Effective Date, this Agreement will evidence the agreement of the parties with respect to the matters which are the subject of the Initial Credit Agreement and this Agreement.

1.2 Definitions

In this Agreement, unless the context otherwise requires, the following terms have the respective meanings set out below or in the preamble (and all such terms that are defined in the singular have the corresponding meaning in the plural and vice versa).

“Acceptance” means:

(a) in respect of a Lender who is a bank that customarily accepts bankers' acceptances, at such Lender’s discretion, either a depository bill subject to the Depository Bills and Notes Act (Canada) or a bill of exchange subject to the Bills of Exchange Act (Canada), in each case, drawn by Cascades on and accepted by such Lender; and

(b) in respect of any other Lender, a promissory note bearing no interest, made by Cascades to such Lender;

“Additional Borrower” means any wholly-owned Subsidiary of Cascades who has become an additional Borrower pursuant to Section 1.4

“Adjusted Consolidated Basis” means, in relation to Cascades, a consolidation that excludes all Persons who are not Credit Parties;

“Administrative Agent” means National Bank of Canada or any successor administrative agent appointed pursuant to Section 18.13;

“Administrative Agent’s Office” means the office of the Administrative Agent designated by it from time to time as its administrative office for the purposes hereof, after notice to the Lenders;

“Affiliate” means, with respect to a Person, any other Person that directly or indirectly Controls, or is Controlled by, or is under common Control with, that Person;

“Agents” means collectively the Administrative Agent and the Collateral Agent;

“Applicable Margin (or Rate)” means a margin (or rate) determined in accordance with Schedule A;

“Borrowing Base” means the amount (expressed in Dollars) determined by the Administrative Agent as being the sum of:

(a) 80% of the book value of the trade accounts receivable of the Credit Parties which are subject to the Security and are owed by customers located in Canada, the United States and Europe, but excluding accounts that have been outstanding for more than 90 days, accounts owed by Credit Parties, accounts subject to set-off, accounts in dispute and doubtful accounts, provided that,

(i) such 80% percentage will be increased to 90% for accounts receivable insured for at least 90% of their amounts by Export Development Canada or another credit insurer acceptable to the Majority Lenders but on the condition that the Collateral Agent be named as loss payee under the related policy,

(ii) if a Securitization or Factoring Program is in effect, the accounts receivable which are subject (in whole or in part) to such program will be excluded from the Borrowing Base (as provided in Section 13.3(b)(iv)) and the aggregate of the amounts determined pursuant to paragraphs (b) and (c) below will be included in the Borrowing Base only up to 300% of the amount determined under paragraph (a);

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(b) 60% of the book value of the inventory of the Credit Parties which is subject to the Security and is located in Canada and the United States, but excluding work in process; and

(c) 60% (rounded upwards to the next $5,000,000) of the market value of the Charged Fixed Assets but only up to 50% of the aggregate amount of the Facility;

less the excess of (i) a reasonable estimate of the aggregate of all amounts owing to creditors (including governments) whose claims are secured or protected by a Lien capable of ranking pari passu with or prior to the Security with respect to such accounts receivables and inventory, over (ii) $10,000,000;

“Borrowings” means the Prime Rate Loans, the US Base Rate Loans, the Acceptances, the Libor Loans and the Letters of Credit;

“Branch of Account” means, with respect to the Facility, a branch of a bank in Canada where the Administrative Agent has established an account for the Facility, in each case as may be designated by the Administrative Agent from time to time as the applicable branch of account, after consultation with Cascades;

“Business Day” means a day on which banks are open for business in Montreal and in Toronto, excluding Saturday and Sunday; where such term is used in the context of a US Base Rate Loan, such day must also be a day on which banks are open for business in New York City and where such term is used in the context of a Libor Loan, such day must also be a day on which banks are open for business in London, England;

“Cascades Indentures” refers collectively to (i) the indenture dated as of June 19, 2014 between Cascades and Computershare Trust Company of Canada providing for the issue of notes due in 2021, (ii) the indenture dated as of June 19, 2014 between Cascades and Wells Fargo Bank, National Association providing for the issue of notes due in 2022, (iii) the indenture dated May 19, 2015 between Cascades and Wells Fargo Bank National Association providing for the issue of notes due in 2023, (in each case, as any such indenture may be amended or supplemented from time to time), and (iv) any other indenture or instrument providing for the issue or incurrence of Funded Debt the proceeds of which are used to refinance any of the notes issued under the indentures referred to in clauses (i) to (iii) inclusively or for any other general corporate purposes provided that such Funded Debt has a stated maturity falling beyond the Facility Maturity Date;

“CDOR Rate” means, for any day, the arithmetic average of the Dollar bankers’ acceptances offered discount rates for the applicable period which appear on the Reuters service at 10:00 a.m., or if such day is not a Business Day, then on the immediately preceding Business Day; provided however, that if such rates are not available, then the CDOR Rate for any day will be the bankers’ acceptances discount rate of the Administrative Agent for the applicable period as of 10:00 a.m. on such day, or if said day is not a Business Day, then on the immediately preceding Business Day, provided that if on any day the CDOR Rate so determined is less than zero percent, then the CDOR Rate on such day will be deemed to be zero percent;

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“Charged Fixed Assets” means the fixed assets of the Credit Parties which are subject to the Security in accordance with Section 10.3;

“Collateral Agent” means The Bank of Nova Scotia or any successor collateral agent appointed pursuant to Section 18.13;

“Commitment” means, with respect to each Lender, its proportion (expressed as a percentage or as an amount, as the case may be) of the amount of the Facility or, as the case may be, of any of Tranche A or Tranche B, as specified opposite its name on the signature pages of this Agreement, subject however to any readjustment resulting from an increase or a reduction in the amount of the Facility, a change in the amount of any Tranche or from an assignment of Commitment made pursuant to this Agreement;

“Control” (including any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or trust interests, by contract or otherwise); without limiting the generality of the foregoing (i) a Person is deemed to Control a corporation if such Person (or such Person and its Affiliates) holds outstanding shares or other rights carrying more than 50% of the voting power in the election of the board of directors of the corporation, (ii) a Person is deemed to Control a partnership if such Person (or such Person and its Affiliates) holds more than 50% in value of the equity of the partnership, (iii) a Person is deemed to Control a trust if such Person (or such Person and its Affiliates) holds more than 50% in value of the beneficial interests in the trust, and (iv) a Person that controls another Person is deemed to Control any Person controlled by that other Person;

“Corporate Structure Chart” means the corporate and capital structure of Cascades and its Subsidiaries and the other information relating to them, as described in the chart dated as of the date of this Agreement to be delivered by Cascades pursuant to Section 9.1 (as may be updated from time to time thereafter by the delivery of any such update to the Administrative Agent);

“Credit Card Creditor” has the meaning given to such term in Section 10.5;

“Credit Documents” means this Agreement, the Security Documents, any note issued pursuant to Section 20.6 and any other present and future document relating to any of the foregoing, in each case, as amended, supplemented or restated;

“Credit Parties” means each of the Borrowers and their Subsidiaries, but excluding (i) Persons in which investments are classified under GAAP as joint ventures or minority investments, (ii) Reno de Medici S.p.A. and its Subsidiaries until such time as all shares of Reno de Medici S.p.A. carrying voting power in all circumstances are owned by Cascades or a wholly-owned Subsidiary thereof, (iii) 27102009 USA Inc. and its Subsidiaries until such time as all shares of the project vehicle formed for the purposes of the construction and operation of the “Greenpac” project carrying voting power in all circumstances are owned by Cascades or a wholly-owned Subsidiary thereof, and (iv) Cascades Europe S.A.S. and its Subsidiaries;

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“Default” means any event or circumstance which constitutes an Event of Default or which, with the passage of time, the giving of a notice or both, would constitute an Event of Default;

“Designated Subsidiaries” means the Subsidiaries of Cascades (other than a Borrower) designated as Designated Subsidiaries pursuant to Section 1.3;

“Discount Rate” means on any day,

(a) in respect of any Acceptance accepted by a Lender that is a Canadian Schedule I bank, the CDOR Rate on such day for the applicable period; and

(b) in respect of any Acceptance to which clause (a) does not apply, the lesser of (x) the discount rate of such Lender in effect at or about 10:00 a.m. on the relevant date for bankers’ acceptances (or equivalent instruments if such Lender does not customarily accept bankers’ acceptances) of such Lender for a period comparable to the period of such Acceptance and (y) the CDOR Rate plus 0.10%, provided that for greater certainty such latter rate will apply to any Lender that does not have a discount rate as contemplated in (x);

“Discounted Proceeds” means, with respect to any issue of Acceptances, an amount (rounded to the nearest whole cent and with one-half of one cent being rounded up) calculated by multiplying:

(a) the aggregate face amount of such Acceptances; by

(b) the price, where the price is determined by dividing one by the sum of one plus the product of:

(i) the Discount Rate applicable to such Acceptances (expressed as a decimal); and

(ii) a fraction, the numerator of which is the number of days in the period of such Acceptances and the denominator of which is 365;

with the price as so determined being rounded up or down to the fifth decimal place and .000005 being rounded up;

“Distribution” means any payment in cash or in kind that provides an income (including interest or dividend) or a return on, or constitutes a distribution or redemption of, the equity or capital of a Person (other than by way of the issuance of new equity interests);

“Dollar” and the symbol $ mean lawful money of Canada;

“EBITDA” means, with respect to Cascades, the net income of Cascades for the rolling four-quarter period ending on the date that EBITDA is determined, plus the following items, to the extent such items have been deducted in calculating net income:

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(a) Interest Expense;

(b) income taxes;

(c) depreciation;

(d) non-cash compensation expenses for grants of performance shares or stock options to the extent same are not redeemable for cash;

(e) non-cash restructuring charges or reserves, including in relation to severance and termination costs, pension settlement, future lease commitments, consolidation of facilities and employee relocation costs; and

(f) other non-cash items, including resulting from amortization, write-up, write-down or write-off of any kind of tangible assets (other than inventory) or intangible assets (including goodwill and deferred financing costs), but to the extent that they do not represent an accrual of or reserve for cash expenditures in any future period;

minus the following item:

(g) cash payments made during such period in respect of non-cash items referred to above which had been added to net income during a prior period;

provided that net income is calculated excluding:

(h) the equity of Cascades in the net income of any other Person that is not a Credit Party to the extent same has not been distributed in cash to a Credit Party by way of Distributions (it being understood that all cash dividends received by a Credit Party from non-Credit Parties are included in its net income);

(i) gains or losses arising from (i) the translation of any long-term debt payable in a foreign currency, (ii) Hedging Agreements and other derivative agreements, (iii) any refinancing, repurchase or extinguishment of Funded Debt, and (iv) extraordinary, unusual or non-recurring items not otherwise dealt with in the definition of EBITDA including fees and expenses relating to any event or transactions giving rise to such items;

(j) non-cash items that will not result in the receipt of cash payments in any future period; and

(k) the net income of any Subsidiary to the extent that the payment of Distributions of net income by that Subsidiary is not at the date of determination permitted (i) without prior governmental approval (that has not been obtained), or (ii) pursuant to the terms of its constitutive documents or any agreement, order, law or regulation applicable to such Subsidiary or its shareholders;

“Effective Date” means the date this Agreement becomes effective as provided in the first sentence of Section 9.1;

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“Environmental Laws” shall mean all laws, rules and regulations, and any orders or legally binding policies, in each case as now or hereafter in effect, relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes;

“Equity Derivative” means any derivative agreement entered into by a Credit Party in connection with the Credit Parties’ stock option plans or grant of performance shares and capable to protect Credit Parties against fluctuations of equity securities;

“ERISA” means the Employee Retirement Income Security Act of 1974 of the United States, as amended from time to time;

“ERISA Affiliate” means any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the US Revenue Code of which any Credit Party is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the US Revenue Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the US Revenue Code, described in Section 414(m) or (o) of the US Revenue Code of which any Credit Party is a member;

“Event of Default” has the meaning given to such term in Section 16.1;

“Facility” means the revolving facility made available to the Borrowers pursuant to Section 2.1, by way of Tranche A and Tranche B;

“Facility Maturity Date” means July 7, 2021, or such subsequent date as may be agreed on pursuant to Section 2.14;

“Funded Debt” means, with respect to a Person, and without duplication, all obligations that under GAAP should be classified on such Person’s balance sheet as liabilities or to which reference should be made by footnotes thereto, (i) including, whether or not so classified, Guarantees and Liens granted in respect of Funded Debt of another Person, but (ii) excluding Subordinated Debt, future income taxes, employees future benefits, the negative mark-to-market value of unrealized losses on Hedging Agreements and Equity Derivatives, assets retirement obligations, deferred revenues, as well as trade accounts payable, obligations under operating leases and all other accrued obligations and liabilities incurred in the ordinary course of business;

“Funded Debt to Capitalization Ratio” means the ratio of Funded Debt to the sum of Funded Debt and shareholders’ equity (with shareholders’ equity being calculated including Subordinated Debt), provided that for the purposes of calculating this ratio:

(a) the mark-to-market value of Hedging Agreements relating to obligations for monies borrowed or raised in US Dollars (i) if positive, will be deducted from Funded Debt and (ii) if negative, will be included in Funded Debt;

(b) cash and cash equivalents will be deducted from Funded Debt to the extent that the requirements of Section 10.2(b) are met, but only up to an aggregate amount not exceeding $50,000,000;

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(c) preferred shares redeemable in cash at the option of the issuer with no possibility of redemption prior to the Facility Maturity Date or convertible in shares of another class at the option of the issuer or holder thereof may be included in shareholders’ equity (and excluded from Funded Debt) even if they are treated as liabilities under GAAP; and

(d) other adjustments in shareholders equity as a result of changes in GAAP which came into effect on January 1, 2011 will not reduce shareholders equity for the portion thereof that is not in excess of $225,000,000;

“GAAP” means generally accepted accounting principles in Canada (including the International Financing Reporting Standards to the extent applicable) which are in effect from time to time (subject however to Section 1.6(b));

“Guarantee” means any obligation or arrangement, contingent or not, directly or indirectly (i) guaranteeing any liability or indebtedness of any Person, or (ii) protecting a creditor of any Person from a loss in respect of any such liability or indebtedness, or (iii) intended to ensure that any Person will maintain certain financial conditions such as financial ratios or solvency or liquidity requirements, or (iv) having the same economic effect as any of the foregoing;

“Hedging Agreement” means any foreign exchange contract, interest rate hedging contract and any other financial contract or arrangement capable to protect a Credit Party against fluctuations in currencies, interest rates or commodities;

“Hedging Creditor” has the meaning given to such term in Section 10.5;

“Initial Credit Agreement” has the meaning given to such term in the Recitals;

“Interest Coverage Ratio” means the ratio of EBITDA to Interest Expense for the period EBITDA has been calculated;

“Interest Expense” means, for any period, the aggregate amount of interest and other financing expenses during such period, net of interest income, in each case determined in accordance with GAAP, but (i) including interest and other financing charges which have been capitalized, but however (ii) excluding amortization of financing expenses and debt discount or premium, deferred gains or losses on the translation of any long-term debt payable in foreign currency or non-recurrent upfront and financing costs, (iii) excluding unrealized gains or losses arising from Hedging Agreements, (iv) excluding any gain or loss arising from any refinancing, repurchase or extinguishment of Funded Debt, and (v) excluding the non-cash portion of the net interest expense related to the net position of defined benefit liability (asset);

“Issuing Lender” means, in respect of any Tranche, the Lender who is the Swingline Lender under such Tranche, provided that Cascades will be entitled with the consent of the Administrative Agent to replace an Issuing Lender by another Lender who has a Commitment under the applicable Tranche and is willing to issue Letters of Credit;

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“Lender” means each of the Persons having executed this Agreement as Lender and any other Person who becomes a Lender pursuant to an assignment or a designation made in accordance with Section 20.4 or Section 20.5;

“Letter of Credit” means a documentary or standby letter of credit or a letter of guarantee issued pursuant to this Agreement;

“Libor” means, with respect to any Libor Loan, the annual rate of interest determined by the Administrative Agent as being the average (rounded upwards to the nearest multiple of 0.01%) of the rates for deposits in US Dollars or in Euros (as applicable) in the London interbank market which is shown on the applicable page of the Reuters service as of 11:00 a.m. (London, England time) on the second Business Day prior to the commencement of the applicable Libor Loan and for a comparable period, or if such rate is not available, the annual rate (rounded up to the nearest 0.01%) which the Administrative Agent is prepared to offer in the London interbank market for taking deposits in U.S. Dollars or Euros (as applicable) at approximately 11:00 a.m. (London time) on the second Business Day prior to the commencement of the applicable Libor Loan and for a comparable period; provided that if any annual rate so determined is a negative rate (below zero percent), then in such case Libor for the applicable Libor Loan will be deemed equal to zero percent for the period of such Loan;

“Libor Loan” means a loan denominated in US Dollars or in Euros bearing interest at Libor for US Dollars or Euros, as applicable, plus the Applicable Margin;

“Lien” means any hypothec, security interest, mortgage, lien, right of preference, pledge, assignment by way of security or any other agreement or encumbrance of any nature that secures the performance of an obligation, and a Person is deemed to own subject to a Lien any property or assets that it has acquired or holds subject to the right of a vendor or lessor under any conditional sale agreement, capital or synthetic lease or similar agreement (other than an operating lease) relating to such property or assets;

“Majority Lenders” means any group of Lenders whose Commitments amount in the aggregate to more than 50% of the aggregate amount of the Facility;

“Material Adverse Change” means any change, condition, event or occurrence which, when considered individually or together with other changes, conditions, events or occurrences, could reasonably be expected to have a Material Adverse Effect;

“Material Adverse Effect” means (i) a material adverse effect on the condition (financial or otherwise), business, operations, assets, liabilities (absolute or contingent) or prospects of the Credit Parties taken as a whole, (ii) a material adverse effect on the ability of Cascades or of the Credit Parties taken as a whole to perform their obligations under any Credit Document, or, (iii) a material impairment of the rights or remedies of the Lenders under any Credit Document;

“Net Tangible Assets” means, in respect of Cascades, total assets, after deducting current liabilities and non-controlling interests, and less, to the extent otherwise included in total assets, the amounts of (without duplication) (i) reevaluations and other write-ups of assets subsequent to June 30, 2015, and (ii) goodwill and other intangible assets, in each case calculated on an Adjusted Consolidated Basis;

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“Non-Designated Subsidiaries” means the Subsidiaries of Cascades (other than Borrowers and non-Credit Parties) that are not Designated Subsidiaries;

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA;

“Permitted Liens” means:

(a) Liens imposed or arising by operation of law, in each case, in respect of obligations which have not been enforced or are being contested in good faith and by appropriate proceedings to the extent that adequate reserves are maintained;

(b) pledges or deposits made in the ordinary course of business in connection with bids, or tenders or to obtain performance bonds or to comply or ensure compliance with the requirements of any law or regulation applicable to a Credit Party or its business or assets;

(c) Liens granted by Credit Parties incorporated in a member state of the European Union on their accounts receivable and inventory not subject to the Security and securing credit facilities made available to such Credit Parties in an aggregate amount at any time not exceeding $;

(d) Liens (other than Liens permitted pursuant to paragraph (e) below) securing obligations incurred in connection with the purchase or the lease of any real or immovable property, improvement thereto and equipment or securing any renewal, extension or replacement of such obligations, provided that any such Lien charges only the property so purchased or leased and for an amount not in excess of the related obligation and that the aggregate of all outstanding amounts secured by such Liens does not at any time exceed for all Credit Parties the greater of $150,000,000 and 7.5% of the Net Tangible Assets of Cascades and provided further that no such property is part of Charged Fixed Assets or is material to the operations of such assets;

(e) Liens existing on the date hereof and listed in the Permitted Liens list dated February 10, 2011 delivered to the Administrative Agent on that date and any renewal, extension or replacement of any such Lien provided that no such renewal, extension or replacement may extend to property other than that initially charged by such Lien and that the aggregate of all outstanding amounts secured by Liens permitted under this paragraph does not at any time exceed $50,000,000 and provided further that no property charged by such Liens is part of Charged Fixed Assets or is material to the operation of such assets ;

(f) Liens securing loans and advances made by a Credit Party to another Credit Party, provided such loans and advances are subject to the Security;

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(g) Liens securing obligations under a Securitization or Factoring Program, provided that such Liens charge only accounts receivable sold pursuant to such program; and

(h) Liens by way of deposits or pledges of segregated property consisting of cash and cash equivalents (including marketable securities) to secure obligations under (i) Hedging Agreements with counterparties other than Hedging Creditors, and (ii) Equity Derivatives with counterparties who are Lenders, provided that the aggregate value of the property subject to all such Liens does not at any time exceed $25,000,000;

(i) Liens granted by Cascades Recovery Inc. to Metauro Group Holdings Inc. securing the $28,800,000 balance of purchase price payable by Cascades Canada ULC to Metauro Group Holdings Inc. pursuant to the terms of the share purchase agreement dated as of November 27, 2015 between Cascades Canada ULC, Metauro Group Holdings Inc., Albino Metauro and Anthony Metauro;

“Person” means any natural person, legal person, corporation, company, partnership, joint venture, unincorporated organization, business trust or any other entity;

“Plan” means an employee benefit or other plan established or maintained by a Credit Party or any ERISA Affiliate and that is covered by Title IV of ERISA;

“Prime Rate” means, for any day, the greater of:

(a) the annual rate of interest established by the Administrative Agent (or the Swingline Lender concerned where Section 2.8 applies) as being its reference rate then in effect for determining interest rates for commercial loans denominated in Dollars made in Canada; and

(b) the CDOR Rate for bankers’ acceptances with a period of one month, plus 0.75%;

“Prime Rate Loan” means a loan denominated in Dollars bearing interest at the Prime Rate, plus the Applicable Margin;

“Securitization or Factoring Program” means any securitization or factoring program providing for the sale of accounts receivable of any Credit Party, provided for greater certainty that no such program may permit borrowings against the value of accounts receivable;

“Security” means the security, the guarantees and the loss payee designations contemplated in Article 10;

“Security Documents” means any document or agreement evidencing or relating to the Security, including any subordination agreement contemplated herein;

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“Solvent” means, with respect to any Person, that as of the date of determination such Person is “solvent” within the meaning given to that term and similar terms under applicable corporations laws or laws relating to voidable transactions or fraudulent transfers or conveyances;

“Subordinated Debt” means any debt of Cascades which is fully subordinated and postponed to the obligations of the Credit Parties to the Lenders, the Hedging Creditors and the Credit Card Creditors under the Facility, the Hedging Agreements and credit card obligations (respectively), and that the Administrative Agent, acting with the consent of the Majority Lenders, has agreed in writing to consider as such for the purposes of this Agreement;

“Subsidiary” means a Person that is under the Control of another Person;

“Swingline Lender” means, in respect of Tranche A, The Bank of Nova Scotia as Lender and in respect of Tranche B, Comerica Bank as Lender, provided that the Borrower concerned will be entitled with the consent of the Administrative Agent to replace a Swingline Lender by another Lender who agrees to become a Swingline Lender and has a Commitment under the applicable Tranche;

“Tranche” means any of Tranche “A” and Tranche “B”; “Tranche A” means the portion of the Facility made available as Tranche A as provided in Section 2.1; “Tranche B” means the portion of the Facility made available as Tranche B as provided in Section 2.1;

“US Base Rate” means, for any day, the greater of:

(a) the annual rate of interest established by the Administrative Agent (or the Swingline Lender concerned where Section 2.8 applies) as being its reference rate then in effect for determining interest rates for commercial loans denominated in US Dollars made in Canada (in the case of US Base Rate Loans made under Tranche A) or made in New York City (in the case of US Base Rate Loans made under Tranche B), but in each case, not less than zero percent;

(b) the federal funds effective rate in effect on such day (and if such day is not a Business Day, then on the preceding Business Day), ; the term “federal funds effective rate” means the rate usually designated as such and as published by the Federal Reserve Bank of New York for the relevant Business Day, or if such rate is not available on any Business Day, the rate that the Administrative Agent is prepared to offer, at approximately 9:00 a.m. on such day, for overnight deposits in US Dollars in New York; and

(c) but only in the case of US Base Rate Loans made under Tranche B, the Libor that would apply on such day for a period of one month, ;

“US Base Rate Loan” means a loan denominated in US Dollars and bearing interest at the US Base Rate, plus the Applicable Margin;

“US Revenue Code” shall mean the Internal Revenue Code of 1986 of the United States, as amended from time to time;

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1.3 Designated Subsidiaries

(a) The Subsidiaries of Cascades listed in Schedule B hereof are hereby designated as Designated Subsidiaries.

(b) Cascades may designate any other of its Subsidiaries that is a Credit Party (other than a Borrower) as a Designated Subsidiary upon giving prior notice to the Agents specifying the date of effectiveness of the designation (which must be after the date of the notice). Any such designation will be effective on the date specified in the notice and no such designation may be cancelled or revoked.

(c) Each Designated Subsidiary must be at all times a wholly-owned Subsidiary of Cascades and must provide Security as and to the extent required by Article 10.

(d) Cascades covenants that the Non-Designated Subsidiaries will include no Subsidiary of Cascades who is directly or indirectly liable for the payment of obligations under any of the Cascades Indentures or Funded Debt issued thereunder.

1.4 Additional Borrowers

(a) Cascades may designate any of its wholly-owned Subsidiary as an additional Borrower (“Additional Borrower”) under the Facility upon giving to the Agents a prior notice of such designation, such notice to be accompanied by an accession agreement executed by the Additional Borrower, Cascades and such Subsidiary whereby the latter will agree to become a Borrower and to be bound by the provisions of this Agreement.

(b) Any Additional Borrower so designated must be incorporated under the laws of Canada or a province thereof (in which case it will be an Additional Borrower but under Tranche A only) or under the laws of a state of the United States of America (in which case it will be an Additional Borrower but under Tranche B only).

(c) Any such designation will be effective when the Administrative Agent confirms to Cascades and the Lenders that the following documents have been received by the Administrative Agent to its satisfaction: (i) the constitutive documents of the Additional Borrower and a certificate as to its legal existence, (ii) a resolution of the board of directors of the Additional Borrower evidencing the authority of the Persons acting on behalf of the Additional Borrower, (iii) an amendment to the Security Documents to the effect that they also secure the obligations of the Additional Borrower, (iv) a legal opinion from counsel to the Additional Borrower relating to such matters as the Agents may reasonably require, and (v) a confirmation by each Lender that it has received the information requested by it pursuant to Section 12.3 to comply with its “know your customer” obligations in respect of the Additional Borrower.

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1.5 Currency Conversions

Where any amount expressed in any currency has to be converted or expressed in another currency, or where its equivalent in another currency has to be determined (or vice versa), the calculation is made at the spot rate announced by the Bank of Canada in accordance with its normal practices at or around 16:30 pm on the previous Business Day for the relevant currency against the other currency (or vice versa). If the Bank of Canada does not announce such a rate, then the Administrative Agent or the Issuing Lender concerned (as applicable) will use the spot rate available from the Bloomberg service, or if such rate is not available, its own spot rate or, if it does not have its own rate, a rate it determines to be reasonable;

1.6 GAAP, Calculations and Historical Adjustments

(a) Unless otherwise provided, (i) terms and expressions of an accounting or financial nature have the respective meanings given to such terms and expressions under GAAP; (ii) calculations must be made and financial statements must be prepared in accordance with GAAP insofar as applicable, and (iii) financial ratios must be calculated on an Adjusted Consolidated Basis.

(b) In the event of a change in GAAP having a material effect on the intent or the application of the provisions of this Agreement which are of a financial nature, Cascades and the Administrative Agent, at the request of either of them, will use reasonable efforts to negotiate amendments to the affected provisions in order to preserve their original intent or to facilitate their application provided that all such amendments will be subject to Article 19. Should no such amendments be agreed on by Cascades and the Lenders within 120 days from any such request, then the affected provisions will be applied as if the change in GAAP giving rise to the request had not occurred.

(c) If any business is acquired, discontinued or disposed of during any period in respect of which EBITDA or Interest Expense has to be calculated, the historical financial results of such business will be included or excluded (as applicable) in the relevant calculations for that period as if the acquisition, disposition or discontinuance had occurred on the first day of said calculation period, but with such adjustments to said historical results as may be made by Cascades and are acceptable to the Majority Lenders.

1.7 Time

Except where otherwise indicated, any reference to time means local time in Montreal.

1.8 Headings and Table of Contents

The headings and the Table of Contents are inserted for convenience of reference only and do not affect the construction or interpretation of this Agreement.

1.9 Governing Law and Jurisdiction

(a) This Agreement is governed by and construed in accordance with the laws of the Province of Quebec and the laws of Canada applicable therein.

(b) Any legal proceedings arising out of this Agreement may be instituted in the Superior Court of the district of Montreal (Quebec) and the parties submit to the non-exclusive jurisdiction of such court.

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1.10 Previous Agreements

This Agreement supersedes any previous agreement in connection with the Facility.

1.11 Inconsistency

In the event of inconsistency between this Agreement and any other Credit Document, the provisions of this Agreement must be accorded precedence.

Article 2 - The Facility

2.1 Amount of the Facility

The Lenders, individually, and not solidarily (and not jointly and severally), agree to make available to the Borrowers a revolving credit facility (the “Facility”) in an aggregate maximum amount at any time not exceeding the total of the Commitments under the Facility in effect at such time. As of the date hereof, the Commitment of each Lender under the Facility is as specified opposite its name on the signature pages of this Agreement and the collective Commitments of the Lenders with respect to the Facility aggregate to $750,000,000. The Facility is available in two tranches, Tranche A and Tranche B, as follows:

(a) Tranche A, in the amount of $100,000,000 on the date hereof, is available to Cascades and, as the case may be, any Additional Borrower in the proportion as to each Lender of its Commitment under Tranche A; and

(b) Tranche B, in the amount of $650,000,000 on the date hereof, is available to Cascades US and, as the case may be, any Additional Borrower in the proportion as to each Lender of its Commitment under Tranche B.

2.2 Reallocation among Tranches

(a) Upon giving not less than ten Business Days prior notice to the Administrative Agent, Cascades may change the allocations among Tranches set out in Section 2.1 (and, accordingly, the resulting available amounts of Tranche A and Tranche B), in multiples of $5,000,000;

(b) Any reallocation will result in a corresponding adjustment in the amounts of the Commitments of the Lenders under Tranche A and Tranche B, in order that the percentage of each Lender’s Commitment under any Tranche be in the same percentage as under the Facility;

(c) Reallocations will be effective on the first Business Day of the quarter following the expiry of said ten-day notice period. Any reallocation will remain in effect until the effective date of any subsequent reallocation replacing same;

(d) No reallocation will be effective if, after giving effect thereto, the outstanding Borrowings under any Tranche would exceed on the intended effective date of such reallocation the intended new amount of such Tranche.

2.3 Purpose, Nature and Availability of the Facility

(a) The Borrowers will use the Facility for general corporate purposes.

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(b) The Facility will revolve and, accordingly, Borrowings may be obtained, repaid and re-borrowed by any Borrower under the applicable Tranche until the Facility Maturity Date.

(c) Any Borrower under the applicable Tranche may use such Tranche without the concurrence of notice to any other Borrower.

2.4 Borrowing Options

(a) Borrowings may be obtained by Cascades (or any Additional Borrower) under Tranche A in the form of:

(i) Prime Rate Loans;

(ii) Acceptances;

(iii) US Base Rate Loans;

(iv) Libor Loans in US Dollars or Euros; and

(v) Letters of Credit;

(b) Borrowings may be obtained by Cascades US (or any Additional Borrower) under Tranche B in the form of:

(i) US Base Rate Loans;

(ii) Libor Loans in US Dollars; and

(iii) Letters of Credit.

2.5 Borrowing Base Limitations

The Borrowers must ensure that all outstanding Borrowings under the Facility (expressed in Dollars) will not at any time exceed the lesser of the amount at such time of the Facility and the Borrowing Base. Accordingly, no Borrower may request a Borrowing if the making of such Borrowing would result in such limit being exceeded.

2.6 Borrowings Proportionate to Commitments

Each Borrowing will be made through the Administrative Agent at the applicable Branch of Account and will be allocated by the Administrative Agent among the Lenders approximately in the proportion of their respective Commitments under the relevant Tranche subject however to the provisions of Section 2.8 (Swingline Utilizations) and of Article 5 (Letters of Credit).

2.7 Notice of Borrowings

To obtain a Borrowing (other than a Letter of Credit), the Borrower concerned must give a notice to the Administrative Agent specifying:

(a) the applicable Tranche and the selected form of Borrowing;

(b) the amount of the Borrowing, with a minimum of (i) $5,000,000 (or US$5,000,000 or Euros 5,000,000 as the case may be) per Borrowing under Tranche A the Facility and (ii) US$5,000,000 per Borrowing under Tranche B;

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(c) the date of the Borrowing, which must be a Business Day; and

(d) to the extent applicable, the period of the Borrowing.

The notice must be given by telephone not later than 11:00 a.m. two Business Days prior to the Borrowing, except in the case of a Libor Loan where the notice must be given not later than 10:00 a.m. three Business Days prior to the date of such Libor Loan. Each telephone notice must be followed by a written confirmation on the same date, in the form of Schedule B or in any other manner as may be agreed between the Administrative Agent and the relevant Borrower.

2.8 Swingline Utilizations

(a) The notice and minimum amount requirements otherwise applicable to Borrowings do not apply to Borrowings under the Facility in the form of Prime Rate Loans or US Base Rate Loans (as applicable) obtained from any Swingline Lender by way of overdrafts in accounts opened and pursuant to agreements made for such purposes with the applicable Swingline Lender, up to a maximum outstanding amount not exceeding $50,000,000 in Tranche A and $35,000,000 in Tranche B. Any cheque or payment instruction or debit authorization from the Borrower concerned and resulting in an overdraft in any such account will be deemed to be a request for such a Borrowing, in an amount that is sufficient to cover the overdraft.

(b) Such accounts may include accounts of the Borrower concerned and of other Credit Parties in respect of which set-off and netting arrangements have been made with the applicable Swingline Lender, including any notional account reflecting any such arrangements. The outstanding Borrowings owed to any Swingline Lender may be calculated after giving effect to said arrangements.

(c) The Administrative Agent may permit that Prime Rate Loans and US Base Rate Loans (as applicable) under Tranche A or Tranche B be owing to the Lenders in proportions other than those of their respective Commitments under Tranche A or Tranche B, as applicable. However, the Administrative Agent may from time to time, and will at the request of the applicable Swingline Lender (which may be made at any time), make adjustments among the Lenders under any Tranche so that all Borrowings under such Tranche be approximately in the proportion of the respective Commitments of the Lenders (including the Swingline Lender) under said Tranche.

(d) For greater certainty, (i) this Section 2.8 does not authorize the Administrative Agent to allow that Borrowings owing to a Lender (other than a Swingline Lender) under any Tranche exceed the amount of the Commitment of such Lender under such Tranche, and (ii) the aggregate amount of the Borrowings outstanding under any Tranche (including Borrowings from the applicable Swingline Lender) may not exceed the amount of such Tranche, as determined pursuant to Sections 2.1 and 2.2.

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2.9 Funding

(a) At the request of the Administrative Agent, (including following a request from a Swingline Lender), each Lender will promptly pay to the Administrative Agent such Lender’s share of any Borrowing made or to be made by the Administrative Agent on behalf of the Lenders and of any adjustment payable pursuant to Section 2.8(c). The Administrative Agent will provide the Lenders with such information as may be necessary in order for the Lenders to make payments to the Administrative Agent and fund their respective shares of any Borrowing.

(b) Any amount to be paid by a Lender to the Administrative Agent must be available to the Administrative Agent at the Administrative Agent’s Office by 2:00 p.m. on the applicable day. Any amount to be disbursed by the Administrative Agent to a Borrower will be made available to the relevant Borrower by crediting such Borrower’s account at the applicable Branch of Account or at any other place to be agreed upon from time to time between the relevant Borrower and the Administrative Agent.

2.10 Lender’s Failure to Fund

If a Lender fails to advance its share of any Borrowing and, despite such failure, the Administrative Agent advances such amount to a Borrower, the Administrative Agent may recover such amount from such Lender or, if it is unable to do so, from such Borrower, with interest from the date of disbursement at the rate applicable to Borrowings in the same form under the relevant Tranche. Nothing in this Section obliges the Administrative Agent to fund any Borrowing or advance any sums on behalf of a Lender who has failed to comply with its obligations.

2.11 Conversions and Renewals

(a) A Borrower may convert from one form of permitted Borrowings to another form of permitted Borrowings the whole or any part of the outstanding Borrowings owed by it under the applicable Tranche and renew Acceptances and Libor Loans owed by it, provided that (i) Acceptances and Libor Loans may not be converted prior to the maturity of their respective periods and (ii) Letters of Credit may not be converted.

(b) Sections 2.4 to 2.10 (other than 2.8) apply to a conversion or a renewal with such modifications as may be required.

(c) Unless they are repaid, converted or renewed upon the maturity date of their respective periods, (i) Acceptances will then become Prime Rate Loans for the face amount of such Acceptances, (ii) Libor Loans in US Dollars will then become US Base Rate Loans, and (iii) Libor Loans in Euros under Tranche A will then become Prime Rate Loans.

(d) Any conversion to Borrowings in another currency will be effected by the repayment of the Borrowings to be so converted and by the re-borrowing of an equivalent amount in the other currency.

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2.12 Limitations on Lender’s Obligation to Fund

Each Lender’s obligation to fund Borrowings is limited to such Lender’s Commitment under the relevant Tranche, subject however to the agreements made with Swingline Lenders pursuant to Section 2.8(a). The obligations of the Lenders hereunder are not solidary (and are not joint and several) and no Lender is responsible for the obligations of any other Lender.

2.13 Increase of the Facility

(a) At any time following the execution of this Agreement but no later than the 180^th day preceding the Facility Maturity Date and so long as the amount of the Facility has not been voluntarily reduced by Cascades (but solely pursuant to Section 7.5), Cascades may, by notice to the Administrative Agent, request an increase up to $250,000,000 in the amount of the Facility (an “increase”). The notice must specify:

(i) the amount of the proposed increase, which must be a multiple of $10,000,000, provided that the aggregate amount of all increases made pursuant to this Section 2.13 may not exceed $250,000,000; and

(ii) the allocation of the proposed increase among the Tranches.

(b) Upon receipt of such notice, the Administrative Agent will offer to the Lenders to participate in the increase pro rata to their Commitments. If some but not all of the Lenders accept the offer, then the Administrative Agent will offer to the Lenders who have then accepted a portion of the increase to participate in the remaining unaccepted portion of the increase pro rata to the Commitments of such Lenders. If after such offers, any portion of the increase remains unaccepted, then Cascades will have the right to offer such portion to Persons who are not Lenders, provided that any offer to any such Person would qualify as an assignment of Commitment hereunder, as if such offer were an assignment.

(c) If offers made pursuant to Section 2.13(b) have been accepted, the Administrative Agent, the Borrowers and the Lenders and other Persons who have accepted such offers will execute an amendment to this Agreement:

(i) providing that each Person who has accepted to participate in the increase will have a Commitment equal to the amount of its participation in the increase (or an additional Commitment equal to such amount in the case of a Person who is already a Lender); and

(ii) containing such other provisions as may be necessary to give effect to the increase including as to the absence of a Default and the delivery of legal opinions.

(d) For greater certainty, (i) nothing in this Section is intended to commit any Lender to participate or the Administrative Agent to arrange for a participation in an increase, and (ii) the aggregate amount of all increases made pursuant to this Section 2.13 may not exceed $250,000,000. Notwithstanding any other provision of this Agreement, an amendment agreement giving effect to an increase under this Section 2.13 will not require the consent of Lenders other than those participating in the increase and the Agents, any Swingline Lender and any Issuing Lender.

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2.14 Extension of the Facility Maturity Date

(a) Cascades may request that the Facility Maturity Date be extended for a one-year period by delivering to the Administrative Agent a written notice to that effect between April 1 and April 30 of each year (other than the year of the Facility Maturity Date). If all Lenders agree to the extension request within 60 days from the receipt of such notice, the Administrative Agent will notify Cascades of same and the Facility Maturity Date will be extended for a period of one year from its then current date. Subject to Section 2.14(b), unless all Lenders agree in writing to the extension request within said 60-day period, the Facility Maturity Date will not be extended.

(b) If a group of Lenders whose Commitments amount in the aggregate to more than 66⅔% (but less than 100%) of the Facility have agreed to an extension of the Facility Maturity Date within the 60-day period specified in Section 2.14(a), the Administrative Agent will notify Cascades of same together with specifying the names of the Lenders who have not provided their consent with such 60-day period (the “declining Lenders”). After receipt of such notice and for a period of 45 days, Cascades will be entitled to exercise any of the following options (or a combination of them):

(i) Cascades may require that any declining Lender assign its rights under the Facility to another Person who has agreed to assume the Commitment of such declining Lender and to consent to the extension, provided that no such assignment and assumption will be effective unless Section 20.4 be complied with and the consideration paid to such declining Lender for the assignment include all amounts owed to such declining Lender in respect of the Facility (plus breakage costs, if any);

(ii) Cascades may cancel in its entirety the Commitment of any declining Lender provided that no such cancellation will be effective unless all amounts owed to such declining Lender in respect of the Facility (plus breakage costs, if any) be paid to it.

(c) If the Commitments of all declining Lenders have been assumed or cancelled in accordance with Section 2.14(b) within the period of time therein specified, the Administrative Agent will notify the Lenders of same and the Facility Maturity Date will be extended for a period of one year from its then current date. However, if the Commitments of all declining Lenders in respect of the Facility have not been so assumed or cancelled within such period of time, the Facility Maturity Date will not be extended and the Administrative Agent will notify Cascades and the Lenders of same.

(d) For greater certainty, if an extension request is not made during any particular year or does not give rise to an extension, such fact will not preclude Cascades from making an extension request during any subsequent year (other than the year of the Facility Maturity Date).

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Article 3 - Acceptances

3.1 Period and Amounts

Acceptances:

(a) are for periods of one, two, three or six months (or such other periods agreed on by all Lenders), but must mature on a date which is a Business Day and which is no later than the Facility Maturity Date;

(b) are denominated in Dollars, in multiples of $100,000 with a minimum of $5,000,000 per issue, provided that the Administrative Agent may round each Lender’s allocation of such issue to the nearest $100,000 increment;

(c) constitute outstanding Borrowings for their face amount;

(d) do not bear interest nor carry any days of grace; and

(e) may be discounted by the Lenders for their own account or may be sold to third parties.

3.2 Disbursement

(a) The amount to be disbursed to the Borrower concerned with respect to Acceptances discounted by the Lenders is the Discounted Proceeds of such Acceptances, less the applicable acceptance fee.

(b) In the case of an issue of Acceptances for the purposes of replacing existing Borrowings, the Borrower concerned must, concurrently with such issue, pay to the Administrative Agent an amount equal to the aggregate amount of the Borrowings so replaced. The amount so paid to the Administrative Agent will be applied to the portion of the Borrowings which have been replaced by such Acceptances.

3.3 Power of Attorney

(a) Upon any issue of Acceptances, each Lender is authorized to sign, complete, endorse and deliver on behalf of the Borrower concerned the Acceptances to be so issued and to do all things necessary or useful in order to facilitate such issuance. The Administrative Agent is also authorized to make the necessary arrangements for the negotiation of Acceptances intended to be sold on the money market.

(b) In the case of an issue of Acceptances by way of promissory notes to the order of Lenders who do not customarily accept banker’s acceptances (as provided in paragraph (b) of the definition of Acceptances), the Borrower concerned will be deemed to have issued the corresponding notes to such Lenders, without the necessity of physical execution and delivery of any note.

3.4 Depository Bills

A Lender who accepts Acceptances that are “depository bills” within the meaning of the Depository Bills and Notes Act (Canada) may deposit same with the CDS Clearing and Depository Services Inc. and such Acceptances may be dealt with in accordance with the rules and procedures of such entity.

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3.5 Availability

(a) The availability of Acceptances (including by way of conversions or renewals) is subject (i) to funds being available for such purpose in the Canadian money market and the CDOR Rate being available, and (ii) with respect to any Lender, such Lender not having advised the Administrative Agent and Cascades that the Discount Rate is less than its effective funding cost for Acceptances issued by Cascades to be sold on the Canadian money market. The Administrative Agent will notify Cascades if Acceptances cease to be so available (either generally or with any particular Lender) as well as when availability resumes. For so long as Acceptances are not available with any particular Lender, Borrowings with such Lender that otherwise would have been made by way of Acceptances will be made by way of Prime Rate Loans, notwithstanding Section 2.6.

(b) The Borrowers under Tranche A must ensure that no more than ten different issues of Acceptances be outstanding at any time, provided that on an occasional basis the Administrative Agent may permit such limit to be exceeded.

Article 4 - Libor Loans

4.1 Amounts and Periods

(a) Libor Loans may be obtained for periods of one, two, three or six months (or such other periods agreed on by all Lenders), but must mature on a Business Day which is not later than the Facility Maturity Date;

(b) Libor Loans must be in multiples of US$100,000 (or 100,000 Euros), with a minimum of (i) US$5,000,000 (or 5,000,000 Euros) under Tranche A, and (ii) US$5,000,000 under Tranche B; and

(c) The Borrowers must ensure that no more than ten different Borrowings by way of Libor Loans be outstanding at any time under the Facility, provided that on an occasional basis the Administrative Agent may permit such limit to be exceeded.

4.2 Changed Circumstances

If a Lender determines that:

(a) it is unable to obtain US Dollars or Euros in the London inter-bank market,

(b) a law, regulation, administrative decision or guideline, or a Court decision has made it unlawful or prohibits such Lender from making or maintaining Libor Loans in US Dollars or in Euros, or has imposed costs or constraints on such Lender that do not exist on the date hereof in respect of Libor Loans in US Dollars or in Euros, or

(c) Libor is less than its effective funding cost for making or maintaining Libor Loans in the applicable currency,

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the affected Lender may so notify the Administrative Agent and the Borrowers concerned and no Libor Loans (including by way of conversions or renewals) in the applicable currency may be made with such Lender from the date of the notice until the cause of such determination has ceased to exist. In any such case, Borrowings with such Lender that otherwise would have been made by way of Libor Loans in US Dollars or Euros will be made by way of US Base Rate Loans or Prime Rate Loans (respectively) notwithstanding Section 2.6.

4.3 Conversion Prior to Maturity

If it becomes unlawful or prohibited for a Lender to maintain Libor Loans in US Dollars or in Euros, all Libor Loans owed to such Lender in US Dollars or Euros will become US Base Rate Loans or Prime Rale Loans respectively on the date of the notice given pursuant to Section 4.2.

Article 5 - Letters of Credit

5.1 Availability

Letters of Credit will be issued by the applicable Issuing Lender in Dollars, US Dollars, Euros or any other freely tradable currency acceptable to such Issuing Lender, for such transactions and on such terms and conditions as are mutually agreed upon between the Borrower concerned and the applicable Issuing Lender and are not inconsistent with the provisions of this Article 5. Letters of Credit are available only up to an aggregate outstanding amount (expressed in Dollars) at any time not exceeding, in respect of any Tranche, 20% of the amount of such Tranche. The applicable Issuing Lender will notify the Administrative Agent of any request for the issuance of a Letter of Credit.

5.2 Maturity of Letters of Credit

No Letter of Credit may have at any time a remaining term exceeding 365 days from such time or extending beyond the 180^th day following the Facility Maturity Date.

5.3 Borrowings

(a) Any Letter of Credit constitutes from the date of its issue an outstanding Borrowing under the applicable Tranche in a principal amount equal to the maximum amount of the obligation of the applicable Issuing Lender. Any Issuing Lender will notify the Administrative Agent of the issue of any Letter of Credit at least one Business Day prior to the date of such issue.

(b) For greater certainty, if Letters of Credit under any Tranche are outstanding on the Facility Maturity Date or on any other date the Borrowings hereunder become due, the aggregate amount of such outstanding Letters of Credit must be prepaid on such date by the Borrower concerned to the Administrative Agent (for the account of the applicable Issuing Lender). However, if any such Letter of Credit expires or is cancelled without having been drawn, the amount prepaid in respect of same will be reimbursed to the Borrower concerned but only if no indebtedness of the Borrowers hereunder is due and payable; otherwise, any such amount will be remitted to the Administrative Agent to be applied to such indebtedness.

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5.4 Payments under Letters of Credit

(a) Any amount paid by an Issuing Lender under a Letter of Credit issued under Tranche A (and not repaid on the same day or already prepaid) will constitute, as of the date of payment, a Prime Rate Loan, if the payment is made in Dollars or in a currency other than the US Dollar, and a US Base Rate Loan if the payment is made in US Dollars. Any amount paid by an Issuing Lender under a Letter of Credit issued under Tranche B (and not repaid on the same day or already prepaid) will constitute, as of the date of payment, a US Base Rate Loan. Any such Loan will be allocated among the Lenders pro rata to their respective Commitments under the applicable Tranche. Each Lender must fund such loan by remitting to the Administrative Agent (for the account of the applicable Issuing Lender) the amount of its share of such loan. The provisions of Section 2.10 will apply in the event of non-disbursement by a Lender.

(b) If an Issuing Lender has paid an amount under a Letter of Credit in a currency other than the currency of the resulting Loan, such amount will be converted into the applicable currency on the date of payment.

5.5 Indemnity

The Borrower concerned will reimburse and indemnify the Agents, any Issuing Lender and the Lenders in respect of any reasonable cost, loss or damage incurred or suffered by them in connection with Letters of Credit or litigation relating thereto (including proceedings to restrain an Issuing Lender from making or to compel it to make a payment), including reasonable legal fees and other costs of litigation, except for any cost, loss or damage resulting from the wilful misconduct or gross negligence of any Agent, any Issuing Lender or the Lenders.

5.6 I.C.C. Rules

Unless otherwise provided in this Agreement or in any agreement relating to their issue, Letters of Credit are governed by the Uniform Customs and Practice for Documentary Credits (I.C.C. Publication 600, 2007 revision).

Article 6 - Fees And Interest

6.1 Letter of Credit Fees

The Borrower concerned must pay a fee for each Letter of Credit. The fee for each Letter of Credit which is either a non-documentary letter of credit or a letter of guarantee will be at an annual rate equal to the Applicable Rate. The fee for each documentary Letter of Credit will be determined on the basis of the rate then offered by the applicable Issuing Lender to its customers for similar documentary letters of credit. Fees are calculated on the face amount of each Letter of Credit for the number of days included in the period of same. Any such fee must be paid to the Administrative Agent quarterly in arrears on the first Business Day of each calendar quarter (commencing with the quarter of the issue of the relevant Letter of Credit), for distribution to the Lenders pro rata to their Commitments under the relevant Tranche. Concurrently with the payment of any such fee, the Borrower concerned must also pay to the applicable Issuing Lender, for its own account, a fronting fee at an annual rate equal to %, calculated as aforesaid.

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6.2 Administrative Charges with respect to Letters of Credit

The Borrower concerned must pay to the applicable Issuing Lender administrative charges in connection with Letters of Credit at the rates and on the terms generally applicable to the other customers of such Issuing Lender.

6.3 Standby Fee

Cascades must pay to each Lender, through the Administrative Agent, a standby fee on the unused portion of such Lender’s Commitment. The standby fee will be calculated daily from the most recent date on which it has been paid under the Initial Credit Agreement. The stand-by fee will be calculated for any day at the Applicable Rate and will be payable quarterly in arrears on the first Business Day of the following quarter.

6.4 Acceptance Fees

Upon the issue of any Acceptance, Cascades must pay to the relevant Lender (or to the Administrative Agent for the account of such Lender) an acceptance fee at an annual rate equal to the Applicable Rate. The acceptance fee will be calculated on the face amount of the applicable Acceptance and for the number of days included in the period of same. Any such payment may be made in the manner provided in Section 3.2(a).

6.5 Other Fees

Cascades must pay, on the Effective Date, an extension fee calculated at an annual rate of 6.5 bps calculated on each Commitment for a period of two years. The annual agency fee payable to the Administrative Agent will continue to be payable in accordance with the agency fee letter executed by Cascades prior to the date of this Agreement.

6.6 Interest on Prime Rate Loans

Prime Rate Loans bear interest until they are converted or repaid in full (both before and after any Event of Default or judgment) at the Prime Rate in effect from time to time, plus the Applicable Margin. The interest is payable by the Borrower concerned monthly in arrears on the first Business Day of the following month.

6.7 Interest on US Base Rate Loans

US Base Rate Loans bear interest until they are converted or repaid in full (both before and after an Event of Default or judgment) at the US Base Rate in effect from time to time, plus the Applicable Margin. The interest is payable by the Borrower concerned monthly in arrears on the first Business Day of the following month.

6.8 Interest on Libor Loans

Each Libor Loan bears interest at the Libor applicable to each such loan, plus the Applicable Margin. The interest is payable by the Borrower concerned at the maturity of the period of the loan or, if the period of such loan is more than three months, at three-month intervals during the period of the loan.

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6.9 Calculation of Interest Rates

(a) Interest rates and fees calculated at the Applicable Margins or Rates are annual rates and are calculated daily on the basis of a 365-day year, except for (i) Libor Loans, (ii) US Base Rate Loans under Tranche A when paragraph (b) of the definition of US Base Rate applies to such loans, and (iii) US Base Rate Loans under Tranche B, where in each case rates are calculated on the basis of a 360-day year.

(b) For the purposes of the Interest Act (Canada) only, the annual rate of interest equivalent to a rate otherwise calculated under this Agreement is equal to the rate so calculated multiplied by the actual number of days included in a given year and divided by 365 days (or by 360 days, in the case of a rate calculated on the basis of a 360-day year).

6.10 Interest on Arrears

(a) Any amount (other than an amount due on account of principal or interest) which is not paid when due will bear interest at the Prime Rate in effect from time to time, increased by 2%, in the case of an amount to be paid in Dollars and at the US Base Rate in effect from time to time, increased by 2%, in the case of an amount to be paid in US Dollars or any other currency (other than the Dollar).

(b) Any interest which is not paid when due will bear interest at the rate that has been used to calculate such unpaid interest.

(c) Interest on arrears is compounded monthly and is payable on demand.

Article 7 - Repayment, Prepayment and Reduction

7.1 Repayment of the Facility

Cascades and any Additional Borrower under Tranche A must repay in full the outstanding Borrowings and pay all other amounts owing under Tranche A on the Facility Maturity Date. Cascades US and any Additional Borrower under Tranche B must repay in full all outstanding Borrowings and pay all other amounts owing under Tranche B on the Facility Maturity Date.

7.2 Mandatory Prepayments

The Borrowers concerned must make such prepayments as may be necessary to ensure (i) that all outstanding Borrowings under any Tranche (expressed in Dollars) will not at any time exceed the amount of such Tranche, and (ii) that the aggregate of all outstanding Borrowings under the Facility (expressed in Dollars) will not at any time exceed the Borrowing Base. Any such prepayment will be applied by the Administrative Agent as specified by the Borrower making the prepayment or otherwise as the Administrative Agent may determine to eliminate the excess.

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7.3 Optional Prepayments

(a) Prepayments may be made at any time on Borrowings outstanding under Tranche A or Tranche B without affecting the right of any Borrower to re-borrow under the applicable Tranche up to its maximum available amount. Any such prepayment (except for a prepayment applied to overdraft utilizations pursuant to Section 2.8) must be in an amount of at least $2,000,000 or US$2,000,000 or 2,000,000 Euros (as applicable) and is subject to the Borrower concerned giving a one-Business Day prior notice to the Administrative Agent.

(b) For greater certainty, any prepayment in respect of Acceptances or Libor Loans is subject to Section 20.10(c).

7.4 Exchange Rate Fluctuations

If, at any time, due to fluctuations in the rate of exchange of a currency against another currency, the outstanding amount of the Borrowings under any Tranche (expressed in Dollars), exceeds the amount of such Tranche, Cascades must pay to the Administrative Agent, three Business Days following a demand to that effect, the amount of such excess. However, no such demand may be made as long as the excess is not more than 5% and the Borrowing Base is not exceeded.

7.5 Reduction of the Facility

Cascades may, on giving not less than ten Business Days prior notice to the Administrative Agent, permanently reduce the aggregate amount of the Facility by amounts of not less than $5,000,000. Any such reduction will result in a corresponding reduction of each of Tranche A and Tranche B, on a pro rata basis (such reduction to also apply on a pro rata basis as to each Lender). The notice of reduction must specify the amount of the reduction, and the Business Day when the reduction will be become effective. On such date, the Borrowers must make repayments in amounts sufficient for the outstanding Borrowings under any Tranche not to exceed the new amount of such Tranche.

Article 8 – Place of Payment, Currency and Taxes

8.1 Payments to the Administrative Agent

Unless otherwise provided or agreed between the Borrower concerned and the Administrative Agent, (i) all payments to be made by a Borrower must be made to the Administrative Agent at the applicable Branch of Account, except that interest payments on outstanding Borrowings owing to a Swingline Lender pursuant to Section 2.8 must be made to such Swingline Lender, and (ii) all payments made to the Administrative Agent will be deemed to have been made for the rateable benefit of the applicable Lenders. Any payment due by a Borrower may be charged to an account maintained by such Borrower with the Administrative Agent or the applicable Lender.

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8.2 Manner of Payments

Any payment that is due on a day that is not a Business Day may be made on the next Business Day but will bear interest until received in full. All payments must be made free of any set-off or other deduction and in funds which are immediately available on the date on which payment is due.

8.3 Currency

Unless otherwise provided, (i) all amounts owing under any Borrowing are payable in the currency of such Borrowing, (ii) Letter of Credit fees under Tranche A are payable in Dollars, except that any such fee owing as a result of a Letter of Credit issued in US Dollars is payable in US Dollars, (iii) Letter of Credit fees under Tranche B are payable in US Dollars, (iv) standby fees are payable in Dollars, and (v) all other amounts are payable in Dollars, US Dollars or Euros, as may be specified by the Administrative Agent.

8.4 Judgment Currency

If a judgment is rendered against a Borrower for an amount owed hereunder and if the judgment is rendered in a currency (“other currency”) other than that in which such amount is owed under this Agreement (“currency of the Agreement”), such Borrower will pay, if applicable, at the date of payment of the judgment, an additional amount equal to the excess (i) of the said amount owed under this Agreement, expressed into the other currency as at the date of payment of the judgment, over (ii) the amount of the judgment. For the purposes of obtaining the judgment and making the calculation referred to in (i), the exchange rate will be the spot rate at which the Administrative Agent, on the relevant date, may in Montreal, sell the currency of the Agreement to obtain the other currency. Any additional amount owed under this Section will constitute a cause of action distinct from the cause of action which gave rise to the judgment, and said judgment shall not constitute res judicata in that respect.

8.5 Payments Net of Taxes

If a Borrower, any Agent or any Lender is compelled by law to make any withholding or deduction due to any tax or if a Lender is liable to pay tax in respect of any payment due or made by a Borrower, the Borrower concerned must pay to such Agent or such Lender such additional amount as may be necessary in order that the payment actually received be equal to the payment which otherwise would have been received in the absence of such withholding or deduction or tax (including in the absence of any additional withholding or deduction or tax in respect of any additional amount payable pursuant to this Section). However, this Section 8.5 will not apply in respect of (i) a tax on the overall net income or capital of a Lender or (ii) a withholding, deduction or tax from which a Lender would have been exempted but for its failure to fulfill applicable exemption formalities.

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Article 9 - Conditions Precedent

9.1 Conditions Precedent to the Effectiveness of this Agreement

This Agreement will become effective on the date (the “Effective Date”) the Administrative Agent confirms to Cascades and the Lenders that the following documents have been received by the Administrative Agent, in form and substance satisfactory to the Lenders:

(a) a copy of this Agreement executed by all parties thereto;

(b) a certificate as to the legal existence of the Borrowers and a resolution of their board of directors evidencing the authority of the Persons acting on behalf of the Borrowers;

(c) the Corporate Structure Chart as at the date of this Agreement;

(d) an acknowledgement agreement between the Administrative Agent, the Collateral Agent, the Borrowers and the Designated Subsidiaries providing that the Security Documents executed pursuant to the Initial Credit Agreement are still in full force and effect.

9.2 Conditions Precedent to all Borrowings

The Borrowers may not obtain any Borrowing or convert or renew any Borrowing:

(a) if the Administrative Agent has not received timely notice of such Borrowing, conversion or renewal; or

(b) if a Default has occurred and is continuing or would occur after giving effect to such Borrowing, conversion or renewal.

Each notice of Borrowing or of the renewal or conversion of a Borrowing constitutes a certification by the Borrowers that no Default has occurred and is continuing or would occur after giving effect thereto.

9.3 Waiver of Conditions Precedent

The conditions precedent provided for in this Article 9 are for the sole benefit of the Agents and the Lenders. The Agents and the Lenders may waive such conditions precedent, in whole or in part, with or without conditions, without prejudice to any other rights that they might have against the Borrowers and any other Person.

9.4 Early Termination of this Agreement

If all of the conditions precedent provided for in Section 9.1 have not been fulfilled or waived on or before June 15, 2017, this Agreement will not come into effect.

9.5 Borrowings under the Initial Credit Agreement

For greater certainty, all Borrowing under the Initial Credit Agreement continue to be Borrowings under this Agreement in the same proportions for all Lenders as immediately prior to the Effective Date.

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Article 10- Security

10.1 Guarantees

Each Borrower must guarantee in favour of the Collateral Agent and the Lenders the performance of all obligations of the other Borrowers under the Facility and each Designated Subsidiary must guarantee in favour of the Collateral Agent and the Lenders the performance of all obligations of the Borrowers under the Facility.

10.2 Security over Current Assets

(a) To secure the performance of the obligations of the Borrowers under the Facility, each of the Borrowers and the Designated Subsidiaries that owns material inventory and accounts receivable must provide in favour of the Collateral Agent (for the benefit of the Agents and the Lenders) security over all of its present and future inventory and accounts receivable and other claims (including related assets), present and future.

(b) Any cash and cash equivalents deducted in the calculation of the Funded Debt to Capitalization Ratio (as contemplated by the definition of such ratio) must be held by Cascades, Cascades USA Inc. and Cascades Canada ULC in a bank account in Canada or the United States and be specifically subject to perfected security for the benefit of the Agents and the Lenders.

10.3 Security over Charged Fixed Assets

(a) To secure the performance of the obligations of the Borrowers under the Facility, Cascades Canada ULC (formerly Cascades Canada Inc.) must provide in favour of the Collateral Agent and the Lenders, security over the following plants and related assets: 467 Marie-Victorin Street, Kingsey Falls, Quebec, 75 Marie-Victorin Street, Candiac, Quebec, 200 Cascades Street, Cabano, Quebec, 601, 655 and 701 Creditstone Road, Vaughan, Ontario and 115 de la Princesse, Lachute, Quebec (together with other fixed assets which may become subject to the Security pursuant to this Section 10.3, the “Charged Fixed Assets”).

(b) For Borrowing Base purposes, the market value of the Charged Fixed Assets will be determined by the Agents using a market value in an aggregate amount of $853,000,000 until such amount is revised as a result of the delivery to the Administrative Agent of a valuation report in accordance with the other provisions of this Section 10.3.

(c) After the date hereof, Cascades will have the option, but not the obligation, to increase the market value of the Charged Fixed Assets component of the Borrowing Base by providing, or causing Designated Subsidiaries to provide, security over other fixed assets acceptable to the Majority Lenders (or to all Lenders in the case of fixed assets located in the United States) by an amount equal to the market value of such assets as determined by a valuation report to be furnished to the Administrative Agent prior to or concurrently with the grant of the related security.

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(d) If, at any time after the date of this Agreement, the Majority Lenders have reasonable grounds to believe that the market value of the Charged Fixed Assets has reduced below the most recent value determined pursuant to this Section 10.3 (or below $853,000,000 if such most recent value is greater than $853,000,000), Cascades will provide to the Administrative Agent, within 30 days from a request by the Administrative Agent, a valuation report on such assets.

(e) From the date a valuation report is provided to the Administrative Agent and until such time a new valuation report is so provided pursuant to this Section 10.3, the market value of the Charged Fixed Assets will be determined for Borrowing Base purposes on the basis of the most recent valuation.

(f) If there has been a decrease in the market value of the Charged Fixed Assets or if a Credit Party proposes to sell assets which are part of the Charged Fixed Assets, Cascades will have the option, but not the obligation, to provide or to cause Designated Subsidiaries to provide security over other fixed assets acceptable to the Majority Lenders (or to all Lenders in the case of fixed assets located in the United States) to increase at a higher level (or to maintain at a certain level in the event of a proposed sale) the market value of the Charged Fixed Assets component of the Borrowing Base. The market value of such other fixed assets will be determined on the basis of a valuation report which Cascades undertakes to provide to the Administrative Agent at the time of any request made to the Majority Lenders (or to all Lenders) pursuant to this paragraph. For greater certainty, (i) no such sale may be made unless same is otherwise permitted by Section 13.3(b) and (ii) from the date of any such sale, the market value of the fixed assets so sold will no longer be included in the Charged Fixed Assets component of the Borrowing Base.

(g) Any valuation report to be provided to the Administrative Agent pursuant to this Section 10.3 must use the discounting cash flow methodology and may be prepared using a combination of internal analysis and independent assessments; the conclusion of each report must be validated by an independent firm acceptable to the Majority Lenders. Each such report must be accompanied by an environmental review acceptable to the Majority Lenders.

10.4 Insurance

The Borrowers will cause the Collateral Agent to be named as loss payee on all insurance policies relating to the property and assets covered by the Security. Each policy covering immovable property and equipment must contain a “mortgage clause”.

10.5 Security for Hedging Agreements and Credit Card Obligations

(a) The guarantees, security and loss payee designations provided for under the other sections of this Article 10 (the “Security”) will also secure the performance of the obligations of (i) the Borrowers to the Lenders and their Affiliates in their capacity as counterparties under Hedging Agreements (the “Hedging Creditors”) and (ii) the Credit Parties to the Lenders in their capacities as creditors of obligations arising from credit card agreements with Credit Parties (the “Credit Card Creditors”). The Collateral Agent will act as agent for the Hedging Creditors and the Credit Card Creditors for all purposes of the Security Documents, including the enforcement or release thereof. For such purposes, the provisions of Article 17, Article 18 and Article 19 (adapted accordingly) will also apply to the Hedging Creditors and the Credit Card Creditors. However, until termination and repayment in full of the Facility, the claims of the Hedging Creditors and the Credit Card Creditors will not be taken into account in any situation where a decision regarding the Security has to be made by the Lenders, including any enforcement or release thereof.

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(b) The rights of the Lenders, the Hedging Creditors and the Credit Card Creditors under the Security will rank pari passu, but only to the extent of an aggregate maximum amount of $135,000,000 in respect of the claims of the Hedging Creditors under Hedging Agreements (such amount to be calculated as provided in Section 10.5(c)) and of $15,000,000 in respect of the claims of the Credit Card Creditors under credit card obligations. Any excess will rank after the rights of the Lenders under the Facility. Any proceeds of realization of the Security to be distributed to the Hedging Creditors and the Credit Card Creditors will be allocated among them pro rata to their claims (irrespective of the dates of the related agreements or transactions).

(c) Each Hedging Creditor will calculate its claim under any Hedging Agreement in accordance with normal market practices (using the mark-to-market method whenever applicable) and after giving effect to any close-out, netting arrangement or right of set-off provided by contract or permitted by law.

(d) The Hedging Agreements and credit card obligations secured by the Security will consist of Hedging Agreements made or credit card obligations incurred at a time when the counterparty or creditor thereof was a Lender (or an Affiliate of a Lender in the case of Hedging Agreements). For greater certainty, the Security (to the extent not released by the Lenders) will continue to secure the obligations of any Borrower to any Hedging Creditor or any Credit Party to any Credit Card Creditor (i) after termination and repayment in full of the Facility, or (ii) after such Hedging Creditor or Credit Card Creditor has ceased to be a Lender.

(e) The Agents will be entitled at any time to assume that the only Lenders or Affiliates thereof with a Hedging Creditor or Credit Card Creditor status are those who have notified the Agents of such status before such time. Cascades represents and warrants to the Agents that the Exiting Lender has no such status.

10.6 Validity and Contents of Security Documents

The Security must be valid, perfected and first-ranking at all times with respect to all property intended to be covered thereby, subject however to Liens described in paragraph (a) and in the exception at the end of paragraph (e) of the definition of Permitted Liens. Each Security Document must be in form and substance satisfactory to the Collateral Agent and remain valid and in force at all times. The Security Documents will include such legal opinions, Lien searches and certificates of location or surveys as the Collateral Agent may reasonably require.

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10.7 Release of the Security

The Collateral Agent is authorized to act alone to release the Security with respect to any property which is the subject of a disposition permitted by this Agreement or which is no longer required to be charged by the Security. The Collateral Agent is authorized to determine whether any disposition is so permitted by relying on a certificate from Cascades.

Article 11 - Representations and Warranties

Each of the Borrowers represents and warrants that:

11.1 Corporate Existence and Capacity

Each of the Credit Parties

(a) is a Person duly constituted and organized, validly existing and in good standing under the laws of the jurisdiction of its constitution;

(b) has all requisite corporate or other power necessary to own its assets and carry on its business as now being or as proposed to be conducted; and

(c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could have a Material Adverse Effect.

11.2 Authorization and Validity

Each Credit Party has all necessary power, authority and legal right to execute, deliver and perform its obligations under the Credit Documents to which it is a party, has duly authorized by all necessary action the execution, delivery and performance of its obligations under such Credit Documents and has duly and validly executed and delivered the Credit Documents to which it is a party. The obligations of each Credit Party under the Credit Documents to which it is a party constitute legal, valid and binding obligations, enforceable against such Credit Party in accordance with their terms.

11.3 No Breach

The execution and delivery of the Credit Documents and the performance by the Credit Parties of their respective obligations thereunder will not conflict with, result in a breach of or require any consent under, the constitutive documents or by-laws of any Credit Party, or any applicable law or regulation in any material respect, or any order or decision of any court or governmental authority or agency, or any agreement (including the Cascades Indentures) to which any Credit Party is a party or by which it or any of its property is bound.

11.4 Approvals

Except for filings or registrations required to perfect the Security, no authorization, approval or consent of, nor any filing or registration with, any governmental or regulatory authority or agency, is necessary for the execution, delivery or performance by each Credit Party of any Credit Document to which it is a party or to ensure its legality, validity or enforceability.

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11.5 Compliance with Laws and Permits

Each of the Credit Parties is in compliance in all material respects with all laws and regulations applicable to it and its business and assets, including Environmental Laws and anti-bribery, anti-money laundering, anti-terrorism and sanction laws. Each of the Credit Parties holds all material permits, licenses, approvals, consents and other authorizations required under all such laws and regulations to own its assets and to carry on its business.

11.6 Title to Assets

The assets of the Credit Parties, taken as a whole, are not subject to title defects or restrictions which could materially and adversely impair their value or normal use. The Credit Parties own or have rights of use for all property and assets (including intellectual property) necessary to carry on their businesses.

11.7 Litigation

There are no legal or arbitration proceedings, or any proceedings by or before any governmental or regulatory authority or agency, or, to the best of its knowledge, any claim or investigation by any such authority or agency, or any labour disputes, now pending or, to the best of its knowledge, threatened against any of the Credit Parties or any of their properties or rights that, if adversely determined, could have a Material Adverse Effect.

11.8 No Default

No Default has occurred and is continuing.

11.9 Solvency

Each of the Credit Parties is Solvent.

11.10 Taxes

Each of the Credit Parties has filed all income tax returns and all other material tax returns and paid all taxes material in their amount that are required to be filed or paid by them. The charges, accruals and reserves on the books of the Credit Parties in respect of taxes and other governmental charges are adequate.

11.11 ERISA and Pension Plans

Each Plan and each other pension or employee benefit plan of any Credit Party is in compliance in all material respects with the applicable provisions of ERISA, the US Revenue Code and any other applicable law. No Credit Party has any material unfunded liability under any pension plan on an ongoing or termination basis.

11.12 Margin Stock Restrictions

None of the Credit Parties is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, of buying or carrying margin stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any margin stock in violation of Regulations U and X issued by the Board of Governors of the Federal Reserve System of the United States.

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11.13 Investment Company Act

None of the Credit Parties is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940 of the United States, as amended.

11.14 Restriction on Payments

Except as provided in the Cascades Indentures, none of the Credit Parties is subject to any law, regulation, agreement or legal impediment that prohibits, restricts or imposes any condition upon the ability of a Credit Party to pay Distributions or to make or repay loans or advances.

11.15 Corporate Structure and Location of Assets

The Corporate Structure Chart contains a complete and correct list of all of the Subsidiaries of Cascades and indicates (i) the jurisdiction of formation of each such entity, (ii) each Person holding ownership interests in each such entity, (iii) the nature of the ownership interests held by each such Person and the percentage of ownership represented by such ownership interests, (iv) the location of the registered and chief executive offices of each Credit Party that must provide Security, (v) any prior name (including any pre-merger corporate name) of each such Credit Party and (vi) the jurisdictions where the material inventory and accounts receivable of each such Credit Party are located.

11.16 Financial Statements and Financial Year

The most recent audited financial statements of Cascades are complete and correct and fairly present the consolidated financial condition and results of operation of Cascades as at their stated date, all in accordance with GAAP. Except as reflected or disclosed in such financial statements, none of the Credit Parties has on the date hereof any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavourable commitments that have not been disclosed in writing to the Administrative Agent and the Lenders. The fiscal year of each of the Credit Parties ends on December 31 of each year.

11.17 No Material Change

There has been no Material Adverse Change since December 31, 2016.

11.18 True and Complete Disclosure

The information, reports, financial statements and documents furnished or to be furnished by or on behalf of the Credit Parties to the Agents or any Lender in connection with the negotiation, preparation, execution, delivery or performance of the Credit Documents, when taken as a whole, do not and will not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

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Article 12 - Affirmative Covenants

12.1 General Covenants

Each of the Borrowers will, and will cause each of the other Credit Parties to:

(a) Legal Existence – subject to Section 13.3, preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises;

(b) Legal Compliance – comply in all material respects with the requirements of all laws and regulations applicable to it and its business and assets (including Environmental Laws and anti-bribery, anti-money laundering, anti-terrorism and sanction laws) and with all orders of governmental or regulatory authorities;

(c) Payment of Taxes – pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property or assets prior to the date on which penalties or interest attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained;

(d) Maintenance of Property – maintain all of its properties and assets used or useful in its business in good working order and condition, ordinary wear and tear excepted;

(e) Material Agreements – perform its obligations under and preserve and maintain in force all agreements to which it is a party that are necessary for or material to its operations and business;

(f) Insurance – insure and keep insured its property, assets and business, and will maintain business interruption and civil liability (including product and environmental liability) insurance for such coverage as a prudent administrator would obtain for similar property, assets and businesses, in each case, with financially sound and reputable insurance companies;

(g) Records – keep adequate records and books of account, in which complete entries will be made in accordance with GAAP; and

(h) Access – permit representatives of any Agent and any Lender, upon reasonable prior notice and during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its properties or assets, and to discuss its business and affairs with its officers and auditors.

12.2 Use of Proceeds and Compliance with Indenture Limitations

(a) The Borrowers will use the proceeds of the Facility only for the purposes permitted under this Agreement. The Borrowers will not use the Facility to finance any private or public tender offer for the shares or other securities of a Person whose governing body has not approved such offer (“hostile take-over”).

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(b) The Borrowers will ensure that the outstanding obligations secured by the Security and that the value of the assets subject to Permitted Liens will not at any time exceed any maximum amount permitted under any of the Cascades Indentures.

12.3 Know Your Customer Laws

Promptly, following a request by any Lender, the Borrowers will provide all documentation and other information which such Lender may reasonably request in order to comply with its ongoing obligations under applicable “know your customer” laws and regulations in effect in Canada and the United States, including without limitation the USA Patriot Act (as amended) and any similar law. The Borrowers authorize any Lender to request and obtain such information from any Person. The Borrowers also acknowledge that pursuant to such laws and regulations each Lender is or may be required to obtain, verify and record information which allows such Lender to identify each Borrower in accordance with said laws and regulations.

12.4 Further Assurances

Each of the Borrowers will, and will cause each of the other Credit Parties to, cooperate with the Lenders and the Agents and execute such further instruments and documents as the applicable Agent may reasonably request to carry out to its satisfaction the transactions contemplated in the Credit Documents.

12.5 Representations and Warranties

Each of the Borrowers will ensure that all representations made in this Agreement are true and correct at all times, except for representations made as of a date expressly stated therein.

Article 13 - Negative Covenants

Each of the Borrowers covenants and agrees that:

13.1 Negative Pledge

None of the Credit Parties will create, incur, assume or suffer to exist any Lien on their present and future property or assets except for the Security and Permitted Liens.

13.2 Indebtedness

None of the Credit Parties other than Cascades will create, incur, assume or permit to exist any Funded Debt other than:

(a) indebtedness to the Agents and the Lenders under the Credit Documents;

(b) indebtedness among the Credit Parties;

(c) indebtedness permitted to be secured by Permitted Liens;

(d) indebtedness under Hedging Agreements and Equity Derivatives, provided that none of the Credit Parties (including Cascades) will enter into Hedging Agreements, Equity Derivatives or other derivative agreements for speculative purposes;

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(e) indebtedness under any of the Cascades Indentures; and

(f) indebtedness up to an aggregate outstanding amount for all Credit Parties other than Cascades not exceeding at any time the greater of $150,000,000 and 6% of Net Tangible Assets.

13.3 Limitations on Fundamental Changes

None of the Credit Parties will:

(a) enter into any transaction of merger or amalgamation, or liquidate, wind up or dissolve itself, except that any Credit Party may merge or amalgamate with any other Credit Party provided that the following conditions are fulfilled:

(i) no Default occurs as a result of the merger or amalgamation;

(ii) if any of the merging or amalgamating entity is a Borrower or a Designated Subsidiary, the surviving or amalgamated entity must be a Borrower or a Designated Subsidiary and must execute and deliver to the applicable Agent all such documents as may be necessary or advisable to confirm that such entity is bound as successor of the merging or amalgamating entities by all Credit Documents to which such entities were parties;

(iii) the Administrative Agent has been provided prior to or concurrently with the merger or amalgamation with satisfactory evidence of compliance with the requirements of clauses (i) and (ii) including such financial information, certificates, documents and legal or other professional opinions as the Administrative Agent may reasonably request; and

(iv) a seven-day prior notice is given to the Administrative Agent in the case of an amalgamation or merger involving a Borrower.

(b) sell, lease, transfer or otherwise dispose of, in one transaction or a series of related transactions to any Person (in each case, a “disposition”), any property (other than inventory sold in the ordinary course of business), except for the following dispositions (in each case, provided that no Default occurs as a result of the disposition):

(i) a disposition of property with a market value of less than $50,000,000;

(ii) a disposition to another Credit Party provided the conditions of paragraph (a) above are fulfilled (as if the disposition were a merger and the transferee were the surviving entity) and provided further that if the disposition relates to substantially all of the property of the transferor, the latter (if not a Borrower) may wind-up or dissolve itself after completion of such disposition;

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(iii) a disposition to any non-Credit Party (other than pursuant to a Securitization or Factoring Program), provided that the disposition is made for a consideration at least equal to the fair market value of the related property, at least 75% of the consideration is paid in cash or through assumption of liabilities and the available cash proceeds of the disposition are used to permanently reduce the Facility by no later than the 360^th day following their receipt; for purposes of the foregoing, the available cash proceeds of a disposition are the cash proceeds of such disposition (net of related expenses and payments made to repay indebtedness secured by Liens on the property sold), less the portion of such cash proceeds which has been reinvested in Credit Parties within 360 days from the date of their receipt or allocated by Cascades to the funding of an investment made in Credit Parties within 180 days prior to the date of the disposition; notwithstanding the foregoing:

(x) ;

(y) ;

(iv) dispositions of accounts receivable pursuant to a Securitization or Factoring Program to the extent such accounts receivable are not generated by a disposition of inventory subject to the Security made after the occurrence of an Event of Default specified in Section 16.1(f) or Section 16.1(g)) or after the date the outstanding Borrowings become repayable pursuant to Section 16.2 and provided that no account receivable subject (in whole or in part) to a Securitization or Factoring Program will be included in the Borrowing Base, it being understood however that accounts receivable permitted to be disposed of pursuant to this clause (iv) will be excluded from the Security from the date of any such permitted disposition; and

(v) a disposition of property to any non-Credit Party in exchange for other property to be used in the business of the Credit Parties, provided that the market value of the property so received in exchange is not less than that of the property so disposed;

(c) carry on any business, directly or indirectly, other than the businesses currently carried on by them and activities ancillary or reasonably related thereto (the “core business”), or make any investment (other than investments referred to in clauses (ii) and (iii) of Section 13.4(b)) in a non-Credit Party who is not in the same line of business as the core business, provided that businesses other than the core business may be carried on by Credit Parties and by non-Credit Parties in which investments are made to the extent that the aggregate of the combined assets of such Credit Parties and of the value of all such investments in such non-Credit Parties does not at any time exceed 5% of Cascades’ Net Tangible Assets, provided however that the foregoing limitation will not apply to the investments made by Cascades in Boralex prior to December 31, 2010.

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13.4 Investments

(a) None of the Credit Parties will, directly or indirectly, make any investment in any Person who is not a Credit Party, if such investment would result in the aggregate amount of all investments made after July 1, 2015 in non-Credit Parties being in excess of $300,000,000.

(b) However, the foregoing limitation will not apply to (i) investments funded from the proceeds of any issue of equity made by Cascades after July 1, 2015, (ii) cash or cash equivalent investments made for cash management purposes, and (iii) loans and advances to employees in an aggregate amount not exceeding $5,000,000 at any time.

13.5 Distributions

(a) None of the Credit Parties will make any Distribution (other than a direct or indirect Distribution to a Credit Party) if there is a Default or if such Distribution could result in a Default or if, after giving effect to the Distribution, the aggregate amount of all Distributions made from July 1, 2015 to non-Credit Parties were to exceed 50% of the net income of Cascades (calculated on an Adjusted Consolidated Basis but with the increases, exclusions or reductions resulting from the application of paragraphs (d) to (k) of the definition of EBITDA) for the period from July 1, 2015 to the end of its most recent fiscal quarter (treated as one accounting period) plus the sum of (i) the proceeds of any new issue of equity made by Cascades during the same period less the portion of same which is used to fund investments in non-Credit Parties (other than investments permitted by Sections 13.4(b)(ii) and (iii)), and (ii) $150,000,000.

(b) However, the foregoing limitation will not apply to (i) Distributions made pursuant to stock option plans and other plans or agreements with or for the benefit of employees or directors up to an aggregate amount not exceeding $10,000,000 per fiscal year (with the unused portion being permitted to be carried forward but to the next year only and up to $5,000,000 only) and (ii) ordinary course of business Distributions on Cascades’ shares and open market purchases of Cascades’ shares pursuant to stock buyback programs, up to an aggregate amount of $50,000,000 per fiscal year (with the unused portion being permitted to be carried forward but to the next year only and up to $25,000,000 only).

13.6 Transactions with Related Parties

None of the Credit Parties will engage in any material transactions with any related party on terms and conditions not less favourable in any material respect to the relevant Credit Party than those that could be obtained on an arm’s length basis from unrelated third parties, provided that the foregoing requirement will not apply to transactions among the Credit Parties. For the purposes of this Section 13.6, (i) related party means, with respect to a Person, another Person that Controls or is Controlled by or is under common Control with the relevant Person, and (ii) the definition of Control must be read replacing 50% by 20%.

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Article 14 - Financial Ratios

14.1 Funded Debt to Capitalization Ratio

Cascades must maintain at all times, on an Adjusted Consolidated Basis, a Funded Debt to Capitalization Ratio of not more than 65%.

14.2 Interest Coverage Ratio

Cascades must maintain at all times, on an Adjusted Consolidated Basis, an Interest Coverage Ratio not less than 2.25:1.00.

Article 15 - Reporting Requirements

15.1 Annual Reporting

The Borrowers will deliver to the Administrative Agent, for distribution to the Lenders, as soon as possible but within 90 days after the end of each fiscal year of the Borrowers:

(a) the unqualified audited annual financial statements of Cascades, on a consolidated basis and the unaudited annual financial statements of Cascades, on an Adjusted Consolidated Basis;

(b) the unaudited annual financial statements of each of the other Borrowers on a consolidated basis;

(c) the annual business plans and annual operating and capital budgets for the current fiscal year of Cascades, on a consolidated and Adjusted Consolidated Basis;

(d) the unaudited annual financial statements of each of the businesses operated with the Charged Fixed Assets; and

(e) a certificate evidencing the insurance coverage required to be maintained by the Credit Parties pursuant to this Agreement.

15.2 Quarterly Reports

The Borrowers will deliver to the Administrative Agent, for distribution to the Lenders, as soon as possible but within 60 days after the end of each of their fiscal quarters (including the fourth quarter):

(a) the unaudited financial statements of Cascades for the relevant fiscal quarter, on a consolidated and Adjusted Consolidated Basis;

(b) the unaudited financial statements for the relevant fiscal quarter of each of the other Borrowers on a consolidated basis;

(c) the unaudited financial statements for the relevant quarter of each of the businesses operated with the Charged Fixed Assets;

(d) a compliance certificate relating to the covenants herein in the form of Schedule D (with sufficient details to reconcile the financial statements with the calculation base of the financial covenants);

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(e) a Borrowing Base report in the form of Schedule D; and

(f) copy of any filing with securities regulators.

15.3 ERISA

Cascades US will notify the Administrative Agent of the occurrence of any of the following events, within 10 days after it knows or has reason to believe that the relevant event has occurred (and will provide a copy of any report or notice required in that connection to be filed with or given to PBGC):

(a) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, unless the 30-day notice requirement in respect thereof has been waived by the PBGC;

(b) a notice of intent to terminate any Plan or any action taken by a Credit Party to terminate any Plan, provided notice of intent to terminate is required pursuant to Section 4041(a)(2) of ERISA;

(c) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; and

(d) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the US Revenue Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if security has not been provided in accordance with the provisions of these Sections.

15.4 Reporting from Time to Time

The Borrowers will promptly notify the Administrative Agent of any Default and deliver to the Administrative Agent any auditor letter highlighting issues or deficiencies that, if not addressed or corrected, could reasonably result in a Material Adverse Change. The Borrowers will also furnish the Administrative Agent all information, documents and records and allow any enquiry, study, audit or inspection that the Administrative Agent or, when an Event of Default is continuing, any Lender may reasonably request in connection with the business, financial condition, property, assets or prospects of the Credit Parties, or to verify compliance with the obligations of any of the Credit Parties under any Credit Document.

15.5 Hedging Agreements, Securitization and Factoring

(a) The Borrowers will provide to the Administrative Agent, concurrently with the compliance certificates required to be delivered pursuant to Section 15.2, a report listing all outstanding Hedging Agreements secured by the Security and all outstanding Hedging Agreements and Equity Derivatives secured by a Permitted Lien, and specifying the counterparties, notional amounts, dates, maturities and marked-to-market value of all such agreements (as applicable).

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(b) Prior to or concurrently with the coming into effect of any material Securitization or Factoring Program (or any material amendment thereto), Cascades will provide to the Administrative Agent (i) a description of such program (or of such material amendment), such description to include the criteria permitting the identification of the accounts receivable subject to the program as well as the amount and term of any such program, and (ii) an update (giving effect to the program or the amendment) of the most recent Borrowing Base report delivered pursuant to Section 15.2(e).

Article 16 - Events of Default and Remedies

16.1 Events of Default

The occurrence of one or more of the following events constitutes an event of default (“Event of Default”) under the Credit Documents:

(a) a Borrower defaults in the payment when due of any amount owing under any Facility in respect of principal, interest or acceptance fee, or defaults for more than five Business Days in the payment of any other amount owing under a Credit Document or any Hedging Agreement with a Lender or an Affiliate thereof;

(b) anyone or more of the Credit Parties (i) fails or fail to make a payment or payments exceeding in the aggregate $ in respect of any obligation or obligations (other than the Facility), when and as due, or (ii) is or are in default under any of the Cascades Indentures and, in each case, such failure or default continues after the applicable notice or grace period, if any;

(c) any representation, warranty or certification made or deemed made by a Credit Party in any Credit Document proves to be false or misleading as of the time made in any material respect;

(d) any of the provisions of Article 10 is not complied with;

(e) any of the covenants contained in Article 13 and Sections 14.1 and 14.2 is not complied with;

(f) a Credit Party becomes unable to pay its debts generally as such debts become due or is adjudicated bankrupt or insolvent;

(g) a Credit Party (i) applies for or consents to or is the subject of an order for the appointment of a receiver, interim receiver, trustee (or any Person performing similar functions) in respect of itself or of all or a substantial part of its assets, (ii) makes a general assignment for the benefit of its creditors, (iii) takes advantage of any law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or (iv) takes any action for the purpose of effecting any of the foregoing;

(h) a proceeding is commenced or any similar action is taken against a Credit Party seeking (i) its bankruptcy, reorganization, liquidation, dissolution, arrangement or winding-up, or similar relief, (ii) the appointment of a receiver, interim receiver, trustee (or any Person performing similar functions) in respect of itself or of all or any substantial part of its assets, or (iii) the seizure or the attachment of, or the enforcement of remedies on, any part of the assets of the Credit Parties having a value of more than $ and, in each case, such proceeding (or similar action) is not dismissed or withdrawn after a period of 60 days, provided that such grace period will apply only if such proceeding (or action) is diligently contested in good faith and does not disrupt the business or normal operations of the Credit Party concerned;

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(i) a Credit Party defaults in the performance of any of its other obligations under a Credit Document and such default continues unremedied for a period of 30 days after notice by the Administrative Agent to the Borrowers;

(j) the Control of Cascades is acquired by any Person (or by a group of Persons acting in concert) other than Bernard Lemaire, Laurent Lemaire or Alain Lemaire (the term “Control” being read for the purposes of this Section 16.1(j) by referring only to clauses (i) through (iv) of the definition of Control in Section 1.1); or

(k) a Material Adverse Change.

16.2 Remedies

If an Event of Default occurs and is continuing, the Administrative Agent (or the Collateral Agent in the case of paragraph (c) below) may, on giving a notice to the Borrowers take any one or more of the following actions:

(a) terminate the right of the Borrowers to use the Facility;

(b) declare all indebtedness of the Borrowers under the Credit Documents to be immediately payable and demand immediate payment of the whole or part thereof;

(c) exercise all of the rights of the Agents and the Lenders under the Security Documents; and

(d) exercise all of the other rights of the Agents and the Lenders;

provided that all indebtedness of the Borrowers under the Credit Documents will automatically become due and payable without any notice upon the occurrence of any Event of Default specified in Section 16.1(f) or Section 16.1(g).

Article 17 - Equality Among Lenders

17.1 Distribution among Lenders

Any payment received by any Agent on account of the Facility, including any amount received through the exercise of any right of set-off and the enforcement of any Security, must be distributed among the Lenders proportionately to the amount of the indebtedness owing to them hereunder and which is then payable. Any such distribution must be made forthwith but no later than the Business Day following the date of receipt of the payment.

17.2 Other Security

No Lender may take any Security or Lien in connection with the Facility, Hedging Agreements or credit card obligations except in accordance with Article 10.

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17.3 Direct Payment to a Lender

Subject to the other provisions of this Agreement permitting direct payment to Lenders, if a Lender receives, otherwise than through an Agent, a payment on account of any Facility (including any payment received through the exercise of any right of set-off), such Lender will remit the payment to the Administrative Agent, for distribution among all Lenders.

17.4 Adjustments

If, at any time, the ratio of the Borrowings owing to a Lender under the Facility to the aggregate amount of all outstanding Borrowings under the Facility is not proportional to such Lender’s Commitment, expressed as a percentage, the Administrative Agent may (and will, after termination of the Facility) make from time to time such adjustments as may be necessary in order that the outstanding Borrowings under the Facility are in the proportions of the Commitments. The Lenders will make all such payments as the Administrative Agent may direct to give full effect to such adjustments. The Borrowers will be bound by such adjustments.

Article 18 - The Agents and The Lenders

18.1 Appointment of the Agents

Each Lender irrevocably appoints the Administrative Agent and the Collateral Agent to exercise on its behalf the rights and powers delegated to the Administrative Agent or the Collateral Agent (as applicable) hereunder and authorizes each Agent to take any action necessary for the performance of its duties. Whenever acting in such capacity, the Agent concerned represents and binds all Lenders.

18.2 Restrictions on the Powers of the Lenders

No Lender may exercise individually the rights and powers delegated to the Agents, including the enforcement of remedies after the occurrence of an Event of Default.

18.3 Security Documents

The Collateral Agent is authorized to hold any Security on behalf of the Lenders and to execute in their name any Security Document. For greater certainty, the Collateral Agent is authorized to act as hypothecary representative (fondé de pouvoir) of the Lenders (notwithstanding that the Collateral Agent is also a Lender) for the purposes of any hypothec granted by any Credit Party pursuant to article 2692 of the Civil Code of Quebec to comply with Article 10.

18.4 Action by the Agents

The duties of each Agent are limited to those specifically conferred upon it in the Credit Documents. Except as otherwise provided, the Administrative Agent or the Collateral Agent is not required to exercise any discretion or to take any action under the Credit Documents, unless it has been so required by the Majority Lenders (or by all Lenders where the consent of all Lenders is required). In no event, will an Agent be required to exercise any right or power, if in its judgment, doing so would contravene any Credit Document or applicable law or where the Agent concerned determines that the indemnity provided in Section 18.6 may not be available or adequate.

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18.5 Enforcement Measures

Any legal proceedings and enforcement measures on behalf of the Lenders will be taken by the applicable Agent; at such Agent’s request, all Lenders must join it in such proceedings or enforcement measures.

18.6 Indemnification

Each Lender will indemnify any Agent (and their directors, officers, employees and agents), proportionately to its respective Commitment, from and against all losses suffered or liabilities or expenses incurred by such Agent of any kind or nature when exercising its rights and powers, save any losses, liabilities or expenses resulting from the wilful misconduct or gross negligence of the applicable Agent (or their directors, officers, employees or agents).

18.7 Reliance on Reports

The Administrative Agent will be entitled to make any determination of the Borrowing Base based on the most recent reports or certificates furnished by Cascades in relation to such matter.

18.8 Liability of the Agents

The Administrative Agent or the Collateral Agent (as applicable) will only be liable to the Lenders for willful misconduct or gross negligence, and will have no liability as a consequence of a failure of any Person to fulfil its obligations or any action authorized by the Majority Lenders (or by all Lenders where the consent of all Lenders is required). Each Agent will be entitled to assume that there exists no Default, unless it has been notified in writing of the existence of a Default.

18.9 Liability of Lenders

Each Lender acknowledges that it has been and will continue to be solely responsible for making its own independent appraisal and investigation of the financial condition of the Borrowers and any other Credit Party, and for the assessment of the risks arising from the Facility. No Lender may rely on any Agent in this regard nor will any Agent be responsible for ensuring the validity or enforceability of any Credit Document.

18.10 Rights of an Agent as Lender

In its capacity as Lender, each Agent has the same rights as the other Lenders and may exercise such rights independently of its role as Agent; unless the context otherwise requires, the expression “Lender” also refers to the Lender which is the Administrative Agent or Collateral Agent.

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18.11 Sharing of Information

(a) The Lenders may share with each other any information held by them regarding the financial condition, business or property of any Credit Party or relating to matters contemplated in the Credit Documents or the Hedging Agreements. The Lenders may provide such information on a confidential and need-to-know basis to their Affiliates, any assignee or prospective assignee of Commitments, any participant or prospective participant in the Facility, any counterparty or prospective counterparty to any Hedging Agreement and any credit protection provider.

(b) Any Agent may disclose to any agency or organization that assigns standard identification numbers to credit facilities such basic information describing the Facility as is necessary to assign unique identifiers (and, if requested, supply a copy of this Agreement), it being understood that the Person to whom such disclosure is made will be informed of the confidential nature of such information and instructed to make available to the public only such information as such person normally makes available in the course of its business of assigning identification numbers. In addition, but after consultation with Cascades, any Agent may provide to Loan Pricing Corporation or other recognized publishers of information for circulation in the loan market information of the type customarily provided by financial institutions to Loan Pricing Corporation.

18.12 Competition

Subject to the other provisions of this Agreement, any Agent, and each of the Lenders may enter into other transactions with any Credit Party and they are not required to notify each other of such transactions.

18.13 Successor Agent

Any Agent may resign by giving notice thereof to the Borrowers and to the Lenders. Any Agent may also be replaced by the Majority Lenders following its failure to perform its obligations under this Agreement. The resignation or replacement of an Agent will be effective upon the appointment by the Majority Lenders of a successor Agent from among the Lenders. Promptly after being so appointed, any successor Agent must give notice thereof to the Borrowers and the Lenders. From the effective date of its appointment, any successor Agent will be vested with all the rights, powers and duties of the Administrative Agent or Collateral Agent (as applicable) under the Credit Documents.

Article 19 - Decisions, Waivers and Amendments

19.1 Amendments and Waivers by the Majority Lenders

Subject to Section 19.2, the provisions of the Credit Documents may be amended or waived, and consents thereunder may be given, only by an instrument signed by the Administrative Agent or the Collateral Agent (as applicable), with the approval of the Majority Lenders, and in the case of an amendment, also signed by the relevant Credit Party.

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19.2 Amendments and Waivers by Unanimous Approval

Except as otherwise expressly provided in this Agreement, an amendment, waiver or consent that relates to any of the following matters must be made or given by an instrument signed by the Administrative Agent (or the Collateral Agent in the case of paragraph (d) below), with the prior consent of all Lenders, and in the case of an amendment, also signed by the relevant Credit Party:

(a) any increase in the amount of the Facility (other than pursuant to Section 2.13) or the extension of the maturity date of the Facility (other than pursuant to Section 2.14);

(b) any postponement of the due date, any subordination or any reduction of any amount payable hereunder;

(c) the reduction of any interest rate, discount rate or fee (including an amendment to Schedule A which would have the same economic effect);

(d) the release or subordination of any portion of the Security; and

(e) the definition of “Majority Lenders” and the provisions of Sections 1.4, 9.1, 16.1(a), 16.1(f), 16.1(g), Articles 17, 18, and 19 and Section 20.3.

19.3 Amendments requiring the consent of the Affected Party

No amendment affecting the rights and obligations of an Agent, an Issuing Lender or a Swingline Lender may be made without the consent of such Agent, such Issuing Lender or such Swingline Lender (as applicable). No increase in the amount of the Commitment of any Lender, may be made without the consent of such Lender.

19.4 Dissenting and Affected Lenders

(a) Where an amendment or waiver referred to in Section 19.2 has been approved by the Majority Lenders, but not by all the Lenders, the Administrative Agent will notify Cascades and each Lender of such fact and will identify the Lenders approving of such amendment or waiver and the Lenders disapproving of such amendment or waiver (each a “dissenting Lender”).

(b) Where a Lender claims the benefit of Sections 3.5(a) or 4.2 or claims amounts under Sections 8.5 or 20.10(b) such Lender (the “affected Lender”) will notify Cascades of that fact.

(c) At any time following the date of a notification under Section 19.4(a) or Section 19.4(b), Cascades will be entitled to require that each such dissenting Lender or affected Lender, as applicable, assign its rights under the Facility to another Lender (or a Person who would be a permitted assignee under Section 20.4) who has agreed to assume the Commitment of such dissenting Lender or affected Lender, and to consent as the case may be to the amendment or waiver, provided that no such assignment and assumption will be effective unless the consideration payable to such dissenting Lender or affected Lender, for the assignment includes all amounts owed to such dissenting Lender or affected Lender, in respect of the Facility and is paid to the latter by the assignee (together with breakage costs if any); Section 20.4 will apply (adapted accordingly) to the said assignment and assumption.

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(d) Notwithstanding Section 19.4(c), Cascades will not be entitled to require the replacement of a dissenting Lender after the expiry of a 45-day time period following the date of the notification under Section 19.4(a) relating to such dissenting Lender.

19.5 Defaulting Lenders

(a) Where a Lender has become in default (a “defaulting Lender”), the Administrative Agent will notify Cascades and each Lender of that fact after having acquired actual knowledge of same. For the purposes of this Agreement, a Lender will be deemed to be in default if (i) such Lender has failed to fund its share of any requested or outstanding Borrowing hereunder (including any related adjustment), (ii) such Lender has notified the Borrower, the Administrative Agent, any Swingline Lender or any Issuing Lender that it does not intend to comply with its funding obligations hereunder or has made a public statement to such effect (except if such position is based on the existence of a Default), (iii) such Lender becomes subject to a “Bail-In Action” (as defined in Section 19.6) or (iv) if any of the events listed in Sections 16.1(f), (g) and (h) occurs in respect of such Lender or a Person who Controls such Lender.

(b) At any time following the date of a notification under Section 19.5(a), Cascades will be entitled to require that each such defaulting Lender assign its rights under the Facility to a Person who would be a permitted assignee under Section 20.4 who has agreed to assume the Commitment of such defaulting Lender. However, no such assignment and assumption will be effective unless the consideration payable to such defaulting Lender for the assignment includes all amounts owed to such defaulting Lender in respect of the Facility and is paid to the latter by the assignee (together with breakage costs if any). Section 20.4 will apply (adapted accordingly) to the said assignment and assumption and any defaulting Lender will take all such actions as are required to promptly effect same.

(c) Notwithstanding any other provision of this Agreement, from the time a Lender becomes a defaulting Lender:

(i) such defaulting Lender will not be entitled to vote on any issue (other than on a reduction of a principal amount payable to it and any increase or extension of its Commitment) and, subject to the foregoing exceptions, the entirety of its Commitment will be disregarded in the calculation of all Majority Lenders’ or Lenders’ unanimous decisions;

(ii) standby fees and Letter of Credit fees will not accrue and be payable in respect of such defaulting Lender’s Commitment provided that Letter of Credit fees relating to such defaulting Lender’s obligations that are reallocated pursuant to clause (iv) below will be payable to the Lenders to whom such obligations have been reallocated;

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(iii) such defaulting Lender will not participate in any new Borrowing and its Commitment will be disregarded in the calculation of the pro rata share of the Lenders in any new Borrowing;

(iv) the funding obligations of the defaulting Lender under Section 2.9 in respect of Borrowings made by any Swingline Lender and under Section 5.4 in respect of payments made by any Issuing Lender under Letters of Credit will be reallocated among the other Lenders and will be calculated excluding the defaulting Lender’s Commitment from the pro rata share of the funding obligations of the other Lenders, but only to the extent such reallocation and calculation does not cause the outstanding Borrowings owing to any non-defaulting Lender to exceed the amount of its Commitment and provided that no such reallocation will release the defaulting Lender from its obligations hereunder;

(v) if a reallocation contemplated in clause (iv) above cannot be effected (in full or in part), the Borrower will (y) repay to any Swingline Lender the portion of any outstanding Borrowings under Section 2.6 which has not been so reallocated, and (z) prepay, or provide cash collateral to secure the unreallocated portion of the funding obligations referred to in Section 5.4 in respect of Letters of Credit;

(vi) any Swingline Lender or any Issuing Lender may decline to provide Borrowings under Section 2.8 or issue Letters of Credit under Article 5 (as applicable) if it has an exposure to a defaulting Lender as a result of any reallocation pursuant to clause (iv) not being fully effected; and

(vii) the Administrative Agent will be entitled to withhold any amount that would otherwise be distributed or payable to a defaulting Lender and to apply (in the order determined by the Administrative Agent) any such amount to the obligations of such defaulting Lender hereunder or to outstanding Borrowings owing to the non-defaulting Lenders.

(d) A Lender who becomes a defaulting Lender will retain such status until the Administrative Agent, any Issuing Lender and any Swingline Lender notify such defaulting Lender that they are satisfied that all existing defaults in respect of such Lender have been remedied and that such Lender has the financial ability to perform its obligations hereunder. Concurrently with such notification, the Administrative Agent will make such adjustments among the Lenders as are necessary to give effect to the foregoing and to the fact that Section 19.5(c) has ceased to apply in respect of the Lender concerned, provided that no retroactive adjustments will be made (including with respect to interest and fees).

(e) For greater certainty, (i) the default by a Lender to perform its obligations hereunder will not relieve any other Lender from its obligations hereunder (including to fund Borrowings in the proportion of its Commitment), and (ii) an assignment of the Commitment of a defaulting Lender will not relieve such defaulting Lender from its obligations to indemnify any other party from the consequences of its default.

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19.6 Bail-In Provisions

(a) For the purposes of Section 19.6:

(i) “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

(ii) “Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

(iii) “EEA Financial Institution” means (x) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (y) any entity established in an EEA Member Country which is a parent of an institution described in clause (x) of this definition, or (z) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (x) or (z) of this definition and is subject to consolidated supervision with its parent;

(iv) “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

(v) “EEA Resolution Authority” means anybody which has authority to exercise any Write-Down and Conversion Powers.

(vi) “Write-Down and Conversion Powers” means the write-down and conversion powers of any EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country (which powers are described in the EU Bail-In Legislation Schedule referred to in the definition of Bail-In Legislation).

(b) Notwithstanding anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any the parties thereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Credit Document, may be subject to the write-down and conversion powers of an EEA Resolution Authority and consents to, and agrees to be bound by:

(i) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liability which may be payable to it by any party hereto that is an EEA Financial Institution; and

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(ii) the effects of any Bail-in Action on any such liability, including, if applicable:

(x) a reduction in full or in part or cancellation of any such liability;

(y) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments will be accepted by it in lieu of any rights with respect to any such liability under any Credit Document; or

(z) any variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

Article 20 - Miscellaneous

20.1 Books and Accounts

The Administrative Agent will keep books and accounts evidencing the transactions made pursuant to this Agreement. Absent manifest error, such books and accounts will be deemed to represent accurately such transactions and the indebtedness of the Borrowers.

20.2 Determination

In the absence of manifest error, any determination made by the Administrative Agent of the amounts payable hereunder will be conclusive and binding upon the Lenders and the Borrowers.

20.3 Prohibition on Assignment by Borrowers

No Borrower may assign its rights under this Agreement.

20.4 Assignments and Participations

(a) A Lender (the “assignor”) may assign, in whole or in part, its Commitment under the Facility, including outstanding Borrowings owing to it, to any Person who makes purchases or otherwise invests in commercial loans in the ordinary course of its business (the “assignee”). The assignment must be substantially in the form of Schedule E. The assignor must pay to the Administrative Agent, for its own account, an assignment fee of $5,000. When the assignment becomes effective, the assignee will become a Lender and will benefit from the rights and be liable for the obligations of the assignor, proportionally to the assigned Commitment, and, to the same extent, the assignor will be released from its obligations. The assignor and the assignee will be liable for all expenses incurred by the Administrative Agent in connection with such assignment.

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(b) No partial assignment of a Commitment may be made (i) if the residual amount of the Commitment of the assignor or if the total Commitment of the assignee is less than $10,000,000 or (ii) if the assigned portion is not allocated among Tranches A and B in the same proportion as the Commitment of the assignor.

(c) Concurrently with any assignment in favour of an assignee who is not, at the time of the assignment, party to this Agreement, the Borrowers and the Designated Subsidiaries (if so required by the Collateral Agent) must acknowledge that the assignee is entitled to the benefit of the Security.

(d) Each assignment by a Lender is subject to the prior consent of the Agents, of any Issuing Lender and of any Swingline Lender, and, if made at a time when no Default is continuing, to the prior consent of the Borrowers (which consents will not be unreasonably withheld). However, no such consent will be required if the assignee is another Lender.

(e) Sections 20.4(a) to 20.4(d) do not apply to (i) a participation that a Lender may grant to another financial institution or to an assignment by way of security to a Federal Reserve Bank provided that no such participation or assignment will release any Lender of its obligations under the Credit Documents or confer upon any participant any right against any Agent, and (ii) an assignment made after Default to effect any adjustment required to be made pursuant to Section 17.4.

(f) No assignment or participation made at the time when no Default is continuing may increase for any Borrower the costs of the Borrowings pursuant to Section 8.5.

20.5 Designated Lenders

(a) With the written consent of the Administrative Agent (which will not be unreasonably withheld), a Lender (the “designating Lender”) may designate one of its Affiliates or another Lender or an Affiliate thereof (the “designated Lender”) for the purposes of making available its Commitment in respect of Tranche B. Upon its acceptance of the designation and as long as such designation has not been terminated, the designated Lender (if not already a Lender) will be deemed to be a Lender for all purposes of the Credit Documents, with a Commitment (or an additional Commitment if it is already a Lender) corresponding to the portion of the applicable Tranche to be made available to it and with the designating Lender’s Commitment under the Facility being reduced accordingly. No such designation will reduce the obligations of the designating Lender under Tranche A, including as a result of an increase in its Commitment due to a reallocation made pursuant to Section 2.2.

(b) A designating Lender may not make an assignment of its Commitment under the Facility without terminating the designation prior to making the assignment. For greater certainty, the assignee may also avail itself of the provisions of Section 20.5(a). A designated Lender may not make an assignment in respect of the Tranche which is the subject of the designation. Any termination of a designation will result in the outstanding Borrowings owing to the designated Lender in respect of the Tranche which was the subject of the designation being automatically assigned to its designating Lender (notwithstanding anything to the contrary in Section 20.4 but subject to Section 20.4(f)), with the designating Lender being obligated to pay to the designated Lender the price of the assignment in accordance with their agreement relating to the designation.

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(c) Each of Fédération des caisses Desjardins du Québec and The Toronto-Dominion Bank designates as its designated Lender its Affiliate specified below its name on the signature pages of this Agreement for the purposes of making available its Commitment in respect of Tranche B. Each such designated Lender hereby accepts the designation made by its designating Lender.

(d) Sections 20.4(c) and 20.4(f) will apply to any designation of a designated Lender made after the date of this Agreement, as if the designation were an assignment and the designated Lender were an assignee.

20.6 Notes

At the request of a Lender, any Borrower will execute in favour of such Lender a note evidencing its indebtedness to such Lender under this Agreement.

20.7 No Waiver

The omission by any Agent or any Lender to exercise any of its rights will not be deemed to be a waiver of the exercise of any such right subsequently. The omission by any Agent or any Lender to notify any Credit Party of the occurrence of a Default will not be deemed to be a waiver of the right of such Agent or of such Lender to avail itself of such Default.

20.8 Irrevocability of Notices of Borrowings

No Borrower may cancel a notice of Borrowing, conversion, renewal, reduction or prepayment. The Borrower concerned must indemnify the Lenders in respect of any loss resulting from its failure to act in accordance with such notice.

20.9 Set-off

If an Event of Default occurs and is continuing, any Agent and any Lender are authorized to set off and to apply any and all deposits held for any Credit Party against any amount due and payable by any Credit Party under the Credit Documents.

20.10 Indemnification

(a) The Borrowers must pay on demand the amount of all reasonable costs and expenses (including legal and other professional fees) incurred by any Agent in connection with the implementation of the Facility and the preparation, negotiation, execution, syndication and administration of the Credit Documents, as well as the reasonable costs and expenses incurred by any Agent or the Lenders in connection with the enforcement of, or the preservation of any rights under, any Credit Document.

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(b) If any law, regulation, administrative decision or guideline or decision of a Court (i) increases the cost of the Facility for any Lender or (ii) reduces the income receivable by any Lender from such Facility (including, without limitation, by reason of the imposition of reserves, taxes or requirements as to the capital adequacy of such Lender but in no event by reason of taxes on the overall net income of a Lender), such Lender may send to the Borrower concerned a statement indicating the amount of such additional cost or reduction of income; in the absence of manifest error, this statement shall be conclusive evidence of the amount of such additional cost or reduction of income and the Borrower concerned must pay forthwith said amount to such Lender.

(c) The Borrowers must pay on demand the amount of any breakage cost and other loss suffered by a Lender as a result of the conversion or repayment of a Borrowing before the maturity date of its period, irrespective of the cause of such conversion or repayment (including a repayment resulting from a demand for payment after the occurrence of an Event of Default). In the absence of manifest error, a statement prepared by the affected Lender indicating the amount of such cost or other loss and the method by which same was calculated will be binding and conclusive.

(d) The Borrowers must indemnify the Administrative Agent, the Collateral Agent, the Lenders, their Affiliates and their respective officers, directors, employees and agents (each, an “indemnitee”) and hold them harmless from and against all losses, liabilities, claims, damages or expenses (including costs to defend any claim) suffered or incurred by or made against any of them in any manner whatsoever arising from or related to the Credit Documents or the transactions contemplated thereby (including the use of the proceeds from any Borrowing or as a result of any Default or non-compliance by any Credit Party with any Environmental Laws or of any claim under Environmental Laws in connection with the operations of, or any property owned or operated by, any Credit Party). The foregoing indemnity will not however apply as to any indemnitee to losses, liabilities, claims, damages or expenses resulting from the gross negligence or wilful misconduct of such indemnitee or from a breach in bad faith by such indemnitee of its obligations under a Credit Document.

20.11 Mitigation of costs

Each Lender will use its best efforts to avoid any additional cost or reduction of income for which a Borrower is required to indemnify such Lender pursuant to Section 20.10(b). However, nothing herein will require any Lender to take any action which would cause such Lender to incur any expense which would not materially reduce any amount to be received pursuant to Section 20.10(b) or which the Lender determines in its sole judgment to be inadvisable for regulatory, competitive or internal management reasons. The Borrowers will reimburse any Lender for any expense incurred by such Lender in taking any action pursuant to this Section 20.11.

20.12 Corrections of Errors

The Administrative Agent is authorized to correct any typographical error or other error of an editorial nature in this Agreement and to substitute such corrected text in the counterparts of this Agreement, provided that such corrections do not modify the meaning or the interpretation of this Agreement and provided that copies of the corrected texts are remitted to each party.

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20.13 Communications

Any Agent is entitled to rely in its dealings with any Borrower upon any instruction or notice which such Agent believes in good faith to have been given by a Person authorized to give such instruction or notice or to make the applicable transaction.

20.14 Counterparts

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered will be deemed to be an original and all of which taken together will constitute the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier or by electronic mail will be as effective as delivery of a manually executed counterpart of this Agreement.

20.15 Waiver of Jury Trial

EACH OF THE BORROWERS, THE AGENTS AND THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS.

Article 21 - Notices

21.1 Sending of Notices

Unless otherwise provided, any notice to be given to a party in connection with this Agreement will be given in writing and will be given by personal delivery, by a reputable delivery service, by telecopier or (except for any notice pursuant to Article 16) by electronic mail, addressed to the recipient at its address specified in Schedule F hereof in the case of a notice to a Borrower or an Agent or at its address provided to the Administrative Agent in the case of a notice to another party or, in each case, at such other address as may be notified by such party to the others pursuant to this Article.

21.2 Receipt of Notices

Any notice given by personal delivery or by a delivery service will be conclusively deemed to have been given at the time of such delivery and, if given by telecopier or by electronic mail, on the day of transmittal if before 3:00 p.m. on a Business Day, or on the following Business Day if such transmission occurs on a day which is not a Business Day or after 3:00 p.m. on a Business Day. If the telecopy or electronic transmission system suffers any interruptions by way of a strike, slow-down, a force majeure, or any other cause, a party giving a notice must do so using another means of communication not affected by the disruption.

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IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed as of the date and year first above written.

Cascades Inc.
Per:	/s/ Allan Hogg
Per:	/s/ Robert F. Hall
Cascades USA Inc.
Per:	/s/ Allan Hogg
Per :	/s/ Robert F. Hall
National Bank of Canada, as Administrative Agent
Per:	/s/ Dominic Albanese
Per:	/s/ Alexandre Bergeron
The Bank of Nova Scotia, as Collateral Agent
Per:	/s/ Clement Yu
Per:	/s/ Ryan Moonilal
(the names and signatures of the Lenders are on the next pages)

[Signature page – June 1, 2017 Cascades Credit Agreement]

Commitment Amounts		Lenders
Tranche A:	$	National Bank of Canada
Tranche B:	$
		per : /s/ Alexandre Bergeron
Total:	$
		per:
Percentage:	%
		National Bank of Canada, New York Branch
		(in respect of Tranche B)
		per : /s/ Alexandre Bergeron
		per:
Tranche A:	$	The Bank of Nova Scotia
Tranche B:	$
		per : /s/ François De Broux
Total:	$
		per: /s/ Daniel Zolov
Percentage:	%
Tranche A:	$	Canadian Imperial Bank of Commerce
Tranche B:	$
		per : /s/ Peter Rawlins
Total :	$
		per: /s/ Kazim Mehdi
Percentage:	%

[Signature page – June 1, 2017 Cascades Credit Agreement]

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Commitment Amounts		Lenders
Tranche A:	$	Fédération des caisses Desjardins du Québec
Tranche B:	$
		per : /s/ André Roy
Total :	$
Percentage:	%	per: /s/ Dominique Parizeau
		Desjardins Florida Branch, as designated Lender pursuant to Section 20.5 with respect to Tranche B
		per: /s/ Michel Brouillet
Tranche A:	$	Wells Fargo Bank, National Association,
Tranche B:	$	Canadian Branch
Total :	$	per : /s/ Michel Sirois
Percentage:	%
Tranche A:	$	Bank of America, N. A., Canada Branch
Tranche B:	$
Total:	$
		per : /s/ Steven Côté
Percentage:	%
		per :

[Signature page – June 1, 2017 Cascades Credit Agreement]

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Commitment Amounts		Lenders
Tranche A:	$	BNP Paribas, Canada Branch
Tranche B:	$
		per : /s/ Edouard Sinor
Total:	$
		per: /s/ Jean Rolin
Percentage:	%
Tranche A:	$	Rabobank Canada
Tranche B:	$
Total:	$	per : /s/ Marc J. Drouin
Percentage:	%
		per: /s/ Yacouba Kane
Tranche A:	$	Comerica Bank, operating through its Canada
Tranche B:	$	Branch
Total:	$	per : /s/ Gregory N. Bloch
Percentage:	%	Comerica Bank,
		(in respect of Tranche B)
		per : /s/ Gregory N. Bloch

[Signature page – June 1, 2017 Cascades Credit Agreement]

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Commitment Amounts		Lenders
Tranche A:	$	The Toronto-Dominion Bank
Tranche B:	$
		per : /s/ Serge Cloutier
Total:	$
		per: /s/ Mel Saklatvala
Percentage:	%
		Toronto Dominion (Texas) LLC, as designated Lender pursuant to Section 20.5 with respect to Tranche B
		per : /s/ Annie Dorval
Tranche A:	$	Royal Bank of Canada
Tranche B:	$
		per: /s/ Pierre Bouffard
Total:	$
		per:
Percentage:	%
Tranche A:	$	Bank of Montreal
Tranche B:	$
		per: /s/ Bruno Jarry
Total:	$
		per:
Percentage:	%
		Bank of Montreal, Chicago Branch
		(in respect of Tranche B)
		per: /s/ Brian L. Banke

[Signature page – June 1, 2017 Cascades Credit Agreement]

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Schedule A
Applicable Margins or Rates

Rating	Prime, US Base	Acceptance Fee / Libor L/C Fee	Stand-By Fee
BBB/Baa2 or Higher	bps	bps	bps
BBB-/Baa3	bps	bps	bps
BB+/Bal	bps	bps	bps
BB/Ba2	bps	bps	bps
BB-/Ba3 or Lower	bps	bps	bps

DETERMINATION OF APPLICABLE MARGIN OR RATE

1. The rates of the margins applicable to Prime Rate, US Base Rate and Libor and the rates of the Acceptance Fees, stand-by fees and Letter of Credit fees under the Facility (the “Rates”) will be determined as set forth in this Schedule.

2. During any day that Cascades has a senior secured long-term debt rating from S&P or Moody’s without third-party credit enhancement (a “Rating”), the applicable Rates will be those which correspond to the Rating in effect at the close of business on such day, as specified in the above grids. If, on any day, Cascades has a Rating from both of S&P and Moody’s but the two Ratings are not at the same level, then (i) the higher Rating will apply if the Ratings are not more than one level apart, and (ii) the Rating which is at mid-point will apply if the Ratings are more than one level apart; if there is no mid-point level, the higher of the two intermediate Ratings will apply.

3. If, on any day, Cascades has no Rating, then the applicable Rates will be those which correspond to the Rating that would be one level higher than the S&P or Moody’s rating in effect on such day for the senior unsecured long-term debt rating of Cascades; if on any day, Cascades has received different senior unsecured long-term debt ratings from both S&P and Moody’s, then the applicable Rates will be determined using the same formula as in paragraph 2 for differentials in Ratings. If there exists any day that Cascades does not have any Rating or senior unsecured long-term debt rating from S&P and Moody’s, the applicable Rates for such day will be those which correspond to a Rating of lower than BB-/Ba3.

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4. Interest, Letter of Credit fees and stand-by fees will be calculated, for any day, using the applicable Rate in effect on the relevant day. Acceptance fees will be calculated using the Rate in effect on the date such fees are payable. Any change of Rate (including on the Effective Date or as a result of an amendment to this Agreement) will give rise to adjustments to Acceptance fees previously calculated if the period of calculation extended beyond the date of the modification. The adjustments will apply to the number of days remaining to accrue from the date of the modification. The adjustments will be calculated by the Administrative Agent and be payable by the Cascades or the Lenders (as applicable) within three Business Days from the date of a demand therefor by the Administrative Agent.

5. The Applicable Rate will be 66⅔% of the rate otherwise applicable (as specified in the column governing Letter of Credit fees) for fees payable in respect of Letters of Credit securing the performance by the Credit Parties of contracts (including bids) for the supply of goods or services by the Credit Parties to their customers.

6. This Schedule does not apply to the Letter of Credit fee applicable to a documentary Letter of Credit. As provided in Section 6.2 of the Credit Agreement, the fee payable in respect of any documentary Letter of Credit will be based on the rate then offered by the applicable Issuing Lender to its customers for similar documentary letters of credit.

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Schedule B
List of Designated Subsidiaries

Name

Cascades Canada ULC

Cascades Holding US Inc.

Cascades Paperboard International Inc.

Cascades New York Inc.

Cascades Fine Papers Group Inc.

Cascades Flexible Packaging Inc.

7251637 Canada Inc.

Norampac Inc.

Cascades Containerboard Packaging – Export Sales Corp.

4626 Royal Avenue Holding LLC

401 47^th Street Holding LLC

Cascades Transport Inc.

Cascades CS + Inc.

Cascades CS + USA Inc.

7678169 Canada Inc.

Cascades Maritime Inc.

Cascades Médcas Inc.

- 8 -

XXXXXX X
 

- 9 -

XXXX        XXXX X

- 10 -

XXXXXXXX X

- 11 -

XXXXXXXX X

- 12 -

- 13 -

- 14 -

- 15 -

- 16 -

EX-13.1

Exhibit 13.1

ANNUAL INFORMATION FORM

For the year ended December 31, 2017

March 29, 2018

TABLE OF CONTENTS

Annual Information Form for the year ended December 31, 2017	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, Address and Incorporation	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
3.3 Trends	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 Containerboard Packaging Group	4
4.2.1.2 Boxboard Europe Group	6
4.2.1.3 Specialty Products Group	6
4.2.2 Tissue Papers Sector	8
4.2.2.1 Tissue Group	8
4.3 Research, Development and Innovation	9
4.4 Competitive Conditions	10
4.4.1 Our Markets	10
4.4.2 Our Competitive Strengths	10
4.5 Cyclical Considerations	10
4.6 Environmental Protection	11
4.6.1 Regulations	11
4.6.2 Commitment to Sustainable Development	11
4.7 Reorganizations	11
4.8 Social Policies	11
4.9 Risk Factors	11
Item 5 - Dividends and Distributions	11
Item 6 - Capital Structure	11
6.1 General Description of Capital Structure	11
6.2 Ratings	12
Item 7 - Market for Securities	13
7.1 Trading Price and Volume	13
Item 8 - Directors and Officers	13
8.1 Name, Occupation and Security Holding	13
8.2 Cease Trade Orders, Bankruptcies, Penalties or Sanctions	20
8.3 Information concerning Executive Officers	20
Item 9 - Legal Proceedings and Regulatory Actions	21
Item 10 - Transfer Agents and Registrars	21
Item 11 - Material Contracts	21
Item 12 - Interests of Experts	21
Item 13 - Audit and Finance Committee	22
13.1 Composition and Mandate	22
13.2 Relevant Education and Experience of the Members	22
13.3 Independent Auditor Services Fees	23
13.4 Policies and Procedures for the Engagement of Audit and Non-Audit Services	23
Item 14 - Additional Information	24
Schedule A - Charter of the Audit and Finance Committee	25

In this Annual Information Form, the terms “We”, “Us”, “Our”, “Corporation” and “Cascades” refer to Cascades Inc., its subsidiaries, divisions and its interests in joint ventures and associates. Except as otherwise indicated, all dollar amounts are expressed in Canadian dollars. The information in this Annual Information Form is stated as at December 31, 2017, except as otherwise indicated, and except for information in documents incorporated by reference that have a different date.

DOCUMENTS INCORPORATED BY REFERENCE

The documents in the table below contain information that is incorporated by reference into this Annual Information Form and may be found on SEDAR at www.sedar.com.

Documents	Where they are incorporated in this Annual Information Form
Cascades Inc.’s 2017 Annual Report - Management’s Discussion and Analysis, NEAR-TERM OUTLOOK, page 65, RISK FACTORS, page 70	Items 3.3, 4.6.1 and 4.9

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Information Form or in documents incorporated by reference, including statements regarding future results and performance, are forward-looking statements within the meaning of the “Safe Harbour” provision of the United States Private Securities Litigation Reform Act of 1995 based on current expectations. The accuracy of these 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 (See heading Risk Factors).

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ITEM 1 - DATE OF THE ANNUAL INFORMATION FORM

This Annual Information Form (“AIF”) is dated as at March 29, 2018. Except as otherwise indicated, the information contained in this AIF is stated as at December 31, 2017.

ITEM 2 - CORPORATE STRUCTURE

2.1 Name, Address and Incorporation

Cascades Inc. was incorporated under the name Papier Cascades Inc./Cascades Paper Inc. under the laws of the Province of Québec by letters patent issued on March 26, 1964. Supplementary letters patent were issued on March 11, 1968, July 4, 1979 and October 19, 1979 to amend the authorized capital stock and the restrictions and privileges attached to certain classes of shares of the Corporation.

Cascades was continued under the name Cascades Inc. under Part 1A of the Companies Act (Québec) by Certificate of Continuance dated October 26, 1982. Certificates of Amendment were issued on July 5, 1984, September 16, 1985 and May 13, 1986 to permit the subdivision of the Corporation's Common Shares, as well as on July 15, 1992, July 24, 1992, December 17, 1992 and July 20, 1993 in order to modify the authorized share-capital and/or the restrictions and privileges of certain classes of shares of the Corporation.

On December 30, 2003, in accordance with Article 123.129 of the Companies Act (Québec), Cascades, by simplified amalgamation, merged with 9135-2591 Québec Inc., a wholly owned subsidiary of the Corporation. The articles of amalgamation and schedules as well as the composition of the Board of Directors of the new company following the amalgamation are exactly the same as those of Cascades Inc. prior to the amalgamation.

Since February 14, 2011, all Québec corporations incorporated under Part IA of the Companies Act (Québec) are governed by the Business Corporations Act (Québec).

On July 27, 2011, the Corporation amended its Articles which essentially provide that (i) the Board of Directors may, at its discretion, appoint one or more directors, who shall hold office for a term expiring no later than the close of the next annual meeting of shareholders following their appointment, but the total number of directors so appointed may not exceed one-third of the number of directors elected at the annual meeting of shareholders preceding their appointment; and (ii) the Board of Directors may, at its discretion and from time to time, determine to hold a meeting of shareholders outside of the Province of Québec.

The head office and corporate offices of Cascades are located at 404 Marie Victorin Blvd, Kingsey Falls (Québec) J0A 1B0. Cascades also has executive offices located at 772 Sherbrooke Street West, Suite 100, Montréal (Québec) H3A 1G1. Cascades’ website can be found at www.cascades.com.

2.2 Intercorporate Relationships

The following list sets out the principal subsidiaries of the Corporation and their respective jurisdictions as at December 31, 2017:

Corporate Name	Percentage owned (%)	Jurisdiction
Cascades Canada ULC	100	Alberta, Canada
Cascades USA Inc.	100	Delaware, U.S.
Reno de Medici S.p.A.	57.8	Italy

ITEM 3 - GENERAL DEVELOPMENT OF THE BUSINESS

3.1       Three Year History

Financing activities

Bank Financing

On July 7, 2015, the Corporation entered into an agreement with its lenders to extend and amend its existing $750 million credit facility. The amendment provides that the term of the facility is extended to July 2019. The applicable pricing grid was slightly lowered to better reflect market conditions. The other existing financial conditions remained essentially unchanged.

On June 1, 2017, the Corporation entered into an agreement with its lenders to extend and amend its existing $750 million credit facility. The amendment extends the term of the facility to July 2021. The financial conditions remain essentially unchanged.

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Debt Refinancing

On May 19, 2015, the Corporation issued US$250 million ($305 million) aggregate principal amount of 5.75% senior notes due in 2023. The Corporation used the proceeds from this offering of notes to repurchase a total of US$250 million ($305 million) aggregate principal amount of 7.875% senior notes due in 2020 for a total consideration of US$250 million ($305 million). The Corporation also paid premiums of US$11 million ($13 million) to repurchase the 2020 notes as well as fees and expenses in connection with the offering and the tender offer totalling $5 million. The refinancing of these notes will reduce the Corporation's future interest expense by approximately US$6 million annually.

On December 12, 2017, the Corporation announced the results of tender offers and proceeded with the purchase of US$150 million of its 5.500% unsecured senior notes due 2022 and US$50 million of its 5.75% unsecured senior notes due 2023.

Greenpac Debt Refinancing

On May 6, 2016, the Corporation announced that its associate company Greenpac, located in Niagara Falls, NY, successfully refinanced its debt. The debt package includes a term loan and a revolving credit facility. This five-year agreement allowed the mill to reduce its financing costs by approximately 225 basis points, increasing its flexibility to successfully address future market fluctuations.

Corporate Activities

On July 22, 2016, Cascades announced the appointment of Ms. Michelle A. Cormier and Messrs. Martin Couture and Patrick Lemaire to its Board of Directors.

On April 5, 2017, the Corporation announced that results from the Greenpac Mill LLC (Greenpac) would be consolidated with those of the Corporation following changes to the Greenpac equity holders agreement. As a result, the Corporation began consolidating Greenpac results on April 4, 2017. The agreement did not involve any cash consideration.

On March 21, 2017, the Corporation acquired 23% of Containerboard Partners (Ontario) Inc. for a consideration of US$12 million ($16 million ). This company is a member of Greenpac Holding LLC, of which it owns 12.1%. On November 30, 2017, the Corporation acquired an additional 30% of Containerboard Partners (Ontario) Inc. for a consideration of $19 million. These transactions add an indirect participation of 6.4% in Greenpac Holding LLC bringing total ownership to 66.1%.

On June 12, 2017, the Corporation announced that S&P Dow Jones Indices LLC confirmed that Cascades would be added to the S&P/TSX Composite Index and S&P/TSX Composite Dividend Index effective June 19, 2017.

On July 27, 2017, the Corporation announced the sale of its 17.3% equity holding in Boralex to the Caisse de Dépôt et Placement du Québec for $288 million.

Packaging Products Sector

Containerboard Packaging Group

On February 4, 2015, Cascades confirmed completion of the transaction relating to the sale of its North American boxboard manufacturing and converting assets to Graphic Packaging Holding Company for a cash consideration of $40 million, net of transactions fees. Included in the transaction were the Cascades boxboard units in East Angus and Jonquière (Québec), Winnipeg (Manitoba), and Mississauga and Cobourg (Ontario). This move, which reflects Cascades’ intention to refocus its activities on the strategic sectors in which it excels, did not affect the Corporation's European-based boxboard operations.

On April 10, 2015, Cascades announced major investments in a biorefinery project at its Cabano (Québec) plant. This project, worth a total of $26 million, represents a major advance in biorefinery development in Canada. Backed by a $10 million investment from Natural Resources Canada’s Investments in Forest Industry Transformation (IFIT) program and an additional $4 million from the Québec Ministère des Forêts, de la Faune et des Parcs, the Cabano plant replaced its process - the production of sodium carbonate-based chemical pulp - with this new, more environmentally friendly and economical one that was developed in conjunction with a U.S. partner.

In addition, Cascades invested $26 million in 2015 and 2016 in its Drummondville plant, for the expansion of the building and the installation of a new corrugator. It officially started operating at the beginning of 2016.

On January 13, 2016, the Corporation announced Mr. Marc-André Dépin's decision to step down as President and Chief Executive Officer of the Containerboard Packaging Group. Mr. Charles Malo succeeded him as President and Chief Operating Officer.

On June 1, 2016, the Corporation announced the completion of a transaction with US-based company Rand-Whitney Container LLC for the acquisition of its plant in Newtown, Connecticut. In return, Cascades transferred equipment and its customer list from its Thompson plant, located in Connecticut. The Corporation also paid US$12 million ($15 million) to Rand-Whitney.

On August 3, 2017, as part of its modernization and optimization efforts in the Northeastern United States, the Corporation announced an investment of US$80 million for the construction of a new containerboard packaging plant in Piscataway, New Jersey. This new plant will manufacture corrugated packaging products. The operation is planned to start in the second quarter of 2018. In addition, the Corporation announced on August 10, 2017, that it will close its containerboard converting plant in Maspeth, New York. On January 31, 2018, the Corporation completed the sale of the building and land of its Maspeth plant, NY, for US$72 million ($90 million) of which US$68 million ($85 million) was received at closing and US$4 million ($5 million) is held in escrow. Release of the escrow is contingent upon certain conditions being met over the next three years. The Corporation will continue to use the facility until December 31, 2018, the date the plant is scheduled to close. The volumes will be progressively redeployed to other Cascades units over the course of the year.

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On December 4, 2017, the Corporation announced that it had acquired three converting plants from the Coyle Group in Ontario, Canada, to strengthen its position in the containerboard packaging sector.

Boxboard Europe Group

On June 30, 2016, the Corporation completed the transfer of its virgin fibre boxboard mill located in La Rochette, France, to its 57.8%-owned subsidiary Reno de Medici, for a consideration of €19 million ($27 million). The transaction combined the Corporation’s virgin and recycled boxboard activities in Europe. Apart from higher non-controlling interests after the closing, no impact was recorded on the Corporation’s financial statements, as both entities had been fully consolidated prior to the transaction.

On November 3, 2016, RdM appointed Mr. Michele Bianchi as its Chief Executive Officer, following the resignation of Mr. Ignazio Capuano as Chief Executive Officer on April 26, 2016.

On January 1, 2018, the Corporation, through its 57.8% equity ownership in Reno de Medici S.p.A., acquired 66.67% of PAC Service S.p.A., a boxboard converter for the packaging, publishing, cosmetics and food industries. The Corporation already had a 33.33% equity participation before the transaction.

Specialty Products Group

In the third quarter of 2015, the Specialty Products Group proceeded with the legal restructuring of its Norcan Flexible Packaging subsidiary, which was owned at 62.1%. As a result of the restructuring, the Corporation now owns 100% of this business through its Cascades Flexible Packaging subsidiary.

On November 27, 2015, the Corporation entered into an agreement for the acquisition of the 27% minority interest of its subsidiary Cascades Recovery Inc. for a cash consideration of $32 million, payable over a ten-year period.

On June 22, 2016, the Corporation announced the closure of its de-inked pulp mill located in Auburn (Maine, USA). The plant closed on July 15, 2016.

On October 30, 2017, the Corporation announced a $21 million investment in its Cascades Inopak and Plastiques Cascades plants, both in Québec, in order to acquire equipment enabling it to increase its production of food packaging, primarily for the fresh protein market.

Tissue Group

On April 17, 2015, Cascades announced the installation of a new converting line in the Candiac plant (Québec), for the manufacturing of high-quality paper towels. In addition, two converting lines were upgraded in Candiac and Kingsey Falls (Québec) that produce high-end tissue products. The new line in Candiac (Québec) started production in July 2015, while the improved converting lines began production in the second quarter of 2016.

On May 13, 2016, in order to optimize its supply chain and to maximize its profitability, the Corporation decided to close its tissue converting operations located in Toronto (Ontario), and transferred some of the equipment to other facilities.

During the first quarter of 2017, the Corporation successfully began production at its new tissue converting facility in Scappoose, Oregon, which houses three new state-of-the-art converting lines. The plant manufactures virgin and recycled bathroom tissue products and paper hand towels for the Cascades Pro brand (Away-from-Home market). The plant is supplied by the Corporation's tissue paper plant located 12 kilometers away in St. Helens.

On March 14, 2017, the Corporation announced the launch of a brand-new consumer line of tissue paper, Cascades Fluff ^TM and Cascades Tuff ^TM, consisting of three varieties of toilet paper and two varieties of paper towels.

3.2 Significant Acquisitions

No significant acquisition was completed by the Corporation during the financial year ended December 31, 2017 for which disclosure would have been required under Part 8 of National Instrument 51-102 of the Canadian Securities Administrators, namely the filing of a Business Acquisition Report.

3.3 Trends

Reference is made to Management’s Discussion and Analysis in the 2017 Annual Report, specifically on page 65 under the heading “NEAR-TERM OUTLOOK”, which is incorporated by reference.

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ITEM 4 - DESCRIPTION OF THE BUSINESS

4.1 General

Established in 1964, Cascades is the parent company of a North American and European group of companies involved in the production, conversion and marketing of packaging products and tissue papers principally composed of recycled fibre. In 2017, including its 57.8% owned subsidiary Reno De Medici S.p.A. ("RdM"), Cascades consumed approximately 3.85 million short tons of fibre. Recycled fibre, wood fibre (chips and logs) and virgin pulp respectively accounted for 82%, 11% and 7% of the total fibre consumption. Cascades sources its supply of recycled fibre through its own recovery network as well as through mid- to long-term agreements with independent suppliers. Cascades sources its supply of wood fibre and pulp through contractual agreements with independent sawmills, timberland owners and pulp producers.

Cascades conducts its business principally through four (4) reporting groups in two (2) operating sectors, namely:

1) The Packaging Products sector which includes:

i) The Containerboard Packaging Group, a manufacturer of containerboard and leading converter of corrugated products in North America;

ii) The Boxboard Europe Group, a manufacturer of premium coated recycled and virgin boxboard in Europe; and

iii) The Specialty Products Group, which manufactures industrial and consumer packaging products, and is also involved in recovery and recycling.

2) The Tissue Papers sector which includes the Tissue Group, a manufacturer and converter of tissue papers for the Away-from-Home and consumer products markets.

These two sectors include more than 90 operating units located in Canada, the United States and Europe. As at December 31, 2017, the Corporation employed approximately 11,000 employees, of which roughly 9,500 were employees of its Canadian and United States operations. Approximately 33% of the Corporation's Canadian and United States workforce is unionized under 30 separate collective bargaining agreements. In addition, in Europe, some of the Corporation's operations are subject to national industry collective bargaining agreements that are renewed on an annual basis. Of the 30 collective bargaining agreements in North America, 4 are expired and are currently under negotiation, 7 will expire in 2018 and 8 will expire in 2019.

Cascades sets the overall strategic guidelines and ensures that corporate policies concerning acquisition and financing strategies, legal affairs, human resources management and environmental protection are applied by its subsidiaries, divisions, joint ventures and associates.

4.2 Industry Sector Information

4.2.1 Packaging Products sector

4.2.1.1 Containerboard Packaging Group

The Containerboard Packaging Group employs close to 4,000 employees, and operates six (6) linerboard and corrugated medium mills and twenty-one (21) converting plants across Canada and the Northeastern United States. The mills have a combined annual production capacity of 1,531,000 short tons, of which 48% is linerboard and 52% is corrugated medium. In 2017, approximately 53% of the mills output was converted by the Group’s converting facilities. This integration rate increases to 66% when associates and joint ventures are taken into consideration. The Group produces a broad range of products for regional and national customers in a variety of industries, including food, beverage and consumer products. Approximately 84% of the total pulp and fibre consumed by this Group is recycled fibre. Products are delivered by truck or rail.

On April 5, 2017, the Corporation announced that results from Greenpac Mill LLC (Greenpac) would be consolidated with those of the Corporation following an amendment to make certain changes to the Greenpac equity holders agreement. As a result, the Corporation began consolidating Greenpac results on April 4, 2017. The agreement did not involve any cash consideration. The Greenpac Mill, a state-of-the-art linerboard mill with annual production of 540,000 short tons, manufactures one of the best linerboards in the industry. The mill is located in Niagara Falls (NY, USA) and employs approximately 140 employees.

Sales from this Group totaled $1,652 million in 2017, compared to $1,370 million in 2016, of which 65% were in Canada and 35% were in the United States. This Group sells its products via its own sales force and external representatives when needed for export purposes.

The following table lists the mills and converting plants of the Containerboard Packaging Group and the approximate annual production capacity or shipments of each facility as well as the products manufactured or, where applicable, their activities in 2017:

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Facilities	Products / Services	Annual capacity or Shipments
Manufacturing		Annual Capacity in short tons
Niagara Falls, New York, USA	100% recycled corrugating medium	275,000
Greenpac, Niagara Falls, New York, USA	100% recycled linerboard	540,000
Kingsey Falls, Québec	100% recycled linerboard	105,000
Cabano, Québec	Corrugating medium in various basis weights	244,000
Trenton, Ontario	Corrugating medium in various basis weights	194,000
Mississauga, Ontario	100% recycled linerboard	173,000
Converting		Shipments in square feet (000)
Drummondville, Québec	Corrugated packaging	1,769,000
Victoriaville, Québec	Corrugated packaging	274,000
Vaudreuil, Québec	Corrugated packaging	966,000
Montréal, Québec	Micro-Litho packaging	414,000
Belleville, Ontario	Corrugated packaging	233,000
Etobicoke, Ontario	Corrugated packaging	525,000
Jellco, Barrie, Ontario	Corrugated packaging	225,000
St. Marys, Ontario	Corrugated packaging	1,048,000
Vaughan, Ontario	Corrugated packaging	2,405,000
Lithotech, Scarborough, Ontario	Micro-Litho packaging	228,000
Guelph, Ontario	Corrugated packaging	254,000
McLeish, Etobicoke, Ontario	Corrugated packaging	165,000
Burlington, Ontario	Corrugated packaging	90,000
Scarborough, Ontario	Corrugated packaging	234,000
Winnipeg, Manitoba	Corrugated packaging	745,000
Calgary, Alberta	Corrugated packaging	652,000
Richmond, British Columbia	Corrugated packaging	594,000
New York City, New York, USA	Corrugated packaging	899,000
Schenectady, New York, USA	Corrugated packaging	581,000
Lancaster, New York, USA	Corrugated packaging	359,000
Newtown, Connecticut, USA	Corrugated packaging	755,000
Services
Art & Die, Etobicoke, Ontario	Graphic art and printing plates	N/A

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4.2.1.2 Boxboard Europe Group

As at December 31, 2017, the Corporation's holding in its subsidiary RdM, the second largest European producer of coated recycled boxboard, stood at 57.8%. RdM operates five (5) recycled boxboard mills with an annual production capacity of 885,000 metric tonnes, one (1) virgin boxboard mill with an annual production capacity of 165,000 metric tonnes and three (3) sheeting centers. It employs approximately 1,500 employees. RdM is a public company listed on the Milan and Madrid stock exchanges. Information concerning RdM’s production facilities can be found at www.rdmgroup.com. Sales for the Boxboard Europe Group stood at $838 million in 2017 compared to $796 million in 2016.

The following table lists the mills of the Boxboard Europe Group and the approximate annual production capacity of each facility as well as the products manufactured or, where applicable, their activities in 2017:

Facilities	Products	Annual capacity in metric tonnes
Arnsberg, Germany	Coated recycled boxboard	220,000
Santa Giustina, Italy	Coated recycled boxboard	240,000
Ovaro, Italy	Coated recycled boxboard	95,000
Villa Santa Lucia, Italy	Coated recycled boxboard	220,000
Blendecques, France	Coated recycled boxboard	110,000
La Rochette, France	Coated virgin boxboard	165,000

4.2.1.3 Specialty Products Group

The Specialty Products Group operates in three (3) main sub-segments, namely industrial packaging, consumer products packaging, and recovery and recycling. This Group operates thirty-eight (38) facilities in North America and Europe, including nineteen (19) recovery centers across Canada and the Northeastern United States. It employs more than 2,200 employees. In 2017, sales from this Group amounted to $703 million, compared to $620 million in 2016, of which 56% were in Canada, 35% in the United States, and 9% were in Europe.

a) Industrial Packaging

The Industrial Packaging sub-segment is active in four (4) markets: protective packaging, specialty containers, structural components and paperboard and fibre composites.

One plant produces uncoated recycled paperboard (URB) using 100% recycled fibres. The URB produced is mainly used by packaging converters and industrial users of headers and wrappers for the paper industry, as well as partitions used as protective packaging. Four (4) plants in Québec and in the United States manufacture honeycomb paperboard for industrial and commercial packaging as well as partitions, mostly for the beer, wine and spirits industry. One facility manufactures laminated paperboard that is used in the food packaging and furniture backing industries while another facility manufactures backing for vinyl flooring. Products are sold in Canada and the United States.

Two (2) plants in France manufacture roll headers made of linerboard and uncoated paperboard. All products are sold in Europe.

The following table lists the plants (including joint ventures, which are not consolidated) of the industrial packaging business sector and the approximate annual production capacity of each facility as well as the products manufactured or, where applicable, their activities in 2017:

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Facilities	Products	Annual capacity in metric tonnes
Cascades Sonoco, Kingsey Falls, Québec*	Roll headers and wrappers	80,000
Cascades Sonoco, Berthierville, Québec*	Roll headers and wrappers	50,000
Cascades Sonoco, Birmingham, Alabama, USA*	Roll headers and wrappers	50,000
Cascades Sonoco, Tacoma, Washington, USA*	Roll headers and wrappers	30,000
Cascades Rollpack, Saulcy-sur-Meurthe, France	Roll headers and packaging reams	40,000
Cascades Rollpack, Châtenois, France	Packaging reams	25,000
Cascades Multi-Pro, Drummondville, Québec	Laminated paperboard and specialty containers	18,000
Cascades Enviropac, Berthierville, Québec	Honeycomb packaging products	12,600
Cascades Enviropac, St-Césaire, Québec	Uncoated paperboard partitions	7,500
Cascades Enviropac, Grand Rapids, Michigan, USA	Honeycomb packaging products and other packaging products	10,000
Cascades Enviropac, Aurora, Illinois, USA	Uncoated paperboard partitions	6,000
Cascades Papier Kingsey Falls, Kingsey Falls, Québec	Uncoated paperboard	103,000
Cascades Lupel, Trois-Rivières, Québec	Manufacture of backing for vinyl flooring	55,000

*Joint ventures

b) Consumer Products Packaging

The Consumer Products Packaging sub-segment designs and manufactures packaging for fresh foods, catering to the food processing, retailing and quick-service restaurant industries.

Two (2) plants manufacture egg filler flats for egg processors and four-cup carriers for the quick-service restaurant industry using 100% recycled material. Two (2) facilities manufacture polystyrene foam trays, marketed under the EVOK® brand, for processors and retailers in the food industry. Another plant manufactures rigid plastic packaging, under various brand names such as Ultratill™ and Poultray™, primarily for the food industry, processors and retailers. A facility specializes in the manufacturing of flexible film for packaging mainly for customers in the frozen foods, bakery and ice industries. This sub-segment has sales in both Canada and the United States.

The following table lists the plants in the consumer products packaging sub-segment and the approximate annual production capacity of each facility as well as the products manufactured or, where applicable, their activities in 2017:

Facilities	Products	Annual capacity in kilograms
Plastiques Cascades, Kingsey Falls, Québec	Polystyrene foam food packaging, plate and bowls	9,500,000
Cascades Plastics, Warrenton, Missouri, USA	Polystyrene foam food packaging	8,500,000
Cascades Inopak, Drummondville, Québec	Plastic food packaging	7,000,000
Cascades Flexible Packaging, Mississauga, Ontario	Film packaging	7,941,000
Cascades Forma-Pak, Kingsey Falls, Québec	Egg filler flats and beverage carry trays	16,500,000
Cascades Moulded Pulp, Rockingham, North Carolina, USA	Egg filler flats and beverage carry trays	9,000,000

c) Recovery and Recycling

The recovery and recycling sub-segment provides services to recover and process discarded materials for the municipal, industrial, commercial and institutional sectors. Services are offered across Canada and the Northeastern United States through nineteen (19) recovery facilities. In 2017, this sub-segment processed, brokered and bought over 1.45 million short tons of recovered papers through its recovery facilities.

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4.2.2 Tissue Papers Sector

4.2.2.1 Tissue Group

The Tissue Group manufactures, converts and markets a wide variety of tissue paper products intended for the Away-from-Home and consumer products markets. The Group operates seven (7) manufacturing facilities, ten (10) converting facilities, and four (4) facilities with both manufacturing and converting activities. It also operates the Best Diamond Packaging, LLC joint venture in Kinston, NC, USA. The Group employs more than 2,200 employees.

The Group markets and sells its lines of bathroom tissue, facial tissue, paper towels, paper hand towels, paper napkins and other related products under the Decor®, North River®, Cascades®, Cascades Moka®, Tandem®, Tandem+®, Cascades Elite® and Wiping Solutions® brand labels in both the Canadian and American Away-from-Home markets. In 2016, the Tissue Group rebranded its Away-from-Home product offerings as Cascades PRO, and markets and sells its lines under the five brand names of Cascades PRO Signature™, Cascades PRO Perform™, Cascades PRO Select™, Cascades Pro Tandem™ and Cascades PRO Tuff-Job™. In the consumer products market, lines are principally marketed under private labels and under the Cascades Fluff ^TM, Cascades Tuff ^TM and April Soft® labels in Canada, and under the Nature’s Choice® label and other secondary marks in the United States. Products are sold principally through a direct sales force and are delivered by truck.

Sales from this Group amounted to $1,268 million in 2017, compared to $1,305 million in 2016, of which 74% were in the United States and the remaining 26% were in Canada. On a segmented basis, the Away-from-Home market represented 43% of sales in Canada and 50% in the US, while the retail market represented 57% in Canada and 50% in the US.

The following table lists the mills and converting plants (including joint ventures, which are not consolidated) of the Tissue Group and the approximate annual production capacity of each facility as well as the products manufactured or, where applicable, their activities in 2017:

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Facilities	Products / Services	(Manufacturing only)
Manufacturing / Converting
Candiac, Québec	Parent rolls, paper towels, bathroom tissue	74,000
Lachute, Québec	Parent rolls, paper hand towels, bathroom tissue	35,000
Kingsey Falls, Québec	Parent rolls, facial tissue, bathroom tissue	105,000
Eau Claire, Wisconsin, USA	Parent rolls, paper towels, bathroom tissue, facial tissue and paper napkins	56,000
Manufacturing
Toronto PM , Ontario (2)	Parent rolls	54,000
St-Helens, Oregon, USA	Parent rolls	116,000
Ransom, Pennsylvania, USA	Parent rolls	59,000
Memphis, Tennessee, USA	Parent rolls	40,000
Rockingham, North Carolina, USA	Parent rolls	58,000
Mechanicville, New York, USA	Parent rolls	53,000
Converting
Laval, Québec	Paper napkins	N/A
Granby, Québec	Bathroom tissue, facial tissue and paper hand towels	N/A
Kingman, Arizona, USA	Paper towels, bathroom tissue, paper hand towels, paper napkins	N/A
Waterford, New York, USA	Paper towels, bathroom tissue, paper hand towels, paper napkins	N/A
Pittston, Pennsylvania, USA	Paper towels, bathroom tissue, facial tissue and paper napkins	N/A
Wagram, North Carolina, USA	Paper towels, bathroom tissue, paper hand towels, paper napkins	N/A
Kinston, North Carolina, USA*	Paper napkins	N/A
Grande Prairie, Texas, USA*	Paper towels, bathroom tissue, paper hand towels, paper napkins	N/A
Brownsville, Tennessee, USA	Industrial wipes	N/A
Scappoose, Oregon, USA	Bathroom tissue, paper hand towels	N/A

* Joint ventures

4.3 Research, Development and Innovation

Cascades has its own research and development centre located in Kingsey Falls (Québec) and is composed of 70 employees. It provides Cascades’ business units with technical support in solving production problems and improving quality as well as the development of new products and processes. Moreover, it is strongly involved in innovation and sustainable development through its scientific and technical support to the Corporation’s marketing and innovation teams.

Cascades has adopted a clear strategy relative to innovation as it is one of the key enablers of the Corporation's strategic plan. Each Cascades Division has defined their strategic arena and their action plan in order to reach the ambitious goal of generating 20% of their sales relating to the introduction of new products by 2020. Cascades also put in place a centralized work team, the CIC (Cascades Innovation Center), to develop and support innovation within the Divisions. The team includes specialists in market research as well as product development.

Activities related to our ERP system and business process re-engineering increased our costs by $10 million in 2017 compared to 2016. These higher costs reflect the accelerated implementation of our ERP platform since the second half of 2016, and additional costs associated with the optimization of internal processes such as sales and operations planning, logistics and procurement during 2016 and the beginning of 2017. The implementation phase of these initiatives are completed and are expected to reduce cost levels beginning in 2018 through stabilization and optimization. In 2017, the Corporation invested $20 million in intangible and other assets compared to $15 million in 2016, for the implementation of our ERP information technology system.

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4.4 Competitive Conditions

4.4.1 Our Markets

Cascades operates in large, highly competitive markets. Our products and services compete with similar products manufactured and distributed by others both domestically and globally. The success in our markets is influenced by many factors, including customer service, price, geographic location, quality, breadth and performance characteristics of our products. Given our products, integration level, markets and geographic diversification, we believe that we are well-positioned to compete in our packaging and tissue sectors.

According to RISI and the Canadian Corrugated and Containerboard Association ("CCCA"), the total containerboard production in North America was approximately 39.3 million tons in 2017 while total containerboard production capacity totaled approximately 40.6 million tons. We estimate the five largest manufacturers, International Paper Company, WestRock Company⁽¹⁾, Georgia-Pacific LLC, Packaging Corporation of America and KapStone Paper and Packaging Corporation⁽¹⁾ to account for approximately 75% of total production capacity. Total U.S. containerboard production increased by 3.1% in 2017. With respect to demand, while the containerboard market is cyclical and impacted by economic conditions, it tends to be more resilient given that approximately 75% of the end demand for corrugated boxes comes from the non-durable goods industries according to the Fibre Box Association.

According to RISI, demand in the U.S. tissue paper market reached approximately 9.3 million tons in 2017. Tissue production capacity in North America totaled approximately 10.0 million tons during the same period. We estimate the five largest manufacturers, Georgia-Pacific LLC, The Procter & Gamble Company, Kimberly-Clark Corporation, Svenska Cellulosa Aktiebolaget (SCA) and Cascades Inc. to account for approximately 74% of total production capacity. The tissue paper market consists of both the consumer products and Away-from-Home markets. Shipments of consumer products and Away-from-Home tissue products represented approximately 68% and 32%, respectively, of total U.S. tissue paper shipments in 2017. The tissue market is considered to be the most stable paper sector with demand in North America growing at a 1.5% compound annual growth rate since 2005.

⁽¹⁾ On January 29, 2018, WestRock Company announced the signing of a definitive agreement, pursuant to which it would acquire KapStone Paper and Packaging Corporation.

4.4.2 Our Competitive Strengths

Leading Market Positions with Environmentally Sustainable Product Focus. We are one of the two leaders in Canada and hold one of the leading market positions in the packaging industry in North America. We also are a leading producer of coated recycled boxboard in Europe through our ownership of Reno de Medici, S.p.A. We believe our leading market positions and our environmental focus give us an advantage over many of our competitors. We believe the demand for green products is growing and we are well-positioned to take advantage of the growing environmental trend due to our strengths and diversity of product offerings.

Integrated Recycling Solutions Provider. We are an integrated manufacturer with both downstream recycled paper collection and processing capabilities and upstream manufacturing and converting operations. We have created the closed-loop system^TM that enables us to manufacture our products efficiently for our customers. In North America, 30% of the recycled fibre that we use in our products come from our own recovery facilities. We continually look for opportunities to increase our integration to further ensure the supply of raw materials to our mills and grow the development of our environmentally sustainable products.

Diversified Portfolio of Products, Markets and Geographic Locations. We manufacture and sell a diversified portfolio of packaging, tissue and specialty products for commercial, industrial and consumer products end markets in Canada, the United States, Europe and other regions. Our customers include Fortune 500, medium and small-sized companies across a broad range of industries. We believe that our product, geographic and customer diversification help us maintain our operating performance through economic downturns and changing market conditions. The size and diversity of our operations also allow us to cost-effectively serve customers on a regional and multinational basis, reducing delivery times and enhancing customer service.

Strong Presence in Consumer-Oriented End Markets. Our packaging, tissue and other products are sold primarily to consumer-oriented end markets, which tend to be less sensitive to economic cycles. As a result, products sold to these markets tend to exhibit a greater degree of stability and predictability in demand and product prices than products sold to commercial or industrial-oriented end markets. Our participation in consumer-oriented end markets has increased with our focus on selling tissue products.

4.5 Cyclical Considerations

Although the Corporation believes that its products, integration level, market, and geographical diversification help to mitigate the adverse effects of industry conditions, the markets, for some of its products, notably containerboard and boxboard, remain cyclical. These markets are influenced by changes in the North American and global economies, industry capacity and inventory levels maintained by customers, all of which affect selling prices and profitability. The Corporation is also affected by the variation of the Canadian dollar against the U.S. dollar and the Euro, and the effect of the volatility of the costs of raw materials, particularly recycled fibre and energy prices.

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4.6 Environmental Protection

4.6.1 Regulations

The Corporation’s activities are subject to environmental laws and regulations imposed by various governmental and regulatory authorities in all the countries where it operates. The Corporation is in compliance, in all material respects, with all applicable environmental legislation and regulations. However, ongoing capital and operating expenses are expected to be incurred to achieve and maintain compliance with applicable environmental requirements. For more information, reference is made to the heading “RISK FACTORS”, on page 70 of Management’s Discussion and Analysis in the 2017 Annual Report, which item is incorporated by reference.

In 2017, environmental protection requirements and the application of Cascades’ environmental mission required capital expenditures and led to operating costs as follows:

Country	Capital Expenses		Operating Costs
Canada	$	504,821	$	28,048,397
United States	$	1,730,819	$	30,548,573
Total	$	2,235,640	$	58,596,970

4.6.2 Commitment to Sustainable Development

Since one of the deeply ingrained values of the Corporation is protecting the environment, Cascades has adopted a Commitment to Sustainable Development, which is available on the Corporation’s website at www.cascades.com.

4.7 Reorganizations

In 2017, no major legal reorganizations were undertaken by Cascades. In the normal course of business, some reorganizations of the subsidiaries of the Corporation could occasionally occur in order to improve the organizational structure, none of them having a material impact on the activities, operations or financial results of the Corporation.

In 2017, the Corporation finished implementing ONE Cascades, a major program to streamline its business processes. The focus for 2018 is the optimization of the different initiatives. ONE Cascades aims to strengthen our customer approach by optimizing and standardizing internal procedures. This program will include improving the supply chain to allow a better response to customers; discharging the plants from repetitive administrative tasks to allow them to focus on improving production; and improving the human resources processes to provide better support to the organization.

4.8 Social Policies

In 2017, the Corporation adopted a revised Code of Ethics and Business Conduct (the “Code”), which is meant to provide directors, officers, employees and consultants with general guidelines for acceptable behaviour in all relationships with each other, customers, suppliers, partners, and the communities where the Corporation operates. A copy of the Code is available on the Corporation' website at www.cascades.com.

4.9 Risk Factors

We refer the reader to Management’s Discussion and Analysis in the 2017 Annual Report, specifically on page 70 under the heading “RISK FACTORS”, incorporated by reference herein.

ITEM 5 - DIVIDENDS AND DISTRIBUTIONS

In 2015, 2016 and 2017, Cascades paid dividends on its Common Shares at the current rate of $0.04 per Common Share per quarter. Other than pursuant to the Indentures, which govern its Senior Notes, and the Credit Facilities, there are no material contractual restrictions on Cascades’ ability to declare and pay dividends on its Common Shares.

The dividend amount is reviewed annually by the Board of Directors and is determined taking into account Cascades’ financial situation, its results from operations, its capital requirements and any other factor deemed pertinent by the Board of Directors.

ITEM 6 - CAPITAL STRUCTURE

6.1 General description of capital structure

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

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The holders of common shares are entitled to the right to vote on the basis of one vote per share at any meetings of shareholders and the right to receive dividends and to share in the remaining assets in the event of a liquidation of the Corporation. As at March 16, 2018, there were 95,174,139 Common Shares issued and outstanding.

The Class “A” and “B” Preferred Shares are issuable in series and rank equally within their respective classes as to dividends and capital. Registered holders of any series of Class “A” or Class “B” are entitled to receive, in each fiscal year of the Corporation or on any other basis, cumulative or non-cumulative preferred dividends payable at the time, at the rates and for such amounts and at the place or places determined by the directors with respect to each series prior to the issuance of any Class “A” or Class “B” Preferred Shares. In the event of the liquidation, winding-up or dissolution of the Corporation or any other distribution of its assets to its shareholders, the holders of Class “A” and “B” Preferred Shares are entitled to receive, out of the assets of the Corporation, the amount 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 or to vote at any meetings of shareholders. None of the Class “A” or “B” Preferred Shares of the capital stock of the Corporation are, as of the date hereof, issued and outstanding.

6.2 Ratings

Credit ratings are intended to provide investors with an independent measure of credit quality of an issuer or a security. Rating for issuers or for debt instruments are presented in ranges by each of the rating agencies. The highest qualities of securities are rated AAA in the case of Standard & Poor’s ("S&P") and Dominion Bond Rating Services (“DBRS”), or Aaa in the case of Moody’s Investors Service ("Moody’s”). The lowest quality of securities are rated D in the case of S&P and DBRS, or C in the case of Moody’s.

According to the S&P rating system (http://www.spratings.com/en_US/understanding-ratings), corporations or notes rated BB, B, CCC, CC, and C are regarded as having from low to significant speculative characteristics. A BB rating indicates the least degree of speculation and C the highest. While such corporations or notes will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. The ratings 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 DBRS rating system (http://dbrs.com/ratingPolicies/list/name/rating+scales), corporations or notes rated BB are defined to be speculative and non-investment grade, where the degree of protection afforded interest and principal is uncertain, particularly during periods of economic recession. Entities in the BB range typically have limited access to capital markets and additional liquidity support. In many cases, deficiencies in critical mass, diversification, and competitive strength are additional negative considerations. The absence of either a high or low designation indicates the rating is in the middle of the category.

According to the Moody’s rating system (https://www.moodys.com/Pages/amr002002.aspx), corporations or notes, which are rated Ba, are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Moody’s applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates a ranking in the lower end of that generic rating 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:  Securities Industry and Financial Markets Association and “Dominion Bond Rating Services”

Cascades is rated by S&P, Moody’s and DBRS. The Corporation’s rating by these three agencies are listed below:

Rating agency	Cascades Rating	Qualitative	Most recent update
S&P	BB-	Stable outlook	June 2016
Moody’s	Ba2	Stable outlook	May 2015
DBRS	BB	Stable outlook	January 2015

It is to be noted that the credit ratings given by the rating agencies are not recommendations to purchase, hold or sell Cascades' notes or securities as such, given these ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn by a rating agency in the future if in its judgment circumstances so warrant. The Corporation is not responsible for credit ratings given by the rating agencies.

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ITEM 7 - MARKET FOR SECURITIES

7.1 Trading Price and Volume

Cascades’ Common Shares are traded on the Toronto Stock Exchange and alternative trading systems under the ticker symbol “CAS”. The following table sets forth the market price range, in Canadian dollars, and trading volumes of the Corporation’s Common Shares on the Toronto Stock Exchange for each month of the most recently completed financial year:

Toronto Stock Exchange - Market price range - Year 2017

Month	High		Low		Closing Market Price		Trading Volume
January		12.95		11.44		11.85		2,493,997
February		14.39		11.78		13.25		4,323,610
March		13.89		12.50		13.54		4,101,512
April		16.45		13.43		16.44		8,023,280
May		16.50		16.94		16.41		7,521,602
June		17.73		16.10		17.69		7,820,738
July		18.20		15.27		15.37		3,811,631
August		15.65		13.76		14.60		4,480,699
September		16.71		13.79		14.96		5,009,450
October		16.41		14.71		15.54		2,499,719
November		15.93		12.20		12.84		5,204,537
December		14.88		12.55		13.62		5,252,733

In 2016, in the normal course of business, the Corporation renewed its redemption program. Purchases began on March 17, 2016 and continued until March 16, 2017. The notice enabled Cascades to acquire up to 1,907,173 Common Shares, representing approximately 2% of the issued and outstanding Common Shares as of March 4, 2016. As of March 16, 2017, the Corporation had redeemed 902,738 Common Shares at an average weighted cost of $8.65.

In 2017, in the normal course of business, the Corporation renewed its redemption program. The period for purchasing began on March 17, 2017 and continued until March 16, 2018. The notice enabled Cascades to acquire up to 946,066 Common Shares, representing approximately 1% of the issued and outstanding Common Shares as of March 4, 2017. As of March 16, 2018, the Corporation had redeemed 178,380 Common Shares at an average weighted cost of $14.30.

On March 15, 2018, Cascades announced that the Toronto Stock Exchange had accepted its notice of intention to begin a normal course issuer bid in respect of its Common Shares. Purchases pursuant to the normal course issuer bid commenced on March 19, 2018 and will cease on March 18, 2019. The Common Shares purchased shall be cancelled. The notice will enable Cascades to acquire up to 951,641 Common Shares, which represents approximately 1% of the 95,164,119 issued and outstanding Common Shares as at March 9, 2018.

ITEM 8 - DIRECTORS AND OFFICERS

The Directors of the Corporation are elected annually to hold office until the next annual general meeting or until a successor is elected or appointed.

8.1 Name, Occupation and Security Holding

The following table sets out the name, age and place of residence of each director, its principal occupation, the year in which he or she first became a director of the Corporation, the number of common shares of the Corporation beneficially owned directly or indirectly by him or her, their independence status, the number of deferred share units he or she holds, if the Director sits on boards of directors and committees of other public companies, membership on the committees of the Board of Directors of the Corporation. Also disclosed in their respective biographies is their value of at-risk holdings as at December 31, 2017 and the percentage of votes voted in favour of their election at last year's meeting.

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Annual Information Form                  

	Principal occupation :	Executive Chair of the Board
	Committee(s) :	N.A.
	2017 Annual Meeting Votes in favour (%) : 95.69
Alain Lemaire Age 70 Kingsey Falls (Québec) Canada Non-Independent Director since 1967	One of the founders of Cascades, Mr. Lemaire is Executive Chair of the Board of the Corporation. He held the position of President and Chief Executive Officer from 2004 to May 2013. He was Executive Vice-President of the Corporation from 1992 to 2004 and was President and Chief Executive Officer of Norampac Inc., from 1998 to 2004. A former student of the Institut des pâtes et papiers de Trois-Rivières (Québec), he holds an Honorary Doctorate in Business Administration from the University of Sherbrooke (Québec). He received an Honorary Doctorate in Civil Law from Bishop's University in Lennoxville (Québec) in 2013, and Doctorat Honoris Causa d'Université from Université Laval (Québec) in 2017. Mr. Lemaire is an Officer of the Order of Canada and was named a Chevalier de l'Ordre national du Québec in 2015.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES (2)		DSUs (4)		SHARES (2)		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	4,983,532		—		4,979,516		—		4,016		67,875,705

	Principal occupation :	President, Louis Garneau Sports Inc.
	Committee(s) :	Health and Safety, Environment and Sustainable Development (Member)
	2017 Annual Meeting Votes in favour (%) : 95.89
Louis Garneau Age 59 St-Augustin-de-Desmaures (Québec) Canada Independent (1) Director since 1996	Mr. Garneau is President of Louis Garneau Sports Inc., a manufacturer and distributor of sports clothing and accessories throughout the world. He is a member of the Health and Safety, Environment and Sustainable Development Committee. A former international cycle racer, Mr. Garneau participated in the 1984 Olympic Games in Los Angeles. He is a Chevalier de l’Ordre national du Québec and an Officer of the Order of Canada. In June 2007, he was awarded an Honorary Doctorate from the Faculty of Administration of the University of Ottawa. In 2008, he received the “Gloire de l’Escolle” medal as a former graduate having honored Université Laval due to the extent of his professional activities and his contribution to society. In November 2014, he was awarded the Medal of Honour of the Assemblée nationale du Québec. This medal is awarded to public figures who are deserving of recognition by the Members of the Assembly. He was one of the personalities named Grand Québécois 2017 by the Chambre de commerce et d'industrie de Québec.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	5,018		54,723		5,018		51,518		3,205		813,672

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Annual Information Form                  

	Principal occupation :	Director of companies
	Committee(s) :	Health and Safety, Environment and Sustainable Development (Chair) Corporate Governance and Nominating (Member)
	2017 Annual Meeting Votes in favour (%) : 87.46
Sylvie Lemaire Age 55 Otterburn Park (Québec) Canada Non-Independent Director since 1999	Ms. Lemaire is a director of companies. She has held production, research and development and general management positions. She was co-owner of Dismed Inc., a distributor of medical products and Fempro Inc., a manufacturer of absorbent products, where she held the position of President until 2007. She is Chair of the Health and Safety, Environment and Sustainable Development Committee and a member of the Corporate Governance and Nominating Committee. Since June of 2014, Ms. Lemaire is a certified Director of Companies having successfully completed the governance program offered by the Collège des administrateurs de sociétés of Université Laval (Québec). Ms. Lemaire sits on the Boards of Groupe Marcelle Inc., involved in the manufacture of cosmetic products, and Harnois Groupe Pétrolier, wholesaler of petroleum products and propane gas. She holds the degree of Bachelor in Industrial Engineering from Polytechnique Montréal.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES (3)		DSUs (4)		SHARES (3)		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	175,287		51,759		175,287		48,588		3,171		3,092,367

	Principal occupation :	Partner, McCarthy Tétrault
	Committee(s) :	Human Resources (Chair) Corporate Governance and Nominating (Member)
	2017 Annual Meeting Votes in favour (%) : 94.05
David McAusland Age 64 Baie d'Urfé (Québec) Canada Independent (1) Director since 2003	Mr. McAusland is a partner in the law firm of McCarthy Tétrault. From 1999 to February 2008, he held among others, the position of Executive Vice-President, Corporate Development and Chief Legal Officer of Alcan Inc., a large multinational industrial company. He is Chair of the Human Resources Committee and member of the Corporate Governance and Nominating Committee. Mr. McAusland sits on the Boards of Directors of Cogeco Inc., and Cogeco Communication Inc., two companies involved in the communications sector where he is a member of the Corporate Governance Committee and Chair of the Human Resources Committee of both these issuers. He is the Chairman of the Board of Directors of ATS Automation Tooling Systems Inc., a leader in automation manufacturing solutions, and sits on the Board of the Montreal General Hospital Foundation, a non-profit organization.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	4,000		68,372		4,000		62,438		5,934		985,707

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Annual Information Form                  

	Principal occupation :	Director of companies
	Committee(s) :	Audit and Finance (Chair) Corporate Governance and Nominating (Member) Lead Director
	2017 Annual Meeting Votes in favour (%) : 97.01
Georges Kobrynsky Age 71 Outremont (Québec) Canada Independent (1) Director since 2010	Mr. Kobrynsky is a director of companies. He is Lead Director of the Board of Directors, Chair of the Audit and Finance Committee and member of the Corporate Governance and Nominating Committee. He held the position of Senior Vice-President, Investments, Forest Products of the Société générale de financement du Québec from 2005 to 2010. Mr. Kobrynsky has held, for more than 30 years, various senior positions at Domtar Inc., including Senior Vice-President, Pulp and Paper Sales, Marketing and Customer Relations Group from 2001 to 2005 and Senior Vice-President, Communication Papers Division from 1995 to 2001. He sat on the Board of Directors of Norampac Inc., from 1998 to 2006. He holds a Master of Business Administration from McGill University (Québec), a Bachelor’s degree in Forest Engineering from Université Laval (Québec) and a Bachelor of Arts from the Université de Montréal (Québec). He is a member of the Board of Directors of Supremex Inc., a Canadian manufacturer of stock and custom envelopes, and is Chair of the Pension Investment Committee and a member of the Audit and Human Resources Committees.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	—		31,948		—		26,933		5,015		435,132

	Principal occupation :	Director of companies
	Committee(s) :	Human Resources (Member) Health and Safety, Environment and Sustainable Development (Member)
	2017 Annual Meeting Votes in favour (%) : 99.23
Élise Pelletier Age 57 Chambly (Québec) Canada Independent (1) Director since 2011	Retired since 2003, Ms. Pelletier accumulated over 20 years of experience within the Corporation, having held the position of Vice-President, Human Resources of the Corporation during the period between 1995 and 1998, and thereafter, the position of Vice-President with Norampac Inc., from 1998 to 2003. She has extensive knowledge of the pulp and paper sector and was a member of the Board of Directors of the Corporation from 1993 to 2001. She is a member of the Human Resources Committee and of the Environment, Health and Safety and Sustainable Development Committee.  She holds a Certificate in governance of companies from the Collège des administrateurs de sociétés, Université Laval (Québec). She holds the degree of Bachelor in Industrial Relations from the Université de Montréal (Québec).

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	1,500		19,832		1,500		17,032		2,800		290,542

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Annual Information Form                  

	Principal occupation :	President and Chief Executive Officer, The Montreal Port Authority
	Committee(s) :	Audit and Finance (Member) Human Resources (Member)
	2017 Annual Meeting Votes in favour (%) : 98.55
Sylvie Vachon Age 58 Longueuil (Québec) Canada Independent (1) Director since 2013	Ms. Vachon is President and Chief Executive Officer of The Montreal Port Authority (MPA), an autonomous federal agency since 2009. From 1997 to 2009, she was Vice-President, Administration and Human Resources for the federal agency. She is a member of the Audit and Finance Committee and of the Human Resources Committee of the Corporation. Ms. Vachon is a member of the Board of Directors of Hardware Richelieu Ltd and a member of their Human Resources and Corporate Governance committee. She is also Chair of the Board of Directors of Cargo Montreal, the logistic and transportation metropolitan cluster. She is a member of the Board of Directors of the Association of Canadian Port Authorities and a governor member of the Conseil patronal de l’environnement du Québec whose mission is to mobilize Québec companies in order to promote their commitment towards environmental protection and the implementation of sustainable development. Ms. Vachon is also a member of the Board of Directors of SODES whose mission is to protect and promote the economic interests of the St. Lawrence maritime community from a sustainable development perspective. She also sits on the board of Green Marine, a voluntary environmental certification program for the North American marine industry.  She also presides the Board of Directors of the Cercle des présidents (Québec). In 2014, she received the St. Lawrence Award, which is awarded to individuals whose actions have been noteworthy in the marine industry. In 2016, she was awarded the Medal of Honour of the National Assembly of Québec and became a member of the Conseil consultatif sur l’économie et l’innovation of the Québec Government. She holds the degree of Bachelor in Administration, majoring in Human Resources Management from the University of Sherbrooke (Québec).

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	2,000		15,012		—		11,222		5,790		231,703

	Principal occupation :	Business advisor and consultant, Corporate Director
	Committee(s) :	Audit and Finance (Member) Corporate Governance and Nominating (Chair)
	2017 Annual Meeting Votes in favour (%) : 96.88
Laurence Sellyn Age 68 Pointe-Claire (Québec) Canada Independent (1) Director since 2013	Mr. Sellyn retired at the end of 2015 from a career in leadership roles in the management of public companies. He is now active as an advisor and consultant to entrepreneurial CEOs. Mr. Sellyn was Executive Vice-President, Chief Financial and Administrative Officer of Gildan Activewear Inc. between April 1999 and August 2015. From 1992 to 1999, he held the position of Chief Financial Officer and Senior Vice-President of Finance and Corporate Development of Wajax Inc. Mr. Sellyn held successive positions of increasing responsibility at Domtar Inc., including acting as Corporate Controller from 1987 to 1991. Mr. Sellyn is Chair of the Corporate Governance and Nominating Committee, and a member of the Audit and Finance Committee of the Corporation. He is a U.K. Chartered Accountant. He holds a Masters degree in Modern Languages and Literature from Oxford University. Mr. Sellyn is also involved in fundraising for charitable and community activities.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	25,000		27,900		25,000		22,436		5,464		720,498

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Annual Information Form                  

	Principal occupation :	President and Chief Executive Officer
	Committee(s) :	N.A.
	2017 Annual Meeting Votes in favour (%) : 96.87
Mario Plourde Age 56 Kingsey Falls (Québec) Canada Non-Independent Director since 2014	Mr. Plourde is President and Chief Executive Officer of the Corporation since May 2013. He has been in the employ of the Corporation since 1985 and has held several senior management positions such as Vice-President and Chief Operating Officer of Cascades' Specialty Products Group. He was named President of this Group in 2000. In 2011, he was appointed Chief Operating Officer of the Corporation. He joined the Board of Directors of Cascades on November 6, 2014. Mr. Plourde sits on the Board of Directors of Transcontinental Inc., where he is Chair of the Governance Committee and also sits on the Board of Directors of the Fondation Centre de Cancérologie Charles-Bruneau. Actively involved in social and community affairs, he was awarded in 2012, the Prix bâtisseur - Tour CIBC Charles Bruneau, (a foundation for pediatric cancer research). Mr. Plourde holds a Bachelor's degree in Business Administration, majoring in Finance from the Université du Québec in Montréal.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	134,070		—		126,179		—		7,891		1,826,033

	Principal occupation :	Consultant, Wynnchurch Capital (Canada) Ltd
	Committee(s) :	Audit and Finance (Member) Human Resources (Member)
	2017 Annual Meeting Votes in favour (%) : 98.48
Michelle Cormier, CPA,CA Age 61 Montréal (Québec) Canada Independent (1) Director since 2016	A senior-level executive with experience in financial management, strategic consulting as well as corporate financing, turnaround and governance, Michelle Cormier has in-depth knowledge of financial and public markets in Canada and the United States. She is a member of the Audit and Finance committee and a member of the Human Resources committee of the Corporation. Ms. Cormier has been acting as a consultant for Wynnchurch Capital (Canada) Ltd since 2014. She spent 13 years in senior management positions at TNG Capital Inc., and was CFO at a major North American forest products company. She also worked at Alcan Aluminium Limited and Ernst & Young. Ms. Cormier is a Certified Director of companies and sits on the Board of Directors of Dorel Industries Inc., Uni-Select Inc. and Champion Iron Ore Ltd.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	7,000		7,342		—		2,117		12,225		195,338

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	Principal occupation :	President and Chief Executive Officer, Sanimax Inc. (Canada)
	Committee(s) :	Audit and Finance (Member) Health and Safety, Environment and Sustainable Development (Member)
	2017 Annual Meeting Votes in favour (%) : 99.35
Martin Couture Age 49 Montréal (Québec) Canada Independent (1) Director since 2016	Recipient of a Bachelor's degree in Economics from St. Lawrence University (Canton, New York), Martin Couture is CEO of Sanimax Inc., where he has worked since 1990. He is a member of the Audit and Finance Committee and of the Health and Safety, Environment and Sustainable Development Committee of the Corporation. Combining strong leadership skills with extensive operational experience, Mr. Couture was named one of Canada's "Top 40 under 40," a Caldwell Partners award, in 2007. He received the Ernst & Young Entrepreneur of the Year award in 2008. He is an active member of the National Renderers Association, the professional association of the rendering industry in North America, and has also been deeply involved with the Young Presidents' Organization since 2003.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES (6)		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	12,100		10,885		1,600		3,527		17,858		313,056

	Principal occupation :	President and Chief Executive Officer, Boralex Inc.
	Committee(s) :	N/A
	2017 Annual Meeting Votes in favour (%) : 96.86
Patrick Lemaire Age 54 Kingsey Falls (Québec) Canada Non-Independent Director since 2016	Patrick Lemaire has served as President and CEO of Boralex Inc. since September 2006. Over the last decade, he has profoundly transformed the company and helped position it as a renewable energy leader in Canada and France. In 1988, after obtaining his degree in Mechanical Engineering from Université Laval (Québec), he began his career at Cascades. He successively held the positions of project manager, maintenance manager and plant manager in France and the United States. His managerial skills and leadership were then put to use as General Manager of five plants and as Vice-President and Chief Operating Officer in the containerboard packaging sector. In 2016, he received the Prix d'excellence from the Cercle des Dirigeants d’Entreprises Franco-Québécois. In 2017, he was a finalist at the Quebec EY Entrepreneur of the year Awards, and ranked as the 58th most influential individual in the wind industry by the British magazine A Word about Wind.

INFORMATION ON EQUITY HOLDINGS
DECEMBER 31, 2017				DECEMBER 31, 2016				TOTAL NET CHANGE		TOTAL VALUE AT RISK
SHARES		DSUs (4)		SHARES		DSUs		(#)		AS OF DECEMBER 31, 2017 ($) (5)
	13,628		4,082		6,628		1,465		9,617		241,210

(1) "Independent" refers to the standards of independence established under Section 1.2 of the Canadian Securities Administrators’ National Instrument 58-101 (Disclosure of Corporate Governance Practices).

(2) Held directly or indirectly by Gestion Alain Lemaire Inc., of which Alain Lemaire is the sole voting shareholder.

(3) 86,277 shares are held directly or indirectly by Tremer II Inc., a company in which Ms. Lemaire holds a 50% shareholding.

(4) DSUs are paid annually, as described in section 3.8.3 Deferred Share Unit Plan on page 27 of the Circular. DSUs for 2017 were attributed on January 15, 2018.

(5) The total value at risk is based on the closing share price of the Common Shares of the Corporation on the Toronto Stock Exchange (TSX) on December 31, 2017 ($13.62).

(6) Held directly by Placements Martin Couture Inc., of which Martin Couture is the sole voting shareholder.

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8.2 Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the Corporation’s knowledge, no director or executive officer of the Corporation and no shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation:

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

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

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

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

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

c) was subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision, save for,

i) Mr. Sellyn joined the Board of Beyond the Rack Enterprises Inc. on February 26, 2014 as an independent Director to complement the company’s venture capital and management shareholders. After exploring numerous options to finance the company’s operations and strategic plan, the company filed for creditor protection and obtained a stay of proceedings on March 24, 2016 pursuant to the Companies’ Creditors Arrangement Act (Canada), as the implementation of a plan to rationalize and restructure its business was determined to be the only way for the company to continue its operations. In the context of these proceedings, the company filed a plan of compromise, which was approved by a majority of creditors and sanctioned by the Court on September 15, 2016.

ii) In January 2017, Ms. Michelle Cormier was asked by the remaining senior secured creditor and by the sole shareholder of Calyx Transportation Inc. (“Calyx”) to become the sole Director and Officer of Calyx.  In this capacity, her mandate was to wind down Calyx in the most efficient manner, following the sale, in December 2016, by Calyx of all assets and businesses in which it operated. The large majority of net proceeds from such sales were used to repay bank indebtedness, employee severances and suppliers. Following all such payments, the cash on hand was insufficient to repay the remaining secured creditor. Given the insolvency of Calyx, Michelle Cormier in her capacity of Director of Calyx approved a voluntary assignment in bankruptcy pursuant to the Bankruptcy and Insolvency Act in order to complete the wind down of Calyx’s affairs and discharge her mandate.

8.3 Information concerning Executive Officers

Executive Officers	Occupation in the Corporation
Alain Lemaire	Executive Chair of the Board of Directors
Kingsey Falls, Québec
Mario Plourde	President and Chief Executive Officer
Kingsey Falls, Québec
Allan Hogg	Vice-President and Chief Financial Officer
Kingsey Falls, Québec
Maryse Fernet	Chief Human Resources Officer
Kingsey Falls, Québec
Dominic Doré	Chief Information Officer
Mont-Saint-Hilaire, Québec
Hugo D'Amours	Vice-President, Communications and Public Affairs
Saint-Bruno de Montarville, Québec
Léon Marineau	Vice-President, Environment
Kingsey Falls, Québec
Robert F. Hall	Chief Legal Officer and Corporate Secretary
Canton de Hatley, Québec
Thierry Trudel	Vice-President, Innovation and Marketing
Montréal, Québec
Pascal Aguettaz	Vice-President, Corporate Services
Kingsey Falls, Québec
Jean Jobin	President and Chief Operating Officer, Tissue Group
Carignan, Québec
Charles Malo	President and Chief Operating Officer, Containerboard Packaging Group
Boucherville, Québec
Luc Langevin	President and Chief Operating Officer, Specialty Products Group
Notre-Dame-des-Prairies, Québec

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During the past five years, each of the Executive Officers of the Corporation have been engaged in their present principal occupations or in other executive capacities for the Corporation or with associates or joint ventures indicated opposite their name, except for Mr. Hugo D'Amours, who was appointed Vice-President, Communications and Public Affairs, on January 21, 2013. Prior thereto, Mr. D'Amours was Press Secretary and Director of Media Relations for the Premier of Québec. On August 12, 2014, the Corporation announced the appointment of Mr. Jean Jobin as President and Chief Operating Officer of Cascades Tissue Group. On January 13, 2016, the Corporation announced that Mr. Marc-André Dépin had stepped down as President and Chief Executive Officer of the Containerboard Packaging Group. Mr. Charles Malo succeeded him as President and Chief Operating Officer. On June 9, 2017, the Corporation announced the retirement of Mrs. Suzanne Blanchet, Senior Vice-President, Corporate Development. On September 20, 2017, the Corporation announced the appointment of Mr. Thierry Trudel as Vice-President, Innovation and Marketing.

As at December 31, 2017, the Directors and Executive Officers of the Corporation listed herein beneficially owned as a group, or exercised control or direction over, directly or indirectly, 5,719,659 Common Shares representing 6.02% of the Common Shares issued and outstanding.

ITEM 9 - LEGAL PROCEEDINGS

In the normal course of operations, the Corporation is party to various legal actions and contingencies, mostly related to contract disputes, environmental, product claims, and labour issues. While the final outcome with respect to legal actions outstanding or pending as at December 31, 2017 cannot be predicted with certainty, it is management’s opinion that the outcome will not have a material adverse effect on the Corporation’s consolidated financial position, results of its operations or its cash flows.

ITEM 10 - TRANSFER AGENTS AND REGISTRARS

Cascades’ transfer agent and registrar is Computershare Investor Services Inc. (“Computershare”), having its place of business in Montréal, Québec, Canada at 1500 Robert-Bourassa Blvd., 7^th Floor, H3A 3S8. The register of transfers of the Common Shares of the Corporation is located in the same office in Montreal.

ITEM 11 - MATERIAL CONTRACTS

The only material contracts entered into during the year ended December 31, 2017 or in prior years that are still in effect and filed on SEDAR and EDGAR, as required by applicable legislations, are:

Third Amended and Restated Credit Agreement dated June 1, 2017 (the "Third Amended and Restated Credit Agreement"), amongst Cascades Inc., Cascades USA Inc., National Bank of Canada, as administrative agent, The Bank of Nova Scotia, as collateral agent, and a syndicate of lenders named therein, as lenders. Upon the terms of the Third Amended and Restated Credit Agreement, among other amendments, the Facility Maturity Date has been extended until July 7, 2021.

Indenture dated May 19, 2015, amongst Cascades, the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, pursuant to which Cascades issued 5.75% Senior Notes due 2023, as amended by Supplemental Indentures dated September 23, 2015, December 9, 2015, September 30, 2016, March 29, 2017 and December 14, 2017.

Indenture dated June 19, 2014, amongst Cascades, the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, pursuant to which Cascades issued 5.50% senior notes due in 2022, as amended by Supplemental Indentures dated March 16, 2015, September 23, 2015, December 9, 2015, September 30, 2016, March 29, 2017 and December 14, 2017.

Indenture dated June 19, 2014, amongst Cascades, the Subsidiary Guarantors party thereto Computershare Trust Company of Canada, as Trustee, pursuant to which Cascades issued 5.50% Senior Notes due 2021, as amended by Supplemental Indentures dated March 16, 2015, September 23, 2015, December 9, 2015, September 30, 2016, March 29, 2017 and December 14, 2017.

Joint Venture Formation Agreement between Maritime Paper Products Limited (MPPL) and Cascades Canada ULC in respect of Maritime Paper Products Limited Partnership relating to the integration of the Containerboard Group's Newfoundland and Moncton (New Brunswick) plants dated as of November 27, 2013. Filed on SEDAR only.

ITEM 12 - INTERESTS OF EXPERTS

PricewaterhouseCoopers LLP, Partnership of Chartered Professional Accountants (“PwC”), is the Independent Auditor of the Corporation who have prepared the Independent Auditor’s report dated February 28, 2018, in respect of the Corporation’s consolidated financial statements with accompanying notes as at and for the years ended December 31, 2017 and 2016. PwC has advised that they are independent with respect to the Corporation within the meaning of the Code of Ethics of the Ordre des comptables professionnels agréés du Québec and Rule 3520 Auditor Independence of the Public Company Accounting Oversight Board.

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ITEM 13 - AUDIT AND FINANCE COMMITTEE

13.1 Composition and mandate

The Audit and Finance Committee (the “Committee”) is composed of five independent directors, namely Messrs.Georges Kobrynsky (Chair), Laurence Sellyn, Martin Couture, Ms. Sylvie Vachon and Ms. Michelle Cormier. The Charter of the Audit and Finance Committee is set out in Schedule C to this Circular. All the members of the Committee are independent as defined in section 1.4 of the Canadian Securities Administrators National Instrument 52-110 and are financially literate.

13.2 Relevant Education and Experience of the Members

The following describes the relevant education and experience of each member of the Committee that provides him or her with (a) an understanding of the accounting principles used by the Corporation to prepare its financial statements, (b) the ability to assess the general application of such accounting principles, (c) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to those that can reasonably be expected to be raised by the Corporation’s financial statements or experience actively supervising one or more persons engaged in such activities and (d) an understanding of internal controls and procedures for financial reporting.

Name of Committee Member	Relevant Education and Experience
Georges Kobrynsky	Mr. Kobrynsky is a Director of companies and held the position of Senior Vice-President, Investments, Forest Products of the Société générale de financement du Québec from 2005 to 2010. He also held for more than 30 years, various senior positions at Domtar Inc. Mr. Kobrynsky 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 Corporation’s financial statements. Mr. Kobrynsky is a member of the Board of Directors of Supremex Inc.
Laurence Sellyn	Mr. Sellyn is the former Chief Financial and Administrative Officer and Executive Vice-President of Gildan Activewear Inc. He served as Chief Financial Officer and other senior level corporate officer positions with long established Canadian public companies in a variety of industries. Mr. Sellyn is a U.K. chartered accountant and 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 Corporation’s financial statements.
Sylvie Vachon	As President and Chief Executive Officer of the Montreal Port Authority, Ms. Vachon 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 Corporation’s financial statements. From 1997 to 2009, she was Vice-President, Administration and Human Resources for the federal agency, where she was responsible for financial services, immovables, procurement, information technology, continuous improvement and human resources. She is a member of the Board of Directors of Hardware Richelieu Ltd.
Michelle Cormier	Since 2014, Ms. Cormier, CPA, CA, has been acting as a consultant for Wynnchurch Capital (Canada) Inc. A senior-level executive with experience in financial management, strategic consulting and corporate financing, she has in-depth knowledge of financial and public markets in Canada and the United States. Ms. Cormier sits on the Board of Directors of Dorel Industries Inc., Uni-Select Inc., and Champion Iron Ore Ltd.
Martin Couture	Mr. Couture is Chief Executive Officer of Sanimax Inc. Combining strong leadership skills with extensive operational experience he understands the breadth and complexity of accounting issues that can reasonably be expected to be raised in the course of reviewing the Corporation’s financial statements.

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13.3 Independent Auditor Services Fees

The following table presents, by category, the fees incurred by the Corporation and paid to PricewaterhouseCoopers LLP, Partnership of Chartered Professional Accountants, in Canadian dollars in the past two fiscal years for various services provided to the Corporation and its subsidiaries:

SERVICES	FEES DECEMBER 31, 2016		FEES DECEMBER 31, 2017
Audit Fees (1)	$	1,607,759	$	1,715,891
Audit-Related Fees (2)	$	445,473	$	672,135
Tax Fees (3)	$	210,741	$	117,149
Other fees (4)		N/A	$	619,668
Total	$	2,263,973	$	3,124,843

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

(2) Professional services provided in connection with auditing as well as consultations on accounting and regulatory matters.

(3) Professional services mainly for compliance to Income Tax laws.

(4) Professional services consisting primarily of transaction support services.

13.4 Policies and Procedures for the Engagement of Audit and Non-Audit Services

The Corporation’s Audit and Finance Committee (the “Committee”) has adopted a Pre-approval Policy and Procedures for services provided by the Independent Auditor (the “Policy”) that sets forth the procedures and the conditions pursuant to which permissible services proposed to be performed by the Independent Auditor are pre-approved. Under the terms of the Policy, services that involve fees of less than $25,000 up to an annual limit of $50,000 are pre-approved. The Committee has delegated to the Chairman of the Committee pre-approval authority for any services not previously approved by the Committee that involve the payment of unbudgeted fees up to a maximum of $100,000 per mandate. Services that involve fees of more than $100,000 require pre-approval of all members of the Committee.

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ITEM 14 - ADDITIONAL INFORMATION

Additional information, including Directors' and Senior Officers' remuneration and indebtedness, principal holders of the securities of Cascades and options to purchase securities, and interests of insiders in material transactions, if any, is contained in the Management Proxy Circular dated March 16, 2018, for the Annual General Meeting of Shareholders.

Also, additional financial information pertaining to the fiscal year ended December 31, 2017, including Management’s Discussion and Analysis is presented in the Corporation’s 2017 Annual Report.

In addition, the following documents may be obtained, upon written request, from the Corporation’s Corporate Secretary:

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

(i) one copy of the latest Annual Information Form of the Corporation, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the Annual Information Form;

(ii) one copy of the latest Annual Report of the Corporation, a copy of the comparative financial statements of the Corporation for its most recently completed financial year for which financial statements have been filed together with the accompanying Independent Auditor’s report, and the Management's Discussion and Analysis and one copy of any interim financial statements of the Corporation that have been filed, if any, for any period after the end of its most recently completed financial year;

(iii) one copy of the Corporation’s Management Proxy Circular in respect of its most recent Annual General Meeting of Shareholders that involved the election of Directors; and

(iv) one copy of any other documents which are incorporated by reference into the preliminary short form prospectus or the short form prospectus; or

(b) at any other time, a copy of the documents referred to in a) i) to iii) above, may be obtained from the Corporate Secretary of the Corporation, at the address indicated below, provided that the Corporation may require the payment of a reasonable fee if the request is made by a person or company who is not a security holder of Cascades.

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

Cascades Inc.

Corporate Secretariat

404 Marie-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

CHARTER OF THE AUDIT AND FINANCE COMMITTEE

1. PURPOSE

The purpose of this charter is to describe the role of the Audit and Finance Committee (the « Committee ») as well as its duties and responsibilities delegated by the Board of Directors (« the Board »). The main duty of the Committee is to assist the Board in fulfilling its oversight responsibilities with respect to the following issues:

• the quality and integrity of the Corporation’s financial statements;

• the enterprise risk management process;

• accounting and financial reporting process;

• systems of internal accounting and financial controls;

• independent auditor’s qualifications, independence and performance;

• internal audit function and process;

• the Corporation’s compliance with legal and regulatory requirements relating to the Corporation’s financial statements;

• fulfill any other responsibilities assigned to it from time to time by the Board.

2. DIVISION OF RESPONSABILITIES

In carrying out the duties of the Committee described in this charter, the members of the Committee recognize that its function is to oversee the Corporation’s financial reporting process on behalf of the Board as well as to report its activities regularly to the Board. Management of the Corporation is responsible for the preparation, the presentation and the integrity of the Corporation’s financial statements and for the effectiveness of internal control over financial reporting.

Management is responsible for maintaining appropriate accounting and financial reporting principles and policies as well as internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The independent auditor is responsible for planning and carrying out audits of the Corporation’s annual financial statements and annually auditing management’s assessment of the effectiveness of internal control over financial reporting and other auditing procedures.

In performing their duties, the members of the Committee must have open and free discussions with the Board, the independent auditor, the internal auditor and management of the Corporation.

3. COMPOSITION AND ORGANIZATION

The Committee shall be composed of a minimum of three independent Directors, as appointed by the Board at its first meeting following the annual shareholders meeting. Each member of the Committee shall satisfy the applicable independence and experience requirements of the laws governing the Corporation, the applicable stock exchanges on which the Corporation’s securities are listed and applicable securities regulatory authorities.

Each Committee member must be financially literate in accordance with applicable laws and at least one member must have accounting or related financial management expertise, as determined by the Board.

The Committee will appoint one of its members as Chairman and the Secretary or Assistant Secretary of the Corporation or the person designated as Secretary will be secretary for all meetings of the Committee and will keep minutes of the Committee’s deliberations.

4. MEETINGS AND RESOURCES

The Committee shall meet at least four times a year, or more frequently if circumstances so dictate. By virtue of its mandate to foster open relations, the Committee shall also meet separately and in camera for discussions with the internal auditor, management and with the independent auditor, as required.

The Committee shall establish its own rules and procedures (subject to any specific guidelines from the Board) and shall meet at the place and in accordance with the terms prescribed by its rules. A quorum shall not be less than a majority of the members of the Committee.

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The Chairman of the Committee determines the agenda for each meeting in consultation with the Vice-President and Chief Financial Officer, the Secretary and the internal auditor. The agenda and supporting documentation are distributed to the members of the Committee within a reasonable timeframe prior to the meetings.

The Chairman of the Committee shall report quarterly and when required to the Board on the Committee’s activities and shall make recommendations concerning all matters deemed necessary or appropriate.

The Committee shall at all times have free and open access to management, to the internal auditor and to the independent auditor in order to seek explanations or information on specific questions.

The Committee shall have the resources and the authority appropriate to carry out its duties, including the authority to retain, as it deems necessary, counsel and other external consultants and to set and pay their remuneration, without further Board approval.

In carrying out its duties and to meet its responsibilities, the Committee shall examine the books and relevant accounts of the Corporation, its divisions and its subsidiaries.

5. DUTIES AND RESPONSIBILITIES

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

5.1 FINANCIAL REPORTING

• reviews the quality and integrity of the Corporation’s accounting and financial reporting system through discussions with management, the independent auditor and the internal auditor;

• reviews with management and the independent auditor the annual audited financial statements of the Corporation, including the information contained in management’s discussion and analysis, related press releases and the independent auditor’s report on the annual audited financial statements prior to public disclosure and filing with the Securities Regulatory Authorities;

• reviews the unaudited interim financial statements, including management’s discussion and analysis for each interim period of the fiscal year and related press releases prior to public disclosure and filing with the Securities Regulatory Authorities;

• reviews the financial information contained in prospectuses, offering memoranda, the annual information form and other reports that include audited or unaudited financial information submitted for approval by the Board;

• reviews with the independent auditor and management the quality, appropriateness and disclosure of the Corporation’s accounting principles and policies, the underlying assumptions and reporting practices, and any proposed changes thereto;

• reviews financial analysis and other written communications prepared by management, the internal auditor or the independent auditor, setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analysis of the effects of alternative methods in conformity with International Financial Reporting Standards («IFRS») on the financial statements;

• verifies the compliance of management certification of financial reports with applicable legislation;

• reviews important litigation and any regulatory or accounting initiatives that could have a material effect on the Corporation's financial situation or operating results and the appropriateness of the disclosure thereof in the documents reviewed by the Committee;

• reviews the results of the external audit, and any significant problems encountered in the performance of the audit, and management's response or action plan related to any Management Letter issued by the independent auditor.

5.2 RISK MANAGEMENT AND INTERNAL CONTROL

• periodically receives management’s report assessing the adequacy and effectiveness of the Corporation’s disclosure controls and procedures and systems of internal control;

• reviews insurance coverage for the Corporation annually and as may otherwise be appropriate;

• evaluates the effectiveness of the Corporation’s overall system of internal controls as well as the process of identifying and managing key risks;

• monitors the capital structure of the Corporation and ensures that it has the capacity and the flexibility required to implement its strategic plan to meet the demands of debt repayment;

• examines the relevance of any form of financing;

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• reviews significant capital costs and other major expenditures, related party transactions and any other transactions which could alter the Corporation’s financial or organizational structure, including off-balance sheet items;

• periodically inquires as to the funding of the retirement plans as well as the investment management, the structure and performance of the retirement plans;

• assists the Board in carrying out its responsibility for ensuring that the Corporation is compliant with applicable legal and regulatory requirements relating to the financial statements;

• while ensuring confidentiality and anonymity, establishes procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, including employee concerns regarding accounting or auditing matters;

• periodically reviews with the Board, the internal auditors and the independent auditor of the Corporation and senior management, the Corporation’s antifraud program and practices.

5.3 INTERNAL AUDIT FUNCTION

• reviews with management, the internal audit staff qualifications and experience and, if required, recommends the appointment or replacement of the internal auditor;

• regularly assesses the internal audit function’s performance, its responsibilities, its staffing, budget and the compensation of its members;

• annually reviews and approves the internal audit plan;

• undertakes private discussions with the internal auditor to establish internal audit independence, the level of co-operation received from management, the degree of interaction with the independent auditor, and any unresolved differences of opinion or disputes.

5.4 INDEPENDENT AUDITOR

• recommends to the Board, the appointment of the independent auditor and, if appropriate, their removal (in both cases, subject to shareholder approval), evaluates and compensates them and assesses their qualifications, performance and independence;

• ensures that as representatives of the shareholders, the independent auditor reports to the Committee and to the Board;

• approves all audit services provided by the independent auditor and determines and approves in advance, non-audit services provided, in compliance with applicable legal and regulatory requirements;

• discusses with the independent auditor the quality and not just the acceptability of the Corporation’s accounting principles, including: i) all critical accounting policies and practices used ; ii) any alternative treatments of financial information that have been discussed with management, the ramification of their use as well as iii) any other material written communications between the Corporation and the independent auditor, including any disagreement or unresolved differences of opinion between management and the independent auditor that could have an impact on the financial statements;

• reviews at least once a year the independent auditor’s report stating all relationships the independent auditor has with the Corporation and confirming their independence, and holding discussions with the independent auditor as to any relationship or services that may impact the quality of the audit services, or their objectivity and independence;

• reviews and approves policies for the Corporation’s hiring of partners and employees or former partners and employees of the independent auditor;

5.5 PERFORMANCE EVALUATION OF THE COMMITTEE

• prepares and reviews with the Board, an annual performance evaluation of the Committee and its members and assesses once a year, the adequacy of its mandate and, if required, makes recommendations to the Board.

Approved by the Board of Directors on March 12, 2014.

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EX-13.2

EXHIBIT 13.2

MANAGEMENT’S REPORT

TO THE SHAREHOLDERS OF CASCADES INC

March 1, 2017

The accompanying consolidated financial statements are the responsibility of the management of Cascades Inc., and have been reviewed by the Audit and Finance Committee and approved by the Board of Directors.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and include certain estimates that reflect management’s best judgment.

The Management of the Corporation is also responsible for all other information included in this Annual Report and for ensuring that this information is consistent with the Corporation’s consolidated financial statements and business activities.

The Management of the Corporation is responsible for the design, establishment and maintenance of appropriate internal controls and procedures for financial reporting, to ensure that financial statements for external purposes are fairly presented in conformity with IFRS. Such internal control systems are designed to provide reasonable assurance on the reliability of the financial information and the safeguarding of assets.

External and internal auditors have free and independent access to the Audit and Finance Committee, which comprises outside independent directors. The Audit Committee, which meets regularly throughout the year with members of management and the external and internal auditors, reviews the consolidated financial statements and recommends their approval to the Board of Directors.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, whose report is provided below.

Management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the United States Securities Exchange Act of 1934. Internal control over financial reporting is a process designed by, or under the supervision of, the President and Chief Executive Officer (CEO) and the Vice - President and Chief Financial Officer (CFO) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management conducted an assessment of the effectiveness of the Corporation’s internal control over financial reporting, as at December 31, 2017 based on the framework and criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO Framework). Based on this evaluation, management has concluded that the Corporation’s internal control over financial reporting was effective as at December 31, 2017.

/s/ Mario Plourde MARIO PLOURDE	/s/ Allan Hogg ALLAN HOGG
PRESIDENT AND CHIEF EXECUTIVE OFFICER KINGSEY FALLS, CANADA	VICE-PRESIDENT AND CHIEF FINANCIAL OFFICER KINGSEY FALLS, CANADA

1 

INDEPENDENT AUDITOR'S REPORT

TO THE SHAREHOLDERS OF CASCADES INC.

February 28, 2018

We have audited the accompanying consolidated financial statements of Cascades Inc. and its subsidiaries, which comprise the consolidated balance sheets as at December 31, 2017 and 2016 and the consolidated statement of earnings, comprehensive income, equity and cash flows for the years then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Cascades Inc. and its subsidiaries as at December 31, 2017 and 2016 and their financial performance and their cash flows for the years then ended in accordance with International Financial Reporting Standards.

/s/ PricewaterhouseCoopers LLP1 Chartered Professional Accountants - Montréal, Canada

1 CPA auditor, CA, public accountancy permit No. A126402

2 

CONSOLIDATED BALANCE SHEETS

(in millions of Canadian dollars)	NOTE	December 31, 2017		December 31, 2016
Assets
Current assets
Cash and cash equivalents	25	89		62
Accounts receivable	6 and 14	563		524
Current income tax assets		18		12
Inventories	7 and 14	523		460
Current portion of financial assets	26	9		3
Assets held for sale	29	13		—
		1,215		1,061
Long-term assets
Investments in associates and joint ventures	8	78		335
Property, plant and equipment	9 and 14	2,104		1,635
Intangible assets with finite useful life	10	212		171
Financial assets	26	22		10
Other assets	11, 26 and 29	74		72
Deferred income tax assets	17	149		179
Goodwill and other intangible assets with indefinite useful life	10	528		350
		4,382		3,813
Liabilities and Equity
Current liabilities
Bank loans and advances	25	35		28
Trade and other payables	12	638		661
Current income tax liabilities		6		1
Current portion of long-term debt	14, 25 and 26	59		36
Current portion of provisions for contingencies and charges	13	7		9
Current portion of financial liabilities and other liabilities	15 and 26	101		27
		846		762
Long-term liabilities
Long-term debt	14, 25 and 26	1,517		1,530
Provisions for contingencies and charges	13	36		34
Financial liabilities	26	18		16
Other liabilities	15	178		178
Deferred income tax liabilities	17	186		219
		2,781		2,739
Equity attributable to Shareholders
Capital stock	18	492		487
Contributed surplus	19	16		16
Retained earnings		982		512
Accumulated other comprehensive loss	20	(35	)	(31	)
		1,455		984
Non-controlling interests	8	146		90
Total equity		1,601		1,074
		4,382		3,813

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors 

/s/ Alain Lemaire	/s/ Georges Kobrynsky
Alain Lemaire - DIRECTOR	Georges Kobrynsky - DIRECTOR

3 

CONSOLIDATED STATEMENTS OF EARNINGS

(in millions of Canadian dollars, except per common share amounts and number of common shares)	NOTE	2017			2016
Sales		4,321			4,001
Cost of sales and expenses
Cost of sales (including depreciation and amortization of $215 million (2016 — $192 million)	21	3,708			3,380
Selling and administrative expenses	21	440			402
Gain on acquisitions, disposals and others	23	(8		)	(4		)
Impairment charges and restructuring costs	24	17			12
Foreign exchange gain		(5		)	(4		)
Gain on derivative financial instruments	26	(6		)	(6		)
		4,146			3,780
Operating income		175			221
Financing expense	25	92			88
Interest expense on employee future benefits	25	5			5
Loss on repurchase of long-term debt	14, 25 and 26	14			—
Foreign exchange gain on long-term debt and financial instruments		(23		)	(22		)
Fair value revaluation gain on investments	5 and 8	(315		)	—
Share of results of associates and joint ventures	8	(39		)	(32		)
Earnings before income taxes		441			182
Provision for (recovery of) income taxes	17	(81		)	45
Net earnings including non-controlling interests for the year		522			137
Net earnings attributable to non-controlling interests	8	15			2
Net earnings attributable to Shareholders for the year		507			135
Net earnings per common share
Basic		$	5.35		$	1.42
Diluted		$	5.19		$	1.39
Weighted average basic number of common shares outstanding		94,680,598			94,709,048
Weighted average number of diluted common shares		97,598,900			96,933,338

The accompanying notes are an integral part of these consolidated financial statements.

4 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions of Canadian dollars)	NOTE	2017		2016
Net earnings including non-controlling interests for the year		522		137
Other comprehensive income (loss)
Items that may be reclassified subsequently to earnings
Translation adjustments	20
Change in foreign currency translation of foreign subsidiaries		(43	)	(33	)
Change in foreign currency translation related to net investment hedging activities		33		21
Cash flow hedges	20
Change in fair value of foreign exchange forward contracts		1		—
Change in fair value of commodity derivative financial instruments		1		10
Available-for-sale financial assets	8	(1	)	(2	)
Share of other comprehensive income of associates	5 and 8	21		—
Recovery of income taxes		(13	)	(6	)
		(1	)	(10	)
Items that are reclassified to retained earnings
Actuarial gain (loss) on employee future benefits	16	(13	)	11
Provision for (recovery of) income taxes	17	3		(3	)
		(10	)	8
Other comprehensive loss		(11	)	(2	)
Comprehensive income including non-controlling interests for the year		511		135
Comprehensive income (loss) attributable to non-controlling interests for the year		18		(4	)
Comprehensive income attributable to Shareholders for the year		493		139

The accompanying notes are an integral part of these consolidated financial statements.

5 

CONSOLIDATED STATEMENTS OF EQUITY

		For the year ended December 31, 2017
(in millions of Canadian dollars)	NOTE	CAPITAL STOCK		CONTRIBUTED SURPLUS		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE LOSS		TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS		NON- CONTROLLING INTERESTS		TOTAL EQUITY
Balance - Beginning of year		487		16		512		(31	)	984		90		1,074
Comprehensive income (loss)
Net earnings		—		—		507		—		507		15		522
Other comprehensive income (loss)		—		—		(10	)	(4	)	(14	)	3		(11	)
		—		—		497		(4	)	493		18		511
Business combinations	5	—		—		—		—		—		57		57
Dividends		—		—		(15	)	—		(15	)	—		(15	)
Stock options expense		—		1		—		—		1		—		1
Issuance of common share upon exercise of stock options		5		(1	)	—		—		4		—		4
Partial disposal of a subsidiary to non-controlling interests		—		—		(1	)	—		(1	)	1		—
Acquisition of non-controlling interests		—		—		(11	)	—		(11	)	(15	)	(26	)
Dividends paid to non-controlling interests		—		—		—		—		—		(5	)	(5	)
Balance - End of year		492		16		982		(35	)	1,455		146		1,601
		For the year ended December 31, 2016
(in millions of Canadian dollars)		CAPITAL STOCK		CONTRIBUTED SURPLUS		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE LOSS		TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS		NON- CONTROLLING INTERESTS		TOTAL EQUITY
Balance - Beginning of year		490		17		387		(27	)	867		96		963
Comprehensive income (loss)
Net earnings		—		—		135		—		135		2		137
Other comprehensive income (loss)		—		—		8		(4	)	4		(6	)	(2	)
		—		—		143		(4	)	139		(4	)	135
Dividends		—		—		(15	)	—		(15	)	—		(15	)
Stock options expense		—		1		—		—		1		—		1
Issuance of common share upon exercise of stock options		2		(1	)	—		—		1		—		1
Redemption of common shares		(5	)	(1	)	(3	)	—		(9	)	—		(9	)
Dividends paid to non-controlling interests and acquisition of non-controlling interests		—		—		—		—		—		(2	)	(2	)
Balance - End of year		487		16		512		(31	)	984		90		1,074

The accompanying notes are an integral part of these consolidated financial statements.

6 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions of Canadian dollars)	NOTE	2017		2016
Operating activities
Net earnings attributable to Shareholders for the year		507		135
Adjustments for:
Financing expense and interest expense on employee future benefits	25	97		93
Loss on repurchase of long-term debt	14, 25 and 26	14		—
Depreciation and amortization		215		192
Gain on acquisitions, disposals and others	23	(8	)	(4	)
Impairment charges and restructuring costs	24	11		4
Unrealized gain on derivative financial instruments		(8	)	(18	)
Foreign exchange gain on long-term debt and financial instruments		(23	)	(22	)
Provision for (recovery of) income taxes	17	(81	)	45
Fair value revaluation gain on investments	5 and 8	(315	)	—
Share of results of associates and joint ventures	8	(39	)	(32	)
Net earnings attributable to non-controlling interests	8	15		2
Net financing expense paid		(99	)	(89	)
Premium paid on long-term debt repurchase	14	(11	)	—
Net income taxes received (paid)		(10	)	10
Dividends received	8	12		18
Employee future benefits and others		(17	)	(18	)
		260		316
Changes in non-cash working capital components	25	(87	)	56
		173		372
Investing activities
Investments in associates and joint ventures	8	(17	)	(6	)
Payments for property, plant and equipment		(193	)	(182	)
Proceeds from disposals of property, plant and equipment		15		5
Change in intangible and other assets	8	256		14
Cash acquired in (paid for) a business combinations	5	9		(16	)
		70		(185	)
Financing activities
Bank loans and advances		8		(8	)
Change in revolving credit facilities		114		(146	)
Repurchase of unsecured senior notes	14, 25 and 26	(257	)	—
Increase in other long-term debt		11		40
Payments of other long-term debt		(47	)	(47	)
Settlement of derivative financial instruments		(12	)	3
Issuance of common shares	18	4		1
Redemption of common shares	18	—		(9	)
Dividends paid to non-controlling interests and acquisition of non-controlling interests	8	(24	)	(1	)
Dividends paid to the Corporation’s Shareholders		(15	)	(15	)
		(218	)	(182	)
Change in cash and cash equivalents during the year		25		5
Currency translation on cash and cash equivalents		2		(3	)
Cash and cash equivalents - Beginning of year		62		60
Cash and cash equivalents - End of year		89		62

The accompanying notes are an integral part of these consolidated financial statements.

7 

SEGMENTED INFORMATION

The Corporation analyzes the performance of its operating segments based on their operating income before depreciation and amortization, which is not a measure of performance under International Financial Reporting Standards (IFRS); however, the chief operating decision-maker (CODM) uses this performance measure to assess the operating performance of each reportable segment. Earnings for each segment are prepared on the same basis as those of the Corporation. Intersegment operations are recorded on the same basis as are sales to third parties, which are at fair market value. The accounting policies of the reportable segments are the same as the Corporation’s accounting policies described in Note 2.

The Corporation's operating segments are reported in a manner consistent with the internal reporting provided to the CODM. The Chief Executive Officer has authority for resource allocation and management of the Corporation's performance, and is therefore the CODM.

The Corporation's operations are managed in four segments: Containerboard, Boxboard Europe, Specialty Products (which constitutes the Corporation's Packaging Products) and Tissue Papers.

	SALES
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	1,652		1,370
Boxboard Europe	838		796
Specialty Products	703		620
Intersegment sales	(105	)	(61	)
	3,088		2,725
Tissue Papers	1,268		1,305
Intersegment sales and Corporate Activities	(35	)	(29	)
	4,321		4,001

	OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	238		214
Boxboard Europe	67		51
Specialty Products	67		71
	372		336
Tissue Papers	90		139
Corporate	(72	)	(62	)
Operating income before depreciation and amortization	390		413
Depreciation and amortization	(215	)	(192	)
Financing expense and interest expense on employee future benefits	(97	)	(93	)
Loss on repurchase of long-term debt	(14	)	—
Foreign exchange gain on long-term debt and financial instruments	23		22
Fair value revaluation gain on investments	315		—
Share of results of associates and joint ventures	39		32
Earnings before income taxes	441		182

8 

	PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	65		51
Boxboard Europe	27		26
Specialty Products	32		26
	124		103
Tissue Papers	64		77
Corporate	19		26
Total acquisitions	207		206
Proceeds from disposals of property, plant and equipment	(15	)	(5	)
Capital lease acquisitions	(11	)	(18	)
	181		183
Acquisitions for property, plant and equipment included in “Trade and other payables”
Beginning of year	25		19
End of year	(28	)	(25	)
Payments for property, plant and equipment net of proceeds from disposals	178		177

	TOTAL ASSETS
(in millions of Canadian dollars)	December 31, 2017		December 31, 2016
Packaging Products
Containerboard	1,995		1,285
Boxboard Europe	609		567
Specialty Products	383		336
	2,987		2,188
Tissue Papers	919		922
Corporate	459		400
Intersegment eliminations	(68	)	(37	)
	4,297		3,473
Investments in associates and joint ventures	78		335
Other investments	7		5
	4,382		3,813

9 

Information by geographic segment is as follows:

For the years ended December 31 (in millions of Canadian dollars)	2017	2016
Sales
Operations located in Canada
Within Canada	1,629	1,511
To the United States	488	505
Other countries	11	14
	2,128	2,030
Operations located in the United States
Within the United States	1,217	1,065
To Canada	73	45
Other countries	1	2
	1,291	1,112
Operations located in Italy
Within Italy	279	241
Other countries	138	140
	417	381
Operations located in other countries
Within Europe	411	399
Other countries	74	79
	485	478
	4,321	4,001

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Property, plant and equipment
Canada	840	840
United States	967	512
Italy	183	179
Other countries	114	104
	2,104	1,635

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Goodwill, customer relationships and client lists, and other finite and indefinite useful life intangible assets
Canada	449	441
United States	278	71
Italy	13	9
	740	521

10 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in millions of Canadian dollars, except per common share and option amounts and number of common shares and options)

NOTE 1

GENERAL INFORMATION

Cascades Inc. and its subsidiaries (together “Cascades” or the “Corporation”) produce, convert and market packaging and tissue products composed mainly of recycled fibres. Cascades Inc. is incorporated and domiciled in Québec, Canada. The address of its registered office is 404, Marie-Victorin Boulevard, Kingsey Falls. Its shares are listed on the Toronto Stock Exchange.

The Board of Directors approved the consolidated financial statements on February 28, 2018.

NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Corporation prepares its financial statements in accordance with Canadian generally accepted accounting principles (GAAP) as set forth in Part I of the Chartered Professional Accountants of Canada (CPA Canada) Handbook – Accounting, which incorporates IFRS as issued by the International Accounting Standards Board. The key accounting policies applied in the preparation of these consolidated financial statements are described below. These policies have been consistently applied to all years presented, unless otherwise stated.

BASIS OF MEASUREMENT

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial assets and liabilities, including derivative instruments, which are measured at fair value.

BASIS OF CONSOLIDATION

These consolidated financial statements include the accounts of the Corporation, which include:

A. SUBSIDIARIES

Subsidiaries are all entities over which the Corporation has control, where control is defined as the power to direct decisions about relevant activities. The Corporation does not have any interest in a structured entity. The existence and effect of potential voting rights that are exercisable or convertible are considered when assessing whether the Corporation controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Corporation. They are deconsolidated from the date on which control ceases. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the policies adopted by the Corporation. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Corporation. Results of operations are consolidated commencing on the date of acquisition. The purchase consideration is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The transaction costs directly attributable to the acquisition are expensed. Identifiable assets acquired, as well as liabilities and contingent liabilities assumed in a business combination, are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. The excess of the purchase consideration over the fair value of the Corporation's share of the identifiable net assets acquired is recorded as goodwill. If the purchase consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statement of earnings. Intercompany transactions, balances and unrealized gains on transactions between subsidiaries are eliminated.

The following are the principal subsidiaries of the Corporation:

	PERCENTAGE OWNED (%)	JURISDICTION
Cascades Canada ULC	100	Canada
Cascades USA Inc.	100	Delaware
Greenpac Holding LLC 1	59.7	Delaware
Reno de Medici S.p.A. (RDM)	57.8	Italy

1 For accounting purposes, percentage stands at 82.83% including indirect ownership.See Note 5 for more details.

11 

B. TRANSACTIONS AND CHANGE IN OWNERSHIP

Acquisitions or disposals of equity interests that do not result in the Corporation obtaining or losing control are treated as equity transactions. When the Corporation obtains or loses control, the revaluation of the previously held interest or the non-controlling interests that results in gains or losses for the Corporation is recognized in the consolidated statement of earnings.

C. ASSOCIATES

Associates are all entities over which the Corporation has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Corporation's investment from associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

Unrealized gains on transactions between the Corporation and its associates are eliminated to the extent of the Corporation's interest in the associates. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Corporation. Dilution gains and losses arising in investments in associates are recognized in the consolidated statement of earnings.

The Corporation assesses, at each year-end, whether there is any objective evidence that its interest in associates is impaired. If impaired, the carrying value of the Corporation's share of the underlying assets of associates is written down to its estimated recoverable amount (being the higher of fair value less cost of disposal or value in use) and charged to the consolidated statement of earnings.

D. JOINT VENTURES

A joint venture is an entity in which the Corporation holds a long-term interest and for which it shares joint control over decisions regarding relevant activities. The Corporation reports its interests in joint ventures using the equity method. Accounting policies of joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the Corporation.

REVENUE RECOGNITION

The Corporation recognizes its sales, which consist of product sales, when it is probable that the economic benefits will flow to the Corporation, the goods are shipped and the significant risks and benefits of ownership are transferred, the amount of revenue can be measured reliably, and collection of the resulting receivable is reasonably assured.

Revenue is measured based on the price specified in the sales contract, net of discounts and estimated returns at the time of sale. Historical experience is used to estimate and provide for discounts and returns. Volume discounts are assessed based on anticipated annual sales.

FINANCIAL INSTRUMENTS AND HEDGING RELATIONSHIPS

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instrument. Financial assets are unrecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Corporation has transferred substantially all risks and rewards of ownership. Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

CLASSIFICATION

The Corporation classifies its financial instruments in the following categories: at fair value through profit or loss, held to maturity (HTM), loans and receivables, available for sale (AFS) and other liabilities. The classification depends on the purpose for which the financial instruments were acquired or issued. Management determines the classification of its financial assets and financial liabilities at initial recognition. Settlement date accounting is used by the Corporation for all financial assets.

A. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

A financial asset or financial liability is classified in this category if it is acquired principally for the purpose of selling or repurchasing in the short term. Derivatives are also included in this category unless they are designated as hedges. Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs are expensed in the consolidated statement of earnings. Gains and losses arising from changes in fair value are presented in the consolidated statement of earnings in “Loss (gain) on derivative financial instruments” in the period in which they arise. Financial assets and financial liabilities at fair value through profit or loss are classified as current, except for the portion expected to be realized or paid beyond 12 months of the consolidated balance sheet date, which is classified as long-term.

B. AVAILABLE-FOR-SALE FINANCIAL ASSETS

AFS investments are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. AFS investments are recognized initially at fair value plus transaction costs, and are subsequently carried at fair value. Gains or losses arising from changes in fair value are recognized in the statement of other comprehensive income. AFS investments are classified as long-term, unless the investment matures within 12 months, or Management expects to dispose of them within 12 months.

12 

Interest on AFS investments, calculated using the effective interest method, is recognized in the consolidated statement of earnings as part of financing expense. Dividends on AFS equity instruments are recognized in the consolidated statement of earnings as part of financing expense when the Corporation's right to receive payment is established. When an AFS investment is sold or impaired, the accumulated gains or losses are moved from “Accumulated other comprehensive income” to the consolidated statement of earnings and included in “Loss (gain) on derivative financial instruments”.

C. LOANS AND RECEIVABLES

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Corporation's loans and receivables comprise accounts receivable, notes receivable from business disposals and cash and cash equivalents. Loans and receivables are initially recognized at fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment.

D. FINANCIAL LIABILITIES AT AMORTIZED COST

Financial liabilities at amortized cost include bank loans and advances, trade and other payables, and long-term debt. Financial liabilities at amortized cost are initially recognized at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently, they are measured at amortized cost using the effective interest method. They are classified as current liabilities if payment is due within 12 months. Otherwise, they are presented as long-term liabilities.

IMPAIRMENT OF FINANCIAL ASSETS

At each report date, the Corporation assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Corporation recognizes an impairment loss, as follows:

i) Financial assets carried at amortized cost: The impairment loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument's original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

ii) AFS financial assets: The impairment loss is the difference between the original cost of the asset and its permanent fair value decrease at the measurement date, less any impairment losses previously recognized in the consolidated statement of earnings. This amount represents the cumulative loss in “Accumulated other comprehensive income” that is reclassified to net earnings.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on AFS equity instruments are not reversed.

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and, if so, the nature of the item being hedged. The Corporation designates certain derivative financial instruments as either:

i) hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge);

ii) hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge); or

iii) hedges of a net investment in a foreign operation (net investment hedge).

The Corporation formally documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Corporation also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The full fair value of a hedging derivative is classified as a long-term asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.

A. FAIR VALUE HEDGE

The periodic change in fair value of the hedging derivative is recorded in net income. The periodic change in the cumulative gain or loss on the hedged item is recorded as an adjustment to its carrying amount on the balance sheet and is also recorded in net income. Hedging ineffectiveness is automatically recorded to net income as the difference between the above amounts recorded in net income. Realized gains and losses on the hedging item, resulting from the difference between the interest payments on the receive leg and the pay leg of the hedging derivative, are recorded on an accrual basis in net income as interest income or expense.

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If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity using a recalculated effective interest rate.

B. CASH FLOW HEDGE

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of earnings.

Amounts accumulated in equity are reclassified to profit or loss in the period when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the consolidated statement of earnings on the same line as the hedged item. The gain or loss relating to the ineffective portion is recognized in the consolidated statement of earnings as part of loss (gain) on derivative financial instruments. However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or property, plant and equipment), the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognized in Cost of goods sold in the case of inventory or in Depreciation in the case of property, plant and equipment.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the consolidated statement of earnings. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the consolidated statement of earnings.

C. NET INVESTMENT HEDGE

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in the statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of earnings. Gains and losses accumulated in equity are included in the consolidated statement of earnings when the foreign operation is partially disposed of or sold.

The Corporation also uses cross-currency interest rate swaps to manage the currency fluctuations risk associated with forecasted cash flows in foreign currency. These cross-currency interest rate swaps are designated as foreign exchange hedge of its net investment in foreign operations. The portion of the gains and losses arising from the translation of those derivatives that are determined to be an effective hedge is recognized in other comprehensive income, counterbalancing gains and losses arising from the translation of the Corporation's net investment in its foreign operations.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, bank balances and short-term liquid investments with original maturities of three months or less.

ACCOUNTS RECEIVABLE

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less a provision for doubtful accounts that is based on expected collectability.

INVENTORIES

Inventories of finished goods are valued at the lower of cost, determined by either average production cost or retail method, and net realizable value. Inventories of raw material and supplies are valued at the lower of cost and replacement value, which is the best available measure of their net realizable value. Cost of raw material and supplies is determined using the average cost and first-in, first-out methods respectively. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment are recorded at cost less accumulated depreciation and net impairment losses, including interest incurred during the construction period of qualifying property, plant and equipment. Repairs and maintenance costs are charged to the consolidated statement of earnings during the period in which they are incurred. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.

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Depreciation is calculated on a straight-line basis as follows:

Buildings                Between 10 and 33 years

Machinery and equipment        Between 3 and 30 years

Automotive equipment        Between 5 and 10 years

Other property, plant and equipment    Between 3 and 10 years

GRANTS AND INVESTMENT TAX CREDITS

Grants and investment tax credits for property, plant and equipment are accounted for using the cost reduction method and are amortized to earnings as a reduction of depreciation, using the same basis as that used to depreciate the related property, plant and equipment.

BORROWING COSTS

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until all the activities necessary to prepare the asset for its intended use are complete. All other borrowing costs are recognized in the consolidated statement of earnings in the period in which they are incurred.

INTANGIBLE ASSETS

Intangible assets consist primarily of customer relationships and client lists, application software and favourable leases. They are recorded at cost less accumulated amortization and impairment losses and amortized on a straight-line basis over the estimated useful lives as follows:

Customer relationships and client lists    Between 2 and 20 years

Other finite-life intangible assets    Between 2 and 20 years

Application software    Between 3 and 10 years

Enterprise Resource Planning (ERP)    7 years

Favourable leases    Term of the lease

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

IMPAIRMENT

A. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS WITH FINITE USEFUL LIFE

At the end of each reporting period, the Corporation assesses whether there is an indicator that the carrying amount of an asset or a group of assets may be higher than its recoverable amount which is described in section C hereunder. For that purpose, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash generating units (CGUs)). If there is any indication that an individual asset may be impaired, the recoverable amount shall be estimated for the individual asset.

When the recoverable amount is lower than the carrying amount, the carrying amount is reduced to the recoverable amount. Impairment losses are recorded immediately in the consolidated statement of earnings in the line item Impairment charges and restructuring costs. Impairment losses are evaluated for potential reversals when events or changes in circumstances warrant such consideration. The revalued carrying value is the lower of the estimated recoverable amount and the carrying amount that would have been determined had no impairment loss been recognized and depreciation had been taken previously on the asset or CGU. A reversal of impairment loss is recorded directly in the consolidated statement of earnings in the line item “Impairment charges and restructuring costs”.

B. GOODWILL AND OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE

Goodwill and other intangible assets with an indefinite useful life are recognized at cost less any accumulated impairment losses. They have an indefinite useful life due to their permanent nature since they are acquired rights or not subject to wear and tear. They are reviewed for impairment annually on December 31 or when an event or a circumstance occurs and indicates that the value could be permanently impaired. Goodwill is allocated to CGUs for the purpose of impairment testing based on the level at which Management monitors it, which is not higher than an operating segment. The allocation is made to CGUs that are expected to benefit from the business combination in which the goodwill and other intangible assets with an indefinite useful life arose. Impairment loss on goodwill is not reversed.

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C. RECOVERABLE AMOUNTS

A recoverable amount is the higher of fair value less cost of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or CGU. When determining fair value less cost of disposal, the Corporation considers if there is a market price for the asset being evaluated. Otherwise, the Corporation uses the income approach.

LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the consolidated statement of earnings on a straight-line basis over the term of the lease.

The Corporation leases certain property, plant and equipment. Leases of property, plant and equipment for which the Corporation has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease's commencement at the lower of the fair value of the leased property or the present value of the minimum lease payments. Property, plant and equipment acquired under a finance lease are depreciated over the shorter of the estimated useful life of the asset or the lease term using the straight-line method. Each lease payment is allocated between the liability and the financing expense so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of financing expense, are included in long-term debt.

PROVISIONS FOR CONTINGENCIES AND CHARGES

Provisions for contingencies include mainly legal and other claims. A provision is recognized when the Corporation has a legal or constructive obligation as a result of a past event and it is probable that settlement of the obligation will require a financial payment or cause a financial loss, and a reliable estimate of the amount of the obligation can be made.

If some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recorded in the consolidated balance sheet as a separate asset, but only if it is virtually certain that the reimbursement will be received.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as a financing expense.

ENVIRONMENTAL RESTORATION OBLIGATIONS AND ENVIRONMENTAL COSTS

An obligation to incur restoration and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a plant or landfill site. Such costs arising from the installation of a plant and other site preparation work are provided for and capitalized at the start of each project, or as soon as the obligation to incur such costs arises. Decommissioning costs are recorded at the estimated amount at which the obligation could be settled at the consolidated balance sheet date, and are charged against profit over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. The discount rate is the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Costs for restoring subsequent site damage which is created on an ongoing basis during production are provided for at their present values and charged against profit as the obligation arises.

Changes in the measurement of a liability relating to the decommissioning of a plant or other site preparation work that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate, are added to, or deducted from, the cost of the related asset in the current year. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in the consolidated statement of earnings. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy for impairment testing.

LONG-TERM DEBT

Long-term debt is recognized initially at fair value, net of financing costs incurred. Long-term debt is subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of earnings over the period of the term of the debt using the effective interest method.

Financing costs paid on establishment of the revolving credit facility are recognized as deferred financing costs and amortized on a straight-line basis over the anticipated period of the credit facility.

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EMPLOYEE BENEFITS

The Corporation offers funded and unfunded defined benefit pension plans, defined contribution pension plans and group registered retirement savings plans (RRSPs) that provide retirement benefit payments for most of its employees. The defined benefit pension plans are usually contributory and are based on the number of years of service and, in most cases, the average salaries or compensation at the end of a career. Retirement benefits are not adjusted based on inflation. The Corporation also offers its employees some post-employment benefit plans, such as a retirement allowance, group life insurance and medical and dental plans. However, these benefits, other than pension plans, are not funded. Furthermore, the medical and dental plans upon retirement are being phased out and are no longer offered to the majority of new retirees, and the retirement allowance is not offered to those who do not meet certain criteria.

The liability recognized in the consolidated balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated at least every three years by independent actuaries using the projected unit credit method, and updated regularly by management for any material transactions and changes in circumstances, including changes in market prices and interest rates up to the end of the reporting period.

As well, when an asset is recorded for a pension plan, its carrying value cannot be greater than the future economic benefit that the Corporation will get from the asset. The future economic benefit includes the suspension of contribution if the pension plan provisions allow for it under the minimum funding requirements. When there is a minimum funding requirement, it can increase the liability recorded. All special contributions legally required to fund a plan deficit are considered. For plans for which an actuarial evaluation is required as at December 31, 2017, a schedule of contributions is estimated to establish the minimum funding requirement. For other plans, we have used contributions from the most recent actuarial report.

Actuarial gains and losses that arise in calculating the present value of the defined benefit obligation and the fair value of plan assets are recorded in the statement of other comprehensive income and recognized immediately in retained earnings without recycling to the consolidated statement of earnings. Past service costs are recognized immediately in the consolidated statement of earnings.

When restructuring a plan results in a curtailment and settlement occurring at the same time, the curtailment is accounted for before the settlement.

Interest costs on pension and other post-employment benefits are recognized in the consolidated statement of earnings as Interest expense on employee future benefits. The measurement date of employee future benefit plans is December 31 of each year. An actuarial evaluation is performed at least every three years. Based on their balances as at December 31, 2017, 87% of the plans were evaluated on December 31, 2016 (18% in 2015).

INCOME TAXES

The Corporation uses the liability method to recognize deferred income taxes. According to this method, deferred income taxes are determined using the difference between the accounting and tax bases of assets and liabilities. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates at the consolidated balance sheet date that are expected to apply when the deferred income taxes are expected to be recovered or settled. Deferred income tax assets are recognized when it is probable that the asset will be realized.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

FOREIGN CURRENCY TRANSLATION

Items included in the financial statements of each of the Corporation's entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Canadian dollars, which is Cascades' functional currency.

A. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in currencies other than the business unit's functional currency are recorded at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the consolidated balance sheet date. Unrealized gains and losses on translation of monetary assets and liabilities are reflected in the consolidated statement of earnings for the year.

B. FOREIGN OPERATIONS

The assets and liabilities of foreign operations are translated into Canadian dollars at the exchange rate prevailing at the consolidated balance sheet date. Revenues and expenses are translated at the average monthly exchange rate. Translation gains or losses are deferred and included in “Accumulated other comprehensive income”.

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SHARE-BASED PAYMENTS

The Corporation uses the fair value method of accounting for stock-based compensation awards granted to officers and key employees. This method consists in recording expenses to earnings based on the vesting period of each tranche of options granted. The fair value of each tranche is calculated based on the Black-Scholes option pricing model. This model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. When stock options are exercised, any considerations paid by employees, as well as the related stock-based compensation, are credited to capital stock.

DIVIDEND DISTRIBUTION

Dividend distribution to the Corporation's Shareholders is recognized as a liability in the consolidated financial statements in the period in which the dividends are approved by the Corporation's Board of Directors.

EARNINGS PER COMMON SHARE

Basic earnings per common share are determined using the weighted average number of common shares outstanding during the period. Diluted earnings per common share are determined by adjusting the weighted average number of common shares outstanding for dilutive instruments, which are primarily stock options, using the treasury stock method to evaluate the dilutive effect of stock options. Under this method, instruments with a dilutive effect, which is when the average market price of a share for the period exceeds the exercise price, are considered to have been exercised at the beginning of the period and the proceeds received are considered to have been used to redeem common shares of the Corporation at the average market price for the period.

NOTE 3

CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

A) NEW IFRS ADOPTED

IAS 7 STATEMENT OF CASH FLOWS

In January 2016, the IASB published amendments to IAS 7 Statement of Cash Flows. The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity’s financing activities. They are effective for annual periods beginning on or after January 1, 2017. To comply with the new requirements, a reconciliation of total liabilities arising from financing activities has been added to Note 25.

B) RECENT IFRS PRONOUNCEMENTS NOT YET ADOPTED

IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15 Revenue from Contracts with Customers. IFRS 15 replaces all previous revenue recognition standards, including IAS 18 Revenue, and related interpretations. such as IFRIC 13 Customer Loyalty Programs. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual periods beginning on or after January 1, 2018. The standard will not have a significant impact on the timing of the Corporation's revenues since there is typically only one performance obligation per customer contract. The adoption of the standard will, however, have an impact on the contract liabilities classification. which can no longer be presented against accounts receivable. As well, IFRS 15 will require further disclosure, such as a disaggregation of revenues from contracts with customers in categories that depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. To comply with this requirement, the Corporation will segregate its four segments' sales by country on a quarterly basis. The Corporation will apply the new standard retrospectively. Apart from the balance sheet reclassification discussed above, this standard has no material impact on the Corporation's consolidated financial statements.

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IFRS 9 FINANCIAL INSTRUMENTS

In July 2014, the IASB released the final version of IFRS 9 Financial Instruments. This standard addresses classification and measurement of financial assets and replaces the multiple category and measurement models for debt instruments in IAS 39 Financial Instruments: Recognition and Measurement, with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are recognized either at fair value through profit or loss or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends are recognized in profit or loss insofar as they do not clearly represent a return on investment; however, other gains and losses (including impairments) associated with such instruments remain in accumulated comprehensive income indefinitely. Requirements for financial liabilities carry forward existing requirements in IAS 39, except that fair value changes due to credit risk for liabilities designated at fair value through profit and loss would generally be recorded in the statement of other comprehensive income. It also includes guidance on hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. The new standard will have no material impact on the Corporation's consolidated financial statements.

IFRS 16 LEASES

In January 2016, the IASB released IFRS 16 Leases, which supersedes IAS 17 Leases, and the related interpretations on leases: IFRIC 4 Determining whether an Arrangement Contains a Lease, SIC 15 Operating Leases - Incentives and SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease. The standard is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for companies that also apply IFRS 15 Revenue from Contracts with Customers. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. The new standard requires lessees to recognize a lease liability reflecting future lease payments and a “right-of-use asset” for virtually all lease contracts, and record it on the balance sheet, except with respect to lease contracts that meet limited exception criteria, such as when the underlying asset is of low value or the maturity of the lease is short term. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. As at December 31, 2017, operating lease commitments would have translated into an estimated additional lease liability of $70 million.

NOTE 4

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and disclosure of contingencies at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. On a regular basis and with the information available, Management reviews its estimates, including those related to environmental costs, employee future benefits, collectability of accounts receivable, financial instruments, contingencies, income taxes, useful life and residual value of property, plant and equipment and impairment of property, plant and equipment and intangible assets. Actual results could differ from those estimates. When adjustments become necessary, they are reported in earnings in the period in which they occur.

A. IMPAIRMENT OF LONG-LIVED ASSETS, INTANGIBLE ASSETS AND GOODWILL

In determining the recoverable amount of an asset or a cash generating unit (CGU), the Corporation uses several key assumptions, based on external information on the industry when available, and including estimated production levels, selling prices, volume, raw material costs, foreign exchange rates, growth rates, discounting rates and capital spending.

The Corporation believes its assumptions are reasonable. Based on available information at the assessment date, however, these assumptions involve a high degree of judgment and complexity. Management believes that the following assumptions are the most susceptible to change and therefore could impact the valuation of the assets in the next year.

DESCRIPTION OF SIGNIFICANT IMPAIRMENT TESTING ASSUMPTIONS (see Note 24 of consolidated financial statements)

GROWTH RATES

The assumptions used were based on the Corporation's internal budget. Revenues, operating margins and cash flows were projected for a period of five years, and a perpetual long-term growth rate was applied thereafter. In arriving at its forecasts, the Corporation considers past experience, economic trends such as gross domestic product growth and inflation, as well as industry and market trends.

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DISCOUNT RATES

The Corporation assumed a discount rate in order to calculate the present value of its projected cash flows. The discount rate represents a weighted average cost of capital (WACC) for comparable companies operating in similar industries of the applicable CGU, group of CGUs or reportable segment, based on publicly available information.

FOREIGN EXCHANGE RATES

When estimating the fair value less cost of disposal, foreign exchange rates are determined using the financial institution's average forecast for the first two years of forecasting. For the following three years, the Corporation uses the last five years' historical average of the foreign exchange rate. Terminal rate is based on historical data of the last 20 years and adjusted to reflect management's best estimate.

SHIPMENTS

The assumptions used are based on the Corporation's internal budget for the next year and are usually held constant for the forecast period. In arriving at its budgeted shipments, the Corporation considers past experience, economic trends as well as industry and market trends.

Considering the sensitivity of the key assumptions used, there is measurement uncertainty, since adverse changes in one or a combination of the Corporation's key assumptions could cause a significant change in the carrying amounts of these assets.

B. INCOME TAXES

The Corporation is required to estimate the income taxes in each jurisdiction in which it operates. This includes estimating a value for existing tax losses based on the Corporation's assessment of its ability to use them against future taxable income before they expire. If the Corporation's assessment of its ability to use the tax losses proves inaccurate in the future, more or less of the tax losses might be recognized as assets, which would increase or decrease the income tax expense and, consequently, affect the Corporation's results in the relevant year.

C. EMPLOYEE BENEFITS

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on years of service and Management's best estimate of expected plan investment performance, salary escalations, retirement ages of employees and expected health care costs. The accrued benefit obligation is evaluated using the market interest rate at the evaluation date. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. All assumptions are reviewed annually.

CRITICAL JUDGMENTS IN APPLYING THE CORPORATION'S ACCOUNTING POLICIES

SUBSIDIARIES AND EQUITY ACCOUNTED INVESTMENTS

Significant judgment is applied in assessing whether certain investment structures result in control, joint control or significant influence over the operations of the investment. Management's assessment of control, joint control or significant influence over an investment will determine the accounting treatment for the investment. In 2016, the Corporation had a 59.7% interest in an associate (Greenpac). Greenpac's Shareholders agreement required a majority of 80% for all decision making related to relevant activities. Consequently, the Corporation did not have power over relevant activities of Greenpac and its participation was accounted for as an associate. On April 4, 2017, Cascades and its partners in Greenpac Holding LLC (Greenpac) agreed to modify the equity holders' agreement. These modifications enable Cascades to direct decisions about relevant activities. Therefore, from an accounting standpoint, Cascades now has control over Greenpac, which triggered its deemed acquisition and thus fully consolidates Greenpac since April 4, 2017. Please refer to Notes 5 and 8 of the consolidated financial statements for more details.

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NOTE 5

BUSINESS COMBINATIONS

2017

Coyle containerboard converting plants

On November 30, 2017, the Containerboard Packaging segment purchased, from the Coyle family, three converting plants located in Ontario and specialized in the manufacturing of boxes and specialty products. Total consideration was $30 million and consisted of $25 million in cash, a non-cash provision of $1 million as at December 31, 2017, for working capital purchase price adjustment and $4 million of assumed debts. The excess of the consideration paid over the net fair value of the assets acquired resulted in a tax-deductible goodwill of $3 million and has been allocated to Containerboard Packaging segment CGU. The transaction is expected to create synergies since a significant portion of their procurement is realized through our newly acquired Tencorr joint venture, which has a supply agreement with Greenpac.

The $12 million fair value of accounts receivables is equal to gross contractual cash flows, which are all expected to be collected.

The purchase price is preliminary as of December 31, 2017.

Assets acquired and liabilities assumed were as follows:

(in millions of Canadian dollars)		2017
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Coyle Plants
Fair values of identifiable assets acquired and liabilities assumed:
Accounts receivable		12
Inventories		1
Property, plant and equipment		10
Intangible assets with finite useful life (client list)		7
Goodwill		4
Total assets		34
Trade and other payables		(4	)
Current portion of long-term debt		(1	)
Long-term debt		(3	)
Net assets acquired		26
Cash paid		25
Non-cash provision for working capital purchase price adjustment		1
Total consideration		26

On a stand-alone basis, the acquired business, since the date of acquisition, represents sales amounting to $4 million and the contribution to net earnings attributable to Shareholders is nil. Had the acquisition occurred on January 1, 2017, consolidated sales would have been $4,369 million and consolidated net earnings attributable to Shareholders would have been $506 million. These estimates are based on the assumption that fair value adjustments made as at the acquisition date would have been the same had the acquisition occurred on January 1, 2017.

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Greenpac Holding LLC

On April 4, 2017, Cascades and its partners in Greenpac Holding LLC (Greenpac) agreed to modify the equity holders' agreement. These modifications enable Cascades to direct decisions about relevant activities. Therefore, from an accounting standpoint, Cascades now has control over Greenpac, which triggers its deemed acquisition and thus fully consolidates Greenpac starting April 4, 2017.

There is no cash consideration for the acquisition and there is no change of participation of each partner in Greenpac. Consideration transferred for the acquisition was the fair value of Cascades' investment in Greenpac based on the income approach less net liabilities with acquiree, which settled as a result of the transaction. The excess of the consideration over the net fair value of the assets acquired and the liabilities assumed resulted in a non-deductible goodwill of $190 million and has been allocated to the Containerboard Packaging segment CGU. The consolidation enables Cascades to better reflect its presence in the North American containerboard market.

One of the partners in Greenpac has a put option whereby the partner can require other partners or Greenpac itself to repurchase its shares at a price including a predetermined return on its investment. Under IFRS, this option gives the equity participation of this partner the characteristics of liability more than equity. As such, this partner's participation is classified in the current portion of other liabilities at an initial fair value of $85 million at the acquisition date.

For accounting purposes, the Corporation's share of Greenpac stands at 82.83% as at December 31, 2017, (78.3% for the period of April 4 to November 30, 2017) while legal ownership is 59.7%. The Corporation records income taxes on 71.8% of Greenpac's profit before taxes, as it is a flow-through entity for tax purposes (62.5% for the period of April 4 to November 30, 2017). See Note 8 for details.

The change in control provides for the revaluation of the previously held interest to its fair market value. As such, a gain of $156 million was recognized in the consolidated statement of earnings in the second quarter. Also, consequent to the acquisition, our share of accumulated other comprehensive loss components of Greenpac totaling $4 million on and included in Cascades' consolidated balance sheet prior to the acquisition were reclassified to net earnings. These two items are presented in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings.

The Corporation has reversed its deferred income tax liability related to its Greenpac investment and recorded an income tax recovery of $70 million. The investment in Greenpac is considered as the consideration transferred for the Greenpac acquisition and, as a result, is accounted for as a deemed disposal for tax accounting purposes.

Since the date of acquisition, Greenpac has generated sales of $200 million and net earnings of $17 million. Had the acquisition occurred on January 1, 2017, consolidated sales year-to-date would have been $4,392 million while consolidated net earnings attributable to Shareholders would have been approximately the same, since the Corporation was previously recording its share of results in Greenpac. These estimates are based on the assumption that the fair value adjustments that arose on the date of acquisition would have been the same had the acquisition occurred on January 1, 2017.

The $20 million fair value of accounts receivables is equal to gross contractual cash flows, which are all expected to be collected.

The purchase price allocation of Greenpac was finalized during the third quarter of 2017.

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Assets acquired and liabilities assumed were as follows:

(in millions of Canadian dollars)		2017
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Greenpac Holding LLC
Fair values of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		34
Accounts receivable		20
Inventories		23
Current portion of financial assets		4
Property, plant and equipment		512
Financial assets		16
Intangible assets with finite useful life (client list)		39
Goodwill		190
Total assets		838
Trade and other payables		(39	)
Current portion of long-term debt		(15	)
Current portion of financial liabilities and other liabilities		(90	)
Long-term debt		(238	)
Financial liabilities		(4	)
Deferred income tax liabilities		(91	)
Net assets acquired		361
Non-controlling interests		(57	)
		304
Total non-cash consideration
Previously held interest		187
Revaluation gain on previously held interest on April 4, 2017		156
Settlement of net liabilities with acquiree before the transaction		(39	)
		304

On November 30, 2017, the Corporation increased its participation in Containerboard Partners (Ontario) Inc. from 23% to 53% through the acquisition of 90 common shares for a cash consideration of US$15 million ($19 million). The transaction increases the Corporation's indirect ownership in Greenpac to 6.4% from 3.6%. Since there are no activities in Containerboard Partners (Ontario) Inc. other than its investment in Greenpac, the transaction is accounted as the acquisition of a non-controlling interest.

23 

2016

Rand-Whitney Newtown Plant

On May 31, 2016, the Containerboard Packaging segment purchased from Rand-Whitney Container LLC its corrugated products plant located in Newtown, Connecticut. A total consideration of $18 million was paid by the Corporation and consisted of $15 million (US$12 million) in cash and certain assets of our corrugated containerboard plant located in Thompson, Connecticut, valued at $3 million. The excess of the consideration paid over the net fair value of the assets acquired resulted in a tax-deductible goodwill of $7 million and has been allocated to Containerboard Packaging segment CGU. This acquisition was concluded to create synergies.

The purchase price was finalized on September 30, 2016.

Assets acquired were as follows: 

(in millions of Canadian dollars)		2016
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Rand-Whitney Newtown Plant
Fair values of identifiable assets acquired:
Property, plant and equipment		10
Client list		1
Goodwill		7
		18
Cash paid		15
Fair market value of assets exchanged		3
Total consideration		18

In addition to the purchase price paid to Rand-Whitney, the Corporation also incurred transaction fees amounting to $1 million.

In 2016, on a stand-alone basis and since the date of acquisition, Newtown generated sales amounting to $35 million and the contribution to net earnings attributable to Shareholders was nil. Had the acquisition occurred on January 1, 2016, consolidated sales would have been $60 million higher and consolidated net earnings attributable to Shareholders would have remained unchanged for the year. These estimates are based on the assumption that fair value adjustments made as at the acquisition date would have been the same had the acquisition occurred on January 1, 2016. 

NOTE 6

ACCOUNTS RECEIVABLE 

(in millions of Canadian dollars)	NOTE	2017		2016
Accounts receivable - Trade		526		465
Receivables from related parties	28	35		39
Less: provision for doubtful accounts		(7	)	(6	)
Trade receivables - net		554		498
Provisions for volume rebates		(45	)	(35	)
Other		54		61
		563		524

As at December 31, 2017, trade receivables of $143 million (December 31, 2016 - $118 million) were past due but not impaired.

The aging of these trade receivables at each reporting date is as follows:

(in millions of Canadian dollars)	2017	2016
Past due 1-30 days	73	69
Past due 31-60 days	30	22
Past due 61-90 days	10	8
Past due 91 days and over	30	19
	143	118

24 

Movements in the Corporation's allowance for doubtful accounts are as follows: 

(in millions of Canadian dollars)	2017		2016
Balance at beginning of year	6		12
Provision for doubtful accounts, net of unused beginning balance	2		(3	)
Receivables written off during the year as uncollectable	(1	)	(3	)
Balance at end of year	7		6

The change in the provision for doubtful accounts has been included in “Selling and administrative expenses” in the consolidated statement of earnings.

The maximum exposure to credit risk at the reporting date approximates the carrying value of each class of receivable mentioned above. 

NOTE 7

INVENTORIES 

(in millions of Canadian dollars)	2017	2016
Finished goods	249	219
Raw material	124	107
Supplies and spare parts	150	134
	523	460

As at December 31, 2017, finished goods, raw material and supplies and spare parts were adjusted to net realizable value (NRV) by $8 million, $1 million and nil, respectively (December 31, 2016 - $7 million, nil, and nil). As at December 31, 2017, the carrying amount of inventory carried at net realizable value consisted of $14 million in finished goods inventory, nil in raw material inventory and nil in supplies and spare parts (December 31, 2016 - $9 million, nil and nil).

The Corporation has sold all the goods that were written down in 2017. No reversal of previously written-down inventory occurred in 2017 or 2016. The cost of raw material and supplies and spare parts included in “Cost of sales” amounted to $1,751 million (2016 - $1,612 million). 

25 

NOTE 8

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

A. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ARE DETAILED AS FOLLOWS:

(in millions of Canadian dollars)	2017	2016
Investments in associates	16	281
Investments in joint ventures	62	54
	78	335

Investments in associates and joint ventures as at December 31, 2017, include goodwill of $3 million (December 31, 2016 - $28 million).

B. INVESTMENTS IN ASSOCIATES

The following were the principal associates of the Corporation:

Boralex

On January 18, 2017, Boralex issued common shares to partly finance the acquisition of the interest of Enercon Canada Inc. in the Niagara Region Wind Farm. As a result, the Corporation's participation in Boralex decreased to 17.37%, which resulted in a dilution gain of $15 million and is included in line item “Share of results of associates and joint ventures” in the consolidated statement of earnings.

On March 10, 2017, Boralex announced the appointment of a new Chairman of the Board. This change in the Board composition combined with the decrease of its participation discussed above triggered the loss of significant influence of the Corporation over Boralex. Since March 10, 2017, the investment in Boralex was no longer classified as an associate and is considered as an available-for-sale financial asset. Consequently, the Corporation's investment in Boralex was re-evaluated at fair value on March 10, 2017, and a gain of $155 million was recorded. At the same time, accumulated other comprehensive loss components of Boralex totaling $10 million and included in our consolidated balance sheet were reclassified to net earnings. These two items are presented in line item “Fair value revaluation of investment” in the consolidated statement of earnings. Subsequent fair value revaluation of this investment is recorded in ”Accumulated other comprehensive income”.

On July 27, 2017, Cascades announced the sale of all of its shares in Boralex to the Caisse de Dépôt et Placement du Québec for an amount of $288 million. The increase in fair value of $18 million from March 10 to July 27, 2017, recorded in “Accumulated other comprehensive income” materialized, and the Corporation recorded a gain of $18 million in the third quarter in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings. The Corporation also received $2 million of dividends while Boralex was considered an available-for-sale financial assets.

Greenpac Holding LLC

On April 4, 2017, the Corporation gained control over its associates Greenpac, which triggered its acquisition for accounting purposes. See Note 5 for more details.

On March 21, 2017, the Corporation acquired 23% of Containerboard Partners (Ontario) Inc. for a consideration of US$12 million ($16 million). This company is a member of Greenpac Holding LLC, of which it owns 12.1%. On November 30, 2017, the Corporation acquired an additional 30% of Containerboard Partners (Ontario) for a consideration of $19 million. These transactions add an indirect participation of 6.4% in Greenpac Holding LLC, bringing total legal ownership to 66.1%. However, in line with the deemed acquisition of Greenpac discussed above, the portion of our Containerboard Partners (Ontario) share of results pertaining to Greenpac is reversed for consolidation purposes.

On May 6, 2016, the Corporation announced that its then associate company Greenpac, located in Niagara Falls, NY, successfully refinanced its debt. The debt package included a term loan and a revolving credit facility. The five-year agreement allows the mill to reduce its financing costs by approximately 225 basis points, increasing its flexibility to successfully address future market fluctuations.

26 

The Corporation's financial information from its principal associates (100%), and translated in millions of Canadian dollars if required, is as follows: 

	2017			2016
(in millions of Canadian dollars)	BORALEX INC. (results up to March 10, 2017)		GREENPAC HOLDING LLC (results up to April 4, 2017)	BORALEX INC.		GREENPAC HOLDING LLC
Condensed balance sheet
Cash and cash equivalents	N/A		N/A	100		28
Current assets (other than cash and cash equivalents and current financial assets)	N/A		N/A	288		103
Current financial assets	N/A		N/A	1		1
Long-term assets (other than long-term financial assets)	N/A		N/A	2,311		513
Long-term financial assets	N/A		N/A	2		11
Current liabilities (other than current financial liabilities)	N/A		N/A	131		41
Current financial liabilities	N/A		N/A	321		19
Long-term liabilities (other than long-term financial liabilities)	N/A		N/A	131		—
Long-term financial liabilities	N/A		N/A	1,605		251
Condensed statements of earnings
Sales	96		99	299		340
Depreciation and amortization	31		7	116		28
Financing expense	19		3	76		27
Provision for (recovery of) income taxes	6		—	(9	)	—
Net earnings	13		9	2		22
Other comprehensive income (loss)
Translation adjustment	1		—	(12	)	—
Cash flow hedges	(1	)	1	—		4
	—		1	(12	)	4
Total comprehensive income (loss)	13		10	(10	)	26
Condensed cash flow
Dividends received from associates	2		—	7		—

Investment in Boralex Inc. had a fair value of $252 million as at December 31, 2016.

C. INVESTMENT IN JOINT VENTURES

The following are the principal joint ventures of the Corporation and the Corporation's percentage of equity owned:

	PERCENTAGE EQUITY OWNED (%)	PRINCIPAL ESTABLISHMENT
Cascades Sonoco US Inc.1	50	Birmingham, Alabama and Tacoma, Washington, United States
Cascades Sonoco inc.1	50	Kingsey Falls and Berthierville, Québec, Canada
Maritime Paper Products Limited Partnership (MPPLP) 2	40	Dartmouth, Nova Scotia, Canada
Tencorr Holdings Corporation 3	33.3	Brampton, Ontario, Canada

1 Joint ventures producing specialty paper packaging products such as headers, rolls and wrappers.

2 MPPLP is a Canadian corporation converting containerboard.

3 Tencorr Holdings Corporation operates as a supplier of corrugated sheet stock.

Tencorr Holdings Corporation

On November 30, 2017, the Corporation acquired 33.3% of the outstanding shares of Tencorr Holdings Corporation (Tencorr), a corrugated sheets manufacturer, for a consideration of $5 million, of which $3 million is payable as at December 31, 2017. Tencorr is classified as a joint venture, and accordingly our share of results is recorded using the equity method. 

27 

The Corporation's joint ventures information (100%), translated in millions of Canadian dollar if required, is as follows:

	2017
(in millions of Canadian dollars)	CASCADES SONOCO USINC.		CASCADES SONOCO INC.	MARITIME PAPER PRODUCTS LIMITED PARTNERSHIP	TENCORR HOLDINGS CORPORATION
Condensed balance sheet
Current assets (other than cash and cash equivalents and current financial assets)	30		28	25	20
Long-term assets (other than long-term financial assets)	31		17	28	12
Current liabilities (other than current financial liabilities)	10		6	4	14
Current financial liabilities	2		1	1	5
Long-term liabilities (other than long-term financial liabilities)	4		3	—	—
Long-term financial liabilities	14		3	4	1
Condensed statement of earnings
Sales	119		96	102	111
Depreciation and amortization	2		2	2	2
Financing expense	1		—	—	—
Provision for income taxes	1		1	—	—
Net earnings	8		4	7	1
Other comprehensive income (loss)
Translation adjustment	(2	)	—	—	—
Total comprehensive income	6		4	7	1
Condensed cash flow
Dividends received from joint ventures	4		1	1	—

	2016
(in millions of Canadian dollars)	CASCADES SONOCO USINC.		CASCADES SONOCO INC.	MARITIME PAPER PRODUCTS LIMITED PARTNERSHIP
Condensed balance sheet
Cash and cash equivalents	5		3	3
Current assets (other than cash and cash equivalents and current financial assets)	26		23	20
Long-term assets (other than long-term financial assets)	16		18	28
Current liabilities (other than current financial liabilities)	9		9	6
Current financial liabilities	1		—	1
Long-term liabilities (other than long-term financial liabilities)	4		3	—
Long-term financial liabilities	1		1	5
Condensed statement of earnings
Sales	119		88	96
Depreciation and amortization	2		2	2
Financing expense	1		—	1
Provision for income taxes	4		2	—
Net earnings	9		6	8
Other comprehensive income (loss)
Translation adjustment	(1	)	—	—
Total comprehensive income	8		6	8
Condensed cash flow
Dividends received from joint ventures	4		4	—

There are no contingent liabilities relating to the Corporation's interest in the joint ventures, and no contingent liabilities of the ventures themselves.

28 

D. SUBSIDIARIES WITH NON-CONTROLLING INTERESTS

The Corporation's information for its subsidiaries with significant non-controlling interests is as follows: 

	2017				2016
(in millions of Canadian dollars, unless otherwise noted)	RENO DE MEDICI S.p.A.		GREENPAC HOLDING LLC (since April 4, 2017)		RENO DE MEDICI S.p.A.
Principal establishment	Milan, Italy		New York, United States		Milan, Italy
Percentage of shares held by non-controlling interests (accounting basis)	42.18	%	17.17	%	42.30	%
Net earnings attributable to non-controlling interests	9		5		2
Non-controlling interests accumulated at the end of the year	105		42		90
Dividends paid to non-controlling interests	1		4		1
Condensed balance sheet
Cash and cash equivalents	29		38		41
Current assets (other than cash and cash equivalents and current financial assets)	254		100		231
Current financial assets	—		3		—
Long-term assets (other than long-term financial assets)	335		568		299
Long-term financial assets	—		14		—
Current liabilities (other than current financial liabilities)	195		31		178
Current financial liabilities	30		106		23
Long-term liabilities (other than long-term financial liabilities)	72		—		68
Long-term financial liabilities	67		209		82
Condensed statement of earnings
Sales	838		278		702
Depreciation and amortization	33		22		32
Provision for income taxes	9		—		5
Net earnings	21		21		5
Condensed cash flow
Cash flows from operating activities	49		39		56
Cash flows used from investing activities	(48	)	(3	)	(39	)
Cash flows used for financing activities	(17	)	(30	)	(9	)

E. NON-SIGNIFICANT ASSOCIATES AND JOINT VENTURES

The carrying value of investments in associates and joint ventures that are not significant for the Corporation is as follows: 

(in millions of Canadian dollars)	2017	2016
Non-significant associates	16	17
Non-significant joint ventures	16	14
	32	31

The shares of results of non-significant associates and joint ventures for the Corporation are as follows: 

(in millions of Canadian dollars)	2017	2016
Non-significant associates	1	2
Non-significant joint ventures	3	4
	4	6

The Corporation received dividends of $2 million from these associates and joint ventures as at December 31, 2017 (December 31, 2016 - $3 million).

29 

NOTE 9

PROPERTY, PLANT AND EQUIPMENT

(in millions of Canadian dollars)	NOTE	LAND		BUILDINGS		MACHINERY AND EQUIPMENT		AUTOMOTIVE EQUIPMENT		OTHERS		TOTAL
As at January 1, 2016
Cost		113		717		2,675		104		289		3,898
Accumulated depreciation and impairment		2		351		1,722		67		131		2,273
Net book amount		111		366		953		37		158		1,625
Year ended December 31, 2016
Opening net book amount		111		366		953		37		158		1,625
Additions		—		5		45		25		131		206
Disposals		(1	)	—		(1	)	—		(3	)	(5	)
Depreciation		—		(28	)	(116	)	(13	)	(13	)	(170	)
Business combination, net of assets transferred	5	1		7		—		—		—		8
Reversal of impairment (charges)	24	—		2		(3	)	—		(2	)	(3	)
Others		1		39		55		6		(98	)	3
Exchange differences		(2	)	(4	)	(22	)	—		(1	)	(29	)
Closing net book amount		110		387		911		55		172		1,635
As at December 31, 2016
Cost		110		740		2,553		126		299		3,828
Accumulated depreciation and impairment		—		353		1,642		71		127		2,193
Net book amount		110		387		911		55		172		1,635
Year ended December 31, 2017
Opening net book amount		110		387		911		55		172		1,635
Additions		11		6		24		18		148		207
Disposals		(3	)	(2	)	(1	)	(1	)	(1	)	(8	)
Depreciation		—		(31	)	(132	)	(15	)	(11	)	(189	)
Business combinations	5	7		90		397		1		27		522
Assets held for sale	29	(1	)	(8	)	—		—		(4	)	(13	)
Impairment charges	24	—		—		—		—		(2	)	(2	)
Others		(1	)	48		84		1		(133	)	(1	)
Exchange differences		1		(11	)	(29	)	(1	)	(7	)	(47	)
Closing net book amount		124		479		1,254		58		189		2,104
As at December 31, 2017
Cost		124		824		2,966		140		311		4,365
Accumulated depreciation and impairment		—		345		1,712		82		122		2,261
Net book amount		124		479		1,254		58		189		2,104

Other property, plant and equipment include buildings and machinery and equipment in the process of construction or installation with a book value of $81 million (December 31, 2016 - $90 million) and deposits on purchases of machinery and equipment amounting to $18 million (December 31, 2016 - $7 million). The carrying value of finance-lease assets is $31 million (December 31, 2016 - $24 million).

In 2017, $2 million (2016 - $2 million) of interest incurred on qualifying assets was capitalized. The weighted average capitalization rate on funds borrowed in 2017 was 5.56% (2016 - 5.56%). 

30 

NOTE 10

GOODWILL AND OTHER INTANGIBLE ASSETS WITH FINITE AND INDEFINITE USEFUL LIFE

(in millions of Canadian dollars)	NOTE	APPLICATION SOFTWARE AND ERP		CUSTOMER RELATIONSHIPS AND CLIENT LISTS		OTHER INTANGIBLE ASSETS WITH FINITE USEFUL LIFE		TOTAL INTANGIBLE ASSETS WITH FINITE USEFUL LIFE		GOODWILL		OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE		TOTAL INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE
As at January 1, 2016
Cost		110		170		35		315		343		8		351
Accumulated amortization and impairment		34		78		29		141		4		1		5
Net book amount		76		92		6		174		339		7		346
Year ended December 31, 2016
Opening net book amount		76		92		6		174		339		7		346
Additions		17		—		—		17		—		—		—
Business combinations	5	—		1		—		1		7		—		7
Amortization		(10	)	(9	)	(3	)	(22	)	—		—		—
Others		—		—		1		1		—		(1	)	(1	)
Exchange differences		—		—		—		—		(2	)	—		(2	)
Closing net book amount		83		84		4		171		344		6		350
As at December 31, 2016
Cost		126		171		35		332		349		7		356
Accumulated amortization and impairment		43		87		31		161		5		1		6
Net book amount		83		84		4		171		344		6		350
Year ended December 31, 2017
Opening net book amount		83		84		4		171		344		6		350
Additions		24		—		—		24		—		—		—
Business combinations	5	—		46		—		46		194		—		194
Amortization		(13	)	(11	)	(2	)	(26	)	—		—		—
Exchange differences		—		(3	)	—		(3	)	(17	)	1		(16	)
Closing net book amount		94		116		2		212		521		7		528
As at December 31, 2017
Cost		150		208		32		390		523		7		530
Accumulated amortization and impairment		56		92		30		178		2		—		2
Net book amount		94		116		2		212		521		7		528

NOTE 11

OTHER ASSETS 

(in millions of Canadian dollars)	NOTE	2017		2016
Notes receivable from business disposals		6		9
Other investments		7		5
Other assets		30		27
Employee future benefits	16	37		46
		80		87
Less: Current portion, included in accounts receivables		(6	)	(15	)
		74		72

Other assets include deferred revenue for the supervision of Greenpac Mill totaling $12 million as at December 31, 2016 and nil at the end of 2017. The Corporation did receive $1 million before the acquisition of Greenpac described in Note 5, while the balance of $11 million was written off since expected future cash flows related to this asset will not materialize on a consolidated basis following the Greenpac acquisition.

In December 2017, the Corporation deposited €10 million ($15 million) for the acquisition of PAC Service S.p.A in the Boxboard Europe segment. See Note 29 for more details.

31 

NOTE 12

TRADE AND OTHER PAYABLES 

(in millions of Canadian dollars)	NOTE	2017	2016
Trade payables		488	472
Payables to related parties	28	7	44
Accrued expenses		143	145
		638	661

NOTE 13

PROVISIONS FOR CONTINGENCIES AND CHARGES 

(in millions of Canadian dollars)	ENVIRONMENTAL RESTORATION OBLIGATIONS		ENVIRONMENTAL COSTS		LEGAL CLAIMS		SEVERANCES		ONEROUS CONTRACT		OTHERS		TOTAL PROVISIONS
As at January 1, 2016	9		14		3		2		5		6		39
Additional provision	—		5		1		7		3		4		20
Reversal of provision	—		(1	)	—		—		(1	)	—		(2	)
Payments	(3	)	(2	)	(1	)	(6	)	(1	)	(3	)	(16	)
Revaluation	2		—		—		—		—		—		2
As at December 31, 2016	8		16		3		3		6		7		43
Additional provision	(1	)	—		2		5		—		2		8
Payments	—		—		(1	)	(5	)	(3	)	(2	)	(11	)
Others	—		—		—		—		—		3		3
As at December 31, 2017	7		16		4		3		3		10		43

Analysis of total provisions: 

(in millions of Canadian dollars)	2017	2016
Long-term	36	34
Current	7	9
	43	43

ENVIRONMENTAL RESTORATION

The Corporation uses some landfill sites. A provision has been recognized at fair value for the costs to be incurred for the restoration of these sites.

ENVIRONMENTAL COSTS

An environmental provision is recorded when the Corporation has an obligation caused by its ongoing or abandoned operations.

LEGAL CLAIMS

In the normal course of operations, the Corporation is party to various legal actions and contingencies related to contract disputes and labour issues.

In the normal course of operations, the Corporation is party to various legal actions and contingencies, mostly related to contract disputes, environmental and product warranty claims, and labour issues. While the final outcome with respect to legal actions outstanding or pending as at December 31, 2017, cannot be predicted with certainty, it is Management's opinion that the outcome will not have a material adverse effect on the Corporation's consolidated financial position, the results of its operations or its cash flows.

32 

The Corporation is currently working with representatives of the Ontario Ministry of the Environment (MOE) - Northern Region and Environment Canada - Great Lakes Sustainability Fund in Toronto, regarding its potential responsibility for an environmental impact identified at its former Thunder Bay facility. Both authorities have requested that the Corporation look into a site management plan relating to the sediment quality adjacent to Thunder Bay's lagoon. Several meetings have been held during the past years with the MOE and Environment Canada, and a management plan based on sediment dredging has been proposed by a third party consultant. Both governments are looking at this proposal with stakeholders to agree on this remediation action plan that would likely be implemented in the coming years.

The Corporation is also in discussions with representatives of the MOE, regarding its potential responsibility for an environmental impact identified at Thunder Bay. This facility was sold to Thunder Bay Fine Papers Inc. (Fine Papers) in 2007. Fine Papers has since sold the facility to Superior Fine Papers Inc. (Superior). The MOE has requested that the Corporation, together with the former owner Fine Papers and the current owner Superior, submit a closure plan for the Waste Disposal Site and a decommissioning plan for the closure and long-term monitoring for the Sewage Works (the Plans). Although the Corporation recognizes that, where as a result of past events, there may be an outflow of resources embodying future economic benefits in settlement of a possible obligation, it is not possible at this time to estimate the Corporation's obligation, since Superior has not submitted all of the Plans and related costs to allow the Corporation to perform an evaluation, nor does the Corporation have access to the site. Moreover, the Corporation is unable to ascertain the value of the assets remaining on its former site that may be available to fund this potential obligation. The Corporation is pursuing all available legal remedies to resolve the situation. In any event, Management does not consider the Corporation's potential obligation to be material.

The Corporation has recorded an environmental reserve to address its estimated exposure for these matters. 

NOTE 14

LONG-TERM DEBT

(in millions of Canadian dollars)	NOTE	MATURITY	2017	2016
Revolving credit facility, weighted average interest rate of 3.39% as at December 31, 2017, consists of $5million and US$151 million (December 31, 2016 - $(19) million; US$82 million and €(1)million)	14(b)	2021	195	90
5.50% Unsecured senior notes of $250 million		2021	250	250
5.50% Unsecured senior notes of US$400 million (December 31,2016 - US$550 million)	14(a)	2022	503	738
5.75% Unsecured senior notes of US$200 million (December 31, 2016 - US$250 million)	14(a)	2023	252	336
Other debts of subsidiaries			66	62
Other debts without recourse to the Corporation			320	105
			1,586	1,581
Less: Unamortized financing costs			10	15
Total long-term debt			1,576	1,566
Less:
Current portion of debts of subsidiaries			14	13
Current portion of debts without recourse to the Corporation			45	23
			59	36
			1,517	1,530

a. On December 12, 2017, the Corporation repurchased US$150 million of its 5.50% unsecured senior notes due in 2022 for an amount of US$156 million ($201 million) and US$50 million of its 5.75% unsecured senior notes due in 2023 for an amount of US$52 million ($67 million), including premiums of US$6 million ($8 million) and US$2 million ($3 million). The Corporation also wrote off $3 million of unamortized financing costs related to these notes.

b. On June 1, 2017, the Corporation entered into an agreement with its lenders to extend and amend its existing $750 million credit facility. The amendment extends the term of the facility to July 2021. The financial conditions remain essentially unchanged.

c. As at December 31, 2017, accounts receivable and inventories totaling approximately $748 million (December 31, 2016 - $715 million) as well as property, plant and equipment totaling approximately $237 million (December 31, 2016 - $250 million) were pledged as collateral for the Corporation's revolving credit facility.

d. As a result of the Greenpac acquisition described in Note 5, current portion of long-term debt and long-term debt increased by respectively $15 million and $235 million on April, 4, 2017 (net of $3 million settlement of intercompany debt with Cascades prior to the transaction).

33 

e. The Corporation has finance leases for various items of property, plant and equipment. Renewals and purchase options are specific to the entity that holds the lease. Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

	2017		2016
(in millions of Canadian dollars)	MINIMUM PAYMENTS	PRESENT VALUE OF PAYMENTS	MINIMUM PAYMENTS	PRESENT VALUE OF PAYMENTS
Within one year	11	9	8	7
Later than one year but no later than five years	22	18	19	15
More than five years	6	6	7	6
Total minimum lease payments	39	33	34	28
Less: amounts representing finance charges	6	—	6	—
Present value of minimum lease payments	33	33	28	28

NOTE 15

OTHER LIABILITIES 

(in millions of Canadian dollars)	NOTE	2017		2016
Employee future benefits	16	174		174
Greenpac equity holder put option (see Note 5 for more details)		80		—
Other		6		8
		260		182
Less: Current portion		(82	)	(4	)
		178		178

NOTE 16

EMPLOYEE FUTURE BENEFITS

The Corporation operates various post-employment plans, including both defined benefit and defined contribution pension plans and post-employment benefit plans, such as retirement allowance, group life insurance and medical and dental plans. The table below outlines where the Corporation’s post-employment amounts and activity are included in the consolidated financial statements.

(in millions of Canadian dollars)	NOTE	2017		2016
Consolidated balance sheet obligations for
Defined pension benefits	16(a)	36		22
Post-employment benefits other than defined benefit pension plans	16(b)	101		106
Net long-term liabilities on consolidated balance sheet		137		128
Income statement charge for
Defined pension benefits		7		7
Defined contribution benefits		21		20
Post-employment benefits other than defined benefit pension plans		4		5
		32		32
Remeasurements for
Defined pension benefits	16(a)	14		(13	)
Post-employment benefits other than defined benefit pension plans	16(b)	(1	)	2
		13		(11	)

34 

A. DEFINED BENEFIT PENSION PLANS

The Corporation offers funded and unfunded defined benefit pension plans, defined contribution pension plans and group RRSPs that provide retirement benefit payments for most of its employees. The defined benefit pension plans are usually contributory and are based on the number of years of service and, in most cases, the average salaries or compensation at the end of a career. Retirement benefits are not partially adjusted based on inflation.

The majority of benefit payments are payable from trustee administered funds; however, for the unfunded plans, the Corporation meets the benefit payment obligation as it falls due. Plan assets held in trusts are governed by local regulations and practices in each country. Responsibility for governance of the plans - overseeing all aspects of the plans including investment decisions and contribution schedules - lies with the Corporation. The Corporation has established Investment Committees to assist in the management of the plans and has also appointed experienced, independent professional experts such as investments managers, investment consultants, actuaries and custodians.

The movement in the net defined benefit obligation and fair value of plan assets of pension plans over the year is as follows:

(in millions of Canadian dollars)	PRESENT VALUE OF OBLIGATION		FAIR VALUE OF PLAN ASSETS		TOTAL		IMPACT OF MINIMUM FUNDING REQUIREMENT (ASSET CEILING)		TOTAL
As at January 1, 2016	484		(454	)	30		6		36
Current service cost	5		—		5		—		5
Interest expense (income)	18		(16	)	2		—		2
Impact on profit or loss	23		(16	)	7		—		7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	—		(9	)	(9	)	—		(9	)
Loss from change in financial assumptions	11		—		11		—		11
Experience gains	(9	)	—		(9	)	—		(9	)
Change in asset ceiling, excluding amounts included in interest expense	—		—		—		(6	)	(6	)
Impact of remeasurements on other comprehensive income	2		(9	)	(7	)	(6	)	(13	)
Exchange differences	(1	)	—		(1	)	—		(1	)
Contributions
Employers	—		(7	)	(7	)	—		(7	)
Plan participants	2		(2	)	—		—		—
Benefit payments	(28	)	28		—		—		—
As at December 31, 2016	482		(460	)	22		—		22
Current service cost	5		—		5		—		5
Interest expense (income)	17		(15	)	2		—		2
Impact on profit or loss	22		(15	)	7		—		7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	—		(14	)	(14	)	—		(14	)
Loss from change in demographic assumptions	2		—		2		—		2
Loss from change in financial assumptions	14		—		14		—		14
Experience loss	12		—		12		—		12
Impact of remeasurements on other comprehensive income	28		(14	)	14		—		14
Exchange differences	1		—		1		—		1
Contributions
Employers	—		(8	)	(8	)	—		(8	)
Plan participants	2		(2	)	—		—		—
Benefit payments	(27	)	27		—		—		—
As at December 31, 2017	508		(472	)	36		—		36

35 

The defined benefit obligation and plan assets are composed by country and by sector as follows: 

	2017
(in millions of Canadian dollars)	CANADA		UNITED STATES	EUROPE	TOTAL
Present value of funded obligations	433		10	—	443
Fair value of plan assets	466		6	—	472
Deficit (surplus) of funded plans	(33	)	4	—	(29	)
Present value of unfunded obligations	37		—	28	65
Liabilities on consolidated balance sheet	4		4	28	36

	2017
(in millions of Canadian dollars)	CONTAINERBOARD		BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of funded obligations	405		—	—	37	1	443
Fair value of plan assets	437		—	—	34	1	472
Deficit (surplus) of funded plans	(32	)	—	—	3	—	(29	)
Present value of unfunded obligations	8		28	2	2	25	65
Liabilities (assets) on consolidated balance sheet	(24	)	28	2	5	25	36

	2016
(in millions of Canadian dollars)	CANADA		UNITED STATES	EUROPE	TOTAL
Present value of funded obligations	411		10	—	421
Fair value of plan assets	454		6	—	460
Deficit (surplus) of funded plans	(43	)	4	—	(39	)
Present value of unfunded obligations	37		—	24	61
Liabilities (assets) on consolidated balance sheet	(6	)	4	24	22

	2016
(in millions of Canadian dollars)	CONTAINERBOARD		BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of funded obligations	385		—	—	35	1	421
Fair value of plan assets	427		—	—	32	1	460
Deficit (surplus) of funded plans	(42	)	—	—	3	—	(39	)
Present value of unfunded obligations	8		24	2	2	25	61
Liabilities (assets) on consolidated balance sheet	(34	)	24	2	5	25	22

The significant actuarial assumptions are as follows: 

	2017						2016
	CANADA		UNITED STATES		EUROPE		CANADA		UNITED STATES		EUROPE
Discount rate obligation (ending period)	3.40	%	3.31	%	1.60	%	3.70	%	3.73	%	1.90	%
Discount rate obligation (beginning period)	3.70	%	3.73	%	1.90	%	3.90	%	3.90	%	2.10	%
Discount rate (current service cost)	3.50	%	3.73	%	1.90	%	3.90	%	3.90	%	2.10	%
Salary growth rate	Between 2.00%and 2.75%		N/A		N/A		Between 1.75% and 3.00%		N/A		N/A
Inflation rate	2.25	%	N/A		1.75	%	Between 2.25%and2.50%		N/A		1.75	%

36 

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each territory. For Canadian pension plans, which represent 93% of all pension plans, these assumptions translate into an average life expectancy in years for a pensioner retiring at age 65:

	2017	2016
Retiring at the end of the year
Male	21.7	21.6
Female	24.1	24.1
Retiring 20 years after the end of the reporting year
Male	22.8	22.7
Female	25.1	25

The sensitivity of the Canadian defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented. 

	IMPACT ON DEFINED BENEFIT OBLIGATION
	CHANGE IN ASSUMPTION		INCREASE IN ASSUMPTION		DECREASE IN ASSUMPTION
Discount rate	0.25	%	(2.90	)%	3.10	%
Salary growth rate	0.25	%	0.40	%	(0.30	)%
			INCREASE / DECREASE BY 1 YEAR IN ASSUMPTION
Life expectancy			3.00			%

Plan assets, which are funding the Corporation’s defined pension plans, are comprised as follows: 

	2017
(in millions of Canadian dollars)	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL	%
Cash and short-term investments	5	—	—	5	1.1	%
Bonds
Canadian bonds	92	81	—	173	36.7	%
Shares
Canadian shares	34	—	—	34
Foreign shares	6	—	—	6
				40	8.5	%
Mutual funds
Foreign bond mutual funds	—	6	—	6
Canadian equity mutual funds	7	1	—	8
Foreign equity mutual funds	—	54	—	54
Alternative investments funds	—	22	—	22
				90	19.1	%
Other
Insured annuities	—	164	—	164
				164	34.6	%
	144	328	—	472

37 

	2016
(in millions of Canadian dollars)	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL	%
Cash and short-term investments	9	—	—	9	2.0	%
Bonds
Canadian bonds	47	67	—	114	24.8	%
Shares
Canadian shares	71	—	—	71
Foreign shares	14	—	—	14
				85	18.5	%
Mutual funds
Foreign bond mutual funds	—	2	—	2
Canadian equity mutual funds	16	3	—	19
Foreign equity mutual funds	—	109	—	109
Alternative investments funds	—	21	—	21
				151	32.8	%
Other
Insured annuities	—	94	—	94
Derivatives contract, net	7	—	—	7
				101	21.9	%
	164	296	—	460

The plan assets include shares of the Corporation for an amount of less than $1 million. These shares were bought by one of the asset managers. Annual benefit annuities of an approximate value of $164 million are pledged by insurance contracts.

B. POST-EMPLOYMENT BENEFITS OTHER THAN DEFINED BENEFIT PENSION PLANS

The Corporation also offers its employees some post-employment benefit plans, such as retirement allowance, group life insurance and medical and dental plans. However, these benefits, other than pension plans, are not funded. Furthermore, the medical and dental plans upon retirement are being phased out and are no longer offered to the majority of new retirees, and the retirement allowance is not offered to the majority of employees hired after 2002.

The amounts recognized in the consolidated balance sheet composed by country and by sector are determined as follows: 

	2017
(in millions of Canadian dollars)	CANADA	UNITED STATES	EUROPE	TOTAL
Present value of unfunded obligations	73	4	24	101
Liabilities on consolidated balance sheet	73	4	24	101

	2017
(in millions of Canadian dollars)	CONTAINERBOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of unfunded obligations	38	24	6	12	21	101
Liabilities on consolidated balance sheet	38	24	6	12	21	101

	2016
(in millions of Canadian dollars)	CANADA	UNITED STATES	EUROPE	TOTAL
Present value of unfunded obligations	78	4	24	106
Liabilities on consolidated balance sheet	78	4	24	106

	2016
(in millions of Canadian dollars)	CONTAINERBOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of unfunded obligations	41	24	6	13	22	106
Liabilities on consolidated balance sheet	41	24	6	13	22	106

38 

The movement in the net defined benefit obligation for post-employment benefits over the year is as follows: 

(in millions of Canadian dollars)	PRESENT VALUE OF OBLIGATION		FAIR VALUE OF PLAN ASSET		TOTAL
As at January 1, 2016	105		—		105
Current service cost	2		—		2
Interest expense	3		—		3
Impact on profit or loss	5		—		5
Remeasurements
Loss from change in financial assumptions	2		—		2
Impact of remeasurements on other comprehensive income	2		—		2
Exchange differences	(1	)	—		(1	)
Contributions and premiums paid by the employer	—		(5	)	(5	)
Benefit payments	(5	)	5		—
As at December 31, 2016	106		—		106
Current service cost	2		—		2
Interest expense	3		—		3
Curtailments	(1	)	—		(1	)
Impact on profit or loss	4		—		4
Remeasurements
Loss from change in financial assumptions	1		—		1
Experience gains	(2	)	—		(2	)
Impact of remeasurements on other comprehensive income	(1	)	—		(1	)
Exchange differences	1		—		1
Contributions and premiums paid by the employer	—		(9	)	(9	)
Benefit payments	(9	)	9		—
As at December 31, 2017	101		—		101

The method of accounting, assumptions relating to discount rate and life expectancy, and the frequency of valuations for post-employment benefits are similar to those used for defined benefit pension plans, with the addition of actuarial assumptions relating to the long-term increase in health care costs of 4.50% a year (2016 - 4.50%).

The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented. 

	IMPACT ON OBLIGATION FOR POST-EMPLOYMENT BENEFITS
	CHANGE IN ASSUMPTION		INCREASE IN ASSUMPTION		DECREASE IN ASSUMPTION
Discount rate	0.25	%	(2.20	)%	2.30	%
Salary growth rate	0.25	%	0.50	%	(0.40	)%
Health care cost increase	1.00	%	2.00	%	(1.70	)%
			INCREASE / DECREASE BY 1 YEAR IN ASSUMPTION
Life expectancy			0.80			%

39 

C. RISKS AND OTHER CONSIDERATIONS RELATIVE TO POST-EMPLOYMENT BENEFITS

Through its defined benefit plans, the Corporation is exposed to a number of risks, the most significant of which are detailed below.

Asset volatility

The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; and if plan assets underperform this yield, it will create an experience loss. Both the Canadian and U.S. plans hold a proportion of equities, which are expected to outperform corporate bonds in the long term while contributing volatility and risk in the short term.

The Corporation intends to reduce the level of investment risk by investing more in assets that better match the liabilities when the financial situation of the plans improves and/or the rate of return on bonds used for solvency valuations increases.

As at December 31, 2017, 65% of the plan's assets are invested in bonds. In 2014, the Corporation decided to purchase annuities from a life insurance company for some pensioners according to the market and financial situation of the plans. As at December 31, 2017, the total value of insured annuities is $164 million.

However, the Corporation believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the Corporation’s long-term strategy to manage the plans efficiently. Plan assets are diversified, so the failure of an individual stock would not have a big impact on the plan assets taken as a whole. The pension plans do not face a significant currency risk.

Changes in bond yields

A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings, particularly for plans in a good financial position that have a greater proportion of bonds.

Inflation risk

The benefits paid are not indexed. Only future benefits for active members are based on salaries. Therefore, this risk is not significant.

Life expectancy

The majority of the plans’ obligations are to provide benefits for the member's lifetime, so increases in life expectancy will result in an increase in the plans’ liabilities.

Each sensitivity analysis disclosed in this note is based on changing one assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to variations in significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated using the projected unit credit method at the end of the reporting period) has been applied as for calculating the liability recognized in the consolidated balance sheet.

As at December 31, 2017, the aggregate surplus of the Corporation’s funded pension plans (mostly in Canada) amounted to $29 million (a surplus of $39 million as at December 31, 2016). The Corporation will make special payments of $1 million for past service to fund the Canadian pension plan deficit over ten years. Current agreed expected service contributions amount to $8 million and will be made in the normal course of business. As for the cash flow requirement, these pension plans are expected to require a net contribution of approximately $9 million in 2018.

The weighted average duration of the defined benefit obligation is 11 years (2016 - 12 years).

Expected maturity analysis of undiscounted pension and other post-employment benefits: 

(in millions of Canadian dollars)	LESS THAN A YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	OVER FIVE YEARS	TOTAL
Pension benefits	29	29	89	743	890
Post-employment benefits other than defined benefit pension plans	5	8	24	115	152
As at December 31, 2017	34	37	113	858	1,042

These amounts represent all the benefits payable to current members during the following years and thereafter without limitations. The majority of benefit payments are payable from trustee administered funds. The difference will come from future investment returns expected on plan assets and future contributions that will be made by the Corporation for services rendered after December 31, 2017.

40 

NOTE 17

INCOME TAXES

a. The provision for (recovery of) income taxes is as follows:

(in millions of Canadian dollars)	2017		2016
Current taxes	10		11
Deferred taxes	(91	)	34
	(81	)	45

b. The provision for (recovery of) income taxes based on the effective income tax rate differs from the provision for income taxes based on the combined basic rate for the following reasons:

(in millions of Canadian dollars)	NOTE	2017		2016
Provision for income taxes based on the combined basic Canadian and provincial income tax rate		117		48
Adjustment for income taxes arising from the following:
Difference in statutory income tax rate of foreign operations		10		2
Prior years reassessment		3		1
Reversal of deferred income tax liabilities related to our previously held investment in Greenpac	5	(70	)	—
Permanent difference on revaluation of previously held equity interest - Greenpac associate	5	(57	)	—
Non-taxable portion of capital gain on revaluation of previously held equity interest - Boralex associate	8	(24	)	—
Change in future income taxes resulting from enacted tax rate change		(57	)	2
Unrealized capital gain on long-term debt		(3	)	—
Permanent differences		(6	)	(5	)
Change in deferred income tax assets relating to capital tax loss		6		(3	)
		(198	)	(3	)
Provision for (recovery of) income taxes		(81	)	45

Weighted average income tax rate for the year ended December 31, 2017, was 28.6% (2016 - 27.4%).

In conjunction with the acquisition of Greenpac, the Corporation recorded an income tax recovery of $70 million representing deferred income taxes on its investment prior to the acquisition on April 4, 2017. Also, there was no income tax provision recorded on the gain of $156 million generated by the business combination of Greenpac, since it is included in the fair value of assets and liabilities acquired as described in Note 5.

The income tax provision on Boralex revaluation gain was calculated at the rate of capital gains. Also, consequently with the sale of its participation in Boralex in July 2017, the Corporation has reassessed the probability of recovering unrealized capital losses on long-term debt due to foreign exchange fluctuations. As a result, $6 million of tax assets was unrecognized and recorded in the consolidated statement of earnings.

Under the Tax Cuts and Jobs Act, which was substantially enacted on December 22, 2017, the U.S. statutory federal income tax rate was reduced to 21% from the previous rate of 35%. The impact of the change in tax rate resulted in a reduction of $57 million of the net deferred tax liability position for the year ended December 31, 2017.

c. The provision for income taxes relating to components of other comprehensive income is as follows:

(in millions of Canadian dollars)	2017		2016
Foreign currency translation related to hedging activities	4		3
Cash flow hedge	—		3
Included in share of other comprehensive income of associates	3		—
Actuarial gain (loss) on post-employment benefit obligations	(3	)	3
	4		9

41 

d. The analysis of deferred tax assets and deferred tax liabilities, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

(in millions of Canadian dollars)	2017		2016
Deferred income tax assets:
Deferred income tax assets to be recovered after more than twelve months	223		279
Deferred income tax liabilities:
Deferred income tax liabilities to be used after more than twelve months	260		319
	(37	)	(40	)

The movement of the deferred income tax account is as follows:

(in millions of Canadian dollars)	NOTE	2017		2016
As at January 1		(40	)	(8	)
Through statement of earnings		91		(34	)
Variance of income tax credit, net of related income tax		4		5
Through statement of comprehensive income		(4	)	(9	)
Through business combinations	5	(91	)	—
Others		(7	)	—
Exchange differences		10		6
As at December 31		(37	)	(40	)

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

DEFERRED INCOME TAX ASSET

(in millions of Canadian dollars)	RECOGNIZED TAX BENEFIT ARISING FROM INCOME TAX LOSSES		EMPLOYEE FUTURE BENEFITS		EXPENSE ON RESEARCH		UNUSED TAX CREDITS		FINANCIAL INSTRUMENTS		FOREIGN EXCHANGE LOSS ON LONG-TERM DEBT		OTHERS	TOTAL
As at January 1, 2016	141		25		38		39		16		23		15	297
Through statement of earnings	19		2		(23	)	(3	)	(8	)	(2	)	1	(14	)
Variance of income tax credit	—		—		—		5		—		—		—	5
Through statement of comprehensive income	—		(3	)	—		—		(3	)	(3	)	—	(9	)
Exchange differences	(1	)	—		—		—		—		1		—	—
As at December 31, 2016	159		24		15		41		5		19		16	279
Through statement of earnings	(25	)	(6	)	(10	)	(6	)	(5	)	(12	)	5	(59	)
Variance of income tax credit	—		—		—		4		—		—		—	4
Through statement of comprehensive income	—		3		—		—		1		(5	)	—	(1	)
As at December 31, 2017	134		21		5		39		1		2		21	223

42 

DEFERRED INCOME TAX LIABILITIES

(in millions of Canadian dollars)	NOTE	PROPERTY, PLANT AND EQUIPMENT		INTANGIBLE ASSETS		INVESTMENTS		OTHERS	TOTAL
As at January 1, 2016		169		51		84		1	305
Through statement of earnings		14		3		3		—	20
Exchange differences		(3	)	(1	)	(2	)	—	(6	)
As at December 31, 2016		180		53		85		1	319
Through statement of earnings		(51	)	(14	)	(85	)	—	(150	)
Included in share of other comprehensive income of associates		—		—		3		—	3
Through business combinations	5	80		11		—		—	91
Others		5		2		—		—	7
Exchange differences		(9	)	(1	)	—		—	(10	)
As at December 31, 2017		205		51		3		1	260

When taking into consideration the offsetting of balances within the same tax jurisdiction, the net deferred tax liability of $37 million is presented on the consolidated balance sheet as $149 million of “Deferred income tax asset” amounts and $186 million of “Deferred income tax liabilities”.

e. The Corporation has recognized accumulated losses for income tax purposes amounting to approximately $515 million, which may be carried forward to reduce taxable income in future years. The future tax benefit of $134 million resulting from the deferral of these losses has been recognized in the accounts as a deferred income tax asset. Deferred income tax assets are recognized for tax loss carry forward to the extent that the realization of the related tax benefits through future taxable profits is probable. Income tax losses as at December 31, 2017 are detailed as follows:

(in millions of Canadian dollars)	RECOGNIZED TAX LOSSES	MATURITY
Canada	8	2026
	14	2027
	2	2029
	1	2030
	77	2032
	82	2033
	126	2034
	63	2035
	53	2036
	3	2037
	429
United States	7	2019
	5	2020
	2	2029
	2	2031
	3	2032
	2	2033
	13	2035
	1	2036
	46	2037
	81
Europe	5	Indefinitely
	515

43 

NOTE 18

CAPITAL STOCK

A. CAPITAL MANAGEMENT

Capital is defined as long-term debt, bank loans and advances net of cash and cash equivalents and Shareholders' equity, which includes capital stock.

(in millions of Canadian dollars)	2017		2016
Cash and cash equivalents	(89	)	(62	)
Bank loans and advances	35		28
Long-term debt, including current portion	1,576		1,566
	1,522		1,532
Total equity	1,601		1,074
Total capital	3,123		2,606

The Corporation's objectives when managing capital are:

• to safeguard the Corporation's ability to continue as a going concern in order to provide returns to Shareholders;

• to maintain an optimal capital structure and reduce the cost of capital;

• to make proper capital investments that are significant to ensure that the Corporation remains competitive; and

• to redeem common shares based on an annual redemption program.

The Corporation sets the amount of capital in proportion to risk. The Corporation manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to Shareholders, return capital to Shareholders, issue new shares and acquire or sell assets to improve its financial performance and flexibility.

The Corporation monitors capital on a monthly and quarterly basis based on different financial ratios and non-financial performance indicators. Also, the Corporation must conform to certain financial ratios under its various credit agreements. These ratios are calculated on an adjusted consolidated basis of restricted subsidiaries only. These are a maximum ratio of funded debt to capitalization of 65% and a minimum interest coverage ratio of 2.25x. The Corporation must also comply with a consolidated interest coverage ratio to incur additional debt. Funded debt is defined as liabilities as per the consolidated balance sheet, including guarantees and liens granted in respect of funded debt of another person but excluding other long-term liabilities, trade accounts payable, obligations under operating leases and other accrued obligations (2017 - $1,307 million; 2016 - $1,512 million). The capitalization ratio is calculated as “Shareholders' equity” as shown in the consolidated balance sheet plus the funded debt. Shareholders' equity is adjusted to add back the effect of IFRS adjustments as at December 31, 2010, in the amount of $208 million. The interest coverage ratio is defined as operating income before depreciation and amortization (OIBD) to financing expense. The OIBD is defined as net earnings of the last four quarters plus financing expense, income taxes, amortization and depreciation, expense for stock options and dividends received from a person who is not a credit party (2017 - $296 million; 2016 - $379 million). Excluded from net earnings are the share of results of equity investments and gains or losses from non-recurring items. Financing expense is calculated as interest and financial charges determined in accordance with IFRS plus any capitalized interest but excluding the amortization of deferred financing costs, up-front and financing costs and unrealized gains or losses arising from hedging agreements. It also excludes any gains or losses on the translation of long-term debt denominated in a foreign currency. The consolidated interest coverage ratio to incur additional debt is calculated as defined in the Senior notes indentures dated June 19, 2014 and May 19, 2015.

As at December 31, 2017, the funded debt-to-capitalization ratio stood at 44.01% and the interest coverage ratio was 3.88x. The Corporation is in compliance with the ratio requirements of its lenders.

The Corporation's credit facility is subject to terms and conditions for loans of this nature, including limits on incurring additional indebtedness and granting liens or selling assets without the consent of the lenders.

The unsecured senior notes are subject to customary covenants restricting the Corporation's ability to, among other things, incur additional debt, pay dividends and make other restricted payments as defined in the Indentures dated June 19, 2014 and May 19, 2015.

The Corporation historically invests between $150 million and $250 million annually on purchases of property, plant and equipment. These amounts are carefully reviewed during the course of the year in relation to operating results and strategic actions approved by the Board of Directors. These investments, combined with annual maintenance, enhance the stability of the Corporation's business units and improve cost competitiveness through new technology and improved process procedures. 

44 

The Corporation has an annual share redemption program in place to redeem its outstanding common shares when the market price is judged appropriate by Management. In addition to limitations on the normal course issuer bid, the Corporation's ability to redeem common shares is limited by its senior notes indenture.

B. ISSUED AND OUTSTANDING

The authorized capital stock of the Corporation consists of an unlimited number of common shares, without nominal value, and an unlimited number of Class A and B shares issuable in series without nominal value. Over the past two years, the common shares have fluctuated as follows:

		2017		2016
	NOTE	NUMBER OF COMMON SHARES	IN MILLIONS OF CANADIAN DOLLARS	NUMBER OF COMMON SHARES		IN MILLIONS OF CANADIAN DOLLARS
Balance - beginning of year		94,526,516	487	95,310,923		490
Common shares issued on exercise of stock options	18(d)	461,442	5	262,836		2
Redemption of common shares	18(c)	—	—	(1,047,243	)	(5	)
Balance - end of year		94,987,958	492	94,526,516		487

C. REDEMPTION OF COMMON SHARES

In 2017, in the normal course of business, the Corporation renewed its redemption program of a maximum of 946,066 common shares with the Toronto Stock Exchange, said shares representing approximately 1% of issued and outstanding common shares. The redemption authorization is valid from March 17, 2017 to March 16, 2018. In 2017, the Corporation redeemed no common share under this program (2016 - 1,047,243 common shares for an amount of $9 million).

D. COMMON SHARE ISSUANCE

The Corporation issued 461,442 common shares upon the exercise of options for an amount of $4 million (2016 - $2 million for 262,836 common shares issued).

E. NET EARNINGS PER COMMON SHARE

The basic and diluted net earnings per common share are calculated as follows:

	2017		2016
Net earnings available to common shareholders (in millions of Canadian dollars)	507		135
Weighted average number of basic common shares outstanding (in millions)	95		95
Weighted average number of diluted common shares outstanding (in millions)	98		97
Basic net earnings per common share (in Canadian dollars)	$	5.35	$	1.42
Diluted net earnings per common share (in Canadian dollars)	$	5.19	$	1.39

As at December 31, 2017, 240,880 stock options have an antidilutive effect (2016 - nil). As of February 28, 2018, no common share had been redeemed by the Corporation since the beginning of the financial year.

F. DETAILS OF DIVIDENDS DECLARED PER COMMON SHARE ARE AS FOLLOWS

	2017		2016
Dividends declared per common share	$	0.16	$	0.16

NOTE 19

STOCK-BASED COMPENSATION

a. Under the terms of a share option plan adopted on December 15, 1998, amended on March 15, 2013, and approved by Shareholders on May 8, 2013, a remaining balance of 1,990,554 common shares is specifically reserved for issuance for officers and key employees of the Corporation. Each option will expire at a date not to exceed 10 years following the grant date of the option. The exercise price of an option shall not be lower than the market value of the share at the date of grant, determined as the average of the closing price of the share on the Toronto Stock Exchange on the five trading days preceding the date of grant. The terms for exercising the options are 25% of the number of shares under option within 12 months after the first anniversary date of grant, and up to an additional 25% every 12 months after the second, third and fourth anniversaries of grant date. Options cannot be exercised if the market value of the share at exercise date is lower than the book value at the date of grant. Options exercised are settled in shares. The stock-based compensation cost related to these options amounted to $1 million in 2017 (2016 - $1 million).

45 

Changes in the number of options outstanding as at December 31, 2017 and 2016 are as follows: 

	2017			2016
	NUMBER OF OPTIONS		WEIGHTED AVERAGE EXERCISE PRICE ($)	NUMBER OF OPTIONS		WEIGHTED AVERAGE EXERCISE PRICE ($)
Beginning of year	5,216,063		6.16	5,385,323		6.15
Granted	240,880		14.28	351,461		9.75
Exercised	(461,442	)	8.28	(262,836	)	5.51
Expired	—		—	(257,885	)	11.49
Forfeited	(5,381	)	9.75	—		—
End of year	4,990,120		6.35	5,216,063		6.16
Options exercisable - end of year	4,170,259		5.63	4,166,339		5.78

The weighted average share price at the time of exercise of the options was $14.23 (2016 - $12.14).

The following options were outstanding as at December 31, 2017: 

	OPTIONS OUTSTANDING		OPTIONS EXERCISABLE
YEAR GRANTED	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE ($)	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE ($)	EXPIRATION DATE
2007	95,064	11.83	95,064	11.83	2018
2008	326,166	7.81	326,166	7.81	2018
2009	968,333	3.92	968,333	3.92	2019
2010	444,124	6.43	444,124	6.43	2020
2011	492,432	6.26	492,432	6.26	2020 - 2021
2012	842,524	4.46	842,524	4.46	2018 - 2022
2013	426,392	5.18	426,392	5.18	2018 - 2023
2014	423,974	6.10	308,134	6.10	2020 - 2024
2015	390,185	7.66	185,244	7.66	2020 - 2025
2016	340,046	9.75	81,846	9.75	2020 - 2026
2017	240,880	14.28	—	—	2027
	4,990,120		4,170,259

FAIR VALUE OF THE SHARE OPTIONS GRANTED

Options were priced using the Black-Scholes option pricing model. Expected volatility is based on the historical share price volatility over the past six years. The following weighted average assumptions were used to estimate the fair value of $4.22 (2016 - $2.75) as at the date of grant of each option issued to employees:

	2017			2016
Grant date share price	$	14.26		$	10.09
Exercise price	$	14.28		$	9.75
Risk-free interest rate	1.77		%	1.04		%
Expected dividend yield	1.12		%	1.58		%
Expected life of options	6 years			6 years
Expected volatility	32		%	31		%

b. The Corporation offers its Canadian employees a share purchase plan for its common shares. Employees can voluntarily contribute up to a maximum of 5% of their salary and, if certain conditions are met, the Corporation will contribute 25% of the employee's contribution to the plan.

The shares are purchased on the market on a predetermined date each month. For the year ended December 31, 2017, the Corporation's contribution to the plan amounted to $1 million (2016 - $1 million).

46 

c. The Corporation has a Performance Share Unit (PSU) Plan for the benefit of officers and key employees, allowing them to receive a portion of their annual compensation in the form of PSUs. A PSU is a notional unit equivalent in value to the Corporation's common share. Periodically, the number of PSUs forming part of the award shall be adjusted depending upon the three-year average return on capital employed of the Corporation (ROCE). Such adjusted number shall be obtained by multiplying the number of PSUs forming part of the award by the applicable multiplier based on the ROCE level. Participants are entitled to receive the payment of their PSUs in the form of cash based on the average price of the Corporation's common shares as traded on the open market during the five days before the vesting date.

The PSUs vest over a period of two years starting on the award date. The expense and the related liability are recorded during the vesting period. The liability is adjusted periodically to reflect any variation in the market value of the common shares, the expected average ROCE and the passage of time. As at December 31, 2017, the Corporation had a total of 581,785 PSUs outstanding (2016 - 761,367 PSUs), representing a liability of $1 million (2016 - $5 million). In 2017, the Corporation made payments totaling $7 million in relation to PSUs (2016 - $5 million).

d. The Corporation has a Deferred Share Unit Plan for the benefit of its external directors, allowing them to receive all or a portion of their annual compensation in the form of Deferred Share Units (DSUs). A DSU is a notional unit equivalent in value to the Corporation's common share. Upon resignation from the Board of Directors, participants are entitled to receive the payment of their cumulated DSUs in the form of cash based on the average price of the Corporation's common shares as traded on the open market during the five days before the date of the participant's resignation.

The DSU expense and the related liability are recorded at the grant date. The liability is adjusted periodically to reflect any variation in the market value of the common shares. As at December 31, 2017, the Corporation had a total of 247,276 DSUs outstanding (2016 - 205,773 DSUs), representing a long-term liability of $4 million (2016 - $3 million). On January 15, 2018, the Corporation issued 44,579 DSUs and had a total of 291,855 DSUs outstanding. 

NOTE 20

ACCUMULATED OTHER COMPREHENSIVE LOSS

(in millions of Canadian dollars)	2017		2016
Foreign currency translation, net of hedging activities and related income tax of $12 million (December 31, 2016 - $16million)	(30	)	(13	)
Unrealized gain arising from foreign exchange forward contracts designated as cash flow hedges, net of related income taxes of nil (December 31, 2016 - nil)	1		—
Unrealized loss arising from commodity derivative financial instruments designated as cash flow hedges, net of related income taxes of $2 million (December 31, 2016 - $2 million)	(4	)	(5	)
Unrealized loss on available-for-sale financial assets, net of related income taxes of nil (December31,2016-nil)	(2	)	(1	)
Unrealized loss on share of other comprehensive income of associates, net of related income taxes of nil (December31, 2016 - $9 million)	—		(12	)
	(35	)	(31	)

NOTE 21

COST OF SALES BY NATURE 

(in millions of Canadian dollars)	2017	2016
Raw material	1,751	1,612
Wages and employee benefits expenses	689	662
Energy	259	248
Delivery	331	269
Depreciation and amortization	215	192
Other	463	397
	3,708	3,380

47 

SELLING AND ADMINISTRATIVE EXPENSES BY NATURE 

(in millions of Canadian dollars)	2017	2016
Wages and employee benefits expenses	287	271
Information technology	60	46
Publicity and marketing	16	15
Other	77	70
	440	402

NOTE 22

EMPLOYEE BENEFITS EXPENSES 

(in millions of Canadian dollars)	NOTE	2017	2016
Wages and employee benefits expenses	21	976	933
Share options granted to directors and employees	19(a)	1	1
Pension costs - defined benefit plans	16	7	7
Pension costs - defined contribution plans	16	21	20
Post-employment benefits other than defined benefit pension plans	16	4	5
		1,009	966

KEY MANAGEMENT COMPENSATION

Key management includes the members of the Board of Directors, Presidents and Vice Presidents of the Corporation (same as disclosed in annual information form in section 8.3). The compensation paid or payable to key management for their services is shown below:

(in millions of Canadian dollars)	2017	2016
Salaries and other short-term benefits	11	11
Post-employment benefits	1	—
Share-based payments	6	4
	18	15

NOTE 23

GAIN ON ACQUISITIONS, DISPOSALS AND OTHERS

(in millions of Canadian dollars)	2017		2016
Gain on disposal of assets	(8	)	(4	)

2017

The Containerboard Packaging segment sold a piece of land in Ontario, Canada, and recorded a gain of $7 million.

The Corporate Activities realized a $1 million gain from the sale of some assets.

2016

The Specialty Products segment recorded a $3 million gain on the sale of pieces of land close to the former fine paper plant located in St-Jérôme, Québec. The segment also recorded a $3 million environmental provision mainly related to closed plants in Québec, closed in previous years. Finally, the segment recorded a $4 million gain on the sale of assets following the closure of its de-inked pulp mill located in Auburn, Maine.

48 

NOTE 24

IMPAIRMENT CHARGES AND RESTRUCTURING COSTS

A. IMPAIRMENT CHARGES (REVERSALS) ON PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS WITH FINITE USEFUL LIFE AND OTHER ASSETS

The Corporation recorded net impairment charges totaling $11 million in 2017 and net impairment charges of $3 million in 2016. The recoverable amount of CGUs was determined using a fair value less cost of disposal sell model based on the income approach, unless otherwise indicated. Level 2 inputs are used to measure fair value. Impairments are detailed as follows:

	2017
	PACKAGING PRODUCTS
(in millions of Canadian dollars)	CONTAINER- BOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	SUB-TOTAL	TISSUE PAPERS	CORPORATE ACTIVITIES		TOTAL
Property, plant and equipment	—	—	—	—	2	—		2
Intangible assets with finite useful life and other assets	11	—	—	11	—	(2	)	9
	11	—	—	11	2	(2	)	11

	2016
	PACKAGING PRODUCTS
(in millions of Canadian dollars)	CONTAINER- BOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS		SUB-TOTAL		TISSUE PAPERS	CORPORATE ACTIVITIES	TOTAL
Property, plant and equipment	2	—	(3	)	(1	)	4	—	3

2017

The Containerboard Packaging segment recorded an impairment charge of $11 million on deferred revenues related to the management agreement of Greenpac since the beginning of the mill construction, which was recorded in “Other assets”. Following the acquisition and consolidation of Greenpac described in Note 5, expected future cash flows related to this asset will not materialize on a consolidated basis.

The Tissue Papers segment incurred a $2 million impairment charge on unused assets following the reassessment of its recoverable amount based on estimated selling price.

The Corporate Activities recorded a $2 million reversal of impairment following the collection of a note receivable that had been written off in previous years.

2016

The Containerboard Packaging segment recorded a $2 million impairment charge on the assets of its converting plant in Connecticut which were not part of the disposal related to the Rand-Whitney - Newtown plant acquisition.

The Specialty Products segment sold the building of its closed de-inked pulp mill located in Auburn, Maine, and recorded a $2 million reversal of impairment. This segment also sold a piece of land related to a closed plant and recorded a $1 million reversal of impairment.

The Tissue Papers segment incurred an additional impairment charge of $4 million related to the revaluation of some equipment following the closure of its Toronto converting plant in the second quarter.

B. GOODWILL AND OTHER INDEFINITE USEFUL LIFE INTANGIBLE ASSETS

Allocation of goodwill and other indefinite useful life intangible assets is as follows:

• Containerboard Packaging segment goodwill of $469 million is allocated to all Containerboard CGUs;

• Specialty Products segment goodwill is allocated to all Cascades Recovery CGUs, $13 million, and the Partitioning activities CGU, $3 million;

• Tissue Papers segment goodwill of $36 million is allocated to all Tissue Papers CGUs;

• Water rights of $7 million are allocated to Reno de Medici CGU.

49 

Annually, the Corporation must test all of its goodwill for impairment, except if the following three conditions are met:

• the assets and liabilities making up the unit have not changed significantly since the most recent recoverable amount calculation;

• the most recent recoverable amount calculation resulted in an amount that exceeded the carrying amount of the unit by a substantial margin; and

• based on an analysis of events that have occurred and circumstances that have changed since the most recent recoverable amount calculation, the likelihood that a current recoverable amount determination would be less than the current carrying amount of the unit is remote.

All three conditions were met for all goodwill but Tissue's. Therefore, the Corporation tested its Tissue Papers segment goodwill for impairment. As a result of this impairment test, the Corporation concluded that the recoverable amount of the CGUs was in excess of $305 million over their carrying amount, thus no impairment charge was necessary. With all other variables held constant, a rise in the discounting rate of 3% would reduce the excess of $305 million to nil.

The Corporation applied the income approach in determining fair value less cost of disposal and used the following key assumptions (level 2 inputs):

	TISSUE PAPERS
Discounting rate	9.75		%
Terminal exchange rate (CA$/US$)	$	1.25
Terminal shipments	673,000 s.t.

C. RESTRUCTURING COSTS (GAINS)

Restructuring costs (gains) are detailed as follows: 

(in millions of Canadian dollars)	2017	2016
Containerboard	2	(1	)
Boxboard Europe	1	2
Specialty Products	—	1
Tissue Papers	2	7
Corporate Activities	1	—
	6	9

2017

The Containerboard Packaging segment announced the forthcoming closure of its New York converting plant and recorded severance expenses totaling $2 million.

The Boxboard Europe segment recorded severances costs of $1 million following the restructuring of its sales activities.

The Tissue Papers segment incurred $2 million of restructuring costs following the review of provisions related to the transfer of the converting operations of the Toronto plant to other Tissue segment sites announced in 2016.

The Corporate Activities recorded a severance cost of $1 million following the closure of a sales division.

2016

The Containerboard Packaging segment recorded a $1 million gain on the reversal of a provision for an onerous lease contract in relation to the restructuring of its Ontario converting activities in 2012.

The Boxboard Europe segment recorded restructuring costs of $2 million in relation to the reorganization of its activities following the transfer of the virgin fibre boxboard mill located in La Rochette, France, to our Reno de Medici subsidiary.

The Specialty Products segment recorded restructuring costs of $1 million following the closure of its de-inked pulp mill located in Auburn, Maine.

The Tissue Papers segment recorded a $3 million provision for an onerous lease as a consequence of the closure of its Toronto converting plant. This segment also incurred $4 million of severance costs following the transfer of the converting operations of the Toronto plant to other Tissue Papers segment sites.

50 

NOTE 25

ADDITIONAL INFORMATION

A. CHANGES IN NON-CASH WORKING CAPITAL COMPONENTS ARE DETAILED AS FOLLOWS:

(in millions of Canadian dollars)	2017		2016
Accounts receivable	31		(6	)
Current income tax assets	—		(1	)
Inventories	(46	)	(2	)
Trade and other payables	(71	)	66
Current income tax liabilities	(1	)	(1	)
	(87	)	56

B. FNANCING EXPENSE AND INTEREST EXPENSE ON EMPLOYEE FUTURE BENEFITS

(in millions of Canadian dollars)	2017		2016
Interest on long-term debt	89		83
Interest income	(3	)	(1	)
Amortization of financing costs	3		3
Other interest and banking fees	3		3
Interest expense on employee future benefits	5		5
	97		93

C. TOTAL LIABILITIES FROM FINANCING ACTIVITIES

(in millions of Canadian dollars)	CASH AND CASH EQUIVALENT		BANK LOANS AND ADVANCES		LONG-TERM DEBT		NET DEBT
As at January 1, 2016	(60	)	37		1,744		1,721
Cash flow
Change in cash and cash equivalents	(5	)	—		—		(5	)
Bank loans and advances	—		(8	)	—		(8	)
Change in revolving credit facilities	—		—		(146	)	(146	)
Increase in other long-term debt	—		—		40		40
Payments of other long-term debt	—		—		(47	)	(47	)
Non-cash changes
Foreign exchange gain on long-term debt and financial instruments	—		—		(35	)	(35	)
Capital lease acquisitions	—		—		18		18
Amortization of financing costs	—		—		2		2
Other	—		—		3		3
Exchange differences	3		(1	)	(13	)	(11	)
As at December 31, 2016	(62	)	28		1,566		1,532
Cash flow
Change in cash and cash equivalents	(25	)	—		—		(25	)
Bank loans and advances	—		8		—		8
Change in revolving credit facilities	—		—		114		114
Repurchase of unsecured senior notes	—		—		(257	)	(257	)
Increase in other long-term debt	—		—		11		11
Payments of other long-term debt	—		—		(47	)	(47	)
Non-cash changes
Business combinations	—		—		257		257
Foreign exchange gain on long-term debt and financial instruments	—		—		(62	)	(62	)
Capital lease acquisitions	—		—		11		11
Amortization of financing costs	—		—		2		2
Write off of unamortized financing costs following repurchase of unsecured senior notes	—		—		3		3
Other	—		—		(1	)	(1	)
Exchange differences	(2	)	(1	)	(21	)	(24	)
As at December 31, 2017	(89	)	35		1,576		1,522

51 

NOTE 26

FINANCIAL INSTRUMENTS

26.1 FAIR VALUE OF FINANCIAL INSTRUMENTS

The classification of financial instruments as at December 31, 2017 and 2016, along with the respective carrying amounts and fair values, is as follows: 

		2017				2016
(in millions of Canadian dollars)	NOTE	CARRYING AMOUNT		FAIR VALUE		CARRYING AMOUNT		FAIR VALUE
Financial assets at fair value through profit or loss
Derivatives	26.4	27		27		10		10
Financial assets available for sale
Other investments		1		1		2		2
Financial liabilities at fair value through profit or loss
Derivatives	26.4	(4	)	(4	)	(31	)	(31	)
Financial liabilities at amortized cost
Long-term debt		(1,576	)	(1,626	)	(1,566	)	(1,612	)
Derivatives designated as hedge
Asset derivatives		4		4		2		2
Liability derivatives		(33	)	(33	)	(8	)	(8	)

26.2 DETERMINING THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount of consideration that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as at the measurement date.

(i) The fair values of cash and cash equivalents, accounts receivable, notes receivable, bank loans and advances, trade and other payables and provisions approximate their carrying amounts due to their relatively short maturities.

(ii) The fair value of investment in shares is based on observable market data and represents the Corporation's investment in Junex Inc. which is quoted on the Toronto Stock Exchange.

(iii) The fair value of long-term debt is based on observable market data and on the calculation of discounted cash flows. Discount rates were determined based on local government bond yields adjusted for the risks specific to each of the borrowings and the credit market liquidity conditions.

26.3 HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

The following table presents information about the Corporation's financial assets and financial liabilities measured at fair value on a recurring basis as at December 31, 2017 and 2016, and indicates the fair value hierarchy of the Corporation's valuation techniques to determine such fair value. Three levels of inputs that may be used to measure fair value are:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar

assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for

substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect Management's estimates of assumptions that market participants would

use in pricing the asset or liability. 

				2017
(in millions of Canadian dollars)	CARRYING AMOUNT		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)	SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Financial assets
Available-for-sale investments	1		1	—		—
Derivative financial assets	31		—	31		—
	32		1	31		—
Financial liabilities
Derivative financial liabilities	(37	)	—	(37	)	—
	(37	)	—	(37	)	—

52 

				2016
(in millions of Canadian dollars)	CARRYING AMOUNT		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)	SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Financial assets
Available-for-sale investments	2		1	1		—
Derivative financial assets	12		—	12		—
	14		1	13		—
Financial liabilities
Derivative financial liabilities	(39	)	—	(39	)	—
	(39	)	—	(39	)	—

26.4 FINANCIAL RISK MANAGEMENT

The Corporation's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Corporation's overall risk management program focuses on the unpredictability of the financial market and seeks to minimize potential adverse effects on the Corporation's financial performance. The Corporation uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by a central treasury department and a management committee acting under policies approved by the Board of Directors. They identify, evaluate and hedge financial risks in close cooperation with the business units. The Board provides guidance for overall risk management, covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

Summary 

		2017
(in millions of Canadian dollars)		ASSETS			LIABILITIES
RISK	NOTE	SHORT-TERM	LONG-TERM	TOTAL	SHORT-TERM		LONG-TERM		TOTAL
Currency risk	26.4 A) (i)	5	1	6	(10	)	(15	)	(25	)
Price risk	26.4 A) (ii)	4	21	25	(7	)	(1	)	(8	)
Interest risk	26.4 A) (iii)	—	—	—	(2	)	(2	)	(4	)
		9	22	31	(19	)	(18	)	(37	)

		2016
(in millions of Canadian dollars)		ASSETS			LIABILITIES
RISK	NOTE	SHORT-TERM	LONG-TERM	TOTAL	SHORT-TERM		LONG-TERM		TOTAL
Currency risk	26.4 A) (i)	2	—	2	(20	)	(13	)	(33	)
Price risk	26.4 A) (ii)	1	9	10	(3	)	(3	)	(6	)
		3	9	12	(23	)	(16	)	(39	)

A. MARKET RISK

(i) Currency risk

The Corporation operates internationally and is exposed to foreign exchange risks arising from various currencies as a result of its export of goods produced in Canada, the United States, France, Italy and Germany. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities, and net investments in foreign operations. These risks are partially covered by purchases and debt.

The Corporation manages the foreign exchange exposure by entering into various foreign exchange forward contracts and currency option instruments related to anticipated sales, purchases, interest expense and repayment of long-term debt. Management has implemented a policy for managing foreign exchange risk against its functional currency. The Corporation's risk management policy is to hedge 25% to 90% of anticipated cash flows in each major foreign currency for the next 12 months and to hedge 0% to 75% for the subsequent 24 months. The Corporation may designate these foreign exchange forward contracts as a cash flow hedge of future anticipated sales, purchases, interest expense and repayment of long-term debt denominated in foreign currencies. Gains or losses from these derivative financial instruments designated as hedges are recorded in “Accumulated other comprehensive income” net of related income taxes and are reclassified to earnings as adjustments to sales, cost of sales, interest expense or foreign exchange loss (gain) on long-term debt in the period in which the respective hedged item affected earnings.

53 

In 2017, approximately 23% of sales from Canadian operations were made to the United States and 13% of sales from European operations were made in countries whose currencies were other than the euro.

The following table summarizes the Corporation's commitments to buy and sell foreign currencies as at December 31, 2017 and 2016: 

	2017
	EXCHANGE RATE	MATURITY	NOTIONAL AMOUNT (IN MILLIONS)		FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Repayment of long-term debt
Derivatives at fair value through profit or loss and classified in Foreign exchange loss (gain) on long-term debt:
Foreign exchange forward contracts to buy US$ for CAN$	1.06	January 2020	US$	50	9
Currency option sold to sell US$ for CAN$	1.15	January 2020	US$	100	(11	)
Currency option sold to buy US$ for CAN$	1.0225	January 2020	US$	200	(1	)
Cross currency swap US$ for CAN$	1.33	July 2023	US$	102	(12	)
					(15	)
Net investment hedge
Cross currency swap CAN$ for €	1.4263	December 2018	€	95	(6	)
Forecasted sales
Derivatives at fair value through profit or loss and classified in Loss on derivative financial instruments:
Foreign exchange forward contracts to buy US$ for CAN$	1.3260	0 to 12 months	US$	10	1
Foreign exchange forward contracts to buy US$ for CAN$	1.3260	13 to 24 months	US$	5	—
Currency option instruments to sell US$ for CAN$	1.3171	0 to 12 months	US$ 48 to 70		2
Currency option instruments to sell US$ for CAN$	1.3214	13 to 36 months	US$ 43 to 80		—
					3
					(18	)

In 2017, the Corporation offset $9 million in derivative assets against $11 million in derivative liabilities as we intend to settle the derivatives on a net basis with one counterparty. During the year, the Corporation also paid $12 million related to the settlement of a portion of its 2017 derivatives related to repayment of long-term debt.

	2016
	EXCHANGE RATE	MATURITY	NOTIONAL AMOUNT (IN MILLIONS)		FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Repayment of long-term debt
Derivatives at fair value through profit or loss and classified in Foreign exchange loss (gain) on long-term debt:
Foreign exchange forward contracts to buy US$ for CAN$	1.06	January 2020	US$	50	13
Currency option sold to sell US$ for CAN$	1.15	December 2017	US$	75	(14	)
Currency option sold to sell US$ for CAN$	1.15	January 2020	US$	100	(19	)
Currency option sold to buy US$ for CAN$	1.0225	January 2020	US$	200	(2	)
Cross currency swap US$ for CAN$	1.329	July 2023	US$	102	(2	)
					(24	)
Net investment hedge
Cross currency swap CAN$ for €	1.4263	December 2018	€	95	1
Forecasted sales
Derivatives at fair value through profit or loss and classified in Loss on derivative financial instruments:
Foreign exchange forward contracts to buy US$ for CAN$	1.3543	0 to 12 months	US$	20	—
Currency option instruments to sell US$ for CAN$	1.2709 to 1.2962	0 to 12 months	US$ 48 to 92		(6	)
Currency option instruments to sell US$ for CAN$	1.3042 to 1.3461	13 to 24 months	US$ 15 to 40		(2	)
					(8	)
					(31	)

54 

In 2016, the Corporation offset $12 million in derivative assets against $19 million in derivative liabilities as we intend to settle the derivatives on a net basis with one counterparty. During the year, the Corporation also received $3 million on related to the settlement of a portion of its 2017 derivatives related to repayment of long-term debt.

The fair values of foreign exchange forward contracts and currency options are determined using the discounted value of the difference between the value of the contract at expiry calculated using the contracted exchange rate and the exchange rate the financial institution would use if it renegotiated the same contract under the same conditions as at the consolidated balance sheet date. The discount rates are adjusted for the credit risk of the Corporation or of the counterparty, as applicable. When determining credit risk adjustments, the Corporation considers master netting agreements, if applicable.

In 2017, if the Canadian dollar had strengthened by $0.01 against the US dollar on average for the year with all other variables held constant, operating income before depreciation for the year would have been approximately $3 million lower. This is based on the net exposure of total US sales less US purchases of the Corporation's Canadian operations, and operating income before depreciation of the Corporation's US operations, but excludes the effect of this change on the denominated working capital components. The interest expense would have remained relatively stable.

In 2017, if the Canadian dollar had strengthened by $0.02 against the euro with all other variables held constant, operating income before depreciation for the year would have been approximately $1 million lower following the translation of operating income of the Corporation's European operations.

CURRENCY RISK ON TRANSLATION OF SELF-SUSTAINING FOREIGN SUBSIDIARIES

The Corporation has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk. The Corporation may designate part of its long-term debt denominated in foreign currencies as a hedge of the net investment in self-sustaining foreign subsidiaries. Gains or losses resulting from the translation to Canadian dollars of long-term debt denominated in foreign currencies and designated as net investment hedges are recorded in “Accumulated other comprehensive income”, net of related income taxes.

The table below shows the effect on consolidated equity of a 10% change in the value of the Canadian dollar against the US dollar and the euro as at December 31, 2017 and 2016. The calculation includes the effect of currency hedges of net investment in US foreign entities and assumes that no changes occurred other than a single currency exchange rate movement.

The exposures used in the calculations are the foreign currency-denominated equity and the hedging level as at December 31, 2017 and 2016, with the hedging instruments being the long-term debt denominated in US dollars.

Consolidated Shareholders' equity: Currency effect before tax of a 10% change: 

	2017			2016
(in millions of Canadian dollars)	BEFORE HEDGES	HEDGES	NET IMPACT	BEFORE HEDGES	HEDGES	NET IMPACT
10% change in the CAN$/US$ rate	75	75	—	107	73	34
10% change in the CAN$/euro rate	16	14	2	13	13	—

(ii) Price risk

The Corporation is exposed to commodity price risk on old corrugated containers, electricity and natural gas. The Corporation uses derivative commodity contracts to help manage its production costs. The Corporation may designate these derivatives as cash flow hedges of anticipated purchases of raw material, natural gas and electricity. Gains or losses from these derivative financial instruments designated as hedges are recorded in “Accumulated other comprehensive income” net of related income taxes, and are reclassified to earnings as adjustments to “Cost of sales” in the same period, as the respective hedged item affects earnings.

55 

The fair value of these contracts is as follows: 

	2017
	QUANTITY	MATURITY	FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Forecasted purchases
Derivatives designated as held for trading and reclassified in “Cost of sales”
Electricity	197,100 MWh	2018 to 2019	(1	)
Derivatives designated as cash flow hedges and reclassified in “Cost of sales” (effective portion)
Natural gas:
Canadian portfolio	3,095,029 GJ	2018 to 2022	(5	)
US portfolio	4,847,660 mmBtu	2018 to 2023	(1	)
			(7	)

	2016
	QUANTITY	MATURITY	FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Forecasted purchases
Derivatives designated as held for trading and reclassified in “Cost of sales”
Electricity	109,500 MWh	2017 to 2018	(1	)
Derivatives designated as cash flow hedges and reclassified in “Cost of sales” (effective portion)
Natural gas:
Canadian portfolio	4,658,660 GJ	2017 to 2021	(4	)
US portfolio	4,722,800 mmBtu	2017 to 2021	(1	)
			(6	)

In 2013, the Corporation entered into an agreement to purchase steam. The agreement includes an embedded derivative and the fair value as at December 31, 2017 was $8 million (2016 - $10 million). Greenpac also has an agreement to purchase steam that includes an embedded derivative with a fair value of $16 million as at December 31, 2017.

The fair value of derivative financial instruments other than options is established utilizing a discounted future expected cash flows method. Future expected cash flows are determined by reference to the forward price or rate prevailing on the assessment date of the underlying financial index (exchange or interest rate or commodity price) according to the contractual terms of the instrument. Future expected cash flows are discounted at an interest rate reflecting both the maturity of each flow and the credit risk of the party to the contract for which it represents a liability (subject to the application of relevant credit support enhancements). The fair value of derivative financial instruments that represent options is established utilizing similar methods that reflect the impact of the potential volatility of the financial index underlying the option on future expected cash flows.

The table below shows the effect of changes in the price of old corrugated containers, natural gas and electricity as at December 31, 2017 and 2016. The calculation includes the effect of price hedges of these commodities and assumes that no changes occurred other than a single change in price.

The exposures used in the calculations are the commodity consumption and the hedging level as at December 31, 2017 and 2016, with the hedging instruments being derivative commodity contracts.

Consolidated commodity consumption: Price change effect before tax: 

	2017			2016
(in millions of Canadian dollars1)	BEFORE HEDGES	HEDGES	NET IMPACT	BEFORE HEDGES	HEDGES	NET IMPACT
US$15/s.t. change in brown grades recycled paper price	29	—	29	32	—	32
US$30/s.t. change in commercial pulp price	6	—	6	6	—	6
US$1/mmBTU. change in natural gas price	10	5	5	12	6	6
US$1/MWh change in electricity price	2	—	2	2	—	2

1 Sensitivity calculated with an exchange rate of 1.26 CAN$/US$ for 2017 and 1.33 CAN$/US$ for 2016.

56 

(iii) Interest rate risk

The Corporation has no significant interest-bearing assets.

The Corporation's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Corporation to cash flow interest rate risk. Borrowings issued at fixed rates expose the Corporation to fair value interest rate risk.

When appropriate, the Corporation analyzes its interest rate risk exposure. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Corporation calculates the impact on earnings of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions. As at December 31, 2017, approximately 29% (2016 - 9%) of the Corporation's long-term debt was at variable rates.

Based on the outstanding long-term debt as at December 31, 2017, the impact on interest expense of a 1% change in rate would be approximately $5 million (impact on net earnings is approximately $4 million).

The Corporation holds interest rate swaps through RDM and Greenpac. RDM swaps are contracted to fix the interest rate on a notional amount of €32 million and are maturing from 2020 to 2023. Greenpac swaps are contracted to fix the interest rate on a notional amount of US$81 million maturing in 2020. Some of these swaps have decreasing notional amount to match expected debt level. Fair value of these agreements is a liability of $3 million as at December 31, 2017 (December 31, 2016 - nil).

(iv) Gain on derivative financial instruments is as follows:

(in millions of Canadian dollars)	2017		2016
Unrealized gain on derivative financial instruments	(8	)	(18	)
Realized loss on derivative financial instruments	2		12
	(6	)	(6	)

B. CREDIT RISK

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. The Corporation reduces this risk by dealing with credit worthy financial institutions.

The Corporation is exposed to credit risk on the accounts receivable from its customers. In order to reduce this risk, the Corporation's credit policies include the analysis of the financial position of its customers and the regular review of their credit limits. In addition, the Corporation believes there is no particular concentration of credit risk due to the geographic diversity of customers and the procedures for the management of commercial risks. Derivative financial instruments include an element of credit risk should the counterparty be unable to meet its obligations.

Trade receivables are recognized initially at fair value and are subsequently measured at amortized cost using the effective interest method, less provision for doubtful accounts. An allowance for doubtful accounts of trade receivables is established when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. Each trade receivable balance is evaluated separately to identify impairment. The amount of the allowance for doubtful accounts is the difference between the asset's carrying amount and the present value of estimated cash flows. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recorded in the consolidated statement of earnings in “Selling and administrative expenses”. When a trade receivable is not collectable, it is written off against the “Provision for doubtful accounts”. Subsequent recoveries of amounts previously written off are credited against “Selling and administrative expenses” in the consolidated statement of earnings.

Loans and notes receivables from business disposals are recognized at fair value. There is no past due amount as at December 31, 2017.

57 

C. LIQUIDITY RISK

Liquidity risk is the risk that the Corporation will not be able to meet its obligations as they fall due. The following are the contractual maturities of financial liabilities as at December 31, 2017 and 2016: 

	2017
(in millions of Canadian dollars)	CARRYING AMOUNT	CONTRACTUAL CASH FLOWS	LESS THAN ONE YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	MORE THAN FIVE YEARS
Non-derivative financial liabilities:
Bank loans and advances	35	35	35	—	—	—
Trade and other payables	638	638	638	—	—	—
Revolving credit facility	195	218	7	6	205	—
Unsecured senior notes	1,004	1,284	56	56	906	266
Other debts of subsidiaries	66	77	16	13	31	17
Other debts without recourse to the Corporation	321	329	44	41	230	14
Derivative financial liabilities	37	37	19	2	4	12
	2,296	2,618	815	118	1,376	309

	2016
(in millions of Canadian dollars)	CARRYING AMOUNT	CONTRACTUAL CASH FLOWS	LESS THAN ONE YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	MORE THAN FIVE YEARS
Non-derivative financial liabilities:
Bank loans and advances	28	28	28	—	—	—
Trade and other payables	661	661	661	—	—	—
Revolving credit facility	90	95	2	2	91	—
Unsecured senior notes	1,324	1,735	74	74	464	1,123
Other debts of subsidiaries	62	71	14	13	25	19
Other debts without recourse to the Corporation	105	110	28	24	44	14
Derivative financial liabilities	39	39	23	5	9	2
	2,309	2,739	830	118	633	1,158

As at December 31, 2017, the Corporation had unused credit facilities of $651 million (December 31, 2016 - $768 million), net of outstanding letters of credit of $24 million (December 31, 2016 - $26 million).

D. OTHER RISK

FACTORING OF ACCOUNTS RECEIVABLE

The Corporation sells its accounts receivable from one of its European subsidiaries through a factoring contract with a financial institution. The Corporation uses factoring of accounts receivable as a source of financing by reducing its working capital requirements. When the accounts receivable are sold, the Corporation removes them from the balance sheet, recognizes the amount received as the consideration for the transfer and records a loss on factoring, which is included in “Financing expense”. As at December 31, 2017, the off-balance sheet impact of the factoring of accounts receivable amounted to $39 million (€26 million). The Corporation expects to continue to sell accounts receivable on an ongoing basis. Should it decide to discontinue this contract, its working capital and bank debt requirements would increase.

58 

NOTE 27

COMMITMENTS

a. The Corporation leases various properties, vehicles, equipment and others under non-cancellable operating lease agreements.

Future minimum payments under operating leases are as follows:

(in millions of Canadian dollars)	2017	2016
No later than one year	28	23
Later than one year but no later than five years	37	33
More than five years	5	9

b. Capital and raw material commitments

Capital expenditures and raw material contracted at the end of the reporting date but not yet incurred are as follows: 

	2017		2016
(in millions of Canadian dollars)	PROPERTY, PLANT AND EQUIPMENT	INTANGIBLE ASSETS	PROPERTY, PLANT AND EQUIPMENT	INTANGIBLE ASSETS	RAW MATERIAL
No later than one year	51	8	36	2	73
Later than one year but no later than five years	—	14	—	3	258
More than five years	—	—	—	1	—
	51	22	36	6	331

c. In 2017, the Corporation entered into a lease agreement for the building of its new containerboard converting plant in New Jersey. The building is currently under construction by the lessor and the lease will commence upon delivery of the building in 2018 for a period of 20 years. The lease will be accounted for as a finance lease and total payments will be $96 million for the duration of the lease.

NOTE 28

RELATED PARTY TRANSACTIONS

The Corporation entered into the following transactions with related parties:

(in millions of Canadian dollars)	JOINT VENTURES	ASSOCIATES
2017
Sales to related parties	183	85
Purchases from related parties	16	90
2016
Sales to related parties	155	89
Purchases from related parties	13	168

These transactions occurred in the normal course of operations and are measured at fair value.

The following balances were outstanding at the end of the reporting period:

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Receivables from related parties
Joint ventures	13	18
Associates	22	21
Payables to related parties
Joint ventures	3	2
Associates	4	42

The receivables from related parties arise mainly from sale transactions. The receivables are unsecured in nature and bear no interest. There are no provision held against receivables from related parties. The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

59 

NOTE 29

EVENTS AFTER THE REPORTING PERIOD

On January 1, 2018, the Corporation acquired PAC Service S.p.A., a boxboard converter for the packaging, publishing, cosmetics and food industries and will be fully consolidated. The Corporation already had a 33.33% equity participation through its 57.8% equity ownership in Reno de Medici S.p.A., in the Boxboard Europe segment. The consideration for the acquisition of the remaining 66.67% shares consists of cash totaling €10 million ($15 million) and was deposited on December 19, 2017. Due to the limited period of time between the acquisition of PAC Service S.p.A and the publication of the audited consolidated financial statements of the Corporation, certain items required for the disclosure of asset acquisitions have not been provided, particularly the preliminary purchase price allocation. The Corporation is currently assessing the fair value of assets acquired and liabilities assumed and will publish the preliminary purchase price allocation in its 2018 first quarter unaudited condensed interim consolidated financial statements.

On January 31, 2018, the Corporation completed the sale of the building and land of its plant located in Maspeth, New York, for US$72 million ($90 million) of which US$68 million ($85 million) was received at closing and US$4 million ($5 million) is held in escrow. Release of the escrow is contingent upon certain conditions being met over the next three years. The Corporation will continue to use the facility until December 31, 2018, the date the plant is scheduled to close. The book value of $13 million of the building and land of the facility are classified as “Assets held for sale” on the consolidated balance sheet. The volumes will be progressively redeployed to other Cascades units over the course of the year.

60 

EX-13.3

EXHIBIT 13.3

OUR BUSINESS

Cascades Inc. is a paper and packaging company that produces, converts and sells packaging and tissue products composed primarily of recycled fibres. Established in 1964 in Kingsey Falls, Québec, the Corporation was founded by the Lemaire brothers, who saw the economic and social potential of building a company focused primarily on the sustainable development principles of reusing, recovering and recycling. More than 50 years later, Cascades is a multinational business with more than 90 operating facilities1 and nearly 11,000 employees across Canada, the United States and Europe. The Corporation currently operates four business segments:

(Business segments)	Number of Facilities1	2017 Sales2 (in M$)	2017 Operating income2 (in M$)	2017 Adjusted OIBD2,5 (in M$)	2017 Adjusted OIBD Margin (%)
PACKAGING PRODUCTS
Containerboard	27	1,652	164	247	15	%
Boxboard Europe3	6	838	34	68	8	%
Specialty Products	38	703	46	67	10	%
TISSUE PAPERS	21	1,268	28	94	7	%

The location of our plants and employees around the world are as follows:

   

1 Including associates and joint ventures.

2 Excluding associates and joint ventures not included in consolidated results. Refer to Note 8 of the 2017 audited consolidated financial statements for more information on associates and joint ventures.

3 Via our 57.8% equity ownership in Reno de Medici S.p.A., a public company traded on the Milan and Madrid stock exchanges.

4 Excluding sales offices, distribution and transportation hubs and corporate offices. Including main associates and joint ventures.

5 Please refer to the “Supplemental Information on Non-IFRS Measures” section for a complete reconciliation.

1 

BUSINESS DRIVERS

Cascades' results may be impacted by fluctuations in the following:

EXCHANGE RATES	ENERGY COSTS
On a year-over-year basis, the average value of the Canadian dollar increased by 2% when compared to the US dollar and remained stable compared to the euro in 2017.	The average price of natural gas increased 26% in 2017 compared to the previous year. In the case of crude oil, the average price was 19% higher in 2017 than in 2016.

	2015		2016										2017
	TOTAL		Q1		Q2		Q3		Q4		TOTAL		Q1		Q2		Q3		Q4		TOTAL
US$/CAN$ - Average rate	$	0.78	$	0.73	$	0.78	$	0.77	$	0.75	$	0.75	$	0.76	$	0.74	$	0.80	$	0.79	$	0.77
US$/CAN$ End of period rate	$	0.72	$	0.77	$	0.77	$	0.76	$	0.74	$	0.74	$	0.75	$	0.77	$	0.80	$	0.80	$	0.80
EURO€/CAN$ - Average rate	$	0.71	$	0.66	$	0.69	$	0.69	$	0.70	$	0.68	$	0.71	$	0.68	$	0.68	$	0.67	$	0.68
EURO€/CAN$ End of period rate	$	0.67	$	0.68	$	0.70	$	0.68	$	0.71	$	0.71	$	0.70	$	0.68	$	0.68	$	0.66	$	0.66
Natural Gas Henry Hub - US$/mmBtu	$	2.67	$	2.09	$	1.95	$	2.81	$	2.98	$	2.46	$	3.32	$	3.18	$	3.00	$	2.93	$	3.11

2 

HISTORICAL MARKET PRICES OF MAIN PRODUCTS AND RAW MATERIAL  

	2015	2016					2017					2017 vs. 2016
These indices should only be used as trend indicators; they may differ from our actual selling prices and purchasing costs.	Year	Q1	Q2	Q3	Q4	Year	Q1	Q2	Q3	Q4	Year	Change		%
Selling prices (average)
PACKAGING PRODUCTS
Containerboard (US$/short ton)
Linerboard 42-lb. unbleached kraft, Eastern US (open market)	630	615	615	615	655	625	655	705	705	705	693	68		11	%
Corrugating medium 26-lb. semichemical, Eastern US (open market)	557	518	515	505	540	520	540	590	617	620	592	72		14	%
Boxboard Europe (euro/metric ton)
Recycled white-lined chipboard (WLC) index1	667	664	659	652	649	656	649	680	680	680	672	16		2	%
Virgin coated duplex boxboard (FBB) index2	1,061	1,049	1,044	1,043	1,043	1,045	1,031	1,031	1,031	1,031	1,031	(14	)	(1	)%
Specialty Products (US$/short ton)
Uncoated recycled boxboard - 20-pt. bending chip (serie B)	589	615	605	605	595	605	622	660	660	640	645	40		7	%
TISSUE PAPERS (US$/short ton)
Parent rolls, recycled fibres (transaction)	985	1,016	1,012	1,017	1,008	1,013	1,023	1,040	1,053	1,057	1,043	30		3	%
Parent rolls, virgin fibres (transaction)	1,252	1,273	1,273	1,287	1,287	1,280	1,297	1,320	1,334	1,339	1,323	43		3	%
Raw material prices (average)
RECYCLED PAPER
North America (US$/short ton)
Sorted residential papers, No. 56 (SRP - Northeast average)	58	58	63	76	78	69	92	76	86	63	79	10		14	%
Old corrugated containers, No. 11 (OCC - Northeast average)	83	83	88	101	102	93	142	148	162	99	138	45		48	%
Sorted office papers, No. 37 (SOP - Northeast average)	150	138	142	153	168	150	173	172	170	160	169	19		13	%
Europe (euro/metric ton)
Recovered paper index3	115	115	124	135	134	127	147	138	147	135	142	15		12	%
VIRGIN PULP (US$/metric ton)
Northern bleached softwood kraft, Canada	972	943	980	998	992	978	1,033	1,093	1,110	1,183	1,105	127		13	%
Bleached hardwood kraft, mixed, Canada/US	869	873	847	842	825	847	853	942	985	1,052	958	111		13	%

Source: RISI and Cascades.

1 The Cascades Recycled White-Lined Chipboard Selling Price Index is based on published indices and represents an approximation of Cascades' recycled-grade selling prices in Europe. It is weighted by country and has been rebalanced as at January 1, 2017.

2 The Cascades Virgin Coated Duplex Boxboard Selling Price Index is based on published indices and represents an approximation of Cascades' virgin-grade selling prices in Europe. It is weighted by country and has been rebalanced as at January 1, 2017.

3 The Cascades Recovered Paper Index is based on published indices and represents an approximation of Cascades' recovered paper purchase prices in Europe. It is weighted by country, based on the recycled fibre supply mix and has been rebalanced as at January 1, 2017.

3 

SENSITIVITY TABLE¹

The following table provides a quantitative estimate of the impact that potential changes in the prices of our main products, the costs of certain raw material, energy and the exchange rates may have on Cascades’ annual OIBD, assuming, for each price change, that all other variables remain constant. Estimates are based on Cascades’ 2017 manufacturing and converting external shipments and consumption quantities. It is important to note that this table does not consider the Corporations' use of hedging instruments for risk management. These hedging policies and portfolios (see the “Risk Factors” section) should also be considered in order to fully analyze the Corporation’s sensitivity to the highlighted factors.

Potential indirect sensitivity to the CAN$/US$ exchange rate is not considered in this table. Some of Cascades’ selling prices and raw material costs in Canada are based on U.S. dollar reference prices and costs that are then converted into Canadian dollars. Consequently, fluctuations in the exchange rate may have a direct impact on the value of sales and purchases of Canadian facilities in Canada. However, because it is difficult to measure the precise impact of this fluctuation, we do not take it into consideration in the following table. The impact of the exchange rate on the working capital items and cash positions denominated in currencies other than CAN$ at the Corporations' Canadian units is also excluded. Fluctuations in foreign exchange rates may also impact the translation of the results of our non-Canadian units into CAN$.

	SHIPMENTS/CONSUMPTION ('000 SHORT TONS, '000 MMBTU FOR NATURAL GAS)	INCREASE	OIBD IMPACT (IN MILLIONS OF CAN$)
SELLING PRICE (MANUFACTURING AND CONVERTING)2
North America
Containerboard	1,490	US$25/s.t.	47
Tissue Papers	590	US$25/s.t.	19
	2,080		66
Europe
Boxboard	1,120	€25/s.t.	42
	3,200		108
RAW MATERIAL2
Recycled Papers
North America
Brown grades (OCC and others)	1,560	US$15/s.t.	(29	)
Groundwood grades (SRP and others)	90	US$15/s.t.	(2	)
White grades (SOP and others)	480	US$15/s.t.	(9	)
	2,130		(40	)
Europe
Brown grades (OCC and others)	780	€15/s.t.	(18	)
Groundwood grades (SRP and others)	170	€15/s.t.	(4	)
White grades (SOP and others)	80	€15/s.t.	(2	)
	1,030		(24	)
	3,160		(64	)
Virgin pulp
North America	150	US$30/s.t.	(6	)
Europe	80	€30/s.t.	(4	)
	230		(10	)
Natural gas
North America	8,600	US1.00/mmBtu	(11	)
Europe	4,600	€1.00/mmBtu	(7	)
	13,200		(18	)
Exchange rate3
Sales less purchases in US$ from Canadian operations		CAN$/US$ 0.01 change	2
U.S. subsidiaries translation		CAN$/US$ 0.01 change	1
European subsidiaries translation		CAN$/€ 0.02 change	1

1 Sensitivity calculated according to 2017 volumes or consumption with year-end closing exchange rate of CAN$/US$ 1.26 and CAN$/€ 1.51, excluding hedging programs and the impact of related expenses such as discounts, commissions on sales and profit-sharing.

2 Based on 2017 external manufacturing and converting shipments, as well as fibre and pulp consumption. Including purchases from our subsidiary Cascades Recovery. Including shipments and consumption of Greenpac for the last twelve months.

3 As an example, from CAN$/US$ 1.26 to CAN$/US$ 1.27 and from CAN$/€ 1.51 to CAN$/€ 1.53.

4 

SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

SPECIFIC ITEMS

The Corporation incurs some specific items that adversely or positively affect its operating results. We believe it is useful for readers to be aware of these items, as they provide additional information to measure performance, compare the Corporation's results between periods and assess operating results and liquidity, notwithstanding these specific items. Management believes these specific items are not necessarily reflective of the Corporation's underlying business operations in measuring and comparing its performance and analyzing future trends. Our definition of specific items may differ from those of other corporations, and some of them may arise in the future and may reduce the Corporation's available cash.

They include, but are not limited to, charges for (reversals of) impairment of assets, restructuring gains or costs, loss on refinancing and repurchase of long-term debt, some deferred tax asset provisions or reversals, premiums paid on long-term debt refinancing, gains or losses on the acquisition or sale of a business unit, gains or losses on the share of results of associates and joint ventures, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, unrealized gains or losses on interest rate swaps, foreign exchange gains or losses on long-term debt, specific items of discontinued operations and other significant items of an unusual, non-cash or non-recurring nature.

SPECIFIC ITEMS INCLUDED IN OPERATING INCOME AND NET EARNINGS

The Corporation incurred the following specific items in 2017 and 2016:

GAIN ON ACQUISITIONS, DISPOSALS AND OTHERS

2017

In the second quarter, the Containerboard Packaging segment sold a piece of land in Ontario, Canada, and recorded a gain of $7 million.

In the second quarter, the Corporate Activities realized a $1 million gain from the sale of some assets.

2016

The Specialty Products segment recorded a $3 million gain on the sale of pieces of land of its former fine paper plant located in St-Jérôme, Québec. This segment also recorded a $3 million environmental provision related to plants in Québec closed in previous years. Finally, the segment recorded a $4 million gain on the sale of assets following the closure of its de-inked pulp mill located in Auburn, Maine.

INVENTORY ADJUSTMENT RESULTING FROM A BUSINESS COMBINATION

2017

In the second quarter, operating results of the Containerboard Packaging segment were negatively impacted by $2 million relating to the inventory acquired at the time of the Greenpac consolidation, which was recognized at fair value and no profit was recorded on its subsequent sale.

IMPAIRMENT CHARGES AND RESTRUCTURING COSTS

2017

In the fourth quarter, the Corporate Activities recorded a $2 million reversal of impairment following the collection of a note receivable that had been written off in previous years. As well, the Corporate Activities recorded a severance cost of $1 million following the closure of a sales division.

In the third quarter, the Tissue Papers segment incurred a $2 million impairment charge from the re-evaluation of some unused assets.

In the third quarter, the Containerboard Packaging segment announced the forthcoming closure of its New York converting plant and recorded severance expenses totaling $2 million (please refer to the “Significant Facts and Developments” section for more details).

5 

In the second quarter, the Containerboard Packaging segment recorded an impairment charge of $11 million on deferred revenues related to the Greenpac management agreement that has been in place since the beginning of the mill's construction and recorded in “Other assets.” Following the acquisition and consolidation of Greenpac described in Note 5 of the 2017 audited consolidated financial statements, expected future cash flows related to this asset will not materialize on a consolidated basis.

In the second quarter, the Tissue Papers segment incurred $2 million of restructuring costs following the review of provisions related to the transfer of the converting operations of the Toronto plant to other Tissue segment sites announced in 2016.

In the first quarter, the Boxboard Europe segment recorded severances costs of $1 million following the restructuring of its sales activities.

2016

The Containerboard Packaging segment recorded a $1 million gain on the reversal of a provision for an onerous lease contract in relation to the restructuring of its Ontario converting activities in 2012. As well, the segment recorded a $2 million impairment charge on assets of our converting plant in Connecticut which were not part of the disposal in relation to the Rand-Whitney - Newtown plant acquisition.

The Boxboard Europe segment recorded restructuring costs of $2 million in relation to the reorganization of its activities following the transfer of the virgin fibre boxboard mill located in La Rochette, France, to our Reno de Medici subsidiary (please refer to the “Significant Facts and Developments” section for more details).

The Specialty Products segment recorded restructuring costs of $1 million following the closure of its de-inked pulp mill located in Auburn, Maine. The building of the mill was subsequently sold and a $2 million reversal of impairment was recorded. The segment also sold a piece of land related to another closed plant and recorded a $1 million reversal of impairment.

The Tissue Papers segment recorded a $3 million provision for an onerous lease as a consequence of the closure of its Toronto converting plant. This segment also incurred $4 million of severance costs and recorded an impairment charge of $4 million.

DERIVATIVE FINANCIAL INSTRUMENTS

In 2017, the Corporation recorded an unrealized gain of $8 million, compared to an unrealized gain of $18 million in 2016, on certain derivative financial instruments not designated for hedge accounting. Both the 2017 and 2016 unrealized gains reflect the appreciation of the Canadian dollar during their respective periods. The 2016 unrealized gain also reflects the reversal of the previous year's unrealized loss, which was realized and included in recurring results.

LOSS ON REPURCHASE OF LONG TERM DEBT

The Corporation purchased US$200 million of its unsecured senior notes and recorded early repurchase premiums of $11 million and wrote off $3 million of unamortized financing costs related to these notes.

INTEREST RATE SWAPS

In 2017 and 2016, the Corporation recorded an unrealized gain of $2 million in 2017, compared to an unrealized gain of $1 million in 2016 on interest rate swaps, and are included in financing expense.

FOREIGN EXCHANGE GAIN ON LONG-TERM DEBT AND FINANCIAL INSTRUMENTS

In 2017, the Corporation recorded a gain of $23 million on its US$-denominated debt and related financial instruments, compared to a gain of $22 million during 2016. This is composed of a gain of $11 million in 2017, compared to a gain of $13 million in 2016, on our US$-denominated long-term debt, net of our net investment hedges in the U.S. and Europe and forward exchange contracts designated as hedging instruments, if any. It also includes a gain of $12 million during the year, compared to a gain of $9 million in 2016, on foreign exchange forward contracts not designated for hedge accounting.

6 

FAIR VALUE REVALUATION GAIN ON INVESTMENTS AND SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES

2017

Containerboard

On April 4, 2017, Cascades and its partners in Greenpac Holding LLC (Greenpac) agreed to modify the equity holders' agreement. These modifications enable Cascades to direct decisions about relevant activities. Therefore, from an accounting standpoint, Cascades now has control over Greenpac, which triggers its deemed acquisition and thus fully consolidates Greenpac starting April 4, 2017. The Corporation recorded a revaluation gain on previously held interest of $156 million in the second quarter. As a consequence of the acquisition, accumulated other comprehensive loss components of Greenpac totaling $4 million and included in our consolidated balance sheet prior to the acquisition were reclassified to net earnings. These two items are presented in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings.

The Corporation also recorded its share of $3 million on an unrealized gain on certain derivative financial instruments not designated for hedge accounting prior to the acquisition of Greenpac.

Boralex

On January 18, 2017, Boralex issued common shares to partly finance the acquisition of the interest of Enercon Canada Inc. in the Niagara Region Wind Farm. As a result, the Corporations' participation in Boralex decreased to 17.37%, which resulted in a dilution gain of $15 million that is included in line item “Share of results of associates and joint ventures” in the consolidated statement of earnings.

On March 10, 2017, Boralex announced the appointment of a new Chairman of the Board. This change in Board composition combined with the decrease of our participation discussed above triggered the loss of significant influence of the Corporation over Boralex. Therefore, our investment in Boralex was no longer classified as an associate and considered an available-for-sale financial asset, which is classified in “Other assets”. Consequently, our investment in Boralex was re-evaluated at fair value on March 10, 2017, and we recorded a gain of $155 million. At the same time, accumulated other comprehensive loss components of Boralex totaling $10 million and included in our consolidated balance sheet were released to net earnings. These two items are presented in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings. Subsequent fair value revaluation of this investment was recorded in accumulated other comprehensive income until the investment disposal.

On July 27, 2017, Cascades announced the sale of all of its shares in Boralex to the Caisse de Dépôt et Placement du Québec for an amount of $288 million. The increase in fair value of $18 million from March 10 to July 27, 2017, recorded in accumulated other comprehensive income materialized and the Corporation recorded a gain of $18 million in the third quarter in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings.

2016

On May 6, 2016, the Corporation announced that its then associate company Greenpac, located in Niagara Falls, NY, successfully refinanced its debt. The Corporations' share of the cost related to this debt refinancing amounted to $7 million.

PROVISION FOR INCOME TAXES

2017

Following the US tax reform adopted in December 2017, the Corporation revalued the net deferred tax liability of its entities in the USA and recorded a gain of $57 million.

The income tax provision on Boralex revaluation gain was calculated at the rate of capital gains. Also, consequently with the sale of its participation in Boralex in July 2017, the Corporation has reassessed the probability of recovering unrealized capital losses on long-term debt due to foreign exchange fluctuations. As a result, $6 million of tax assets was derecognized and recorded in the statement of earnings.

In conjunction with the acquisition of Greenpac, the Corporation recorded an income tax recovery of $70 million representing deferred income taxes on its investment prior to the acquisition on April 4, 2017. Also, there was no income tax provision recorded on the gain of $156 million generated by the business combination of Greenpac, since it is included in the fair value of assets and liabilities acquired as described in Note 5 of the 2017 audited consolidated financial statements.

2016

The Corporation recorded a $2 million income tax provision adjustment related to the sale of one of its businesses over the past years.

7 

RECONCILIATION OF NON-IFRS MEASURES

To provide more information for evaluating the Corporation's performance, the financial information included in this analysis contains certain data that are not performance measures under IFRS (“non-IFRS measures”), which are also calculated on an adjusted basis to exclude specific items. We believe that providing certain key performance measures and non-IFRS measures is useful to both management and investors as they provide additional information to measure the performance and financial position of the Corporation. It also increases the transparency and clarity of the financial information. The following non-IFRS measures are used in our financial disclosures:

• Operating income before depreciation and amortization (OIBD): Used to assess operating performance and contribution of each segment when excluding depreciation & amortization. OIBD is widely used by investors as a measure of a corporation's ability to incur and service debt and as an evaluation metric.

• Adjusted OIBD: Used to assess operating performance and contribution of each segment on a comparable basis.

• Adjusted operating income: Used to assess operating performance of each segment on a comparable basis.

• Adjusted net earnings: Used to assess the Corporation's consolidated financial performance on a comparable basis.

• Adjusted free cash flow: Used to assess the Corporation's capacity to generate cash flows to meet financial obligation and/or discretionary items such as share repurchase, dividend increase and strategic investments.

• Net debt to adjusted OIBD ratio: Used to measure the Corporation's credit performance and evaluate the financial leverage.

• Net debt to adjusted OIBD ratio on a pro-forma basis: Used to measure the Corporation's credit performance and evaluate the financial leverage on a comparable basis including significant business acquisitions and excluding significant business disposals, if any.

Non-IFRS measures are mainly derived from the consolidated financial statements but do not have meanings prescribed by IFRS. These measures have limitations as an analytical tool, and should not be considered on their own or as a substitute for an analysis of our results as reported under IFRS. In addition, our definitions of non-IFRS measures may differ from those of other corporations. Any such modification or reformulation may be significant.

The reconciliation of operating income (loss) to OIBD, to adjusted operating income (loss) and to adjusted OIBD by business segment is as follows:

	2017
(in millions of Canadian dollars)	Containerboard	Boxboard Europe	Specialty Products	Tissue Papers	Corporate Activities	Consolidated
Operating income	164	34	46	28	(97)	175
Depreciation and amortization	74	33	21	62	25	215
Operating income (loss) before depreciation and amortization	238	67	67	90	(72)	390
Specific items:
Gain on acquisitions, disposals and others	(7)	—	—	—	(1)	(8)
Inventory adjustment resulting from business acquisition	2	—	—	—	—	2
Impairment charges (reversals)	11	—	—	2	(2)	11
Restructuring costs	2	1	—	2	1	6
Unrealized loss (gain) on financial instruments	1	—	—	—	(9)	(8)
	9	1	—	4	(11)	3
Adjusted operating income (loss) before depreciation and amortization	247	68	67	94	(83)	393
Adjusted operating income (loss)	173	35	46	32	(108)	178

	2016
(in millions of Canadian dollars)	Containerboard	Boxboard Europe	Specialty Products	Tissue Papers	Corporate Activities	Consolidated
Operating income	158	19	51	75	(82)	221
Depreciation and amortization	56	32	20	64	20	192
Operating income (loss) before depreciation and amortization	214	51	71	139	(62)	413
Specific items:
Gain on acquisitions, disposals and others	—	—	(4)	—	—	(4)
Impairment charges (reversals)	2	—	(3)	4	—	3
Restructuring costs (gains)	(1)	2	1	7	—	9
Unrealized loss (gain) on financial instruments	1	—	—	—	(19)	(18)
	2	2	(6)	11	(19)	(10)
Adjusted operating income (loss) before depreciation and amortization	216	53	65	150	(81)	403
Adjusted operating income (loss)	160	21	45	86	(101)	211

8 

Net earnings, as per IFRS, is reconciled below with operating income, adjusted operating income and adjusted operating income before depreciation and amortization: 

(in millions of Canadian dollars)	2017		2016
Net earnings attributable to Shareholders for the year	507		135
Net earnings attributable to non-controlling interests	15		2
Provision for (recovery of) income taxes	(81	)	45
Fair value revaluation gain on investments	(315	)	—
Share of results of associates and joint ventures	(39	)	(32	)
Foreign exchange gain on long-term debt and financial instruments	(23	)	(22	)
Financing expense, interest expense on employee future benefits and loss on repurchase of long-term debt	111		93
Operating income	175		221
Specific items:
Gain on acquisitions, disposals and others	(8	)	(4	)
Inventory adjustment resulting from business acquisition	2		—
Impairment charges	11		3
Restructuring costs	6		9
Unrealized gain on derivative financial instruments	(8	)	(18	)
	3		(10	)
Adjusted operating income	178		211
Depreciation and amortization	215		192
Adjusted operating income before depreciation and amortization	393		403

The following table reconciles net earnings and net earnings per common share, as per IFRS, with adjusted net earnings and adjusted net earnings per common share:

	NET EARNINGS				NET EARNINGS PER COMMON SHARE1
(in millions of Canadian dollars, except amount per common share)	2017		2016		2017			2016
As per IFRS	507		135		$	5.35		$	1.42
Specific items:
Gain on acquisitions, disposals and others	(8	)	(4	)	$	(0.06	)	$	(0.03	)
Inventory adjustment resulting from business acquisition	2		—		$	0.01		—
Impairment charges	11		3		$	0.08		$	0.03
Restructuring costs	6		9		$	0.05		$	0.06
Unrealized gain on derivative financial instruments	(8	)	(18	)	$	(0.07	)	$	(0.14	)
Loss on repurchase of long-term debt	14		—		$	0.10		—
Unrealized gain on interest rate swaps	(2	)	(1	)	$	(0.01	)	$	(0.01	)
Foreign exchange gain on long-term debt and financial instruments	(23	)	(22	)	$	(0.21	)	$	(0.19	)
Fair value revaluation gain on investments	(315	)	—		$	(3.85	)	—
Share of results of associates and joint ventures	(18	)	7		$	(0.15	)	$	0.05
Tax effect on specific items, other tax adjustments and attributable to non-controlling interest1	(98	)	5		$	(0.52	)	$	0.02
	(439	)	(21	)	$	(4.63	)	$	(0.21	)
Adjusted	68		114		$	0.72		$	1.21

1 Specific amounts per common share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interests. Per common share amounts in line item “Tax effect on specific items, other tax adjustments and attributable to non-controlling interests” only include the effect of tax adjustments. Please refer to “Provision for income taxes” prior in this section for more details.

9 

The following table reconciles cash flow from operating activities with operating income and operating income before depreciation and amortization: 

(in millions of Canadian dollars)	2017		2016
Cash flow from operating activities	173		372
Changes in non-cash working capital components	87		(56	)
Depreciation and amortization	(215	)	(192	)
Net income taxes paid (received)	10		(10	)
Net financing expense paid	99		89
Premium paid on long-term debt repurchase	11		—
Gain on acquisitions, disposals and others	8		4
Impairment charges and restructuring costs	(11	)	(4	)
Unrealized gain on derivative financial instruments	8		18
Dividend received, employee future benefits and others	5		—
Operating income	175		221
Depreciation and amortization	215		192
Operating income before depreciation and amortization	390		413

The following table reconciles cash flow from operating activities with cash flow from operating activities (excluding changes in non-cash working capital components) and adjusted cash flow from operating activities. It also reconciles adjusted cash flow from operating activities to adjusted free cash flow, which is also calculated on a per common share basis: 

(in millions of Canadian dollars, except amount per share or otherwise mentioned)	2017			2016
Cash flow from operating activities	173			372
Changes in non-cash working capital components	87			(56		)
Cash flow from operating activities (excluding changes in non-cash working capital components)	260			316
Specific items, net of current income taxes if applicable:
Restructuring costs	6			8
Premium paid on long-term debt repurchase	11			—
Adjusted cash flow from operating activities	277			324
Capital expenditures, other assets1 and capital lease payments, net of disposals	(205		)	(196		)
Dividends paid to the Corporation's shareholders and to non-controlling interests	(20		)	(16		)
Adjusted free cash flow	52			112
Adjusted free cash flow per common share	$	0.55		$	1.18
Weighted average basic number of common shares outstanding	94,680,598			94,709,048

1 Excluding increase in investments

The following table reconciles total debt and net debt with the ratio of net debt to adjusted operating income before depreciation and amortization (adjusted OIBD): 

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Long-term debt	1,517	1,530
Current portion of long-term debt	59	36
Bank loans and advances	35	28
Total debt	1,611	1,594
Less: Cash and cash equivalents	89	62
Net debt	1,522	1,532
Adjusted OIBD (last twelve months)	393	403
Net debt / Adjusted OIBD ratio	3.9	3.8
Net debt / Adjusted OIBD ratio on a pro forma basis1	3.6	N/A

1 Pro forma to include adjusted OIBD of Greenpac and other business combinations on a Last Twelve Month basis.

10 

MANAGEMENT'S DISCUSSION & ANALYSIS

FINANCIAL OVERVIEW - 2016

The Corporation's 2016 financial results reflected sales and operating results growth in the Tissue and the Specialty Products segments, in addition to increased sales in the Containerboard Packaging segment. This was offset by higher corporate costs related to the implementation of our ERP system and other business process optimization initiatives, lower contribution from the Boxboard Europe segment due to the persistent challenging market environment in 2016, and reduced contribution from the Containerboard Packaging segment attributable to higher production and raw material costs.

FINANCIAL OVERVIEW - 2017

Results for the year reflect strong sales driven by year-over-year increases in shipments for the Boxboard Europe segment and higher average selling prices from all three packaging segments on a same plant basis. Beginning in the second quarter, the consolidation of Greenpac benefited both sales and operating income levels. However, a sharp increase in raw material costs impacted the performance of all our segments, the effects of which were partially offset by the corresponding stronger results generated by our recovery and recycling activities. Results from our Tissue segment include costs related to the start-up of the new converting plant on the West Coast of the US, as well as additional costs related to new branding and repositioning efforts of its product lines. Increased capacity in the Tissue market also had a negative impact on shipments. Finally, ERP implementation and business process optimization initiatives at the corporate level also required a higher level of resources during 2017 compared to 2016, but will decrease in 2018.

Sales increased by $320 million to reach $4,321 million in 2017, compared to $4,001 million in 2016. The increase was mainly driven by the acquisition of Greenpac, higher selling prices in all segments and additional contribution from our recovery and recycling activities. On the other hand, the 2% appreciation of the Canadian dollar against the American dollar had a negative impact on North American segments.

The following graphics show the breakdown of sales, before inter-segment eliminations, and adjusted operating income before depreciation and amortization by business segment:

Containerboard Packaging	Tissue papers	Boxboard Europe	Specialty Products

1 Excluding inter-segment sales and Corporate activities.

2 Excluding Corporate activities.

3 Please refer to the “Supplemental Information on Non-IFRS Measures” section for a complete reconciliation.

11 

For 2017, the Corporation posted net earnings of $507 million, or $5.35 per common share, compared to net earnings of $135 million, or $1.42 per common share in 2016. On an adjusted basis, discussed in detail in the “Supplemental Information on Non-IFRS Measures” section, the Corporation generated net earnings of $68 million during 2017, or $0.72 per common share, compared to net earnings of $114 million or $1.21 per common share in 2016. The Corporation recorded an operating income of $175 million during the year, compared to $221 million in 2016. On an adjusted basis, operating income stood at $178 million during the year, compared to $211 million in 2016 (see the “Supplemental Information on Non-IFRS Measures” section for reconciliation of these amounts).

The $3.93 increase in our net earnings per share in 2017 compared to 2016, can be explained by the following factors: 

(in Canadian dollars)
Change in specific items (see reconciliation in the “Supplemental Information on Non-IFRS Measures” section)	$	4.41
Change in net earnings from operating activities normalized at a 30% income tax rate	$	(0.28	)
Change in tax provision - Other items (see the analysis on the “Other Items Analysis” section)	$	0.06
Change in share of results of associates and joint ventures - net of income taxes - and change in non-controlling interests	$	(0.26	)
Increase in net earnings per share	$	3.93

FORWARD-LOOKING STATEMENTS

The following document is the quarterly financial report and Management’s Discussion and Analysis (“MD&A”) of the operating results and financial position of Cascades Inc. (“Cascades” or “the Corporation”), and should be read in conjunction with the Corporation's consolidated financial statements and accompanying notes for the years ended December 31, 2017 and 2016. Information contained herein includes any significant developments as at February 28, 2018, the date on which the MD&A was approved by the Corporation’s Board of Directors. For additional information, readers are referred to the Corporation’s Annual Information Form (“AIF”), which is published separately. Additional information relating to the Corporation is also available on SEDAR at www.sedar.com.

The financial information contained herein, including tabular amounts, is expressed in Canadian dollars unless otherwise specified, and is prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise specified. Unless otherwise specified or if required by context, the terms “we”, “our” and “us” refer to Cascades Inc. and all of its subsidiaries, joint ventures and associates.

This MD&A is intended to provide readers with information that Management believes is necessary for an understanding of Cascades' current results and to assess the Corporation's future prospects. Consequently, certain statements herein, 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, prices and availability of raw material, changes in relative values of certain currencies, fluctuations in selling prices and adverse changes in general market and industry conditions. Cascades disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable securities regulations. This MD&A also includes price indices, as well as variance and sensitivity analysis that are intended to provide the reader with a better understanding of the trends with respect to our business activities. These items are based on the best estimates available to the Corporation.

12 

KEY PERFORMANCE INDICATORS

We use several key performance indicators to monitor our action plan and analyze the progress we are making toward achieving our long-term objectives. These include the following: 

	2015		2016										2017
	TOTAL		Q1		Q2		Q3		Q4		TOTAL		Q1		Q2		Q3		Q4		TOTAL
OPERATIONAL
Total shipments (in '000 s.t.)1
Packaging Products
Containerboard	1,114		277		284		294		283		1,138		285		375		369		372		1,401
Boxboard Europe	1,111		278		267		258		263		1,066		296		283		271		270		1,120
	2,225		555		551		552		546		2,204		581		658		640		642		2,521
Tissue Papers	598		143		158		163		144		608		139		151		157		146		593
Total	2,823		698		709		715		690		2,812		720		809		797		788		3,114
Integration rate2
Containerboard	51	%	52	%	53	%	54	%	51	%	53	%	51	%	51	%	55	%	52	%	53	%
Tissue Papers	67	%	70	%	65	%	65	%	72	%	68	%	71	%	69	%	67	%	66	%	68	%
Manufacturing capacity utilization rate3
Packaging Products
Containerboard	92	%	93	%	93	%	96	%	91	%	93	%	96	%	94	%	91	%	92	%	93	%
Boxboard Europe	94	%	97	%	92	%	89	%	91	%	92	%	102	%	98	%	94	%	93	%	97	%
Tissue Papers	89	%	87	%	89	%	93	%	83	%	88	%	86	%	89	%	90	%	84	%	87	%
Consolidated total	92	%	93	%	91	%	93	%	89	%	92	%	96	%	95	%	92	%	91	%	93	%
FINANCIAL
Return on assets4
Packaging Products
Containerboard	19	%	19	%	19	%	18	%	17	%	17	%	16	%	14	%	13	%	14	%	14	%
Boxboard Europe	10	%	10	%	10	%	10	%	10	%	10	%	10	%	10	%	11	%	12	%	12	%
Specialty Products	17	%	18	%	19	%	20	%	20	%	20	%	20	%	21	%	19	%	18	%	18	%
Tissue Papers	13	%	15	%	17	%	17	%	16	%	16	%	15	%	14	%	12	%	10	%	10	%
Consolidated return on assets	11.3	%	11.8	%	12.0	%	11.3	%	10.8	%	10.8	%	9.8	%	9.1	%	8.9	%	9.2	%	9.2	%
Return on capital employed5	5.7	%	6.0	%	6.2	%	5.5	%	5.2	%	5.2	%	4.5	%	3.9	%	3.7	%	3.7	%	3.7	%
Working capital6
In millions of $, at end of period	389		439		458		443		309		309		385		429		474		442		442
As a % of sales7	10.9	%	10.9	%	10.9	%	10.9	%	10.6	%	10.6	%	10.2	%	9.9	%	9.9	%	10.1	%	10.1	%

1	Shipments do not take into account the elimination of business sector inter-segment shipments. Starting in Q2 2017, including Greenpac. Shipments from our Specialty Products segment are not presented as they use different units of measure.
2	Defined as: Percentage of manufacturing shipments transferred to our converting operations. Starting in Q2 2017, including Greenpac.
3	Defined as: Manufacturing internal and external shipments/practical capacity. Excluding discontinued operations and Specialty Products segment manufacturing activities. Starting in Q2 2017, including Greenpac.
4	Return on assets is a non-IFRS measure defined as the last twelve months' (“LTM”) adjusted OIBD/LTM quarterly average of total assets less cash and cash equivalents. Not adjusted for discontinued operations. Including Greenpac on a consolidated basis starting in Q2 2017.
5	Return on capital employed is a non-IFRS measure and is defined as the after-tax (30%) amount of the LTM adjusted operating income, including our share of core associates and joint ventures, divided by the LTM quarterly average of capital employed. Capital employed is defined as the quarterly total average assets less trade and other payables and cash and cash equivalents. Not adjusted for discontinued operations. Including Greenpac as an associate up to Q1 2017 and on a consolidated basis starting in Q2 2017.
6	Working capital includes accounts receivable (excluding the short-term portion of other assets) plus inventories less trade and other payables. Not adjusted for discontinued operations. Starting in Q2 2017, including Greenpac.
7	% of sales = Average LTM working capital/LTM sales. It includes or excludes significant business acquisitions and disposals. Not adjusted for discontinued operations. Starting in Q2 2017, including Greenpac.

13 

HISTORICAL FINANCIAL INFORMATION 

	2015			2016															2017
(in millions of Canadian dollars, unless otherwise noted)	TOTAL			Q1			Q2			Q3			Q4			TOTAL			Q1			Q22			Q3			Q4			TOTAL
Sales
Packaging Products
Containerboard	1,301			336			342			356			336			1,370			346			428			438			440			1,652
Boxboard Europe	825			219			197			189			191			796			211			213			202			212			838
Specialty Products	579			149			157			158			156			620			173			188			181			161			703
Inter-segment sales	(55		)	(15		)	(14		)	(16		)	(16		)	(61		)	(22		)	(27		)	(32		)	(24		)	(105		)
	2,650			689			682			687			667			2,725			708			802			789			789			3,088
Tissue Papers	1,236			320			324			342			319			1,305			306			338			323			301			1,268
Inter-segment sales and Corporate activities	(25		)	(6		)	(8		)	(8		)	(7		)	(29		)	(8		)	(10		)	(9		)	(8		)	(35		)
Total	3,861			1,003			998			1,021			979			4,001			1,006			1,130			1,103			1,082			4,321
Operating income (loss)
Packaging Products
Containerboard	170			40			46			44			28			158			33			30			50			51			164
Boxboard Europe	(28		)	8			7			1			3			19			5			13			5			11			34
Specialty Products	31			9			16			12			14			51			13			14			10			9			46
	173			57			69			57			45			228			51			57			65			71			244
Tissue Papers	64			19			18			26			12			75			8			17			9			(6		)	28
Corporate activities	(84		)	(3		)	(22		)	(33		)	(24		)	(82		)	(28		)	(26		)	(23		)	(20		)	(97		)
Total	153			73			65			50			33			221			31			48			51			45			175
Adjusted OIBD1
Packaging Products
Containerboard	231			55			60			58			43			216			45			56			72			74			247
Boxboard Europe	63			16			17			9			11			53			14			21			14			19			68
Specialty Products	58			14			16			18			17			65			18			20			15			14			67
	352			85			93			85			71			334			77			97			101			107			382
Tissue Papers	119			34			39			47			30			150			23			35			24			12			94
Corporate activities	(45		)	(13		)	(20		)	(29		)	(19		)	(81		)	(25		)	(25		)	(19		)	(14		)	(83		)
Total	426			106			112			103			82			403			75			107			106			105			393
Net earnings (loss)	(65		)	75			36			20			4			135			161			256			33			57			507
Adjusted1	112			34			35			30			15			114			12			24			19			13			68
Net earnings (loss) per common share (in dollars)
Basic	$	(0.69	)	$	0.79		$	0.38		$	0.21		$	0.04		$	1.42		$	1.70		$	2.70		$	0.35		$	0.60		$	5.35
Basic, adjusted1	$	1.18		$	0.35		$	0.38		$	0.32		$	0.16		$	1.21		$	0.13		$	0.25		$	0.20		$	0.14		$	0.72
Net earnings (loss) from continuing operations per common share (in dollars)	$	(0.70	)	$	0.79		$	0.38		$	0.21		$	0.04		$	1.42		$	1.70		$	2.70		$	0.35		$	0.60		$	5.35
Cash flow from operating activities from continuing operations (excluding changes in non-cash working capital components)	322			56			107			68			85			316			33			89			61			77			260
Net debt1	1,721			1,684			1,664			1,625			1,532			1,532			1,617			1,780			1,469			1,522			1,522

Sources: Bloomberg and Cascades.

1 Please refer to the “Supplemental Information on Non-IFRS Measures” section for reconciliation of these figures.

2 Including Greenpac on a consolidated basis starting in Q2 2017. The purchase price allocation of Greenpac was finalized during the third quarter of 2017. The preliminary estimated deemed consideration of $371 million was revised to $304 million. This change impacted the calculation of the gain on the deemed disposal of the previously held interest and goodwill allocated in the purchase price determination for an amount of $67 million. Adjustments to the preliminary purchase price allocation were recorded retrospectively to the acquisition date as required by IFRS 3. Net earnings per common share disclosed in the second quarter were consequently adjusted to $2.70 per common share from $3.41 per common share.

14 

BUSINESS HIGHLIGHTS

From time to time, the Corporation enters into transactions to optimize its asset base and streamline its cost structure. The following transactions should be taken into consideration when reviewing the overall and segmented analysis of the Corporation's 2017 and 2016 results.

BUSINESS ACQUISITION, DISPOSAL AND CLOSURE

CONTAINERBOARD PACKAGING 

• On December 4, 2017, the Corporation announced that it had acquired three converting plants from the Coyle Group in Ontario, Canada, to strengthen its position in the containerboard packaging sector.

• On April 5, 2017, the Corporation announced that results from the Greenpac Mill LLC (Greenpac) would be consolidated with those of the Corporation following changes to the Greenpac equity holders agreement. As a result, the Corporation began consolidating Greenpac results on April 4, 2017. The agreement did not involve any cash consideration.

• On June 1, 2016, the Corporation announced the completion of a transaction with US-based company Rand-Whitney Container LLC for the acquisition of its plant in Newtown, Connecticut. In return, Cascades transferred equipment and the customer list from its Thompson plant, located in Connecticut, and paid US$12 million ($15 million) to Rand-Whitney.

SPECIALTY PRODUCTS

• On June 22, 2016, the Corporation announced the closure of its de-inked pulp mill located in Auburn, Maine. The plant closed on July 15, 2016.

TISSUE

• During the first quarter of 2017, the Corporation successfully began production at its new tissue converting facility in Scappoose, Oregon, which houses three new state-of-the-art converting lines. The plant manufactures virgin and recycled bathroom tissue products and paper hand towels for the Cascades Pro brand (Away-from-Home market). The plant is supplied by the Corporation's tissue paper plant located 12 kilometers away in St. Helens.

• On May 13, 2016, the Corporation decided to close the tissue paper converting operations in its Toronto, Ontario plant in order to optimize its supply chain and maximize its profitability. The Corporation transferred some of the assets to other facilities.

15 

SIGNIFICANT FACTS AND DEVELOPMENTS

• On January 1, 2018, the Corporation, through its 57.8% equity ownership in Reno de Medici S.p.A., acquired 66.67% of PAC Service S.p.A., a boxboard converter for the packaging, publishing, cosmetics and food industries. The Corporation already had a 33.33% equity participation before the transaction.

• On December 12, 2017, the Corporation announced the results of tender offers and proceeded with the purchase of US$150 million of its 5.500% unsecured senior notes due 2022 and US$50 million of its 5.75% unsecured senior notes due 2023.

• On March 21, 2017, the Corporation acquired 23% of Containerboard Partners (Ontario) Inc. for a consideration of US$12 million ($16 million ). This company is a member of Greenpac Holding LLC, of which it owns 12.1%. On November 30, 2017, the Corporation acquired an additional 30% of Containerboard Partners (Ontario) Inc. for a consideration of $19 million. These transactions add an indirect participation of 6.4% in Greenpac Holding LLC bringing total ownership to 66.1%.

• On August 3, 2017, as part of its modernization and optimization efforts in the Northeastern United States, the Corporation announced an investment of US$80 million for the construction of a new containerboard packaging plant in Piscataway, New Jersey. This new plant will manufacture corrugated packaging products. The operation is planned to start in the second quarter of 2018. In addition, the Corporation announced on August 10, 2017, that it will close its containerboard converting plant in Maspeth, New York. On January 31, 2018, the Corporation completed the sale of the building and land of its Maspeth plant, NY, for US$72 million ($90 million) of which US$68 million ($85 million) was received at closing and US$4 million ($5 million) is held in escrow. Release of the escrow is contingent upon certain conditions being met over the next three years. The Corporation will continue to use the facility until December 31, 2018, the date the plant is scheduled to close. The volumes will be progressively redeployed to other Cascades units over the course of the year.

• On July 27, 2017, the Corporation announced the sale of its 17.3% equity holding in Boralex to the Caisse de Dépôt et Placement du Québec for $288 million.

• On June 30, 2016, the Corporation completed the transfer of its virgin fibre boxboard mill located in La Rochette, France, to its 57.8%-owned subsidiary Reno de Medici, for a consideration of €19 million ($27 million). The transaction combined the Corporation’s virgin and recycled boxboard activities in Europe. Apart from higher non-controlling interests after the closing, no impact was recorded on the Corporation’s financial statements, as both entities had been fully consolidated prior to the transaction.

• On June 1, 2017, the Corporation entered into an agreement with its lenders to extend and amend its existing $750 million credit facility. The amendment extends the term of the facility to July 2021. The financial conditions remain essentially unchanged.

16 

FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017, COMPARED TO THE YEAR ENDED DECEMBER 31, 2016

SALES

Sales increased by $320 million, or 8%, to reach $4,321 million in 2017, compared to $4,001 million in 2016. Sales in the Containerboard business increased by 21% compared to the prior year, driven by the inclusion of results from the Greenpac Mill and the implementation of higher average selling price during the year. Sales levels increased 5% in the Boxboard Europe segment as a result of improvements in volumes. The Specialty Products segment generated a 13% sales increase, reflecting higher average selling prices and additional sales from recovery and recycling activities due to the higher recycled fibre pricing in 2017. Finally, in the Tissue Papers segment, sales decreased by 3%, driven by lower volume, particularly in the parent roll market. These negative impacts were partly offset by a favourable sales mix and higher selling prices. The 2% appreciation of the Canadian dollar against the American dollar had a negative impact on North American segments.

Sales by geographic segment are as follows:

   

The main variances in sales in 2017, compared to 2016, are shown below (in $M):

17 

OPERATING INCOME FROM OPERATIONS

The Corporation generated operating income of $175 million in 2017, compared to $221 million reported in 2016. Variance of specific items recorded in both periods (please refer to the “Supplemental Information on Non-IFRS Measures” section for more details) decreased operating income by $13 million. The decrease, despite the $320 million increase is sales described above, reflects higher raw material costs that negatively impacted contribution levels from all four segments, higher production costs from all three North American segments as well as higher corporate costs related to the continuing ERP platform and business process review implementations. Our Boxboard Europe segment benefited from lower energy and production costs. On the other hand, the Tissue Papers segment's results were negatively impacted by the start-up of the new plant on the West Coast. The depreciation and amortization expense increased by $23 million, mainly due to Greenpac and to the implementation our ERP system now in most of our facilities.

Adjusted operating income1 was $178 million in 2017, compared to $211 million in 2016.

The main variances in operating income in 2017, compared to 2016, are shown below (in $M):

  

Adjusted OIBD (Operating income)	Please refer to “Supplemental Information on Non-IFRS Measures” section for reconciliation of these figures.
Raw Material (Operating income)	The impacts of these estimated costs are based on production costs per unit shipped externally or inter-segment, which are affected by yield, product mix changes, and purchase and transfer prices. In addition to market pulp and recycled fibre, they include purchases of external boards and parent rolls for the converting sector, and other raw material such as plastic and wood chips.
F/X CAN$ (Operating income)	The estimated impact of the exchange rate is based on the Corporation's Canadian export sales less purchases, denominated in US$, that are impacted by exchange rate fluctuations and by the translation of our non-Canadian subsidiaries OIBD into CAN$. It also includes the impact of exchange rate fluctuations on the Corporation's Canadian units in currency other than the CAN$ working capital items and cash positions, as well as our hedging transactions. It excludes indirect sensitivity (please refer to "Sensitivity Table" section for further details).
Other production costs (Operating income)	These costs include the impact of variable and fixed costs based on production costs per unit shipped externally, which are affected by downtimes, efficiency and product mix changes.
Recovery and Recycling activities (Sales and Operating income)	While this segment is integrated within the other segments of the Corporation, any variation in the results of Recovery and Recycling activities are presented separately and on a global basis in the charts.

The analysis of variances in segment operating income appear within each business segment review (please refer to the section "Business Segment Review" for more details).

18 

BUSINESS SEGMENT REVIEW

PACKAGING PRODUCTS - CONTAINERBOARD

Our Industry

U.S. containerboard industry production and capacity utilization rate 1	U.S. containerboard inventories at box plants and mills 2
Total U.S.containerboard production increased by 3% in 2017 due to favourable market conditions in part driven by e-commerce. The industry's capacity utilization rate rose to 97.8% in 2017 from 95.6% in 2016.	The average inventory level decreased by 4% in 2017 due to strong demand levels for corrugated boxes. The number of weeks of supply in inventory averaged 3.8 for the year.

U.S corrugated box industry shipments 2	Canadian corrugated box industry shipments 3
Total U.S. corrugated box shipments increased by 3% in 2017 due to the strong economic environment coupled with the growing importance of e-commerce.	Canadian corrugated box shipments increased for a fourth consecutive year. Favourable market conditions explain the 1% year-over-year increase in 2017.

Reference prices - containerboard 1	Reference prices - recovered papers (brown grade) 1
After a price increase implemented in October 2016, producers of containerboard were able to implement a US$50 per short ton linerboard and corrugating medium price increase last April due to strong supply and demand fundamentals, partially driven by e-commerce. It was followed by a US$30 per short ton corrugating medium price increase later in the year. As a results, the 2017 reference prices for linerboard and corrugating medium increased by 11% and 14%, respectively, compared to 2016.	The average reference price of old corrugated containers no.11 ("OCC") increased by 48% in 2017. OCC index prices were particularly volatile during the year. In the first quarter of 2017, index prices surged due to strong domestic and foreign demand. This was followed by a sharp decrease in index prices in October following China's restriction on recovered paper import permits, which resulted in an increase in domestic supply.
1 Source: RISI
2 Source: Fibre Box Association
3 Source: Canadian Corrugated and Containerboard Association

19 

Our Performance

The main variances in sales and operating income for the Containerboard Packaging segment in 2017, compared to 2016, are shown below :

   

1 For definitions of certain sales and operating income variations categories, please refer to the section "Financial results for the year ended December 31, 2017, compared to the year ended December 31, 2016" for more details.

The Corporation incurred certain specific items in 2017 and 2016 that adversely or positively affected its operating results. Please refer to section "Supplemental Information for Non-IFRS Measures" for reconciliations and details.

20 

2016	2017	Change in %
Shipments2 ('000 s.t.)		23%
1,138	1,401
Average Selling Price
(CAN$/unit)
1,204	1,179	-2%
Sales ($M)		21%
1,370	1,652
Operating income ($M)
(as reported)
158	164	4%
(adjusted)1		8%
160	173
OIBD1 ($M)
214	238	11%
% of sales
16%	14%
(adjusted)1
216	247	14%
% of sales
16%	15%
1 Please refer to the “Supplemental Information on Non-IFRS Measures” section for reconciliation of these figures.
2 Shipments do not take into account the elimination of business sector inter-company shipments. Including 12.5 billion square feet in 2017 compared to 12.2billion square feet in 2016.
3 Up to Q1 2017, the Corporation's interest in Greenpac was recorded under the equity method. All transactions were therefore accounted for as external.
4 Starting in Q2 2017, including sales to other partners in Greenpac.

Shipments increased by 263,000 s.t., or 23%, in 2017. This reflects the 258,000 s.t., or 59%, increase in year-to-date external shipments from containerboard mills, which is primarily attributable to the addition of Greenpac (please refer to the “Business Highlights” section for more details). The mill integration rate also remained stable at 53% in 2017 compared to last year. Including sales to associates, the 2017 integration rate4 was 66% compared to 67% in 2016. On the converting side, shipments increased by 5,000 s.t., compared to last year. Excluding the shipments arising from the transaction completed with US-based company Rand-Whitney in 2016 and the acquisition of three facilities in Ontario in 2017, converting activities shipments increased by 1% in MSF (thousand square feet).

The lower average selling price reflects a less favourable product mix compared to the same period last year. More specifically, the inclusion of Greenpac increased by 11% the proportion of sales of parent rolls which are sold at a lower price than our converted products. However, the average selling price denominated in Canadian dollars increased by $80 per s.t., or 12%, for our primary products, and by $75 per s.t. or 5%, in our converting sector.

Sales increased by $282 million, or 21%, year-over-year, with the 2017 and 2016 business acquisitions contributing $216 million to this increase. Excluding the impact of these transactions on sales mix, the higher average selling price denominated in Canadian dollars added $92 million to sales. The average 2% appreciation of the Canadian dollar and the lower volume on a same plant basis, negatively impacted sales by $15 million and $11 million, respectively.

Operating income increased by $6 million, or 4%, compared to last year. This increase is mainly explained by higher average selling prices on a same plant basis which added $92 million year-over-year. However, higher average raw material costs subtracted $69 million from operating income while other production costs subtracted a further $43 million. These increased costs are attributable to freight, energy, subcontracting and repair & maintenance. The segment also incurred a one-time litigation settlement charge with a client. Moreover, higher labour, training and warehousing costs related to ERP and business process optimization had a negative impact on operating income. Business acquisitions increased depreciation and amortization expense and contributed positively to operating income. Also, the average 2% appreciation of the Canadian dollar and the lower volume on a same plant basis both reduced operating income by $3 million respectively.

The segment incurred some specific items1 in 2017 and 2016 that adversely or positively affected its operating income. Adjusted operating income1 reached $173 million in 2017, compared to $160 million in 2016.

Finally, the Corporation's results for 2017 include its share of results of its associate Greenpac3 Mill (59.7%) prior to the consolidation announced on April 5, 2017. In the first quarter of 2017, contribution stood at $7 million. In 2016, Greenpac contributed $15 million, including our $7 million share of fees related to the debt refinancing completed in the second quarter of 2016.

21 

PACKAGING PRODUCTS - BOXBOARD EUROPE

Our Industry

European industry order inflow of coated boxboard 1

In Europe, order inflows of white-lined chipboard increased by 8% in 2017 compared to 2016, reflecting a strong demand throughout the year. As a result, the industry experienced its best year of the last ten years with orders of approximately 3.2 million tonnes. The folding boxboard industry also experienced a strong year as order inflows reached more than 2.2 million tonnes, representing an increase of 11% in 2017 over 2016.

Coated recycled boxboard industry's order inflow from Europe (White-lined chipboard (WLC) - 5-week weekly moving average)	Coated virgin boxboard industry's order inflow from Europe (Folding boxboard (FBB) - 5-week weekly moving average)

Reference prices - boxboard in Europe 2	Reference prices - recovered papers in Europe 2
White-lined chipboard prices increased for the first time in three years in Western European countries. Strong demand for recycled boxboard resulted in a 2% increase in the 2017 average reference price compared to 2016. Folding boxboard prices remained stable throughout the year, suggesting that new market capacity was counterbalanced by the 11% growth in order inflow levels. However, the average reference price for folding boxboard was 1% lower in 2017 than in 2016.	Recovered paper prices continued to be under pressure in 2017 due to strong demand. As a result, our recovered paper reference index in Europe was 12% higher in 2017 than in 2016, reflecting important increases in brown and white grades.
1 Source: CEPI Cartonboard
2 Source: RISI
3 The Cascades recycled white-lined chipboard selling prices index represents an approximation of Cascades’ recycled grade selling prices in Europe. It is weighted by country. For each country, we use an average of PPI Europe prices for white-lined chipboard.
4 The Cascades virgin coated duplex boxboard selling prices index represents an approximation of Cascades’ virgin grade selling prices in Europe. It is weighted by country. For each country, we use an average of PPI Europe prices for coated duplex boxboard.
5 The recovered paper index represents an approximation of Cascades’ recovered paper purchase prices in Europe. It is weighted by country. For each country, we use an average of PPI Europe prices for recovered papers. This index should only be used as a trend indicator and may differ from our actual purchasing costs and our purchase mix.

22 

Our Performance

The main variances in sales and operating income for the Boxboard Europe segment in 2017, compared to 2016, are shown below:

1 For definitions of certain sales and operating income variations categories, please refer to the section "Financial results for the year ended December 31, 2017, compared to the year ended December 31, 2016" for more details.

The Corporation incurred certain specific items in 2017 and 2016 that adversely or positively affected its operating results. Please refer to section "Supplemental Information for Non-IFRS Measures" for reconciliations and details.

23 

2016	2017	Change in %
Shipments2 ('000 s.t.)		5%
1,066	1,120
Average Selling Price3
(CAN$/unit)
746	748	—
(Euro€/unit)
509	511	—
Sales ($M)		5%
796	838
Operating income ($M)
(as reported)
19	34	79%
(adjusted)1		67%
21	35
OIBD1 ($M)
51	67	31%
% of sales
6%	8%
(adjusted)1
53	68	28%
% of sales
7%	8%

1 Please refer to the “Supplemental Information on Non-IFRS Measures” section for reconciliation

of these figures.

2 Shipments do not take into account the elimination of business sector inter-company shipments.

3 Average selling price is a weighted average of virgin and recycled boxboard shipments.

Recycled boxboard shipments increased by 55,000 s.t., or 6%, to 959,000 s.t. in 2017, from 904,000 in 2016, while shipments of virgin boxboard remained stable year-over-year at 161,000 s.t. The increase in shipments is mainly attributable to the stronger economic environment in Europe.

The 2017 average selling price increased slightly in both euros and Canadian dollars compared to 2016. This reflects the slight average year-over-year appreciation of the Canadian dollar compared to the euro, in addition to some increases in selling prices that were implemented for our products. When compared to 2016, the average 2017 selling price in recycled boxboard activities increased by €8, or 2%, while the average 2017 selling price in virgin boxboard activities decreased by €13, or 2%.

The increase in sales reflects the higher volumes coming from the recycled boxboard activities, in addition to the slightly higher average selling price during the year.

Operating income increased by $15 million, or 79%, in 2017, largely due to lower energy costs. The higher volumes, lower repair and maintenance costs due to shorter seasonal downtime, also positively contributed to operating income. These benefits were partially offset by higher raw material prices.

The segment incurred some specific items1 in 2017 and 2016 that adversely or positively affected its operating income. Adjusted operating income1 was $35 million in 2017, compared to $21 million in 2016.

24 

PACKAGING PRODUCTS - SPECIALTY PRODUCTS

Our Industry

Reference prices - uncoated recycled boxboard 1	Reference prices - fibre costs in North America 1
The reference price for uncoated recycled boxboard increased by 7% in 2017 compared to 2016 due to better market conditions, which resulted in a series of price increases at the beginning of 2017.	The white grade recycled paper No. 37 (sorted office papers), the brown grade recycled paper No. 11 (old corrugated containers) and the recycled paper No. 56 (sorted residential papers) annual index prices increased by 13%, 48% and 14%, respectively, in 2017 compared to 2016. Old corrugated containers index prices were particularly volatile last year. In the first quarter of 2017, index prices surged to US$175 per short ton due to strong domestic and foreign demand. It was followed by a sharp drop in October to US$100 per short ton as China banned recovered paper import permits.

U.S. recycled fibres exports to China 1

The relationship between recovered paper supply and demand, particularly from Asia, plays an important role in pricing dynamics. U.S. exports of recycled fibres to China decreased by 7% in 2017 due to the ban on recovered paper import permits by the Chinese government in the last quarter of 2017. As a result, old corrugated container, old newspaper, mixed paper and other exports decreased by 23%, 4%, 15% and 65% respectively, compared to 2016. The percentage of total U.S exports to China fell to 59% in 2017, from 67% in 2016.

Total U.S. exports of recycled papers to China - all grades	Major grades exported by the U.S.

Chinese imports of recycled fibre 1

Total Chinese imports fell by 10% in 2017 compared to 2016 as explained above. On a more detailed basis, old corrugated container and mixed paper imports were the most impacted, registering decreases of 10% and 14%, respectively, while old newspaper imports decreased by 6% and imports of other grades fell by 4%.

Total Chinese imports of recycled papers - all grades	Major grades imported by China
1 Source: RISI

25 

Our Performance

The main variances in sales and operating income for the Specialty Products segment in 2017, compared to 2016, are shown below:

1 For definitions of certain sales and operating income variations categories, please refer to the section "Financial results for the year ended December 31, 2017, compared to the year ended December 31, 2016" for more details.

The Corporation incurred certain specific items in 2017 and 2016 that adversely or positively affected its operating results. Please refer to section "Supplemental Information for Non-IFRS Measures" for reconciliations and details.

26 

2016	2017	Change in %
Sales ($M)		13%
620	703
Operating income ($M)
(as reported)
51	46	-10%
(adjusted)1		2%
45	46
OIBD1 ($M)
(as reported)
71	67	-6%
% of sales
11%	10%
(adjusted)1
65	67	3%
% of sales
10%	10%

1 Please refer to the “Supplemental Information on Non-IFRS Measures” section for reconciliation of these figures.

2 Recovery and Recycling activities: Given the level of integration of this segment within the

other segments of the Corporation, variances in results are presented excluding the impact

of this segment. The variations of this segment are presented separately on a global basis.

Shipments in the Specialty Products segment increased in most sub-sectors, including Recovery and Recycling.2 More specifically, shipments in the Industrial Packaging sector increased by 17% in 2017. This strong performance reflects improving market dynamics and the strengthening of our European paper mill packaging facility.

In addition to higher volumes, higher selling prices in our Recovery and Recycling activities2 contributed $89 million to the increase in sales. Higher selling prices, mostly in our Industrial and Consumer Products packaging sectors, also added $18 million to sales. These positive factors were partly offset by the $19 million reduction in sales following the closure of our pulp plant in Auburn, Maine, at the end of the second quarter in 2016.

Operating income decreased by $5 million in 2017. Higher realized spreads (between average selling prices and raw material costs) resulted in a $6 million positive impact in our Recovery and Recycling activities2 and $8 million for the other businesses of the specialty products segment. These were offset by lower volume in our Consumer Product segment, and higher operating costs, labour, freight, and selling and administrative costs that were mainly related to lower productivity in our packaging activities.

The segment incurred some specific items1 in 2016 that adversely or positively affected its operating income. Adjusted operating income1 was $46 million in 2017, compared to $45 million in 2016.

27 

TISSUE PAPERS

Our Industry

U.S. tissue paper industry production (parent rolls) and capacity utilization rate 1	U.S. tissue paper industry converted product shipments 1
Total parent roll production increased by 2% for a third consecutive year in 2017. The average capacity utilization rate remained stable at 93% in 2017 compared to 2016. New capacity additions in the market are the main factor for these metrics.	In 2017, shipments for the retail and the away-from-home markets increased by 1% and 3%, respectively, compared to 2016.

U.S. producer price index - annual changes in converted tissue prices 2	Reference prices - parent rolls 1
In the U.S., prices for retail toilet tissue followed a downward trend in 2017. Prices for retail paper towels remained relatively stable throughout the year. Prices for industrial paper towels were very volatile in 2017, suggesting aggressive marketing and pricing strategies.	In 2017, the reference price for both recycled and virgin parent rolls increased by 3% compared to 2016, partially due to rising input costs.

Reference prices - recovered papers (white grade) 1	Reference prices - market pulp 1
The reference price of Sorted office papers no.37 (“SOP”) remained relatively stable in 2017, fluctuating between US$160 and US$175. The average price stood at US$169 in 2017, a 13% increase compared to 2016.	In 2017, the reference price for NBSK and NBHK both rose by 13% compared to 2016 due to a solid demand globally.
1 Source: RISI
2 Source: U.S. Bureau of Labor Statistics

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Our Performance

The main variances in sales and operating income for the Tissue Papers segment in 2017, compared to 2016, are shown below:

1 For definitions of certain sales and operating income variations categories, please refer to the section "Financial results for the year ended December 31, 2017, compared to the year ended December 31, 2016" for more details.

The Corporation incurred certain specific items in 2017 and 2016 that adversely or positively affected its operating results. Please refer to section "Supplemental Information for Non-IFRS Measures" for reconciliations and details.

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2016	2017	Change in %
Shipments2 ('000 s.t.)		-2%
608	593
Average Selling Price
(CAN$/unit)
2,146	2,138	—
Sales ($M)		-3%
1,305	1,268
Operating income ($M)
(as reported)
75	28	-63%
(adjusted)1		-63%
86	32
OIBD1 ($M)
139	90	-35%
% of sales
11%	7%
(adjusted)1
150	94	-37%
% of sales
11%	7%

1 Please refer to the “Supplemental Information on Non-IFRS Measures” section for reconciliation of these figures.

2 Shipments do not take into account the elimination of business sector inter-company shipments.

External manufacturing shipments decreased by 14,000 s.t., or 8%, year-over-year in 2017. This was due to difficult overall market conditions, most notably in hand towels, and upgrades completed at the St-Helens, Oregon, manufacturing facility to align production parameters with market demand and the requirements of the new converting plant in Scappoose, Oregon. The integration rate remained stable year-over-year at 68%.

The slight decrease in the average Canadian dollar selling price was largely due to the 2% average appreciation of the Canadian dollar compared to the U.S. dollar. This was partially offset by a more favourable sales mix as a higher proportion of converted products were sold in 2017 compared to 2016.

Sales for 2017 decreased by 3% compared to the prior year. This reflects a $20 million negative impact related to lower volumes and a $19 million unfavourable foreign exchange impact. On the other hand the favourable mix of product sold generated an additional $6 million of sales compared to last year.

The decrease in operating income is mainly attributable to lower overall volumes, a significant increase in recycled and virgin fibre costs, and an increase in virgin pulp usage. Benefits realized from improved operational efficiencies in 2017 were offset by higher transportation costs, increased marketing expenses related to brand repositioning in both Consumer Products and AFH, and higher outsourcing costs due to variations in our customer mix.

The start-up costs for the new Oregon converting plant negatively impacted 2017 profitability levels compared to last year. While start-up of the facility was successful and is now behind us, new market penetration has been more challenging than anticipated due to current market conditions in this area and the timing of customer bid processes. These start-up costs combined with the lower production at the St-Helens mill as discussed above, impacted operating income by $7 million (including $1 million in depreciation) during 2017.

The segment incurred some specific items1 in 2017 and 2016 that adversely or positively affected its operating income. Adjusted operating income1 was $32 million in 2017, compared to $86 million in 2016.

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CORPORATE ACTIVITIES

Operating income in 2017 includes an unrealized gain of $9 million on financial instruments. This compares to an unrealized gain of $19 million in 2016 following the fluctuation of the Canadian dollar in both years. Corporate activities realized a foreign exchange gain of $6 million in 2017 compared to a loss of $6 million in 2016.

In 2017, a gain of $1 million on sale of assets is also included in operating income during the second quarter. We also recorded a reversal of impairment of $2 million following the collection of a note receivable that was written off in prior years and $1 million of restructuring costs following the closure of a sales division.

Activities related to our ERP system and business process optimization increased our costs by $10 million in 2017 compared to 2016. These higher costs reflect the accelerated implementation of our ERP platform since the second half of 2016, and additional costs associated with the optimization of internal processes such as planning, logistics and procurement. The implementation phase of these initiatives is complete, and costs are expected to be lower in 2018 as efforts are focused on stabilization and optimization.

STOCK-BASED COMPENSATION EXPENSE

Share-based compensation expense recognized in the Corporate Activities results amounted to $5 million in 2017 compared to $4 million in 2016. For more details on stock-based compensation, please refer to Note 19 of the 2017 audited consolidated financial statements.

OTHER ITEMS ANALYSIS

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense increased by $23 million to $215 million in 2017, compared to $192 million in 2016. The increase is mainly attributable to the Greenpac acquisition and to our ERP system which is now implemented in most of our plants.

FINANCING EXPENSE AND INTEREST ON EMPLOYEE FUTURE BENEFITS

The financing expense and interest on employee future benefits amounted to $111 million in 2017, compared to $93 million in 2016. The Corporation recorded $11 million of premiums and wrote off $3 million of capitalized financing fees following the purchase of US$200 million of unsecured senior notes. The addition of Greenpac also increased interest expense during the year while a dividend revenue of $2 million from our participation in Boralex was recorded in 2017, as the investment was reclassified as an available-for-sale financial asset at the end of the first quarter of 2017 up to its subsequent disposal in the third quarter.

RECOVERY OF INCOME TAXES

In 2017, the Corporation recorded an income tax recovery of $81 million. This compares to an income tax provision of $45 million in the same period of 2016.

(in millions of Canadian dollars)	2017		2016
Provision for income taxes based on the combined basic Canadian and provincial income tax rate	117		48
Adjustment for income taxes arising from the following:
Difference in statutory income tax rate of foreign operations	10		2
Prior years reassessment	3		1
Reversal of deferred income tax liabilities related to our previously held investment in Greenpac	(70	)	—
Permanent difference on revaluation of previously held equity interest - Greenpac associate	(57	)	—
Non-taxable portion of capital gain on revaluation of previously held equity interest - Boralex associate	(24	)	—
Change in future income taxes resulting from enacted tax rate change	(57	)	2
Unrealized capital gain on long-term debt	(3	)	—
Permanent differences	(6	)	(5	)
Change in deferred income tax assets relating to capital tax loss	6		(3	)
	(198	)	(3	)
Provision for (recovery of) income taxes	(81	)	45

In conjunction with the acquisition of Greenpac, the Corporation recorded an income tax recovery of $70 million representing deferred income taxes on its investment prior to the acquisition on April 4, 2017. Also, there was no income tax provision recorded on the gain of $156 million generated by the business combination of Greenpac, since it is included in the fair value of assets and liabilities acquired as described in Note 5 of the 2017 audited consolidated financial statements.

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Following the US tax reform adopted in December 2017, the Corporation revalued the net deferred tax liability of its US entities and recorded a gain of $57 million.

The income tax provision on the Boralex revaluation gain was calculated at the rate of capital gains. Also, consequently with the sale of its participation in Boralex in July 2017, the Corporation has reassessed the probability of recovering unrealized capital losses on long-term debt due to foreign exchange fluctuations. As a result, $6 million of tax assets was unrecognized in the consolidated statement of earnings.

The tax provision or recovery on foreign exchange gains or losses on long-term debt and related financial instruments, in addition to some share of results of Canadian associates and joint ventures are calculated at the rate of capital gains.

The Corporation's share of results for our United States-based joint ventures and associates, which are mostly composed of the Greenpac Mill up to the first quarter of 2017, is taxed based on the statutory tax rate. Moreover, as Greenpac is a limited liability company (LLC), partners agreed to account for it as a disregarded entity for tax purposes. As such, income taxes at the United States statutory tax rate are fully integrated into each partners' consolidated income tax provision based on its respective share in the LLC, and no income tax provision is included in Greenpac's net earnings.

The effective tax rate and income taxes are affected by the results of certain subsidiaries and joint ventures located in countries, notably the United States, France and Italy, where the income tax rate is higher than in Canada. The normal effective tax rate is expected to be in the range of 26% to 30%. The weighted-average applicable tax rate was 28.6% in 2017.

SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES

Until March 10, 2017, the share of results of associates and joint ventures included our 17.37% interest in Boralex Inc. (“Boralex”), a Canadian public corporation. Boralex is a producer of electricity whose core business is the development and operation of power stations that generate renewable energy, with operations in the Northeastern United States, Canada and France.

On January 18, 2017, Boralex issued common shares to partly finance the acquisition of the interest of Enercon Canada Inc. in the Niagara Region Wind Farm. As a result, the Corporation's participation in Boralex decreased to 17.37%. This resulted in a dilution gain of $15 million, which is included in line item “Share of results of associates and joint ventures” in the consolidated statement of earnings.

On March 10, 2017, Boralex announced the appointment of a new Chairman of the Board. This change in the Board composition combined with the decrease of our participation discussed above triggered the loss of significant influence of the Corporation over Boralex. Therefore, our investment in Boralex was no longer classified as an associate and considered an available-for-sale financial asset, which is classified in “Other assets.” Consequently, our investment in Boralex was re-evaluated at fair value on March 10, 2017, and we recorded a gain of $155 million. At the same time, accumulated other comprehensive loss components of Boralex totaling $10 million and included in our consolidated balance sheet were released to net earnings. These two items are presented in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings.

On July 27, 2017, Cascades announced the sale of all of its shares in Boralex to the Caisse de Dépôt et Placement du Québec for an amount of $288 million. The increase in fair value of $18 million from March 10 to July 27, 2017, recorded in accumulated other comprehensive income materialized and the Corporation recorded a gain of $18 million in the third quarter in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings.

On April 5, 2017, the Corporation announced the acquisition of Greenpac's for accounting purposes. The transaction resulted in a gain of $156 million on the revaluation of previously held interests. As a result of the acquisition, accumulated other comprehensive loss components of Greenpac totaling $4 million and included in our consolidated balance sheet prior to the acquisition were reclassified to net earnings. These two items are presented in line item “Fair value revaluation gain on investments” in the consolidated statement of earnings (please refer to Note 5 of the 2017 audited consolidated financial statements for more details).

Prior to the announcement, the Corporation recorded its 62.5% share of the Greenpac Mill results as an associate. As such, in the first quarter of 2017, contribution stood at $7 million. For the year 2016, Greenpac had a contribution of $15 million, including our $7 million share of costs related to the debt refinancing completed in the second quarter of 2016. No provision for income taxes was included in our Greenpac share of results, as it is a disregarded entity for tax purposes (see the “Provision for income taxes” section above for more details).

For more information on specific items, please refer to the “Supplemental Information on Non-IFRS Measures” section.

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LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows from operating activities generated $173 million of liquidity in 2017, compared to $372 million generated in 2016. Changes in non-cash working capital components used $87 million of liquidity in 2017, versus $56 million generated in 2016. In 2017, higher inventory levels in our Containerboard and Tissue segments in addition to higher accounts receivable due to higher sales following business combinations in Containerboard and to lower trade and other payables are the main factors leading to the use of liquidity. As at December 31, 2017, working capital as a percentage of LTM sales stood at 10.1%, compared to 10.6% as at December 31, 2016.

Cash flow from operating activities, excluding changes in non-cash working capital components, stood at $260 million in 2017, compared to $316 million in 2016. In 2017, we paid $11 million in premiums related to the repurchase of unsecured senior notes. This cash flow measurement is relevant to the Corporation's ability to pursue its capital expenditure program and reduce its indebtedness.

INVESTING ACTIVITIES

Investment activities generated $70 million in 2017, compared to $185 million used in 2016. Payments for property, plant and equipment totaled $193 million in 2017, compared to $182 million in 2016. Proceeds from disposals of property, plant and equipment stood at $15 million compared to $5 million in 2016. Investments in associates & joint ventures and change in intangible and other assets generated $239 million including the proceeds from the disposal of our investment in Boralex for $288 million, compared to $8 million generated last year. Business combinations added $9 million through cash acquired, net of consideration paid. Refer to the “Supplemental Information on Non-IFRS Measures” section for more details.

PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT

Payments for property, plant and equipment in 2017 were $193 million, compared to $182 million in 2016. However, new capital expenditure projects amounted to $207 million , compared to $206 million in 2016. The variance in the amounts is related to purchases of property, plant and equipment included in “Trade and Other Payables” and to capital-lease acquisitions.

New capital expenditure projects by segment in 2017 were as follows (in $M):

The major capital projects that were initiated, are in progress or were completed in 2017 are as follows:

CONTAINERBOARD PACKAGING

• Investment for the construction of a new containerboard packaging plant in Piscataway, New Jersey, United States (please refer to the “Significant Facts and Developments” section for more details).

BOXBOARD EUROPE

• Installation of new shoe press equipment at the Blendecques, France, recycled boxboard mill.

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SPECIALTY PRODUCTS

• Plant extension and a new extruder at the rigid plastic packaging facility located in Drummondville, Québec.

TISSUE

• Investments associated with the new tissue converting plant in Scappoose, Oregon. Please refer to the “Business Highlights” section for more details.

INVESTMENTS IN ASSOCIATES & JOINT VENTURES AND CHANGE IN INTANGIBLE AND OTHER ASSETS

The main items were as follows:

In 2017, we sold our investment in Boralex for an amount of $288 million (please refer to the “Significant Facts and Developments” section for more details).

At the end of the first quarter of 2017, the Corporation announced the acquisition of a minority stake in Containerboard Partners, which owns 12.1% of Greenpac, for a consideration of US$12 million ($16 million). This transaction increased the Corporation's total participation in Greenpac by 2.8% to 62.5%.

Also in 2017, the Corporation invested in its ERP information technology system and additional software needed to support our business process optimization for $23 million.

Effective January 1, 2018, the Corporation, through its 57.8% equity ownership in Reno de Medici S.p.A., acquired 66.67% of PAC Service S.p.A., a boxboard converter for the packaging, publishing, cosmetics and food industries. The Corporation already had a 33.33% equity participation. The consideration for the acquisition of the remaining 66.67% shares consisted of cash totaling €10 million ($15 million) and was deposited on December 19, 2017 and recorded in other assets at year-end.

In 2016, we received amounts from Greenpac that were related to a bridge loan from the Corporation, and management fees that were due. In addition, we collected an amount that was no longer required to be held in trust, and also received payments for property, plant and equipment sold in prior years. The amounts received were partly offset by the investments made in our ERP information technology system, for software needed to support our business process re-engineering efforts, and by minor investments made in our associates companies.

FINANCING ACTIVITIES

Financing activities, including $15 million of dividend payments to Shareholders, debt repayment and the change in our revolving facility, used $218 million in liquidity in 2017, compared to $182 million used in 2016. We issued 461 442 common shares at an average price of $6.41 as a result of the exercise of stock options in 2017, representing an aggregate amount of $4 million received. In 2017, the Corporation also paid $12 million for the settlement of its 2017 derivative financial instruments on long-term debt. Dividends paid to non-controlling interests amounted to $5 million in 2017 compared to $1 million in 2016. These payments are the results of dividends paid to the non-controlling shareholders of Greenpac and Reno de Medici.

On December 4, 2017, the Corporation announced the acquisition of an additional 30% interest in Containerboard Partners (Ontario) Inc., for a consideration of US$15 million ($19 million). This transaction increased the Corporation's total participation in Greenpac by 3.6% to 66.1%. Containerboard Partners is now fully consolidated in our financial statements.

On December 12, 2017, the Corporation repurchased US$150 million of its 5.50% unsecured senior notes due in 2022 for an amount of $193 million and US$50 million of its 5.75% unsecured senior notes due in 2023 for an amount of $64 million.

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CONSOLIDATED FINANCIAL POSITION

AS AT DECEMBER 31, 2017, 2016 AND 2015

The Corporation's financial position and ratios are as follows:

(in millions of Canadian dollars, unless otherwise noted)	December 31, 2017			December 31, 2016			December 31, 2015
Cash and cash equivalents	89			62			60
Working capital1	442			309			389
As a % of sales2	10.1		%	10.6		%	10.9		%
Bank loans and advances	35			28			37
Current portion of long-term debt	59			36			34
Long-term debt	1,517			1,530			1,710
Total debt	1,611			1,594			1,781
Net debt (total debt less cash and cash equivalents)	1,522			1,532			1,721
Equity attributable to Shareholders	1,455			984			867
Non-controlling interests	146			90			96
Total equity	1,601			1,074			963
Total equity and net debt	3,123			2,606			2,684
Ratio of net debt/(total equity and net debt)	48.7		%	58.8		%	64.1		%
Shareholders' equity per common share (in dollars)	$	15.32		$	10.41		$	9.09

1 Working capital includes accounts receivable (excluding the short-term portion of other assets) plus inventories less trade and other payables.

2 % of sales = Average LTM working capital/LTM sales. It includes or excludes significant business acquisitions and disposals, respectively, of the last twelve months. Not adjusted for discontinued operations.

NET DEBT1 RECONCILIATION

The variances in the net debt (total debt less cash and cash equivalents) in 2017 are shown below (in millions of dollars), with the applicable financial ratios included.

403	Adjusted OIBD1,2 (last twelve months)	393
3.8	Net debt/Adjusted OIBD1,2	3.6

Liquidity available via the Corporation's credit facilities, along with the expected cash flow generated by its operating activities, will provide sufficient funds to meet our financial obligations and to fulfill our capital expenditure program for at least the next twelve months. Net capital expenditures are expected to be in a range of $250-$300 million in 2018. This amount is subject to change, depending on the Corporation’s operating results and on general economic conditions. As at December 31, 2017, the Corporation had $541 million (net of letters of credit in the amount of $14 million) available through its $750 million credit facility (excluding our subsidiaries Greenpac and Reno de Medici's credit facilities). Cash and cash equivalent as at December 31, 2017, is composed as follow: $2 million in the Parent Company, $67 million in Greenpac and Reno de Medici and $20 million in other subsidiaries.

1 Please refer to the “Supplemental Information on Non-IFRS Measures” section for reconciliation of these figures.

2 2017 Adjusted OIBD including the first quarter of 2017 of Greenpac and other business combinations of 2017 on a pro forma basis.

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EMPLOYEE FUTURE BENEFITS

The Corporation’s employee future benefits assets and liabilities amounted to $472 million and $609 million respectively as at December 31, 2017, including an amount of $101 million for post-retirement benefits other than pension plans. The pension plans include an amount of $65 million, which does not require any funding by the Corporation until it is paid to the employees. This amount is not expected to increase, as the Corporation has reviewed its benefits program to phase out some of them for future retirees.

With regard to pension plans, the Corporation’s risk is limited, since all defined benefit pension plans are closed to new employees and less than 10% of its active employees are subject to those pension plans, while the remaining employees are part of the Corporation’s defined- contribution plans, such as group RRSPs or 401(k). Based on their balances as at December 31, 2017, 87% of the Corporation pension plans have been evaluated on December 31, 2016 (18% in 2015). Where applicable, we used the measurement relief allowed by law in order to reduce the impact of its increased current contributions.

Considering the assumptions used and the asset ceiling limit, the deficit status for accounting purposes of its pension plans amounted to $36 million as at December 31, 2017, compared to $22 million in 2016. The 2017 pension plan expense was $7 million and the cash outflow was $8 million. Due to the investment returns in 2017 and the change in the assumptions, the expected expense for these pension plans is $8 million in 2018. As for the cash flow requirements, these pension plans are expected to require a net contribution of approximately $9 million in 2018. Finally, on a consolidated basis, the solvency ratio of the Corporation’s pension plans has remained stable at around 100%.

COMMENTS ON THE FOURTH QUARTER OF 2017

Sales of $1,082 million increased by $103 million or 11% compared to the same period last year. This was driven by the consolidation of results from the Greenpac Mill beginning in the second quarter, improvements realized in pricing and sales mix in all of the Corporation's business segments with the exception of tissue, and improved volumes in the European boxboard and tissue segments. These benefits were partially offset by a less favourable sales and pricing mix in the tissue segment, and less advantageous foreign exchange rates.

Fourth quarter operating income stood at $45 million, a notable improvement from the $33 million generated last year. This increase is largely attributable to the consolidation of Greenpac and a more favourable pricing and sales mix in the containerboard segment. Partially offsetting these benefits were higher raw material costs in all business segments, and higher amortization and depreciation expense as a result of business combinations. On an adjusted basis, fourth quarter operating income stood at $46 million, versus $32 million in the prior year.

On an adjusted basis, fourth quarter 2017 operating income stood at $46 million compared to $32 million in the same period of 2016.

The main specific items, before income taxes, that impacted our fourth quarter 2017 operating income and/or net earnings were:

• $2 million reversal of impairment (operating income and net earnings).

• $1 million restructuring costs associated with the closure of a sales unit (operating income and net earnings).

• $2 million unrealized loss on financial instruments (operating income and net earnings).

• $4 million foreign exchange loss on long-term debt and financial instruments (net earnings).

• $14 million loss related to the early repurchase of long-term debt (net earnings).

• $57 million income tax gain resulting mainly from the U.S. tax reform announced at the end of 2017 (net earnings).

Adjusted net earnings amounted to $13 million, or $0.14 per share, in the fourth quarter of 2017, compared to net earnings of $15 million, or $0.16 per share, for the same period of 2016. As reported, net earnings stood at $57 million, or $0.60 per share in the fourth quarter of 2017, compared to net earnings of $4 million, or $0.04 per share, for the same period of 2016.

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The reconciliation of operating income (loss) to OIBD, to adjusted operating income (loss) and to adjusted OIBD by business segment is as follows:

	For the 3-month period ended December 31, 2017
(in millions of Canadian dollars)	Containerboard	Boxboard Europe	Specialty Products	Tissue Papers	Corporate Activities	Consolidated
Operating income	51	11	9	(6)	(20)	45
Depreciation and amortization	22	8	5	18	6	59
Operating income (loss) before depreciation and amortization	73	19	14	12	(14)	104
Specific items:
Impairment reversal	—	—	—	—	(2)	(2)
Restructuring costs	—	—	—	—	1	1
Unrealized loss on financial instruments	1	—	—	—	1	2
	1	—	—	—	—	1
Adjusted operating income (loss) before depreciation and amortization	74	19	14	12	(14)	105
Adjusted operating income (loss)	52	11	9	(6)	(20)	46
	For the 3-month period ended December 31, 2016
(in millions of Canadian dollars)	Containerboard	Boxboard Europe	Specialty Products	Tissue Papers	Corporate Activities	Consolidated
Operating income	28	3	14	12	(24)	33
Depreciation and amortization	14	8	5	18	5	50
Operating income (loss) before depreciation and amortization	42	11	19	30	(19)	83
Specific items:
Impairment reversal	—	—	(2)	—	—	(2)
Unrealized loss on financial instruments	1	—	—	—	—	1
	1	—	(2)	—	—	(1)
Adjusted operating income (loss) before depreciation and amortization	43	11	17	30	(19)	82
Adjusted operating income (loss)	29	3	12	12	(24)	32

The main variances in sales and operating income in the fourth quarter of 2017, compared to the same period of 2016, are shown below:

1 For definitions of certain sales and operating income variations categories, please refer to the section "Financial results for the year ended December 31, 2017, compared to the year ended December 31, 2016" for more details.

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NEAR-TERM OUTLOOK

We expect several external factors to support results in the near term. The first of these is the combined beneficial impact on our operational performance of the current lower average price for OCC, which accounts for a large portion of the raw materials we use across our operations, and the price increases in linerboard, medium and corrugated products announced for March 5, 2018 in our containerboard segment. The second is the recent corporate tax reform in the US, which will reduce our US corporate tax rate to approximately 25% for 2018, from 38% previously. In addition, underlying industry fundamentals remain positive for both the containerboard business in North America and boxboard operations in Europe. Our tissue division, however, continues to face difficult market conditions, new industry capacity additions, and a slower than anticipated ramp-up of the new Oregon converting facility. On this last point, we are pleased to report that our increased sales and marketing efforts on the West Coast are making inroads in this new end market, and we are confident that this facility will evolve into a solid contributor to our tissue division performance.

As we move forward, we will continue to focus on optimizing our new business platform, and harvesting the gains in productivity, efficiency and cost savings generated through our more customer-centric and efficient processes. On a broader scale, we will continue to advance our strategic plan to position Cascades for the long-term. To this end, in the coming year we intend to invest $250 to $300 million, which will include strategic projects focused on increasing integration, improving operational performance through investments in modern equipment, and optimizing our geographic footprint. Furthermore, we are planning additional investments in tissue over the next several years that will modernize the retail and away-from-home business platforms, and equip this segment with an asset base that is competitively positioned for long-term growth. Each and every investment decision will be made with the goal of delivering quality, innovative and competitive products to our customers within a framework focused on optimal capital allocation, long-term market leadership and return while remaining fully committed to our objective of reducing leverage.

CAPITAL STOCK INFORMATION

SHARE TRADING

Cascades' stock is traded on the Toronto Stock Exchange under the ticker symbol “CAS”. From January 1, 2017 to December 31, 2017, Cascades' share price fluctuated between $11.43 and $18.20. During the same period, 60.5 million Cascades shares were traded on the Toronto Stock Exchange. On December 31, 2017, Cascades shares closed at $13.62. This compares to a closing price of $12.10 on the same day last year.

COMMON SHARES OUTSTANDING

As at December 31, 2017, the Corporation's issued and outstanding capital stock consisted of 94,987,958 common shares (94,526,516 as at December 31, 2016), and 4,990,120 issued and outstanding stock options (5,216,063 as at December 31, 2016). For the full year of 2017, there were no common shares repurchased by the Corporation, 461 442 stock options were exercised and 5,381 stocks options were forfeited. As at February 28, 2018, issued and outstanding capital stock consisted of 95,050,828 common shares and 4,912,991 stock options.

NORMAL COURSE ISSUER BID PROGRAM

The current normal course issuer bid enables the Corporation to purchase for cancellation up to 946,066 common shares between March 17, 2017 and March 16, 2018. During the period from March 17, 2017 to February 28, 2018, there were no common shares repurchased by the Corporation.

DIVIDEND POLICY

On February 28, 2018, Cascades' Board of Directors declared a quarterly dividend of $0.04 per common share to be paid on March 28, 2018, to shareholders of record at the close of business on March 14, 2018. This $0.04 per common share dividend is in line with the previous quarter and the same quarter last year. On February 28, 2018, dividend yield was 1.0%.

	2015			2016												2017
TSX Ticker: CAS	Q4			Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Common shares outstanding (in millions) 1	95.3			95.4			94.5			94.4			94.5			94.7			94.7			94.7			95.0
Closing price 1	$	12.71		$	8.57		$	9.15		$	12.83		$	12.10		$	13.71		$	17.69		$	14.96		$	13.62
Average daily volume 2	218,204			291,483			166,510			118,987			118,554			182,011			362,191			214,545			208,984
Dividend yield 1	1.3		%	1.9		%	1.7		%	1.2		%	1.3		%	1.2		%	0.9		%	1.1		%	1.2		%

1 On the last day of the quarter.

2 Average daily volume on the Toronto Stock Exchange.

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CASCADES' SHARE PRICE FOR THE PERIOD JANUARY 1, 2016 TO DECEMBER 31, 2017

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The Corporation’s principal contractual obligations and commercial commitments relate to outstanding debt, operating-leases and obligations for its pension and post-employment benefit plans. The following table summarizes these obligations as at December 31, 2017:

CONTRACTUAL OBLIGATIONS

Payment due by period (in millions of Canadian dollars)	TOTAL	LESS THAN A YEAR	BETWEEN 1-2 YEARS	BETWEEN 2-5 YEARS	OVER 5 YEARS
Long-term debt and capital-leases, including capital and interest	1,908	123	116	1,372	297
Operating leases	70	28	14	23	5
Pension plans and other post-employment benefits1	1,042	34	37	113	858
Total contractual obligations	3,020	185	167	1,508	1,160

1 These amounts represent all the benefits payable to current members during the following years and thereafter without limitations. The majority of benefit payments are payable from trustee-administered funds. The difference will come from future investment returns expected on plan assets and future contributions that will be made by the Corporation for services rendered after December 31, 2017.

FACTORING OF ACCOUNTS RECEIVABLE

The Corporation sells its accounts receivable from one of its European subsidiaries through a factoring contract with a financial institution. The Corporation uses factoring of receivables as a source of financing by reducing its working capital requirements. When the receivables are sold, the Corporation removes them from the balance sheet, recognizes the amount received as the consideration for the transfer and records a loss on factoring which is included in Financing expense. As at December 31, 2017, the off-balance sheet impact of the factoring of receivables amounted to $39 million (€26 million). The Corporation expects to continue to sell receivables on an ongoing basis. Should it decide to discontinue this contract, its working capital and bank debt requirements would increase.

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TRANSACTIONS WITH RELATED PARTIES

The Corporation has also entered into various agreements with its joint-venture partners, significantly influenced companies and entities that are affiliated with one or more of its directors, for the supply of raw material, including recycled paper, virgin pulp and energy, as well as the supply of unconverted and converted products, and other agreements entered into in the normal course of business. Aggregate sales by the Corporation to its joint-venture partners and other affiliates totaled $268 million and $244 million for 2017 and 2016 respectively. Aggregate sales to the Corporation from its joint-venture partners and other affiliates came to $106 million and $181 million for 2017 and 2016 respectively.

CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

A) NEW IFRS ADOPTED

IAS 7 STATEMENT OF CASH FLOWS

In January 2016, the IASB published amendments to IAS 7 Statement of Cash Flows. The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity’s financing activities. They are effective for annual periods beginning on or after January 1, 2017. To comply with the new requirements, a reconciliation of total liabilities arising from financing activities has been added to Note 25.

B) RECENT IFRS PRONOUNCEMENTS NOT YET ADOPTED

IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15 Revenue from Contracts with Customers. IFRS 15 replaces all previous revenue recognition standards, including IAS 18 Revenue, and related interpretations. such as IFRIC 13 Customer Loyalty Programs. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual periods beginning on or after January 1, 2018. The standard will not have a significant impact on the timing of the Corporation's revenues since there is typically only one performance obligation per customer contract. The adoption of the standard will, however, have an impact on the contract liabilities classification. which can no longer be presented against accounts receivable. As well, IFRS 15 will require further disclosure, such as a disaggregation of revenues from contracts with customers in categories that depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. To comply with this requirement, the Corporation will segregate its four segments' sales by country on a quarterly basis. The Corporation will apply the new standard retrospectively. Apart from the balance sheet reclassification discussed above, this standard has no material impact on the Corporation's consolidated financial statements.

IFRS 9 FINANCIAL INSTRUMENTS

In July 2014, the IASB released the final version of IFRS 9 Financial Instruments. This standard addresses classification and measurement of financial assets and replaces the multiple category and measurement models for debt instruments in IAS 39 Financial Instruments: Recognition and Measurement, with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are recognized either at fair value through profit or loss or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends are recognized in profit or loss insofar as they do not clearly represent a return on investment; however, other gains and losses (including impairments) associated with such instruments remain in accumulated comprehensive income indefinitely. Requirements for financial liabilities carry forward existing requirements in IAS 39, except that fair value changes due to credit risk for liabilities designated at fair value through profit and loss would generally be recorded in the statement of other comprehensive income. It also includes guidance on hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. The new standard will have no material impact on the Corporation's consolidated financial statements.

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IFRS 16 LEASES

In January 2016, the IASB released IFRS 16 Leases, which supersedes IAS 17 Leases, and the related interpretations on leases: IFRIC 4 Determining whether an Arrangement Contains a Lease, SIC 15 Operating Leases - Incentives and SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease. The standard is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for companies that also apply IFRS 15 Revenue from Contracts with Customers. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. The new standard requires lessees to recognize a lease liability reflecting future lease payments and a “right-of-use asset” for virtually all lease contracts, and record it on the balance sheet, except with respect to lease contracts that meet limited exception criteria, such as when the underlying asset is of low value or the maturity of the lease is short term. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. As at December 31, 2017, operating lease commitments would have translated into an estimated additional lease liability of $70 million.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and disclosure of contingencies at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. On a regular basis and with the information available, Management reviews its estimates, including those related to environmental costs, employee future benefits, collectability of accounts receivable, financial instruments, contingencies, income taxes, useful life and residual value of property, plant and equipment and impairment of property, plant and equipment and intangible assets. Actual results could differ from those estimates. When adjustments become necessary, they are reported in earnings in the period in which they occur.

A. IMPAIRMENT OF LONG-LIVED ASSETS, INTANGIBLE ASSETS AND GOODWILL

In determining the recoverable amount of an asset or a cash generating unit (CGU), the Corporation uses several key assumptions, based on external information on the industry when available, and including estimated production levels, selling prices, volume, raw material costs, foreign exchange rates, growth rates, discounting rates and capital spending.

The Corporation believes its assumptions are reasonable. Based on available information at the assessment date, however, these assumptions involve a high degree of judgment and complexity. Management believes that the following assumptions are the most susceptible to change and therefore could impact the valuation of the assets in the next year.

DESCRIPTION OF SIGNIFICANT IMPAIRMENT TESTING ASSUMPTIONS (see Note 24 of consolidated financial statements)

GROWTH RATES

The assumptions used were based on the Corporation's internal budget. Revenues, operating margins and cash flows were projected for a period of five years, and a perpetual long-term growth rate was applied thereafter. In arriving at its forecasts, the Corporation considers past experience, economic trends such as gross domestic product growth and inflation, as well as industry and market trends.

DISCOUNT RATES

The Corporation assumed a discount rate in order to calculate the present value of its projected cash flows. The discount rate represents a weighted average cost of capital (WACC) for comparable companies operating in similar industries of the applicable CGU, group of CGUs or reportable segment, based on publicly available information.

FOREIGN EXCHANGE RATES

When estimating the fair value less cost of disposal, foreign exchange rates are determined using the financial institution's average forecast for the first two years of forecasting. For the following three years, the Corporation uses the last five years' historical average of the foreign exchange rate. Terminal rate is based on historical data of the last 20 years and adjusted to reflect management's best estimate.

SHIPMENTS

The assumptions used are based on the Corporation's internal budget for the next year and are usually held constant for the forecast period. In arriving at its budgeted shipments, the Corporation considers past experience, economic trends as well as industry and market trends.

Considering the sensitivity of the key assumptions used, there is measurement uncertainty, since adverse changes in one or a combination of the Corporation's key assumptions could cause a significant change in the carrying amounts of these assets.

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B. INCOME TAXES

The Corporation is required to estimate the income taxes in each jurisdiction in which it operates. This includes estimating a value for existing tax losses based on the Corporation's assessment of its ability to use them against future taxable income before they expire. If the Corporation's assessment of its ability to use the tax losses proves inaccurate in the future, more or less of the tax losses might be recognized as assets, which would increase or decrease the income tax expense and, consequently, affect the Corporation's results in the relevant year.

C. EMPLOYEE BENEFITS

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on years of service and Management's best estimate of expected plan investment performance, salary escalations, retirement ages of employees and expected health care costs. The accrued benefit obligation is evaluated using the market interest rate at the evaluation date. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. All assumptions are reviewed annually.

CRITICAL JUDGMENTS IN APPLYING THE CORPORATION'S ACCOUNTING POLICIES

SUBSIDIARIES AND EQUITY ACCOUNTED INVESTMENTS

Significant judgment is applied in assessing whether certain investment structures result in control, joint control or significant influence over the operations of the investment. Management's assessment of control, joint control or significant influence over an investment will determine the accounting treatment for the investment. In 2016, the Corporation had a 59.7% interest in an associate (Greenpac). Greenpac's Shareholders agreement required a majority of 80% for all decision making related to relevant activities. Consequently, the Corporation did not have power over relevant activities of Greenpac and its participation was accounted for as an associate. On April 4, 2017, Cascades and its partners in Greenpac Holding LLC (Greenpac) agreed to modify the equity holders' agreement. These modifications enable Cascades to direct decisions about relevant activities. Therefore, from an accounting standpoint, Cascades now has control over Greenpac, which triggered its deemed acquisition and thus fully consolidates Greenpac since April 4, 2017. Please refer to Notes 5 and 8 of the consolidated financial statements for more details.

CONTROLS AND PROCEDURES

EVALUATION OF THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES, AND INTERNAL CONTROL OVER FINANCIAL REPORTING

The Corporation's President and Chief Executive Officer, and its Vice-President and Chief Financial Officer have designed, or caused to be designed under their supervision, disclosure controls and procedures (DC&P), and internal controls over financial reporting (ICFR) as defined in National Instrument 52-109, “Certification of Disclosure in Issuer's Annual and Interim Filings,” in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

The DC&P have been designed to provide reasonable assurance that material information relating to the Corporation is made known to the President and Chief Executive Officer, and the Vice-President and Chief Financial Officer by others, and that information required to be disclosed by the Corporation in its annual filings, interim filings or other reports filed or submitted by the Corporation under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation. The President and Chief Executive Officer and the Vice-President and Chief Financial Officer have concluded, based on their evaluation, that the Corporation's DC&P were effective as at December 31, 2017, providing reasonable assurance that material information related to the issuer is made known to them by others within the Corporation.

The President and Chief Executive Officer, and the Vice-President and Chief Financial Officer have assessed the effectiveness of the ICFR as at December 31, 2017, based on the control framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO Framework). Based on this assessment, they have concluded that the Corporation’s ICFR were effective as at December 31, 2017 and expect to certify the Corporation’s annual filings with the U.S. Securities and Exchange Commission on Form 40-F, as required by the United States Sarbanes-Oxley Act.

During the quarter ended December 31, 2017, there were no changes to the Corporation's ICFR that materially affected, or are reasonably likely to materially affect, its ICFR.

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RISK FACTORS

As part of its ongoing business operations, the Corporation is exposed to certain market risks, including risks ensuing from changes in selling prices for its principal products, costs of raw material, interest rates and foreign currency exchange rates, all of which impact the Corporation’s financial position, operating results and cash flows. The Corporation manages its exposure to these and other market risks through regular operating and financing activities and, on a limited basis, through the use of derivative financial instruments. We use these derivative financial instruments as risk management tools, not for speculative investment purposes. The following is a discussion of key areas of business risks and uncertainties that we have identified, and our mitigating strategies. The risk areas below are listed in no particular order, as risks are evaluated based on both severity and probability. Readers are cautioned that the following is not an exhaustive list of all the risks we are exposed to, nor will our mitigation strategies eliminate all risks listed. 

a) The markets for some of the Corporation’s products tend to be cyclical in nature and prices for some of its products, as well as raw material and energy costs, may fluctuate significantly, which can adversely affect its business, operating results, profitability and financial position.

The markets for some of the Corporation’s products, particularly containerboard and boxboard, are cyclical. As a result, prices for these types of products and for its two principal raw material, recycled paper and virgin fibre, have fluctuated significantly in the past and will likely continue to fluctuate significantly in the future, principally due to market imbalances between supply and demand. Demand is heavily influenced by the strength of the global economy and the countries or regions in which Cascades does business, particularly Canada and the United States, the Corporation’s two primary markets. Demand is also influenced by fluctuations in inventory levels held by customers and consumer preferences. Supply depends primarily on industry capacity and capacity utilization rates. In periods of economic weakness, reduced spending by consumers and businesses results in decreased demand, which can potentially cause downward price pressure. Industry participants may also, at times, add new capacity or increase capacity utilization rates, potentially causing supply to exceed demand and exerting downward price pressure. Depending on market conditions and related demand, Cascades may have to take market-related downtime. In addition, the Corporation may not be able to maintain current prices or implement additional price increases in the future. If Cascades is unable to do so, its revenues, profitability and cash flows could be adversely affected. In addition, other participants may introduce new capacity or increase capacity utilization rates, which could also adversely affect the Corporation’s business, operating results and financial position. Prices for recycled and virgin fibre also fluctuate considerably. The costs of these material present a potential risk to the Corporation’s profit margins, in the event that it is unable to pass along price increases to its customers on a timely basis. Although changes in the price of recycled fibre generally correlate with changes in the price of products made from recycled paper, this may not always be the case. If Cascades weren't able to implement increases in the selling prices for its products to compensate for increases in the price of recycled or virgin fibre, the Corporation’s profitability and cash flows would be adversely affected. In addition, Cascades uses energy, mainly natural gas and fuel oil, to generate steam, which it then uses in the production process and to operate machinery. Energy prices, particularly for natural gas and fuel oil, have continued to remain very volatile. Cascades continues to evaluate its energy costs and consider ways to factor energy costs into its pricing. However, should energy prices increase, the Corporation’s production costs, competitive position and operating results would be adversely affected. A substantial increase in energy costs would adversely affect the Corporation’s operating results and could have broader market implications that could further adversely affect the Corporation’s business or financial results.

To mitigate price risk, our strategies include the use of various derivative financial instrument transactions, whereby it sets the price for notional quantities of old corrugated containers, electricity and natural gas.

Additional information on our North American electricity and natural gas hedging programs as at December 31, 2017 is set out below:

NORTH AMERICAN ELECTRICITY HEDGING 

	UNITED STATES			CANADA
Electricity consumption	47		%	53	%
Electricity consumption in a regulated market	42		%	65	%
% of consumption hedged in a de-regulated market (2017)	37		%	—
Average prices (2017 - 2018) (in US$, per KWh)	$	0.03		—
Fair value as at December 31, 2017 (in millions of CAN$)	$	(1	)	—

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NORTH AMERICAN NATURAL GAS HEDGING

	UNITED STATES			CANADA
Natural gas consumption	45		%	55		%
% of consumption hedged (2017)	44		%	50		%
Average prices (2017 - 2021) (in US$, per mmBTU) (in CAN$, per GJ)	$	3.05		$	3.72
Fair value as at December 31, 2017 (in millions of CAN$)	$	(1	)	$	(5	)

b) Cascades faces significant competition and some of its competitors may have greater cost advantages or be able to achieve greater economies of scale, or be able to better withstand periods of declining prices and adverse operating conditions, which could negatively affect the Corporation’s market share and profitability.

The markets for the Corporation’s products are highly competitive. In some of the markets in which Cascades competes, such as tissue papers, it competes with a small number of other producers. In some businesses, such as the containerboard industry, competition tends to be global. In others, such as the tissue industry, competition tends to be regional. In the Corporation’s packaging products segment, it also faces competition from alternative packaging materials, such as vinyl, plastic and Styrofoam, which can lead to excess capacity, decreased demand and pricing pressures. Competition in the Corporation’s markets is primarily based on price, as well as customer service and the quality, breadth and performance characteristics of its products. The Corporation’s ability to compete successfully depends on a variety of factors, including: 

• its ability to maintain high plant efficiency, operating rates and lower manufacturing costs

• the availability, quality and cost of raw material, particularly recycled and virgin fibre, and labour, and

• the cost of energy.

Some of the Corporation’s competitors may, at times, have lower fibre, energy and labour costs, and less restrictive environmental and governmental regulations to comply with than Cascades. For example, fully integrated manufacturers, or those whose requirements for pulp or other fibre are met fully from their internal sources, may have some competitive advantages over manufacturers that are not fully integrated, such as Cascades, in periods of relatively high raw material pricing, in that the former are able to ensure a steady source of these raw material at costs that may be lower than prices in the prevailing market. In contrast, competitors that are less integrated than Cascades may have cost advantages in periods of relatively low pulp or fibre prices because they may be able to purchase pulp or fibre at prices lower than the costs the Corporation incurs in the production process. Other competitors may be larger in size or scope than Cascades, which may allow them to achieve greater economies of scale on a global basis or to better withstand periods of declining prices and adverse operating conditions. In addition, there has been an increasing trend among the Corporation’s customers towards consolidation. With fewer customers in the market for the Corporation’s products, the strength of its negotiating position with these customers could be weakened, which could have an adverse effect on its pricing, margins and profitability.

To mitigate competition risk, Cascades’ targets are to offer quality products that meet customers’ needs at competitive prices and to provide good customer service. 

c) Because of the Corporation’s international operations, it faces political, social and exchange rate risks that can negatively affect its business, operating results, profitability and financial condition.

Cascades has customers and operations located outside Canada. In 2017, sales outside Canada, in Canadian dollars, represented approximately 61% of the Corporation’s consolidated sales, including 40% in the United States. In 2017, 23% of sales from Canadian operations were made to the United States.

The Corporation’s international operations present it with a number of risks and challenges, including:

• effective product marketing in other countries

• tariffs and other trade barriers, and

• different regulatory schemes and political environments applicable to the Corporation’s operations, in areas such as environmental and health and safety compliance.

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In addition, the Corporation’s consolidated financial statements are reported in Canadian dollars, while a portion of its sales is made in other currencies, primarily the U.S. dollar and the euro. The variation of the Canadian dollar against the U.S. dollar may adversely or positively affect the Corporation’s reported operating results and financial condition. This has a direct impact on export prices and also contributes to the impact on Canadian dollar prices in Canada, because several of the Corporation’s product lines are priced in U.S. dollars. As well, a substantial portion of the Corporation’s debt is also denominated in currencies other than the Canadian dollar. The Corporation has senior notes outstanding and also some borrowings under its credit facility that are denominated in U.S. dollars and in euros, in the amounts of US$939 million and €62 million respectively as at December 31, 2017.

Moreover, in some cases, the currency of the Corporation’s sales does not match the currency in which it incurs costs, which can negatively affect the Corporation’s profitability. Fluctuations in exchange rates can also affect the relative competitive position of a particular facility, where the facility faces competition from non-local producers, as well as the Corporation’s ability to successfully market its products in export markets. As a result, if the Canadian dollar were to remain permanently strong compared to the U.S. dollar and the euro, it could affect the profitability of the Corporation’s facilities, which could lead Cascades to shut down facilities either temporarily or permanently, all of which could adversely affect its business or financial results. To mitigate the risk of currency rises from future commercial transactions, recognized assets and liabilities, and net investments in foreign operations, which are partially covered by purchases and debt, Management has implemented a policy for managing foreign exchange risk against the relevant functional currency.

The Corporation uses various foreign exchange forward contracts and related currency option instruments to anticipate sales net of purchases, interest expenses and debt repayment. Gains or losses from the derivative financial instruments designated as hedges are recorded under “Other comprehensive income (loss)” and are reclassified under earnings in accordance with the hedge items.

Additional information on our North American foreign exchange hedging program is set out below:

NORTH AMERICAN FOREIGN EXCHANGE HEDGING 1

Sell contracts and currency options on net exposure to $US:	2018	2019	2020
Total amount (in millions of US$)	$ 58 to 80	$ 33 to 60	$ 10 to 20
Estimated % of sales, net of expenses from Canadian operations (excluding subsidiaries with non-controlling interests)	35% to 49%	20% to 37%	6	%
Average rate (US$/CAN$)	0.75 to 0.76	0.75	0.77
Fair value as at December 31, 2017 (in millions of CAN$)	3	—	—

1 See Note 26 of the audited consolidated financial statements for more details on financial instruments.

d) The Corporation’s operations are subject to comprehensive environmental regulations and involve expenditures that may be

material in relation to its operating cash flow.

The Corporation is subject to environmental laws and regulations imposed by the various governments and regulatory authorities in all countries in which it operates. These environmental laws and regulations impose stringent standards on the Corporation regarding, among other things:

• air emissions

• water discharges

• use and handling of hazardous materials

• use, handling and disposal of waste, and

• remediation of environmental contamination.

The Corporation is also subject to the U.S. Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) as well as to other applicable legislation in the United States, Canada and Europe that holds companies accountable for the investigation and remediation of hazardous substances. The Corporation’s European subsidiaries and some of our Québec plants are also subject to an emissions market, aimed at reducing worldwide CO2 emissions. Each unit has been allocated emission rights (“CO2 quota”). On a calendar-year basis, the Corporation must buy the necessary credits to cover its deficit, on the open market, if its emissions are higher than quota.

The Corporation’s failure to comply with applicable environmental laws, regulations or permit requirements may result in civil or criminal fines, penalties or enforcement actions. These may include regulatory or judicial orders enjoining or curtailing operations, or requiring corrective measures, the installation of pollution control equipment or remedial actions, any of which could entail significant expenditures. It is difficult to predict the future development of such laws and regulations, or their impact on future earnings and operations, but these laws and regulations may require capital expenditures to ensure compliance. In addition, amendments to, or more stringent implementation of, current laws and regulations governing the Corporation’s operations could have a material adverse effect on its business, operating results or financial position. Furthermore, although Cascades generally tries to plan for capital expenditures relating to environmental and health and safety compliance on an annual basis, actual capital expenditures may exceed those estimates. In such an event, Cascades may be forced to curtail other capital expenditures or other activities. In addition, the enforcement of existing environmental laws and regulations has become increasingly strict.

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The Corporation may discover currently unknown environmental problems or conditions in relation to its past or present operations, or may face unforeseen environmental liabilities in the future.

These conditions and liabilities may:

• require site remediation or other costs to maintain compliance or correct violations of environmental laws and regulations, or

• result in governmental or private claims for damage to person, property or the environment.

Either of these could have a material adverse effect on the Corporation’s financial condition or operating results.

Cascades may be subject to strict liability and, under specific circumstances, joint and several (solidary) liability for the investigation and remediation of soil, surface and groundwater contamination, including contamination caused by other parties on properties that it owns or operates, and on properties where the Corporation or its predecessors have arranged for the disposal of regulated materials. As a result, the Corporation is involved from time to time in administrative and judicial proceedings and inquiries relating to environmental matters. The Corporation may become involved in additional proceedings in the future, the total amount of future costs and other environmental liabilities of which could be material.

To date, the Corporation is in compliance, in all material respects, with all applicable environmental legislation or regulations. However, we expect to incur ongoing capital and operating expenses in order to achieve and maintain compliance with applicable environmental requirements.

EMISSIONS MARKET

The Corporation is exposed to the emissions trading market and has to hold carbon credits equivalent to its emissions. Depending on circumstances, the Corporation may have to buy credits on the market or could sell some in the future. At short or medium term, these transactions would have no significant effect on the financial position of the Corporation and it is not anticipated that this will change in the future.

e) Cascades may be subject to losses that might not be covered in whole or in part by its insurance coverage.

Cascades carries comprehensive liability, fire and extended coverage insurance on most of its facilities, with policy specifications and insured limits customarily carried in its industry for similar properties. In addition, some types of losses, such as losses resulting from wars, acts of terrorism or natural disasters, are generally not insured because they are either uninsurable or not economically practical. Moreover, insurers have recently become more reluctant to insure against these types of events. Should an uninsured loss or a loss in excess of insured limits occur, Cascades could lose capital invested in that property, as well as the anticipated future revenues derived from the manufacturing activities conducted on that property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any such loss could adversely affect its business, operating results or financial condition.

To mitigate the risk subject to insurance coverage, the Corporation reviews its strategy annually with the Board of Directors and is seeking different alternatives to achieve more efficient forms of insurance coverage at the lowest costs possible.

f) Labour disputes could have a material adverse effect on the Corporation’s cost structure and ability to run its mills and plants.

As at December 31, 2017, the Corporation employed approximately 11,000 employees, of which roughly 9,500 were employees of its Canadian and United States operations. Approximately 33% of the Corporation's Canadian and United States workforce is unionized under 30 separate collective bargaining agreements. In addition, in Europe, some of the Corporation's operations are subject to national industry collective bargaining agreements that are renewed on an annual basis. The Corporation’s inability to negotiate acceptable contracts with these unions upon expiration of an existing contract could result in strikes or work stoppages by the affected workers, and increased operating costs as a result of higher wages or benefits paid to union members. If the unionized workers were to engage in a strike or another form of work stoppage, Cascades could experience a significant disruption in operations or higher labour costs, which could have a material adverse effect on its business, financial condition, operating results and cash flow. Of the 30 collective bargaining agreements in North America, 4 are expired and are currently under negotiation, 7 will expire in 2018 and 8 will expire in 2019.

The Corporation generally begins the negotiation process several months before agreements are due to expire and is currently in the process of negotiating with the unions where the agreements have expired or will soon expire. However, Cascades may not be successful in negotiating new agreements on satisfactory terms, if at all.

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g) Cascades may make investments in entities that it does not control and may not receive dividends or returns from those

investments in a timely fashion or at all.

Cascades has established joint ventures, made investments in associates and acquired significant participation in subsidiaries in order to increase its vertical integration, enhance customer service and increase efficiency in its marketing and distribution in the United States and other markets. The Corporation’s principal joint ventures, associates and significant participations in subsidiaries are:

• two 50%-owned joint ventures with Sonoco Products Corporation, of which one is in Canada (two plants) and one in the United States (two plants), that produce specialty paper packaging products such as headers, rolls and wrappers;

• a 57.8%-owned subsidiary, Reno de Medici S.p.A. (RDM), a European manufacturer of recycled boxboard; and

• a 66.1%-owned subsidiary, Greenpac Holding LLC, a North American manufacturer of linerboard (including indirect ownership).

Apart from RDM and Greenpac, Cascades does not have effective control over these entities. The Corporation’s inability to control entities in which it invests may affect its ability to receive distributions from these entities or to fully implement its business plan. The incurrence of debt or entrance into other agreements by an entity not under the Corporation’s control may result in restrictions or prohibitions on that entity’s ability to pay distributions to the Corporation. Even where these entities are not restricted by contract or by law from paying dividends or making distributions to Cascades, the Corporation may not be able to influence the payout or timing of these dividends or distributions. In addition, if any of the other investors in a non-controlled entity fails to observe its commitments, the entity may not be able to operate according to its business plan or Cascades may be required to increase its level of commitment. If any of these events were to transpire, the Corporation’s business, operating results, financial condition and ability to make payments on the notes could be adversely affected.

In addition, the Corporation has entered into various shareholder agreements relating to its joint ventures and equity investments. Some of these agreements contain “shotgun” provisions, which provide that if one Shareholder offers to buy all the shares owned by the other parties to the agreement, the other parties must either accept the offer or purchase all the shares owned by the offering Shareholder at the same price and conditions. Some of the agreements also stipulate that, in the event that a Shareholder is subject to bankruptcy proceedings or otherwise defaults on any indebtedness, the non-defaulting parties to that agreement are entitled to invoke the “shotgun” provision or sell their shares to a third party. The Corporation’s ability to purchase the other Shareholders’ interests in these joint ventures if they were to exercise these “shotgun” provisions could be limited by the covenants in the Corporation’s credit facility and the indenture. In addition, Cascades may not have sufficient funds to accept the offer or the ability to raise adequate financing should the need arise, which could result in the Corporation having to sell its interests in these entities or otherwise alter its business plan.

h) Acquisitions have been, and are expected to continue to be, a substantial part of the Corporation’s growth strategy, which could

expose the Corporation to difficulties in integrating the acquired operation, diversion of management time and resources, and

unforeseen liabilities, among other business risks.

Acquisitions have been a significant part of the Corporation’s growth strategy. Cascades expects to continue to selectively seek strategic acquisitions in the future. The Corporation’s ability to consummate and to effectively integrate any future acquisitions on terms that are favourable to it may be limited by the number of attractive acquisition targets, internal demands on its resources and, to the extent necessary, its ability to obtain financing on satisfactory terms, if at all. Acquisitions may expose the Corporation to additional risks, including:

• difficulty in integrating and managing newly acquired operations, and in improving their operating efficiency

• difficulty in maintaining uniform standards, controls, procedures and policies across all of the Corporation’s businesses

• entry into markets in which Cascades has little or no direct prior experience

• the Corporation’s ability to retain key employees of the acquired corporation

• disruptions to the Corporation’s ongoing business, and

• diversion of management's time and resources.

In addition, future acquisitions could result in Cascades' incurring additional debt to finance the acquisition or possibly assuming additional debt as part of it, as well as costs, contingent liabilities and amortization expenses. The Corporation may also incur costs and divert Management's attention for potential acquisitions that are never consummated. For acquisitions Cascades does consummate, expected synergies may not materialize. The Corporation’s failure to effectively address any of these issues could adversely affect its operating results, financial condition and ability to service debt, including its outstanding senior notes.

Although Cascades generally performs a due diligence investigation of the businesses or assets that it acquires, and anticipates continuing to do so for future acquisitions, the acquired business or assets may have liabilities that Cascades fails or is unable to uncover during its due diligence investigation and for which the Corporation, as a successor owner, may be responsible. When feasible, the Corporation seeks to minimize the impact of these types of potential liabilities by obtaining indemnities and warranties from the seller, which may in some instances be supported by deferring payment of a portion of the purchase price. However, these indemnities and warranties, if obtained, may not fully

47 

cover the liabilities because of their limited scope, amount or duration, or the financial resources of the indemnitor or warrantor, or for other reasons.

i) The Corporation undertakes impairment tests, which could result in a write-down of the value of assets and, as a result, have a material adverse effect.

IFRS requires that Cascades regularly undertake impairment tests of long-lived assets and goodwill to determine whether a write-down of such assets is required. A write-down of asset value as a result of impairment tests would result in a non-cash charge that reduces the Corporation’s reported earnings. Furthermore, a reduction in the Corporation’s asset value could have a material adverse effect on the Corporation’s compliance with total debt-to-capitalization tests under its current credit facilities and, as a result, limit its ability to access further debt capital.

j) Certain Cascades insiders collectively own a substantial percentage of the Corporation’s common shares.

Messrs. Bernard, Laurent and Alain Lemaire (“the Lemaires”) collectively own 29.7% of the common shares as at December 31, 2017, and there may be situations in which their interests and the interests of other holders of common shares do not align. Because the Corporation’s remaining common shares are widely held, the Lemaires may be effectively able to:

• elect all of the Corporation’s directors and, as a result, control matters requiring Board approval

• control matters submitted to a Shareholder vote, including mergers, acquisitions and consolidations with third parties, and the sale of all or substantially all of the Corporation’s assets, and

• otherwise control or influence the Corporation’s business direction and policies.

In addition, the Lemaires may have an interest in pursuing acquisitions, divestitures or other transactions that, in their judgment, could enhance the value of their equity investment, even though the transactions might involve increased risk to the holders of the common shares.

k) If Cascades is not successful in retaining or replacing its key personnel, including its Chief Executive Officer, its Vice-president and Chief Financial Officer, its Chief Legal Officer and Corporate secretary and its Executive Chairman of the Board and co-founder Alain Lemaire, the Corporation's business, financial condition or operating results could be adversely affected.

Although Cascades believes that its key personnel will remain active in the business and that Cascades will continue to be able to attract and retain other talented personnel and replace key personnel should the need arise, competition in recruiting replacement personnel could be significant. Cascades does not carry key-man insurance on the members of its senior management.

l) Risks relating to the Corporation’s indebtedness and liquidity.

The significant amount of the Corporation’s debt could adversely affect its financial health and prevent it from fulfilling its obligations under its outstanding indebtedness. The Corporation has a significant amount of debt. As at December 31, 2017, it had $1,522 million in outstanding total net debt on a consolidated basis, including capital-lease obligations. The Corporation also had $541 million available under its revolving credit facility. On the same basis, its consolidated ratio of net debt to total equity as of December 31, 2017 was 48.7%. The Corporation’s actual financing expense, including interest on employees' future benefits and loss on repurchase of long-term debt, was $111 million. Cascades also has significant obligations under operating leases, as described in its audited consolidated financial statements that are incorporated by reference herein.

On December 12, 2017, the Corporation announced the results of tender offers and proceeded with the purchase of US$150 million of its 5.500% unsecured senior notes due 2022 and US$50 million of its 5.75% unsecured senior notes due 2023.

On June 1, 2017, the Corporation entered into an agreement with its lenders to extend and amend its existing $750 million credit facility. The amendment extends the term of the facility to July 2021. The financial conditions remain essentially unchanged.

The Corporation has outstanding senior notes rated by Moody’s Investor Service (“Moody’s”) and Standard & Poor’s (“S&P”).

48 

The following table reflects the Corporation’s secured debt rating/corporate rating/unsecured debt rating as at the date on which this MD&A was approved by the Board of Directors, and the evolution of these ratings compared to past years: 

Credit rating (outlook)	MOODY'S	STANDARD & POOR'S
2004	Ba1/Ba2/Ba3 (stable)	BBB-/BB+/BB+ (negative)
2005 - 2006	Ba1/Ba2/Ba3 (stable)	BB+/BB/BB- (negative)
2007	Baa3/Ba2/Ba3 (stable)	BBB-/BB/BB- (stable)
2008	Baa3/Ba2/Ba3 (negative)	BB+/BB-/B+ (negative)
2009 - 2010	Baa3/Ba2/Ba3 (stable)	BB+/BB-/B+ (stable)
2011	Baa3/Ba2/Ba3 (stable)	BB+/BB-/B+ (positive)
2012	Baa3/Ba2/Ba3 (stable)	BB+/BB-/B+ (negative)
2013	Baa3/Ba2/Ba3 (stable)	BB/B+/B (stable)
2014	Baa3/Ba2/Ba3 (stable)	BB/B+/B+ (stable)
2015	Baa3/Ba2/Ba3 (stable)	BB/B+/B+ (stable)
2016	Baa3/Ba2/Ba3 (stable)	BB+/BB-/BB- (stable)
2017	Baa3/Ba2/Ba3 (stable)	BB+/BB-/BB- (stable)

This facility is in place with a core group of highly rated international banks. The Corporation may decide to enter into certain derivative instruments to reduce interest rates and foreign exchange exposure.

The Corporation’s leverage could have major consequences for holders of its common shares. For example, it could:

• make it more difficult for the Corporation to satisfy its obligations with respect to its indebtedness

• increase the Corporation’s vulnerability to competitive pressures and to general adverse economic or market conditions, and require it to dedicate a substantial portion of its cash flow from operations to servicing debt, reducing the availability of its cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes

• limit its flexibility in planning for, or reacting to, changes in its business and industry, and

• limit its ability to obtain additional sources of financing.

Cascades may incur additional debt in the future, which would intensify the risks it now faces as a result of its leverage as described above. Even though we are substantially leveraged, we and our subsidiaries will be able to incur substantial additional indebtedness in the future. Although our credit facility and the indentures governing the notes restrict us and our restricted subsidiaries from incurring additional debt, these restrictions are subject to important exceptions and qualifications. If we or our subsidiaries incur additional debt, the risks that we and they now face as a result of our leverage could intensify.

The Corporation’s operations are substantially restricted by the terms of its debt, which could limit its ability to plan for or react to market conditions, or to meet its capital needs. The Corporation’s credit facilities and the indenture governing its senior notes include a number of significant restrictive covenants. These covenants restrict, among other things, the Corporation’s ability to:

• borrow money

• pay dividends on stock or redeem stock or subordinated debt

• make investments

• sell assets, including capital stock in subsidiaries

• guarantee other indebtedness

• enter into agreements that restrict dividends or other distributions from restricted subsidiaries

• enter into transactions with affiliates

• create or assume liens

• enter into sale and leaseback transactions

• engage in mergers or consolidations, and

• enter into a sale of all or substantially all of our assets.

These covenants could limit the Corporation’s ability to plan for or react to market conditions, or to meet its capital needs. The Corporation’s current credit facility contains other, more restrictive covenants, including financial covenants that require it to achieve certain financial and operating results, and maintain compliance with specified financial ratios. The Corporation’s ability to comply with these covenants and requirements may be affected by events beyond its control, and it may have to curtail some of its operations and growth plans to maintain compliance.

The restrictive covenants contained in the Corporation’s senior note indenture, along with the Corporation’s credit facility, do not apply to its subsidiaries with non-controlling interests.

49 

The Corporation’s failure to comply with the covenants contained in its credit facility or its senior note indenture, including as a result of events beyond its control or due to other factors, could result in an event of default that could cause accelerated repayment of the debt. If Cascades is not able to comply with the covenants and other requirements contained in the indenture, its credit facility or its other debt instruments, an event of default under the relevant debt instrument could occur. If an event of default does occur, it could trigger a default under its other debt instruments, Cascades could be prohibited from accessing additional borrowings and the holders of the defaulted debt could declare amounts outstanding with respect to that debt, which would then be immediately due and payable. The Corporation’s assets and cash flow may not be sufficient to fully repay borrowings under its outstanding debt instruments. In addition, the Corporation may not be able to re-finance or re-structure the payments on the applicable debt. Even if the Corporation were able to secure additional financing, it may not be available on favourable terms. A significant or prolonged downtime in general business and difficult economic conditions may affect the Corporation’s ability to comply with its covenants, and could require it to take actions to reduce its debt or to act in a manner contrary to its current business objectives.

m) Cascades is a holding corporation and depends on its subsidiaries to generate sufficient cash flow to meet its debt service

obligations.

Cascades is structured as a holding corporation, and its only significant assets are the capital stock or other equity interests in its subsidiaries, joint ventures and minority investments. As a holding corporation, Cascades conducts substantially all of its business through these entities. Consequently, the Corporation’s cash flow and ability to service its debt obligations are dependent on the earnings of its subsidiaries, joint ventures and minority investments, and the distribution of those earnings to Cascades, or on loans, advances or other payments made by these entities to Cascades. The ability of these entities to pay dividends or make other payments or advances to Cascades will depend on their operating results and will be subject to applicable laws and contractual restrictions contained in the instruments governing their debt. In the case of the Corporation’s joint ventures, associates and minority investments, Cascades may not exercise sufficient control to cause distributions to itself. Although its credit facility and the indenture, respectively, limit the ability of its restricted subsidiaries to enter into consensual restrictions on their ability to pay dividends and make other payments to the Corporation, these limitations do not apply to its joint ventures, associates or minority investments. The limitations are also subject to important exceptions and qualifications. The ability of the Corporation’s subsidiaries to generate cash flow from operations that is sufficient to allow the Corporation to make scheduled payments on its debt obligations will depend on their future financial performance, which will be affected by a range of economic, competitive and business factors, many of which are outside of the Corporation’s control. If the Corporation’s subsidiaries do not generate sufficient cash flow from operations to satisfy the Corporation’s debt obligations, Cascades may have to undertake alternative financing plans, such as re-financing or re-structuring its debt, selling assets, reducing or delaying capital investments, or seeking to raise additional capital. Re-financing may not be possible, and assets may not be able to be sold, or, if they are sold, Cascades may not realize sufficient amounts from those sales. Additional financing may not be available on acceptable terms, if at all, or the Corporation may be prohibited from incurring it, if available, under the terms of its various debt instruments in effect at the time. The Corporation’s inability to generate sufficient cash flow to satisfy its debt obligations, or to re-finance its obligations on commercially reasonable terms, would have an adverse effect on its business, financial condition and operating results. The earnings of the Corporation’s operating subsidiaries and the amount that they are able to distribute to the Corporation as dividends or otherwise may not be adequate for the Corporation to service its debt obligations.

n) Risks related to the common shares.

The market price of the common shares may fluctuate, and purchasers may not be able to re-sell the common shares at or above the purchase price. The market price of the common shares may fluctuate due to a variety of factors relative to the Corporation’s business, including announcements of new developments, fluctuations in the Corporation’s operating results, sales of the common shares in the marketplace, failure to meet analysts’ expectations, general conditions in all of our segments or the worldwide economy. In recent years, the common shares, the stock of other companies operating in the same sectors and the stock market in general have experienced significant price fluctuations, which have been unrelated to the operating performance of the affected companies. There can be no assurance that the market price of the common shares will not continue to experience significant fluctuations in the future, including fluctuations that are unrelated to the Corporation’s performance.

o) Cash-flow and fair-value interest rate risks.

As the Corporation has no significant interest-bearing assets, its earnings and operating cash flows are substantially independent of changes in market interest rates.

The Corporation’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Corporation to a cash-flow interest rate risk. Borrowings issued at a fixed rate expose the Corporation to a fair-value interest rate risk.

50 

p) Credit risk.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. The Corporation reduces this risk by dealing with creditworthy financial institutions.

The Corporation is exposed to credit risk on accounts receivable from its customers. In order to reduce this risk, the Corporation’s credit policies include the analysis of a customer’s financial position and a regular review of its credit limits. The Corporation also believes that no particular concentration of credit risks exists due to the geographic diversity of its customers and the procedures in place for managing commercial risks. Derivative financial instruments include an element of credit risk, should the counterparty be unable to meet its obligations.

q) Cyber security

The Corporation relies on information technology to process, transmit and store electronic data in its daily business activities. Any potential information technology security incident as a result of malicious misbehavior or involuntary in nature could have negative repercussions on business activities, intellectual property, operating results and financial position of the Corporation. Cyber security represents a Company-wide challenge and the related risks are part of the corporate risk management program that is presented to the Audit and Finance committee of the Corporation. To limit Corporation exposure to incidents that may affect confidentiality, integrity and availability of information, the Corporation has put in place control measures that are based on industry best practices.

r) Climate change

The Corporation operates plants and delivers products to clients in locations that may be subject to climate stress events such as sea-level rise and increased storm frequency or intensity. Caused by climate change or not, the occurrence of one or more natural disasters, such as hurricanes, fires or floods, could cause considerable damage to our buildings, disrupt operations, increase operating costs such as freight and energy and have a negative impact on sales. Climate changes could require higher remediation and insurance costs for the Corporation.

51 

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in this Annual Report on Form 40-F for the year ended December 31, 2017 of Cascades Inc. of our report dated February 28, 2018, relating to the consolidated financial statements, which appears in the Exhibit incorporated by reference in this Annual Report.

/s/ PricewaterhouseCoopers LLP¹

Montréal, Canada

March 29, 2018

¹ CPA auditor, CA, public accountancy permit No. A126402

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER IN ACCORDANCE

WITH SECTION 302 OF THE SARBANES – OXLEY ACT OF 2002

I, Mario Plourde, certify that:

1. I have reviewed this annual report on Form 40-F of Cascades Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 29, 2018

/s/ Mario Plourde

Mario Plourde

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER IN ACCORDANCE

WITH SECTION 302 OF THE SARBANES – OXLEY ACT OF 2002

I, Allan Hogg, certify that:

1. I have reviewed this annual report on Form 40-F of Cascades Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 29, 2018

/s/ Allan Hogg

Allan Hogg

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND

OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES OXLEY ACT OF 2002

In accordance with Section 906 of the Sarbanes Oxley Act of 2002, each of the undersigned officers of Cascades Inc. (the “Corporation”), does hereby certify, to such officer’s knowledge, that:

1) the Annual Report on Form 40-F (the “Report”) for the year ended December 31, 2017 of the Corporation as filed with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: March 29, 2018

/s/ Mario Plourde

Name: Mario Plourde

Title: President and Chief Executive Officer

/s/ Allan Hogg

Name: Allan Hogg

Title: Vice-President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information	12 Months Ended
	Dec. 31, 2017 shares
Document And Entity Information [Abstract]
Entity Registrant Name	CASCADES INC
Entity Central Index Key	0001225525
Document Type	40-F
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Entity Common Stock, Shares Outstanding	94,987,598

XML

Consolidated Balance Sheets - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 89	$ 62
Accounts receivable	563	524
Current income tax assets	18	12
Inventories	523	460
Current portion of financial assets	9	3
Assets held for sale	13	0
Current assets	1,215	1,061
Long-term assets
Investments in associates and joint ventures	78	335
Property, plant and equipment	2,104	1,635
Intangible assets with finite useful life	212	171
Financial assets	22	10
Other assets	74	72
Deferred income tax assets	149	179
Goodwill and other intangible assets with indefinite useful life	528	350
Assets	4,382	3,813
Current liabilities
Bank loans and advances	35	28
Trade and other payables	638	661
Current income tax liabilities	6	1
Current portion of long-term debt	59	36
Current portion of provisions for contingencies and charges	7	9
Current portion of financial liabilities and other liabilities	101	27
Current liabilities	846	762
Long-term liabilities
Long-term debt	1,517	1,530
Provisions for contingencies and charges	36	34
Financial liabilities	18	16
Other liabilities	178	178
Deferred income tax liabilities	186	219
Liabilities	2,781	2,739
Equity attributable to Shareholders
Capital stock	492	487
Contributed surplus	16	16
Retained earnings	982	512
Accumulated other comprehensive loss	(35)	(31)
Equity attributable to owners of parent	1,455	984
Non-controlling interests	146	90
Total equity	1,601	1,074
Equity and liabilities	$ 4,382	$ 3,813

XML

Consolidated Statements of Earnings - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Profit or loss [abstract]
Sales	$ 4,321	$ 4,001
Cost of sales and expenses
Cost of sales (including depreciation and amortization of $215 million (2016 — $192 million)	3,708	3,380
Selling and administrative expenses	440	402
Gain on acquisitions, disposals and others	(8)	(4)
Impairment charges and restructuring costs	17	12
Foreign exchange gain	(5)	(4)
Gain on derivative financial instruments	(6)	(6)
Operating expense	4,146	3,780
Operating income	175	221
Financing expense	92	88
Interest expense on employee future benefits	5	5
Loss on repurchase of long-term debt	14	0
Foreign exchange gain on long-term debt and financial instruments	(23)	(22)
Fair value revaluation gain on investments	(315)	0
Share of results of associates and joint ventures	(39)	(32)
Earnings before income taxes	441	182
Provision for (recovery of) income taxes	(81)	45
Net earnings including non-controlling interests for the year	522	137
Net earnings attributable to non-controlling interests	15	2
Net earnings attributable to Shareholders for the year	$ 507	$ 135
Net earnings per common share
Basic (cad per share)	$ 5.35	$ 1.42
Diluted (cad per share)	$ 5.19	$ 1.39
Weighted average basic number of common shares outstanding (shares)	94,680,598	94,709,048
Weighted average number of diluted common shares (shares)	97,598,900	96,933,338

XML

Consolidated Statements of Earnings (Parentheticals) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Profit or loss [abstract]
Depreciation and amortization	$ 215	$ 192

XML

Consolidated Statements of Comprehensive Income - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about hedging instruments [line items]
Net earnings including non-controlling interests for the year	$ 522	$ 137
Translation adjustments
Change in foreign currency translation of foreign subsidiaries	(43)	(33)
Change in foreign currency translation related to net investment hedging activities	33	21
Cash flow hedges
Available-for-sale financial assets	(1)	(2)
Share of other comprehensive income of associates	21	0
Recovery of income taxes	(13)	(6)
Other comprehensive income that may be reclassified to earnings, net of tax	(1)	(10)
Items that are reclassified to retained earnings
Actuarial gain (loss) on employee future benefits	(13)	11
Provision for (recovery of) income taxes	3	(3)
Other comprehensive income that will be classified as retained earnings, net of tax	(10)	8
Other comprehensive loss	(11)	(2)
Comprehensive income including non-controlling interests for the year	511	135
Comprehensive income (loss) attributable to non-controlling interests for the year	18	(4)
Comprehensive income attributable to Shareholders for the year	493	139
Foreign exchange forward
Cash flow hedges
Change in fair value of commodity derivative financial instruments	1	0
Commodity derivative
Cash flow hedges
Change in fair value of commodity derivative financial instruments	$ 1	$ 10

XML

Consolidated Statement of Equity - CAD ($) $ in Millions	Total	TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS	CAPITAL STOCK	CONTRIBUTED SURPLUS	RETAINED EARNINGS	ACCUMULATED OTHER COMPREHENSIVE LOSS	NON-CONTROLLING INTERESTS
Balance - Beginning of year at Dec. 31, 2015	$ 963	$ 867	$ 490	$ 17	$ 387	$ (27)	$ 96
Comprehensive income (loss)
Net earnings	137	135			135		2
Other comprehensive income (loss)	(2)	4			8	(4)	(6)
Comprehensive income including non-controlling interests for the year	135	139			143	(4)	(4)
Dividends	(15)	(15)			(15)
Stock options expense	1	1		1
Issuance of common share upon exercise of stock options	1	1	2	(1)
Redemption of common shares	(9)	(9)	(5)	(1)	(3)
Dividends paid to non-controlling interests and acquisition of non-controlling interests	(2)						(2)
Balance - End of year at Dec. 31, 2016	1,074	984	487	16	512	(31)	90
Comprehensive income (loss)
Net earnings	522	507			507		15
Other comprehensive income (loss)	(11)	(14)			(10)	(4)	3
Comprehensive income including non-controlling interests for the year	511	493			497	(4)	18
Business combinations	57						57
Dividends	(15)	(15)			(15)
Stock options expense	1	1		1
Issuance of common share upon exercise of stock options	4	4	5	(1)
Partial disposal of a subsidiary to non-controlling interests	0	(1)			(1)		1
Redemption of common shares			0
Acquisition of non-controlling interests	(26)	(11)			(11)		(15)
Dividends paid to non-controlling interests and acquisition of non-controlling interests	(5)						(5)
Balance - End of year at Dec. 31, 2017	$ 1,601	$ 1,455	$ 492	$ 16	$ 982	$ (35)	$ 146

XML

Consolidated Statements of Cash Flows - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Operating activities
Net earnings attributable to Shareholders for the year	$ 507	$ 135
Adjustments for:
Financing expense and interest expense on employee future benefits	97	93
Loss on repurchase of long-term debt	14	0
Depreciation and amortization	215	192
Gain on acquisitions, disposals and others	(8)	(4)
Impairment charges and restructuring costs	11	4
Unrealized gain on derivative financial instruments	(8)	(18)
Foreign exchange gain on long-term debt and financial instruments	(23)	(22)
Provision for (recovery of) income taxes	(81)	45
Fair value revaluation gain on investments	(315)	0
Share of results of associates and joint ventures	(39)	(32)
Net earnings attributable to non-controlling interests	15	2
Net financing expense paid	(99)	(89)
Premium paid on long-term debt repurchase	(11)	0
Net income taxes received (paid)	(10)	10
Dividends received	12	18
Employee future benefits and others	(17)	(18)
Adjustments to reconcile profit (loss)	260	316
Changes in non-cash working capital components	(87)	56
Cash flows from (used in) operating activities	173	372
Investing activities
Investments in associates and joint ventures	(17)	(6)
Payments for property, plant and equipment	(193)	(182)
Proceeds from disposals of property, plant and equipment	15	5
Change in intangible and other assets	256	14
Cash acquired in (paid for) a business combinations	9	(16)
Cash flows from (used in) investing activities	70	(185)
Financing activities
Bank loans and advances	8	(8)
Change in revolving credit facilities	114	(146)
Repurchase of unsecured senior notes	(257)	0
Increase in other long-term debt	11	40
Payments of other long-term debt	(47)	(47)
Settlement of derivative financial instruments	(12)	3
Issuance of common shares	4	1
Redemption of common shares	0	(9)
Dividends paid to non-controlling interests and acquisition of non-controlling interests	(24)	(1)
Dividends paid to the Corporation’s Shareholders	(15)	(15)
Cash flows from (used for) financing activities	(218)	(182)
Change in cash and cash equivalents during the year	25	5
Currency translation on cash and cash equivalents	2	(3)
Cash and cash equivalents - Beginning of year	62	60
Cash and cash equivalents - End of year	$ 89	$ 62

XML

Segmented Information

12 Months Ended

Dec. 31, 2017

Operating Segments [Abstract]

Segmented Information

SEGMENTED INFORMATION

The Corporation analyzes the performance of its operating segments based on their operating income before depreciation and amortization, which is not a measure of performance under International Financial Reporting Standards (IFRS); however, the chief operating decision-maker (CODM) uses this performance measure to assess the operating performance of each reportable segment. Earnings for each segment are prepared on the same basis as those of the Corporation. Intersegment operations are recorded on the same basis as are sales to third parties, which are at fair market value. The accounting policies of the reportable segments are the same as the Corporation’s accounting policiesdescribed in Note 2.

The Corporation's operating segments are reported in a manner consistent with the internal reporting provided to the CODM. The Chief Executive Officer has authority for resource allocation and management of the Corporation's performance, and is therefore the CODM.

The Corporation's operations are managed in four segments: Containerboard, Boxboard Europe, Specialty Products (which constitutes the Corporation's Packaging Products) and Tissue Papers.

	SALES
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	1,652		1,370
Boxboard Europe	838		796
Specialty Products	703		620
Intersegment sales	(105	)	(61	)
	3,088		2,725
Tissue Papers	1,268		1,305
Intersegment sales and Corporate Activities	(35	)	(29	)
	4,321		4,001

	OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	238		214
Boxboard Europe	67		51
Specialty Products	67		71
	372		336
Tissue Papers	90		139
Corporate	(72	)	(62	)
Operating income before depreciation and amortization	390		413
Depreciation and amortization	(215	)	(192	)
Financing expense and interest expense on employee future benefits	(97	)	(93	)
Loss on repurchase of long-term debt	(14	)	—
Foreign exchange gain on long-term debt and financial instruments	23		22
Fair value revaluation gain on investments	315		—
Share of results of associates and joint ventures	39		32
Earnings before income taxes	441		182

	PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	65		51
Boxboard Europe	27		26
Specialty Products	32		26
	124		103
Tissue Papers	64		77
Corporate	19		26
Total acquisitions	207		206
Proceeds from disposals of property, plant and equipment	(15	)	(5	)
Capital lease acquisitions	(11	)	(18	)
	181		183
Acquisitions for property, plant and equipment included in “Trade and other payables”
Beginning of year	25		19
End of year	(28	)	(25	)
Payments for property, plant and equipment net of proceeds from disposals	178		177

	TOTAL ASSETS
(in millions of Canadian dollars)	December 31, 2017		December 31, 2016
Packaging Products
Containerboard	1,995		1,285
Boxboard Europe	609		567
Specialty Products	383		336
	2,987		2,188
Tissue Papers	919		922
Corporate	459		400
Intersegment eliminations	(68	)	(37	)
	4,297		3,473
Investments in associates and joint ventures	78		335
Other investments	7		5
	4,382		3,813

Information by geographic segment is as follows:

For the years ended December 31 (in millions of Canadian dollars)	2017	2016
Sales
Operations located in Canada
Within Canada	1,629	1,511
To the United States	488	505
Other countries	11	14
	2,128	2,030
Operations located in the United States
Within the United States	1,217	1,065
To Canada	73	45
Other countries	1	2
	1,291	1,112
Operations located in Italy
Within Italy	279	241
Other countries	138	140
	417	381
Operations located in other countries
Within Europe	411	399
Other countries	74	79
	485	478
	4,321	4,001

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Property, plant and equipment
Canada	840	840
United States	967	512
Italy	183	179
Other countries	114	104
	2,104	1,635

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Goodwill, customer relationships and client lists, and other finite and indefinite useful life intangible assets
Canada	449	441
United States	278	71
Italy	13	9
	740	521

XML

General Information

12 Months Ended

Dec. 31, 2017

General Information About Financial Statements [Abstract]

General Information

GENERAL INFORMATION

Cascades Inc. and its subsidiaries (together “Cascades” or the “Corporation”) produce, convert and market packaging and tissue products composed mainly of recycled fibres. Cascades Inc. is incorporated and domiciled in Québec, Canada. The address of its registered office is 404, Marie-Victorin Boulevard, Kingsey Falls. Its shares are listed on the Toronto Stock Exchange.

The Board of Directors approved the consolidated financial statements on February 28, 2018.

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Corporation prepares its financial statements in accordance with Canadian generally accepted accounting principles (GAAP) as set forth in Part I of the Chartered Professional Accountants of Canada (CPA Canada) Handbook – Accounting, which incorporates IFRS as issued by the International Accounting Standards Board. The key accounting policies applied in the preparation of these consolidated financial statements are described below. These policies have been consistently applied to all years presented, unless otherwise stated.

BASIS OF MEASUREMENT

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial assets and liabilities, including derivative instruments, which are measured at fair value.

BASIS OF CONSOLIDATION

These consolidated financial statements include the accounts of the Corporation, which include:

A. SUBSIDIARIES

Subsidiaries are all entities over which the Corporation has control, where control is defined as the power to direct decisions about relevant activities. The Corporation does not have any interest in a structured entity. The existence and effect of potential voting rights that are exercisable or convertible are considered when assessing whether the Corporation controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Corporation. They are deconsolidated from the date on which control ceases. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the policies adopted by the Corporation. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Corporation. Results of operations are consolidated commencing on the date of acquisition. The purchase consideration is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The transaction costs directly attributable to the acquisition are expensed. Identifiable assets acquired, as well as liabilities and contingent liabilities assumed in a business combination, are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. The excess of the purchase consideration over the fair value of the Corporation's share of the identifiable net assets acquired is recorded as goodwill. If the purchase consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statement of earnings. Intercompany transactions, balances and unrealized gains on transactions between subsidiaries are eliminated.

The following are the principal subsidiaries of the Corporation:

	PERCENTAGE OWNED (%)	JURISDICTION
Cascades Canada ULC	100	Canada
Cascades USA Inc.	100	Delaware
Greenpac Holding LLC 1	59.7	Delaware
Reno de Medici S.p.A. (RDM)	57.8	Italy

^{1 For accounting purposes, percentage stands at 82.83% including indirect ownership.See Note 5 for more details.} 

B. TRANSACTIONS AND CHANGE IN OWNERSHIP

Acquisitions or disposals of equity interests that do not result in the Corporation obtaining or losing control are treated as equity transactions. When the Corporation obtains or loses control, the revaluation of the previously held interest or the non-controlling interests that results in gains or losses for the Corporation is recognized in the consolidated statement of earnings.

C. ASSOCIATES

Associates are all entities over which the Corporation has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Corporation's investment from associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

Unrealized gains on transactions between the Corporation and its associates are eliminated to the extent of the Corporation's interest in the associates. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Corporation. Dilution gains and losses arising in investments in associates are recognized in the consolidated statement of earnings.

The Corporation assesses, at each year-end, whether there is any objective evidence that its interest in associates is impaired. If impaired, the carrying value of the Corporation's share of the underlying assets of associates is written down to its estimated recoverable amount (being the higher of fair value less cost of disposal or value in use) and charged to the consolidated statement of earnings.

D. JOINT VENTURES

A joint venture is an entity in which the Corporation holds a long-term interest and for which it shares joint control over decisions regarding relevant activities. The Corporation reports its interests in joint ventures using the equity method. Accounting policies of joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the Corporation.

REVENUE RECOGNITION

The Corporation recognizes its sales, which consist of product sales, when it is probable that the economic benefits will flow to the Corporation, the goods are shipped and the significant risks and benefits of ownership are transferred, the amount of revenue can be measured reliably, and collection of the resulting receivable is reasonably assured.

Revenue is measured based on the price specified in the sales contract, net of discounts and estimated returns at the time of sale. Historical experience is used to estimate and provide for discounts and returns. Volume discounts are assessed based on anticipated annual sales.

FINANCIAL INSTRUMENTS AND HEDGING RELATIONSHIPS

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instrument. Financial assets are unrecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Corporation has transferred substantially all risks and rewards of ownership. Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

CLASSIFICATION

The Corporation classifies its financial instruments in the following categories: at fair value through profit or loss, held to maturity (HTM), loans and receivables, available for sale (AFS) and other liabilities. The classification depends on the purpose for which the financial instruments were acquired or issued. Management determines the classification of its financial assets and financial liabilities at initial recognition. Settlement date accounting is used by the Corporation for all financial assets.

A. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

A financial asset or financial liability is classified in this category if it is acquired principally for the purpose of selling or repurchasing in the short term. Derivatives are also included in this category unless they are designated as hedges. Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs are expensed in the consolidated statement of earnings. Gains and losses arising from changes in fair value are presented in the consolidated statement of earnings in “Loss (gain) on derivative financial instruments” in the period in which they arise. Financial assets and financial liabilities at fair value through profit or loss are classified as current, except for the portion expected to be realized or paid beyond 12 months of the consolidated balance sheet date, which is classified as long-term.

B. AVAILABLE-FOR-SALE FINANCIAL ASSETS

AFS investments are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. AFS investments are recognized initially at fair value plus transaction costs, and are subsequently carried at fair value. Gains or losses arising from changes in fair value are recognized in the statement of other comprehensive income. AFS investments are classified as long-term, unless the investment matures within 12 months, or Management expects to dispose of them within 12 months.

Interest on AFS investments, calculated using the effective interest method, is recognized in the consolidated statement of earnings as part of financing expense. Dividends on AFS equity instruments are recognized in the consolidated statement of earnings as part of financing expense when the Corporation's right to receive payment is established. When an AFS investment is sold or impaired, the accumulated gains or losses are moved from “Accumulated other comprehensive income” to the consolidated statement of earnings and included in “Loss (gain) on derivative financial instruments”.

C. LOANS AND RECEIVABLES

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Corporation's loans and receivables comprise accounts receivable, notes receivable from business disposals and cash and cash equivalents. Loans and receivables are initially recognized at fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment.

D. FINANCIAL LIABILITIES AT AMORTIZED COST

Financial liabilities at amortized cost include bank loans and advances, trade and other payables, and long-term debt. Financial liabilities at amortized cost are initially recognized at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently, they are measured at amortized cost using the effective interest method. They are classified as current liabilities if payment is due within 12 months. Otherwise, they are presented as long-term liabilities.

IMPAIRMENT OF FINANCIAL ASSETS

At each report date, the Corporation assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Corporation recognizes an impairment loss, as follows:

i) Financial assets carried at amortized cost: The impairment loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument's original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

ii) AFS financial assets: The impairment loss is the difference between the original cost of the asset and its permanent fair value decrease at the measurement date, less any impairment losses previously recognized in the consolidated statement of earnings. This amount represents the cumulative loss in “Accumulated other comprehensive income” that is reclassified to net earnings.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on AFS equity instruments are not reversed.

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and, if so, the nature of the item being hedged. The Corporation designates certain derivative financial instruments as either:

i) hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge);

ii) hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge); or

iii) hedges of a net investment in a foreign operation (net investment hedge).

The Corporation formally documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Corporation also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The full fair value of a hedging derivative is classified as a long-term asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.

A. FAIR VALUE HEDGE

The periodic change in fair value of the hedging derivative is recorded in net income. The periodic change in the cumulative gain or loss on the hedged item is recorded as an adjustment to its carrying amount on the balance sheet and is also recorded in net income. Hedging ineffectiveness is automatically recorded to net income as the difference between the above amounts recorded in net income. Realized gains and losses on the hedging item, resulting from the difference between the interest payments on the receive leg and the pay leg of the hedging derivative, are recorded on an accrual basis in net income as interest income or expense.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity using a recalculated effective interest rate.

B. CASH FLOW HEDGE

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of earnings.

Amounts accumulated in equity are reclassified to profit or loss in the period when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the consolidated statement of earnings on the same line as the hedged item. The gain or loss relating to the ineffective portion is recognized in the consolidated statement of earnings as part of loss (gain) on derivative financial instruments. However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or property, plant and equipment), the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognized in Cost of goods sold in the case of inventory or in Depreciation in the case of property, plant and equipment.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the consolidated statement of earnings. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the consolidated statement of earnings.

C. NET INVESTMENT HEDGE

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in the statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of earnings. Gains and losses accumulated in equity are included in the consolidated statement of earnings when the foreign operation is partially disposed of or sold.

The Corporation also uses cross-currency interest rate swaps to manage the currency fluctuations risk associated with forecasted cash flows in foreign currency. These cross-currency interest rate swaps are designated as foreign exchange hedge of its net investment in foreign operations. The portion of the gains and losses arising from the translation of those derivatives that are determined to be an effective hedge is recognized in other comprehensive income, counterbalancing gains and losses arising from the translation of the Corporation's net investment in its foreign operations.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, bank balances and short-term liquid investments with original maturities of three months or less.

ACCOUNTS RECEIVABLE

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less a provision for doubtful accounts that is based on expected collectability.

INVENTORIES

Inventories of finished goods are valued at the lower of cost, determined by either average production cost or retail method, and net realizable value. Inventories of raw material and supplies are valued at the lower of cost and replacement value, which is the best available measure of their net realizable value. Cost of raw material and supplies is determined using the average cost and first-in, first-out methods respectively. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment are recorded at cost less accumulated depreciation and net impairment losses, including interest incurred during the construction period of qualifying property, plant and equipment. Repairs and maintenance costs are charged to the consolidated statement of earnings during the period in which they are incurred. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.

Depreciation is calculated on a straight-line basis as follows:

Buildings                Between 10 and 33 years

Machinery and equipment        Between 3 and 30 years

Automotive equipment        Between 5 and 10 years

Other property, plant and equipment    Between 3 and 10 years

GRANTS AND INVESTMENT TAX CREDITS

Grants and investment tax credits for property, plant and equipment are accounted for using the cost reduction method and are amortized to earnings as a reduction of depreciation, using the same basis as that used to depreciate the related property, plant and equipment.

BORROWING COSTS

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until all the activities necessary to prepare the asset for its intended use are complete. All other borrowing costs are recognized in the consolidated statement of earnings in the period in which they are incurred.

INTANGIBLE ASSETS

Intangible assets consist primarily of customer relationships and client lists, application software and favourable leases. They are recorded at cost less accumulated amortization and impairment losses and amortized on a straight-line basis over the estimated useful lives as follows:

Customer relationships and client lists    Between 2 and 20 years

Other finite-life intangible assets    Between 2 and 20 years

Application software    Between 3 and 10 years

Enterprise Resource Planning (ERP)    7 years

Favourable leases    Term of the lease

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

IMPAIRMENT

A. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS WITH FINITE USEFUL LIFE

At the end of each reporting period, the Corporation assesses whether there is an indicator that the carrying amount of an asset or a group of assets may be higher than its recoverable amount which is described in section C hereunder. For that purpose, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash generating units (CGUs)). If there is any indication that an individual asset may be impaired, the recoverable amount shall be estimated for the individual asset.

When the recoverable amount is lower than the carrying amount, the carrying amount is reduced to the recoverable amount. Impairment losses are recorded immediately in the consolidated statement of earnings in the line item Impairment charges and restructuring costs. Impairment losses are evaluated for potential reversals when events or changes in circumstances warrant such consideration. The revalued carrying value is the lower of the estimated recoverable amount and the carrying amount that would have been determined had no impairment loss been recognized and depreciation had been taken previously on the asset or CGU. A reversal of impairment loss is recorded directly in the consolidated statement of earnings in the line item “Impairment charges and restructuring costs”.

B. GOODWILL AND OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE

Goodwill and other intangible assets with an indefinite useful life are recognized at cost less any accumulated impairment losses. They have an indefinite useful life due to their permanent nature since they are acquired rights or not subject to wear and tear. They are reviewed for impairment annually on December 31 or when an event or a circumstance occurs and indicates that the value could be permanently impaired. Goodwill is allocated to CGUs for the purpose of impairment testing based on the level at which Management monitors it, which is not higher than an operating segment. The allocation is made to CGUs that are expected to benefit from the business combination in which the goodwill and other intangible assets with an indefinite useful life arose. Impairment loss on goodwill is not reversed.

C. RECOVERABLE AMOUNTS

A recoverable amount is the higher of fair value less cost of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or CGU. When determining fair value less cost of disposal, the Corporation considers if there is a market price for the asset being evaluated. Otherwise, the Corporation uses the income approach.

LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the consolidated statement of earnings on a straight-line basis over the term of the lease.

The Corporation leases certain property, plant and equipment. Leases of property, plant and equipment for which the Corporation has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease's commencement at the lower of the fair value of the leased property or the present value of the minimum lease payments. Property, plant and equipment acquired under a finance lease are depreciated over the shorter of the estimated useful life of the asset or the lease term using the straight-line method. Each lease payment is allocated between the liability and the financing expense so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of financing expense, are included in long-term debt.

PROVISIONS FOR CONTINGENCIES AND CHARGES

Provisions for contingencies include mainly legal and other claims. A provision is recognized when the Corporation has a legal or constructive obligation as a result of a past event and it is probable that settlement of the obligation will require a financial payment or cause a financial loss, and a reliable estimate of the amount of the obligation can be made.

If some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recorded in the consolidated balance sheet as a separate asset, but only if it is virtually certain that the reimbursement will be received.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as a financing expense.

ENVIRONMENTAL RESTORATION OBLIGATIONS AND ENVIRONMENTAL COSTS

An obligation to incur restoration and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a plant or landfill site. Such costs arising from the installation of a plant and other site preparation work are provided for and capitalized at the start of each project, or as soon as the obligation to incur such costs arises. Decommissioning costs are recorded at the estimated amount at which the obligation could be settled at the consolidated balance sheet date, and are charged against profit over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. The discount rate is the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Costs for restoring subsequent site damage which is created on an ongoing basis during production are provided for at their present values and charged against profit as the obligation arises.

Changes in the measurement of a liability relating to the decommissioning of a plant or other site preparation work that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate, are added to, or deducted from, the cost of the related asset in the current year. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in the consolidated statement of earnings. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy for impairment testing.

LONG-TERM DEBT

Long-term debt is recognized initially at fair value, net of financing costs incurred. Long-term debt is subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of earnings over the period of the term of the debt using the effective interest method.

Financing costs paid on establishment of the revolving credit facility are recognized as deferred financing costs and amortized on a straight-line basis over the anticipated period of the credit facility.

EMPLOYEE BENEFITS

The Corporation offers funded and unfunded defined benefit pension plans, defined contribution pension plans and group registered retirement savings plans (RRSPs) that provide retirement benefit payments for most of its employees. The defined benefit pension plans are usually contributory and are based on the number of years of service and, in most cases, the average salaries or compensation at the end of a career. Retirement benefits are not adjusted based on inflation. The Corporation also offers its employees some post-employment benefit plans, such as a retirement allowance, group life insurance and medical and dental plans. However, these benefits, other than pension plans, are not funded. Furthermore, the medical and dental plans upon retirement are being phased out and are no longer offered to the majority of new retirees, and the retirement allowance is not offered to those who do not meet certain criteria.

The liability recognized in the consolidated balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated at least every three years by independent actuaries using the projected unit credit method, and updated regularly by management for any material transactions and changes in circumstances, including changes in market prices and interest rates up to the end of the reporting period.

As well, when an asset is recorded for a pension plan, its carrying value cannot be greater than the future economic benefit that the Corporation will get from the asset. The future economic benefit includes the suspension of contribution if the pension plan provisions allow for it under the minimum funding requirements. When there is a minimum funding requirement, it can increase the liability recorded. All special contributions legally required to fund a plan deficit are considered. For plans for which an actuarial evaluation is required as at December 31, 2017, a schedule of contributions is estimated to establish the minimum funding requirement. For other plans, we have used contributions from the most recent actuarial report.

Actuarial gains and losses that arise in calculating the present value of the defined benefit obligation and the fair value of plan assets are recorded in the statement of other comprehensive income and recognized immediately in retained earnings without recycling to the consolidated statement of earnings. Past service costs are recognized immediately in the consolidated statement of earnings.

When restructuring a plan results in a curtailment and settlement occurring at the same time, the curtailment is accounted for before the settlement.

Interest costs on pension and other post-employment benefits are recognized in the consolidated statement of earnings as Interest expense on employee future benefits. The measurement date of employee future benefit plans is December 31 of each year. An actuarial evaluation is performed at least every three years. Based on their balances as at December 31, 2017, 87% of the plans were evaluated on December 31, 2016 (18% in 2015).

INCOME TAXES

The Corporation uses the liability method to recognize deferred income taxes. According to this method, deferred income taxes are determined using the difference between the accounting and tax bases of assets and liabilities. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates at the consolidated balance sheet date that are expected to apply when the deferred income taxes are expected to be recovered or settled. Deferred income tax assets are recognized when it is probable that the asset will be realized.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

FOREIGN CURRENCY TRANSLATION

Items included in the financial statements of each of the Corporation's entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Canadian dollars, which is Cascades' functional currency.

A. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in currencies other than the business unit's functional currency are recorded at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the consolidated balance sheet date. Unrealized gains and losses on translation of monetary assets and liabilities are reflected in the consolidated statement of earnings for the year.

B. FOREIGN OPERATIONS

The assets and liabilities of foreign operations are translated into Canadian dollars at the exchange rate prevailing at the consolidated balance sheet date. Revenues and expenses are translated at the average monthly exchange rate. Translation gains or losses are deferred and included in “Accumulated other comprehensive income”.

SHARE-BASED PAYMENTS

The Corporation uses the fair value method of accounting for stock-based compensation awards granted to officers and key employees. This method consists in recording expenses to earnings based on the vesting period of each tranche of options granted. The fair value of each tranche is calculated based on the Black-Scholes option pricing model. This model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. When stock options are exercised, any considerations paid by employees, as well as the related stock-based compensation, are credited to capital stock.

DIVIDEND DISTRIBUTION

Dividend distribution to the Corporation's Shareholders is recognized as a liability in the consolidated financial statements in the period in which the dividends are approved by the Corporation's Board of Directors.

EARNINGS PER COMMON SHARE

Basic earnings per common share are determined using the weighted average number of common shares outstanding during the period. Diluted earnings per common share are determined by adjusting the weighted average number of common shares outstanding for dilutive instruments, which are primarily stock options, using the treasury stock method to evaluate the dilutive effect of stock options. Under this method, instruments with a dilutive effect, which is when the average market price of a share for the period exceeds the exercise price, are considered to have been exercised at the beginning of the period and the proceeds received are considered to have been used to redeem common shares of the Corporation at the average market price for the period.

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Changes in Accounting Policy and Disclosures

12 Months Ended

Dec. 31, 2017

Accounting Policies, Changes In Accounting Estimates And Errors [Abstract]

Changes in Accounting Policy and Disclosures

CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

A) NEW IFRS ADOPTED

IAS 7 STATEMENT OF CASH FLOWS

In January 2016, the IASB published amendments to IAS 7 Statement of Cash Flows. The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity’s financing activities. They are effective for annual periods beginning on or after January 1, 2017. To comply with the new requirements, a reconciliation of total liabilities arising from financing activities has been added to Note 25.

B) RECENT IFRS PRONOUNCEMENTS NOT YET ADOPTED

IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15 Revenue from Contracts with Customers. IFRS 15 replaces all previous revenue recognition standards, including IAS 18 Revenue, and related interpretations. such as IFRIC 13 Customer Loyalty Programs. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual periods beginning on or after January 1, 2018. The standard will not have a significant impact on the timing of the Corporation's revenues since there is typically only one performance obligation per customer contract. The adoption of the standard will, however, have an impact on the contract liabilities classification. which can no longer be presented against accounts receivable. As well, IFRS 15 will require further disclosure, such as a disaggregation of revenues from contracts with customers in categories that depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. To comply with this requirement, the Corporation will segregate its four segments' sales by country on a quarterly basis. The Corporation will apply the new standard retrospectively. Apart from the balance sheet reclassification discussed above, this standard has no material impact on the Corporation's consolidated financial statements.

IFRS 9 FINANCIAL INSTRUMENTS

In July 2014, the IASB released the final version of IFRS 9 Financial Instruments. This standard addresses classification and measurement of financial assets and replaces the multiple category and measurement models for debt instruments in IAS 39 Financial Instruments: Recognition and Measurement, with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are recognized either at fair value through profit or loss or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends are recognized in profit or loss insofar as they do not clearly represent a return on investment; however, other gains and losses (including impairments) associated with such instruments remain in accumulated comprehensive income indefinitely. Requirements for financial liabilities carry forward existing requirements in IAS 39, except that fair value changes due to credit risk for liabilities designated at fair value through profit and loss would generally be recorded in the statement of other comprehensive income. It also includes guidance on hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. The new standard will have no material impact on the Corporation's consolidated financial statements.

IFRS 16 LEASES

In January 2016, the IASB released IFRS 16 Leases, which supersedes IAS 17 Leases, and the related interpretations on leases: IFRIC 4 Determining whether an Arrangement Contains a Lease, SIC 15 Operating Leases - Incentives and SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease. The standard is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for companies that also apply IFRS 15 Revenue from Contracts with Customers. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. The new standard requires lessees to recognize a lease liability reflecting future lease payments and a “right-of-use asset” for virtually all lease contracts, and record it on the balance sheet, except with respect to lease contracts that meet limited exception criteria, such as when the underlying asset is of low value or the maturity of the lease is short term. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. As at December 31, 2017, operating lease commitments would have translated into an estimated additional lease liability of$70 million.

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Critical Accounting Estimates

12 Months Ended

Dec. 31, 2017

Accounting Policies, Changes In Accounting Estimates And Errors [Abstract]

Changes in Accounting Policy and Disclosures, and Critical Accounting Estimates and Judgments

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and disclosure of contingencies at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. On a regular basis and with the information available, Management reviews its estimates, including those related to environmental costs, employee future benefits, collectability of accounts receivable, financial instruments, contingencies, income taxes, useful life and residual value of property, plant and equipment and impairment of property, plant and equipment and intangible assets. Actual results could differ from those estimates. When adjustments become necessary, they are reported in earnings in the period in which they occur.

A. IMPAIRMENT OF LONG-LIVED ASSETS, INTANGIBLE ASSETS AND GOODWILL

In determining the recoverable amount of an asset or a cash generating unit (CGU), the Corporation uses several key assumptions, based on external information on the industry when available, and including estimated production levels, selling prices, volume, raw material costs, foreign exchange rates, growth rates, discounting rates and capital spending.

The Corporation believes its assumptions are reasonable. Based on available information at the assessment date, however, these assumptions involve a high degree of judgment and complexity. Management believes that the following assumptions are the most susceptible to change and therefore could impact the valuation of the assets in the next year.

DESCRIPTION OF SIGNIFICANT IMPAIRMENT TESTING ASSUMPTIONS (see Note 24 of consolidated financial statements)

GROWTH RATES

The assumptions used were based on the Corporation's internal budget. Revenues, operating margins and cash flows were projected for a period of five years, and a perpetual long-term growth rate was applied thereafter. In arriving at its forecasts, the Corporation considers past experience, economic trends such as gross domestic product growth and inflation, as well as industry and market trends.

DISCOUNT RATES

The Corporation assumed a discount rate in order to calculate the present value of its projected cash flows. The discount rate represents a weighted average cost of capital (WACC) for comparable companies operating in similar industries of the applicable CGU, group of CGUs or reportable segment, based on publicly available information.

FOREIGN EXCHANGE RATES

When estimating the fair value less cost of disposal, foreign exchange rates are determined using the financial institution's average forecast for the first two years of forecasting. For the following three years, the Corporation uses the last five years' historical average of the foreign exchange rate. Terminal rate is based on historical data of the last 20 years and adjusted to reflect management's best estimate.

SHIPMENTS

The assumptions used are based on the Corporation's internal budget for the next year and are usually held constant for the forecast period. In arriving at its budgeted shipments, the Corporation considers past experience, economic trends as well as industry and market trends.

Considering the sensitivity of the key assumptions used, there is measurement uncertainty, since adverse changes in one or a combination of the Corporation's key assumptions could cause a significant change in the carrying amounts of these assets.

B. INCOME TAXES

The Corporation is required to estimate the income taxes in each jurisdiction in which it operates. This includes estimating a value for existing tax losses based on the Corporation's assessment of its ability to use them against future taxable income before they expire. If the Corporation's assessment of its ability to use the tax losses proves inaccurate in the future, more or less of the tax losses might be recognized as assets, which would increase or decrease the income tax expense and, consequently, affect the Corporation's results in the relevant year.

C. EMPLOYEE BENEFITS

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on years of service and Management's best estimate of expected plan investment performance, salary escalations, retirement ages of employees and expected health care costs. The accrued benefit obligation is evaluated using the market interest rate at the evaluation date. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. All assumptions are reviewed annually.

CRITICAL JUDGMENTS IN APPLYING THE CORPORATION'S ACCOUNTING POLICIES

SUBSIDIARIES AND EQUITY ACCOUNTED INVESTMENTS

Significant judgment is applied in assessing whether certain investment structures result in control, joint control or significant influence over the operations of the investment. Management's assessment of control, joint control or significant influence over an investment will determine the accounting treatment for the investment. In 2016, the Corporation had a59.7%interest in an associate (Greenpac). Greenpac's Shareholders agreement required a majority of80%for all decision making related to relevant activities. Consequently, the Corporation did not have power over relevant activities of Greenpac and its participation was accounted for as an associate. On April 4, 2017, Cascades and its partners in Greenpac Holding LLC (Greenpac) agreed to modify the equity holders' agreement. These modifications enable Cascades to direct decisions about relevant activities. Therefore, from an accounting standpoint, Cascades now has control over Greenpac, which triggered its deemed acquisition and thus fully consolidates Greenpac since April 4, 2017. Please refer to Notes 5 and 8 of the consolidated financial statements for more details.

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Business Combinations

12 Months Ended

Dec. 31, 2017

Business Combinations1 [Abstract]

Business Combination

BUSINESS COMBINATIONS

2017

Coyle containerboard converting plants

On November 30, 2017, the Containerboard Packaging segment purchased, from the Coyle family, three converting plants located in Ontario and specialized in the manufacturing of boxes and specialty products. Total consideration was $30 million and consisted of $25 million in cash, a non-cash provision of $1 million as at December 31, 2017, for working capital purchase price adjustment and $4 million of assumed debts. The excess of the consideration paid over the net fair value of the assets acquired resulted in a tax-deductible goodwill of $3 million and has been allocated to Containerboard Packaging segment CGU. The transaction is expected to create synergies since a significant portion of their procurement is realized through our newly acquired Tencorr joint venture, which has a supply agreement with Greenpac.

The$12 million fair value of accounts receivables is equal to gross contractual cash flows, which are all expected to be collected.

The purchase price is preliminary as of December 31, 2017.

Assets acquired and liabilities assumed were as follows:

(in millions of Canadian dollars)		2017
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Coyle Plants
Fair values of identifiable assets acquired and liabilities assumed:
Accounts receivable		12
Inventories		1
Property, plant and equipment		10
Intangible assets with finite useful life (client list)		7
Goodwill		4
Total assets		34
Trade and other payables		(4	)
Current portion of long-term debt		(1	)
Long-term debt		(3	)
Net assets acquired		26
Cash paid		25
Non-cash provision for working capital purchase price adjustment		1
Total consideration		26

On a stand-alone basis, the acquired business, since the date of acquisition, represents sales amounting to $4 million and the contribution to net earnings attributable to Shareholders is nil. Had the acquisition occurred on January 1, 2017, consolidated sales would have been $4,369 million and consolidated net earnings attributable to Shareholders would have been $506 million. These estimates are based on the assumption that fair value adjustments made as at the acquisition date would have been the same had the acquisition occurred on January 1, 2017.

Greenpac Holding LLC

On April 4, 2017, Cascades and its partners in Greenpac Holding LLC (Greenpac) agreed to modify the equity holders' agreement. These modifications enable Cascades to direct decisions about relevant activities. Therefore, from an accounting standpoint, Cascades now has control over Greenpac, which triggers its deemed acquisition and thus fully consolidates Greenpac starting April 4, 2017.

There is no cash consideration for the acquisition and there is no change of participation of each partner in Greenpac. Consideration transferred for the acquisition was the fair value of Cascades' investment in Greenpac based on the income approach less net liabilities with acquiree, which settled as a result of the transaction. The excess of the consideration over the net fair value of the assets acquired and the liabilities assumed resulted in a non-deductible goodwill of $190 million and has been allocated to the Containerboard Packaging segment CGU. The consolidation enables Cascades to better reflect its presence in the North American containerboard market.

One of the partners in Greenpac has a put option whereby the partner can require other partners or Greenpac itself to repurchase its shares at a price including a predetermined return on its investment. Under IFRS, this option gives the equity participation of this partner the characteristics of liability more than equity. As such, this partner's participation is classified in the current portion of other liabilities at an initial fair value of $85 million at the acquisition date.

For accounting purposes, the Corporation's share of Greenpac stands at 82.83% as at December 31, 2017, (78.3%for the period of April 4 to November 30, 2017) while legal ownership is 59.7%. The Corporation records income taxes on 71.8% of Greenpac's profit before taxes, as it is a flow-through entity for tax purposes (62.5%for the period of April 4 to November 30, 2017). See Note 8 for details.

The change in control provides for the revaluation of the previously held interest to its fair market value. As such, a gain of $156 million was recognized in the consolidated statement of earnings in the second quarter. Also, consequent to the acquisition, our share of accumulated other comprehensive loss components of Greenpac totaling $4 million on and included in Cascades' consolidated balance sheet prior to the acquisition were reclassified to net earnings. These two items are presented in line item “Fair value revaluation gain on investments”in the consolidated statement of earnings.

The Corporation has reversed its deferred income tax liability related to its Greenpac investment and recorded an income tax recovery of $70 million. The investment in Greenpac is considered as the consideration transferred for the Greenpac acquisition and, as a result, is accounted for as a deemed disposal for tax accounting purposes.

Since the date of acquisition, Greenpac has generated sales of $200 million and net earnings of $17 million. Had the acquisition occurred on January 1, 2017, consolidated sales year-to-date would have been $4,392 million while consolidated net earnings attributable to Shareholders would have been approximately the same, since the Corporation was previously recording its share of results in Greenpac. These estimates are based on the assumption that the fair value adjustments that arose on the date of acquisition would have been the same had the acquisition occurred on January 1, 2017.

The $20 million fair value of accounts receivables is equal to gross contractual cash flows, which are all expected to be collected.

The purchase price allocation of Greenpac was finalized during the third quarter of 2017.

Assets acquired and liabilities assumed were as follows:

(in millions of Canadian dollars)		2017
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Greenpac Holding LLC
Fair values of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		34
Accounts receivable		20
Inventories		23
Current portion of financial assets		4
Property, plant and equipment		512
Financial assets		16
Intangible assets with finite useful life (client list)		39
Goodwill		190
Total assets		838
Trade and other payables		(39	)
Current portion of long-term debt		(15	)
Current portion of financial liabilities and other liabilities		(90	)
Long-term debt		(238	)
Financial liabilities		(4	)
Deferred income tax liabilities		(91	)
Net assets acquired		361
Non-controlling interests		(57	)
		304
Total non-cash consideration
Previously held interest		187
Revaluation gain on previously held interest on April 4, 2017		156
Settlement of net liabilities with acquiree before the transaction		(39	)
		304

On November 30, 2017, the Corporation increased its participation in Containerboard Partners (Ontario) Inc. from 23% to 53% through the acquisition of 90 common shares for a cash consideration of US$15 million ($19 million). The transaction increases the Corporation's indirect ownership in Greenpac to 6.4% from 3.6%. Since there are no activities in Containerboard Partners (Ontario) Inc. other than its investment in Greenpac, the transaction is accounted as the acquisition of a non-controlling interest.

2016

Rand-Whitney Newtown Plant

On May 31, 2016, the Containerboard Packaging segment purchased from Rand-Whitney Container LLC its corrugated products plant located in Newtown, Connecticut. A total consideration of $18 million was paid by the Corporation and consisted of $15 million (US$12 million) in cash and certain assets of our corrugated containerboard plant located in Thompson, Connecticut, valued at $3 million. The excess of the consideration paid over the net fair value of the assets acquired resulted in a tax-deductible goodwill of $7 million and has been allocated to Containerboard Packaging segment CGU. This acquisition was concluded to create synergies.

The purchase price was finalized on September 30, 2016.

Assets acquired were as follows:

(in millions of Canadian dollars)		2016
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Rand-Whitney Newtown Plant
Fair values of identifiable assets acquired:
Property, plant and equipment		10
Client list		1
Goodwill		7
		18
Cash paid		15
Fair market value of assets exchanged		3
Total consideration		18

In addition to the purchase price paid to Rand-Whitney, the Corporation also incurred transaction fees amounting to $1 million.

In 2016, on a stand-alone basis and since the date of acquisition, Newtown generated sales amounting to $35 million and the contribution to net earnings attributable to Shareholders was nil. Had the acquisition occurred on January 1, 2016, consolidated sales would have been $60 million higher and consolidated net earnings attributable to Shareholders would have remained unchanged for the year. These estimates are based on the assumption that fair value adjustments made as at the acquisition date would have been the same had the acquisition occurred on January 1, 2016.

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Accounts Receivable

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Accounts Receivable

ACCOUNTS RECEIVABLE

(in millions of Canadian dollars)	NOTE	2017		2016
Accounts receivable - Trade		526		465
Receivables from related parties	28	35		39
Less: provision for doubtful accounts		(7	)	(6	)
Trade receivables - net		554		498
Provisions for volume rebates		(45	)	(35	)
Other		54		61
		563		524

As at December 31, 2017, trade receivables of $143 million (December 31, 2016 - $118 million) were past due but not impaired.

The aging of these trade receivables at each reporting date is as follows:

(in millions of Canadian dollars)	2017	2016
Past due 1-30 days	73	69
Past due 31-60 days	30	22
Past due 61-90 days	10	8
Past due 91 days and over	30	19
	143	118

Movements in the Corporation's allowance for doubtful accounts are as follows:

(in millions of Canadian dollars)	2017		2016
Balance at beginning of year	6		12
Provision for doubtful accounts, net of unused beginning balance	2		(3	)
Receivables written off during the year as uncollectable	(1	)	(3	)
Balance at end of year	7		6

The change in the provision for doubtful accounts has been included in “Selling and administrative expenses” in the consolidated statement of earnings.

The maximum exposure to credit risk at the reporting date approximates the carrying value of each class of receivable mentioned above.

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Inventories

12 Months Ended

Dec. 31, 2017

Inventories [Abstract]

Inventories

INVENTORIES

(in millions of Canadian dollars)	2017	2016
Finished goods	249	219
Raw material	124	107
Supplies and spare parts	150	134
	523	460

As at December 31, 2017, finished goods, raw material and supplies and spare parts were adjusted to net realizable value (NRV) by $8 million, $1 million and nil, respectively (December 31, 2016 - $7 million, nil, and nil). As at December 31, 2017, the carrying amount of inventory carried at net realizable value consisted of $14 million in finished goods inventory, nil in raw material inventory and nil in supplies and spare parts (December 31, 2016 - $9 million, nil and nil).

The Corporation has sold all the goods that were written down in 2017. No reversal of previously written-down inventory occurred in 2017 or 2016. The cost of raw material and supplies and spare parts included in “Cost of sales” amounted to $1,751 million (2016 - $1,612 million).

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Investments in Associates and Joint Ventures

12 Months Ended

Dec. 31, 2017

Interest in Other Entities [Abstract]

Investments in Associates and Joint Ventures

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

A. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ARE DETAILED AS FOLLOWS:

(in millions of Canadian dollars)	2017	2016
Investments in associates	16	281
Investments in joint ventures	62	54
	78	335

Investments in associates and joint ventures as at December 31, 2017, include goodwill of $3 million (December 31, 2016 - $28 million).

B. INVESTMENTS IN ASSOCIATES

The following were the principal associates of the Corporation:

Boralex

On January 18, 2017, Boralex issued common shares to partly finance the acquisition of the interest of Enercon Canada Inc. in the Niagara Region Wind Farm. As a result, the Corporation's participation in Boralex decreased to 17.37%, which resulted in a dilution gain of $15 million and is included in line item “Share of results of associates and joint ventures” in the consolidated statement of earnings.

On March 10, 2017, Boralex announced the appointment of a new Chairman of the Board. This change in the Board composition combined with the decrease of its participation discussed above triggered the loss of significant influence of the Corporation over Boralex. Since March 10, 2017, the investment in Boralex was no longer classified as an associate and is considered as an available-for-sale financial asset. Consequently, the Corporation's investment in Boralex was re-evaluated at fair value on March 10, 2017, and a gain of $155 million was recorded. At the same time, accumulated other comprehensive loss components of Boralex totaling $10 million and included in our consolidated balance sheet were reclassified to net earnings. These two items are presented in line item “Fair value revaluation of investment”in the consolidated statement of earnings. Subsequent fair value revaluation of this investment is recorded in ”Accumulated other comprehensive income”.

On July 27, 2017, Cascades announced the sale of all of its shares in Boralex to the Caisse de Dépôt et Placement du Québec for an amount of $288 million. The increase in fair value of $18 million from March 10 to July 27, 2017, recorded in “Accumulated other comprehensive income” materialized, and the Corporation recorded a gain of $18 million in the third quarter in line item “Fair value revaluation gain on investments”in the consolidated statement of earnings. The Corporation also received $2 million of dividends while Boralex was considered an available-for-sale financial assets.

Greenpac Holding LLC

On April 4, 2017, the Corporation gained control over its associates Greenpac, which triggered its acquisition for accounting purposes. See Note 5 for more details.

On March 21, 2017, the Corporation acquired 23% of Containerboard Partners (Ontario) Inc. for a consideration of US$12 million ($16 million). This company is a member of Greenpac Holding LLC, of which it owns 12.1%. On November 30, 2017, the Corporation acquired an additional 30% of Containerboard Partners (Ontario) for a consideration of $19 million. These transactions add an indirect participation of 6.4% in Greenpac Holding LLC, bringing total legal ownership to 66.1%. However, in line with the deemed acquisition of Greenpac discussed above, the portion of our Containerboard Partners (Ontario) share of results pertaining to Greenpac is reversed for consolidation purposes.

On May 6, 2016, the Corporation announced that its then associate company Greenpac, located in Niagara Falls, NY, successfully refinanced its debt. The debt package included a term loan and a revolving credit facility. The five-year agreement allows the mill to reduce its financing costs by approximately 225 basis points, increasing its flexibility to successfully address future market fluctuations.

The Corporation's financial information from its principal associates (100%), and translated in millions of Canadian dollars if required, is as follows:

	2017			2016
(in millions of Canadian dollars)	BORALEX INC. (results up to March 10, 2017)		GREENPAC HOLDING LLC (results up to April 4, 2017)	BORALEX INC.		GREENPAC HOLDING LLC
Condensed balance sheet
Cash and cash equivalents	N/A		N/A	100		28
Current assets (other than cash and cash equivalents and current financial assets)	N/A		N/A	288		103
Current financial assets	N/A		N/A	1		1
Long-term assets (other than long-term financial assets)	N/A		N/A	2,311		513
Long-term financial assets	N/A		N/A	2		11
Current liabilities (other than current financial liabilities)	N/A		N/A	131		41
Current financial liabilities	N/A		N/A	321		19
Long-term liabilities (other than long-term financial liabilities)	N/A		N/A	131		—
Long-term financial liabilities	N/A		N/A	1,605		251
Condensed statements of earnings
Sales	96		99	299		340
Depreciation and amortization	31		7	116		28
Financing expense	19		3	76		27
Provision for (recovery of) income taxes	6		—	(9	)	—
Net earnings	13		9	2		22
Other comprehensive income (loss)
Translation adjustment	1		—	(12	)	—
Cash flow hedges	(1	)	1	—		4
	—		1	(12	)	4
Total comprehensive income (loss)	13		10	(10	)	26
Condensed cash flow
Dividends received from associates	2		—	7		—

Investment in Boralex Inc. had a fair value of $252 million as at December 31, 2016.

C. INVESTMENT IN JOINT VENTURES

The following are the principal joint ventures of the Corporation and the Corporation's percentage of equity owned:

	PERCENTAGE EQUITY OWNED (%)	PRINCIPAL ESTABLISHMENT
Cascades Sonoco US Inc.1	50	Birmingham, Alabama and Tacoma, Washington, United States
Cascades Sonoco inc.1	50	Kingsey Falls and Berthierville, Québec, Canada
Maritime Paper Products Limited Partnership (MPPLP) 2	40	Dartmouth, Nova Scotia, Canada
Tencorr Holdings Corporation 3	33.3	Brampton, Ontario, Canada

1 Joint ventures producing specialty paper packaging products such as headers, rolls and wrappers.

2 MPPLP is a Canadian corporation converting containerboard.

3 Tencorr Holdings Corporation operates as a supplier of corrugated sheet stock.

Tencorr Holdings Corporation

On November 30, 2017, the Corporation acquired 33.3% of the outstanding shares of Tencorr Holdings Corporation (Tencorr), a corrugated sheets manufacturer, for a consideration of $5 million, of which $3 million is payable as at December 31, 2017. Tencorr is classified as a joint venture, and accordingly our share of results is recorded using the equity method.

The Corporation's joint ventures information (100%), translated in millions of Canadian dollar if required, is as follows:

	2017
(in millions of Canadian dollars)	CASCADES SONOCO USINC.		CASCADES SONOCO INC.	MARITIME PAPER PRODUCTS LIMITED PARTNERSHIP	TENCORR HOLDINGS CORPORATION
Condensed balance sheet
Current assets (other than cash and cash equivalents and current financial assets)	30		28	25	20
Long-term assets (other than long-term financial assets)	31		17	28	12
Current liabilities (other than current financial liabilities)	10		6	4	14
Current financial liabilities	2		1	1	5
Long-term liabilities (other than long-term financial liabilities)	4		3	—	—
Long-term financial liabilities	14		3	4	1
Condensed statement of earnings
Sales	119		96	102	111
Depreciation and amortization	2		2	2	2
Financing expense	1		—	—	—
Provision for income taxes	1		1	—	—
Net earnings	8		4	7	1
Other comprehensive income (loss)
Translation adjustment	(2	)	—	—	—
Total comprehensive income	6		4	7	1
Condensed cash flow
Dividends received from joint ventures	4		1	1	—

	2016
(in millions of Canadian dollars)	CASCADES SONOCO USINC.		CASCADES SONOCO INC.	MARITIME PAPER PRODUCTS LIMITED PARTNERSHIP
Condensed balance sheet
Cash and cash equivalents	5		3	3
Current assets (other than cash and cash equivalents and current financial assets)	26		23	20
Long-term assets (other than long-term financial assets)	16		18	28
Current liabilities (other than current financial liabilities)	9		9	6
Current financial liabilities	1		—	1
Long-term liabilities (other than long-term financial liabilities)	4		3	—
Long-term financial liabilities	1		1	5
Condensed statement of earnings
Sales	119		88	96
Depreciation and amortization	2		2	2
Financing expense	1		—	1
Provision for income taxes	4		2	—
Net earnings	9		6	8
Other comprehensive income (loss)
Translation adjustment	(1	)	—	—
Total comprehensive income	8		6	8
Condensed cash flow
Dividends received from joint ventures	4		4	—

There are no contingent liabilities relating to the Corporation's interest in the joint ventures, and no contingent liabilities of the ventures themselves.

D. SUBSIDIARIES WITH NON-CONTROLLING INTERESTS

The Corporation's information for its subsidiaries with significant non-controlling interests is as follows:

	2017				2016
(in millions of Canadian dollars, unless otherwise noted)	RENO DE MEDICI S.p.A.		GREENPAC HOLDING LLC (since April 4, 2017)		RENO DE MEDICI S.p.A.
Principal establishment	Milan, Italy		New York, United States		Milan, Italy
Percentage of shares held by non-controlling interests (accounting basis)	42.18	%	17.17	%	42.30	%
Net earnings attributable to non-controlling interests	9		5		2
Non-controlling interests accumulated at the end of the year	105		42		90
Dividends paid to non-controlling interests	1		4		1
Condensed balance sheet
Cash and cash equivalents	29		38		41
Current assets (other than cash and cash equivalents and current financial assets)	254		100		231
Current financial assets	—		3		—
Long-term assets (other than long-term financial assets)	335		568		299
Long-term financial assets	—		14		—
Current liabilities (other than current financial liabilities)	195		31		178
Current financial liabilities	30		106		23
Long-term liabilities (other than long-term financial liabilities)	72		—		68
Long-term financial liabilities	67		209		82
Condensed statement of earnings
Sales	838		278		702
Depreciation and amortization	33		22		32
Provision for income taxes	9		—		5
Net earnings	21		21		5
Condensed cash flow
Cash flows from operating activities	49		39		56
Cash flows used from investing activities	(48	)	(3	)	(39	)
Cash flows used for financing activities	(17	)	(30	)	(9	)

E. NON-SIGNIFICANT ASSOCIATES AND JOINT VENTURES

The carrying value of investments in associates and joint ventures that are not significant for the Corporation is as follows:

(in millions of Canadian dollars)	2017	2016
Non-significant associates	16	17
Non-significant joint ventures	16	14
	32	31

The shares of results of non-significant associates and joint ventures for the Corporation are as follows:

(in millions of Canadian dollars)	2017	2016
Non-significant associates	1	2
Non-significant joint ventures	3	4
	4	6

The Corporation received dividends of $2 million from these associates and joint ventures as at December 31, 2017 (December 31, 2016 - $3 million).

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2017

Property, plant and equipment [abstract]

Property, Plant and Equipment

PROPERTY, PLANT AND EQUIPMENT

(in millions of Canadian dollars)	NOTE	LAND		BUILDINGS		MACHINERY AND EQUIPMENT		AUTOMOTIVE EQUIPMENT		OTHERS		TOTAL
As at January 1, 2016
Cost		113		717		2,675		104		289		3,898
Accumulated depreciation and impairment		2		351		1,722		67		131		2,273
Net book amount		111		366		953		37		158		1,625
Year ended December 31, 2016
Opening net book amount		111		366		953		37		158		1,625
Additions		—		5		45		25		131		206
Disposals		(1	)	—		(1	)	—		(3	)	(5	)
Depreciation		—		(28	)	(116	)	(13	)	(13	)	(170	)
Business combination, net of assets transferred	5	1		7		—		—		—		8
Reversal of impairment (charges)	24	—		2		(3	)	—		(2	)	(3	)
Others		1		39		55		6		(98	)	3
Exchange differences		(2	)	(4	)	(22	)	—		(1	)	(29	)
Closing net book amount		110		387		911		55		172		1,635
As at December 31, 2016
Cost		110		740		2,553		126		299		3,828
Accumulated depreciation and impairment		—		353		1,642		71		127		2,193
Net book amount		110		387		911		55		172		1,635
Year ended December 31, 2017
Opening net book amount		110		387		911		55		172		1,635
Additions		11		6		24		18		148		207
Disposals		(3	)	(2	)	(1	)	(1	)	(1	)	(8	)
Depreciation		—		(31	)	(132	)	(15	)	(11	)	(189	)
Business combinations	5	7		90		397		1		27		522
Assets held for sale	29	(1	)	(8	)	—		—		(4	)	(13	)
Impairment charges	24	—		—		—		—		(2	)	(2	)
Others		(1	)	48		84		1		(133	)	(1	)
Exchange differences		1		(11	)	(29	)	(1	)	(7	)	(47	)
Closing net book amount		124		479		1,254		58		189		2,104
As at December 31, 2017
Cost		124		824		2,966		140		311		4,365
Accumulated depreciation and impairment		—		345		1,712		82		122		2,261
Net book amount		124		479		1,254		58		189		2,104

Other property, plant and equipment include buildings and machinery and equipment in the process of construction or installation with a book value of $81 million (December 31, 2016 - $90 million) and deposits on purchases of machinery and equipment amounting to $18 million (December 31, 2016 - $7 million). The carrying value of finance-lease assets is $31 million (December 31, 2016 - $24 million).

In 2017, $2 million (2016 - $2 million) of interest incurred on qualifying assets was capitalized. The weighted average capitalization rate on funds borrowed in 2017 was 5.56% (2016 - 5.56%).

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Goodwill and Other Intangible Assets With Finite and Indefinite Useful Life

12 Months Ended

Dec. 31, 2017

Intangible Assets [Abstract]

Goodwill and Other Intangible Assets With Finite and Indefinite Useful Life

GOODWILL AND OTHER INTANGIBLE ASSETS WITH FINITE AND INDEFINITE USEFUL LIFE

(in millions of Canadian dollars)	NOTE	APPLICATION SOFTWARE AND ERP		CUSTOMER RELATIONSHIPS AND CLIENT LISTS		OTHER INTANGIBLE ASSETS WITH FINITE USEFUL LIFE		TOTAL INTANGIBLE ASSETS WITH FINITE USEFUL LIFE		GOODWILL		OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE		TOTAL INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE
As at January 1, 2016
Cost		110		170		35		315		343		8		351
Accumulated amortization and impairment		34		78		29		141		4		1		5
Net book amount		76		92		6		174		339		7		346
Year ended December 31, 2016
Opening net book amount		76		92		6		174		339		7		346
Additions		17		—		—		17		—		—		—
Business combinations	5	—		1		—		1		7		—		7
Amortization		(10	)	(9	)	(3	)	(22	)	—		—		—
Others		—		—		1		1		—		(1	)	(1	)
Exchange differences		—		—		—		—		(2	)	—		(2	)
Closing net book amount		83		84		4		171		344		6		350
As at December 31, 2016
Cost		126		171		35		332		349		7		356
Accumulated amortization and impairment		43		87		31		161		5		1		6
Net book amount		83		84		4		171		344		6		350
Year ended December 31, 2017
Opening net book amount		83		84		4		171		344		6		350
Additions		24		—		—		24		—		—		—
Business combinations	5	—		46		—		46		194		—		194
Amortization		(13	)	(11	)	(2	)	(26	)	—		—		—
Exchange differences		—		(3	)	—		(3	)	(17	)	1		(16	)
Closing net book amount		94		116		2		212		521		7		528
As at December 31, 2017
Cost		150		208		32		390		523		7		530
Accumulated amortization and impairment		56		92		30		178		2		—		2
Net book amount		94		116		2		212		521		7		528

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Other Assets

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

OTHER ASSETS

OTHER ASSETS

(in millions of Canadian dollars)	NOTE	2017		2016
Notes receivable from business disposals		6		9
Other investments		7		5
Other assets		30		27
Employee future benefits	16	37		46
		80		87
Less: Current portion, included in accounts receivables		(6	)	(15	)
		74		72

Other assets include deferred revenue for the supervision of Greenpac Mill totaling $12 million as at December 31, 2016 and nil at the end of 2017. The Corporation did receive $1 million before the acquisition of Greenpac described in Note 5, while the balance of $11 million was written off since expected future cash flows related to this asset will not materialize on a consolidated basis following the Greenpac acquisition.

In December 2017, the Corporation deposited €10 million ($15 million) for the acquisition of PAC Service S.p.A in the Boxboard Europe segment. See Note 29 for more details.

XML

Trade and Other Payables

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Trade and Other Payables

TRADE AND OTHER PAYABLES

(in millions of Canadian dollars)	NOTE	2017	2016
Trade payables		488	472
Payables to related parties	28	7	44
Accrued expenses		143	145
		638	661

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Provisions for Contingencies and Charges

12 Months Ended

Dec. 31, 2017

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Provisions for Contingencies and Charges

PROVISIONS FOR CONTINGENCIES AND CHARGES

(in millions of Canadian dollars)	ENVIRONMENTAL RESTORATION OBLIGATIONS		ENVIRONMENTAL COSTS		LEGAL CLAIMS		SEVERANCES		ONEROUS CONTRACT		OTHERS		TOTAL PROVISIONS
As at January 1, 2016	9		14		3		2		5		6		39
Additional provision	—		5		1		7		3		4		20
Reversal of provision	—		(1	)	—		—		(1	)	—		(2	)
Payments	(3	)	(2	)	(1	)	(6	)	(1	)	(3	)	(16	)
Revaluation	2		—		—		—		—		—		2
As at December 31, 2016	8		16		3		3		6		7		43
Additional provision	(1	)	—		2		5		—		2		8
Payments	—		—		(1	)	(5	)	(3	)	(2	)	(11	)
Others	—		—		—		—		—		3		3
As at December 31, 2017	7		16		4		3		3		10		43

Analysis of total provisions:

(in millions of Canadian dollars)	2017	2016
Long-term	36	34
Current	7	9
	43	43

ENVIRONMENTAL RESTORATION

The Corporation uses some landfill sites. A provision has been recognized at fair value for the costs to be incurred for the restoration of these sites.

ENVIRONMENTAL COSTS

An environmental provision is recorded when the Corporation has an obligation caused by its ongoing or abandoned operations.

LEGAL CLAIMS

In the normal course of operations, the Corporation is party to various legal actions and contingencies related to contract disputes and labour issues.

In the normal course of operations, the Corporation is party to various legal actions and contingencies, mostly related to contract disputes, environmental and product warranty claims, and labour issues. While the final outcome with respect to legal actions outstanding or pending as at December 31, 2017, cannot be predicted with certainty, it is Management's opinion that the outcome will not have a material adverse effect on the Corporation's consolidated financial position, the results of its operations or its cash flows.

The Corporation is currently working with representatives of the Ontario Ministry of the Environment (MOE) - Northern Region and Environment Canada - Great Lakes Sustainability Fund in Toronto, regarding its potential responsibility for an environmental impact identified at its former Thunder Bay facility. Both authorities have requested that the Corporation look into a site management plan relating to the sediment quality adjacent to Thunder Bay's lagoon. Several meetings have been held during the past years with the MOE and Environment Canada, and a management plan based on sediment dredging has been proposed by a third party consultant. Both governments are looking at this proposal with stakeholders to agree on this remediation action plan that would likely be implemented in the coming years.

The Corporation is also in discussions with representatives of the MOE, regarding its potential responsibility for an environmental impact identified at Thunder Bay. This facility was sold to Thunder Bay Fine Papers Inc. (Fine Papers) in 2007. Fine Papers has since sold the facility to Superior Fine Papers Inc. (Superior). The MOE has requested that the Corporation, together with the former owner Fine Papers and the current owner Superior, submit a closure plan for the Waste Disposal Site and a decommissioning plan for the closure and long-term monitoring for the Sewage Works (the Plans). Although the Corporation recognizes that, where as a result of past events, there may be an outflow of resources embodying future economic benefits in settlement of a possible obligation, it is not possible at this time to estimate the Corporation's obligation, since Superior has not submitted all of the Plans and related costs to allow the Corporation to perform an evaluation, nor does the Corporation have access to the site. Moreover, the Corporation is unable to ascertain the value of the assets remaining on its former site that may be available to fund this potential obligation. The Corporation is pursuing all available legal remedies to resolve the situation. In any event, Management does not consider the Corporation's potential obligation to be material.

The Corporation has recorded an environmental reserve to address its estimated exposure for these matters.

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Long-term Debt

12 Months Ended

Dec. 31, 2017

Financial Instruments [Abstract]

Long-term Debt

LONG-TERM DEBT

(in millions of Canadian dollars)	NOTE	MATURITY	2017	2016
Revolving credit facility, weighted average interest rate of 3.39% as at December 31, 2017, consists of $5million and US$151 million (December 31, 2016 - $(19) million; US$82 million and €(1)million)	14(b)	2021	195	90
5.50% Unsecured senior notes of $250 million		2021	250	250
5.50% Unsecured senior notes of US$400 million (December 31,2016 - US$550 million)	14(a)	2022	503	738
5.75% Unsecured senior notes of US$200 million (December 31, 2016 - US$250 million)	14(a)	2023	252	336
Other debts of subsidiaries			66	62
Other debts without recourse to the Corporation			320	105
			1,586	1,581
Less: Unamortized financing costs			10	15
Total long-term debt			1,576	1,566
Less:
Current portion of debts of subsidiaries			14	13
Current portion of debts without recourse to the Corporation			45	23
			59	36
			1,517	1,530

a. On December 12, 2017, the Corporation repurchasedUS$150 millionof its5.50%unsecured senior notes due in 2022 for an amount ofUS$156 million($201 million) andUS$50 millionof its5.75%unsecured senior notes due in 2023 for an amount ofUS$52 million($67 million), including premiums ofUS$6 million($8 million) andUS$2 million($3 million). The Corporation also wrote off$3 millionof unamortized financing costs related to these notes.

b. On June 1, 2017, the Corporation entered into an agreement with its lenders to extend and amend its existing $750 million credit facility. The amendment extends the term of the facility to July 2021. The financial conditions remain essentially unchanged.

c. As at December 31, 2017, accounts receivable and inventories totaling approximately $748 million (December 31, 2016 - $715 million) as well as property, plant and equipment totaling approximately $237 million (December 31, 2016 - $250 million) were pledged as collateral for the Corporation's revolving credit facility.

d. As a result of the Greenpac acquisition described in Note 5, current portion of long-term debt and long-term debt increased by respectively $15 million and $235 million on April, 4, 2017 (net of $3 million settlement of intercompany debt with Cascades prior to the transaction).

e. The Corporation has finance leases for various items of property, plant and equipment. Renewals and purchase options are specific to the entity that holds the lease. Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

	2017		2016
(in millions of Canadian dollars)	MINIMUM PAYMENTS	PRESENT VALUE OF PAYMENTS	MINIMUM PAYMENTS	PRESENT VALUE OF PAYMENTS
Within one year	11	9	8	7
Later than one year but no later than five years	22	18	19	15
More than five years	6	6	7	6
Total minimum lease payments	39	33	34	28
Less: amounts representing finance charges	6	—	6	—
Present value of minimum lease payments	33	33	28	28

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Other Liabilities

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Other Liabilities

OTHER LIABILITIES

(in millions of Canadian dollars)	NOTE	2017		2016
Employee future benefits	16	174		174
Greenpac equity holder put option (see Note 5 for more details)		80		—
Other		6		8
		260		182
Less: Current portion		(82	)	(4	)
		178		178

XML

Employee Future Benefits

12 Months Ended

Dec. 31, 2017

Employee Benefits [Abstract]

Employee Future Benefits

EMPLOYEE FUTURE BENEFITS

The Corporation operates various post-employment plans, including both defined benefit and defined contribution pension plans and post-employment benefit plans, such as retirement allowance, group life insurance and medical and dental plans. The table below outlines where the Corporation’s post-employment amounts and activity are included in the consolidated financial statements.

(in millions of Canadian dollars)	NOTE	2017		2016
Consolidated balance sheet obligations for
Defined pension benefits	16(a)	36		22
Post-employment benefits other than defined benefit pension plans	16(b)	101		106
Net long-term liabilities on consolidated balance sheet		137		128
Income statement charge for
Defined pension benefits		7		7
Defined contribution benefits		21		20
Post-employment benefits other than defined benefit pension plans		4		5
		32		32
Remeasurements for
Defined pension benefits	16(a)	14		(13	)
Post-employment benefits other than defined benefit pension plans	16(b)	(1	)	2
		13		(11	)

A. DEFINED BENEFIT PENSION PLANS

The Corporation offers funded and unfunded defined benefit pension plans, defined contribution pension plans and group RRSPs that provide retirement benefit payments for most of its employees. The defined benefit pension plans are usually contributory and are based on the number of years of service and, in most cases, the average salaries or compensation at the end of a career. Retirement benefits are not partially adjusted based on inflation.

The majority of benefit payments are payable from trustee administered funds; however, for the unfunded plans, the Corporation meets the benefit payment obligation as it falls due. Plan assets held in trusts are governed by local regulations and practices in each country. Responsibility for governance of the plans - overseeing all aspects of the plans including investment decisions and contribution schedules - lies with the Corporation. The Corporation has established Investment Committees to assist in the management of the plans and has also appointed experienced, independent professional experts such as investments managers, investment consultants, actuaries and custodians.

The movement in the net defined benefit obligation and fair value of plan assets of pension plans over the year is as follows:

(in millions of Canadian dollars)	PRESENT VALUE OF OBLIGATION		FAIR VALUE OF PLAN ASSETS		TOTAL		IMPACT OF MINIMUM FUNDING REQUIREMENT (ASSET CEILING)		TOTAL
As at January 1, 2016	484		(454	)	30		6		36
Current service cost	5		—		5		—		5
Interest expense (income)	18		(16	)	2		—		2
Impact on profit or loss	23		(16	)	7		—		7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	—		(9	)	(9	)	—		(9	)
Loss from change in financial assumptions	11		—		11		—		11
Experience gains	(9	)	—		(9	)	—		(9	)
Change in asset ceiling, excluding amounts included in interest expense	—		—		—		(6	)	(6	)
Impact of remeasurements on other comprehensive income	2		(9	)	(7	)	(6	)	(13	)
Exchange differences	(1	)	—		(1	)	—		(1	)
Contributions
Employers	—		(7	)	(7	)	—		(7	)
Plan participants	2		(2	)	—		—		—
Benefit payments	(28	)	28		—		—		—
As at December 31, 2016	482		(460	)	22		—		22
Current service cost	5		—		5		—		5
Interest expense (income)	17		(15	)	2		—		2
Impact on profit or loss	22		(15	)	7		—		7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	—		(14	)	(14	)	—		(14	)
Loss from change in demographic assumptions	2		—		2		—		2
Loss from change in financial assumptions	14		—		14		—		14
Experience loss	12		—		12		—		12
Impact of remeasurements on other comprehensive income	28		(14	)	14		—		14
Exchange differences	1		—		1		—		1
Contributions
Employers	—		(8	)	(8	)	—		(8	)
Plan participants	2		(2	)	—		—		—
Benefit payments	(27	)	27		—		—		—
As at December 31, 2017	508		(472	)	36		—		36

The defined benefit obligation and plan assets are composed by country and by sector as follows:

	2017
(in millions of Canadian dollars)	CANADA		UNITED STATES	EUROPE	TOTAL
Present value of funded obligations	433		10	—	443
Fair value of plan assets	466		6	—	472
Deficit (surplus) of funded plans	(33	)	4	—	(29	)
Present value of unfunded obligations	37		—	28	65
Liabilities on consolidated balance sheet	4		4	28	36

	2017
(in millions of Canadian dollars)	CONTAINERBOARD		BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of funded obligations	405		—	—	37	1	443
Fair value of plan assets	437		—	—	34	1	472
Deficit (surplus) of funded plans	(32	)	—	—	3	—	(29	)
Present value of unfunded obligations	8		28	2	2	25	65
Liabilities (assets) on consolidated balance sheet	(24	)	28	2	5	25	36

	2016
(in millions of Canadian dollars)	CANADA		UNITED STATES	EUROPE	TOTAL
Present value of funded obligations	411		10	—	421
Fair value of plan assets	454		6	—	460
Deficit (surplus) of funded plans	(43	)	4	—	(39	)
Present value of unfunded obligations	37		—	24	61
Liabilities (assets) on consolidated balance sheet	(6	)	4	24	22

	2016
(in millions of Canadian dollars)	CONTAINERBOARD		BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of funded obligations	385		—	—	35	1	421
Fair value of plan assets	427		—	—	32	1	460
Deficit (surplus) of funded plans	(42	)	—	—	3	—	(39	)
Present value of unfunded obligations	8		24	2	2	25	61
Liabilities (assets) on consolidated balance sheet	(34	)	24	2	5	25	22

The significant actuarial assumptions are as follows:

	2017						2016
	CANADA		UNITED STATES		EUROPE		CANADA		UNITED STATES		EUROPE
Discount rate obligation (ending period)	3.40	%	3.31	%	1.60	%	3.70	%	3.73	%	1.90	%
Discount rate obligation (beginning period)	3.70	%	3.73	%	1.90	%	3.90	%	3.90	%	2.10	%
Discount rate (current service cost)	3.50	%	3.73	%	1.90	%	3.90	%	3.90	%	2.10	%
Salary growth rate	Between 2.00%and 2.75%		N/A		N/A		Between 1.75% and 3.00%		N/A		N/A
Inflation rate	2.25	%	N/A		1.75	%	Between 2.25%and2.50%		N/A		1.75	%

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each territory. For Canadian pension plans, which represent 93% of all pension plans, these assumptions translate into an average life expectancy in years for a pensioner retiring at age 65:

	2017	2016
Retiring at the end of the year
Male	21.7	21.6
Female	24.1	24.1
Retiring 20 years after the end of the reporting year
Male	22.8	22.7
Female	25.1	25

The sensitivity of the Canadian defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented.

	IMPACT ON DEFINED BENEFIT OBLIGATION
	CHANGE IN ASSUMPTION		INCREASE IN ASSUMPTION		DECREASE IN ASSUMPTION
Discount rate	0.25	%	(2.90	)%	3.10	%
Salary growth rate	0.25	%	0.40	%	(0.30	)%
			INCREASE / DECREASE BY 1 YEAR IN ASSUMPTION
Life expectancy			3.00			%

Plan assets, which are funding the Corporation’s defined pension plans, are comprised as follows:

	2017
(in millions of Canadian dollars)	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL	%
Cash and short-term investments	5	—	—	5	1.1	%
Bonds
Canadian bonds	92	81	—	173	36.7	%
Shares
Canadian shares	34	—	—	34
Foreign shares	6	—	—	6
				40	8.5	%
Mutual funds
Foreign bond mutual funds	—	6	—	6
Canadian equity mutual funds	7	1	—	8
Foreign equity mutual funds	—	54	—	54
Alternative investments funds	—	22	—	22
				90	19.1	%
Other
Insured annuities	—	164	—	164
				164	34.6	%
	144	328	—	472

	2016
(in millions of Canadian dollars)	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL	%
Cash and short-term investments	9	—	—	9	2.0	%
Bonds
Canadian bonds	47	67	—	114	24.8	%
Shares
Canadian shares	71	—	—	71
Foreign shares	14	—	—	14
				85	18.5	%
Mutual funds
Foreign bond mutual funds	—	2	—	2
Canadian equity mutual funds	16	3	—	19
Foreign equity mutual funds	—	109	—	109
Alternative investments funds	—	21	—	21
				151	32.8	%
Other
Insured annuities	—	94	—	94
Derivatives contract, net	7	—	—	7
				101	21.9	%
	164	296	—	460

The plan assets include shares of the Corporation for an amount of less than $1 million. These shares were bought by one of the asset managers. Annual benefit annuities of an approximate value of $164 million are pledged by insurance contracts.

B. POST-EMPLOYMENT BENEFITS OTHER THAN DEFINED BENEFIT PENSION PLANS

The Corporation also offers its employees some post-employment benefit plans, such as retirement allowance, group life insurance and medical and dental plans. However, these benefits, other than pension plans, are not funded. Furthermore, the medical and dental plans upon retirement are being phased out and are no longer offered to the majority of new retirees, and the retirement allowance is not offered to the majority of employees hired after 2002.

The amounts recognized in the consolidated balance sheet composed by country and by sector are determined as follows:

	2017
(in millions of Canadian dollars)	CANADA	UNITED STATES	EUROPE	TOTAL
Present value of unfunded obligations	73	4	24	101
Liabilities on consolidated balance sheet	73	4	24	101

	2017
(in millions of Canadian dollars)	CONTAINERBOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of unfunded obligations	38	24	6	12	21	101
Liabilities on consolidated balance sheet	38	24	6	12	21	101

	2016
(in millions of Canadian dollars)	CANADA	UNITED STATES	EUROPE	TOTAL
Present value of unfunded obligations	78	4	24	106
Liabilities on consolidated balance sheet	78	4	24	106

	2016
(in millions of Canadian dollars)	CONTAINERBOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of unfunded obligations	41	24	6	13	22	106
Liabilities on consolidated balance sheet	41	24	6	13	22	106

.

The movement in the net defined benefit obligation for post-employment benefits over the year is as follows:

(in millions of Canadian dollars)	PRESENT VALUE OF OBLIGATION		FAIR VALUE OF PLAN ASSET		TOTAL
As at January 1, 2016	105		—		105
Current service cost	2		—		2
Interest expense	3		—		3
Impact on profit or loss	5		—		5
Remeasurements
Loss from change in financial assumptions	2		—		2
Impact of remeasurements on other comprehensive income	2		—		2
Exchange differences	(1	)	—		(1	)
Contributions and premiums paid by the employer	—		(5	)	(5	)
Benefit payments	(5	)	5		—
As at December 31, 2016	106		—		106
Current service cost	2		—		2
Interest expense	3		—		3
Curtailments	(1	)	—		(1	)
Impact on profit or loss	4		—		4
Remeasurements
Loss from change in financial assumptions	1		—		1
Experience gains	(2	)	—		(2	)
Impact of remeasurements on other comprehensive income	(1	)	—		(1	)
Exchange differences	1		—		1
Contributions and premiums paid by the employer	—		(9	)	(9	)
Benefit payments	(9	)	9		—
As at December 31, 2017	101		—		101

The method of accounting, assumptions relating to discount rate and life expectancy, and the frequency of valuations for post-employment benefits are similar to those used for defined benefit pension plans, with the addition of actuarial assumptions relating to the long-term increase in health care costs of 4.50% a year (2016 - 4.50%).

The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented.

	IMPACT ON OBLIGATION FOR POST-EMPLOYMENT BENEFITS
	CHANGE IN ASSUMPTION		INCREASE IN ASSUMPTION		DECREASE IN ASSUMPTION
Discount rate	0.25	%	(2.20	)%	2.30	%
Salary growth rate	0.25	%	0.50	%	(0.40	)%
Health care cost increase	1.00	%	2.00	%	(1.70	)%
			INCREASE / DECREASE BY 1 YEAR IN ASSUMPTION
Life expectancy			0.80			%

C. RISKS AND OTHER CONSIDERATIONS RELATIVE TO POST-EMPLOYMENT BENEFITS

Through its defined benefit plans, the Corporation is exposed to a number of risks, the most significant of which are detailed below.

Asset volatility

The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; and if plan assets underperform this yield, it will create an experience loss. Both the Canadian and U.S. plans hold a proportion of equities, which are expected to outperform corporate bonds in the long term while contributing volatility and risk in the short term.

The Corporation intends to reduce the level of investment risk by investing more in assets that better match the liabilities when the financial situation of the plans improves and/or the rate of return on bonds used for solvency valuations increases.

As at December 31, 2017, 65% of the plan's assets are invested in bonds. In 2014, the Corporation decided to purchase annuities from a life insurance company for some pensioners according to the market and financial situation of the plans. As at December 31, 2017, the total value of insured annuities is $164 million.

However, the Corporation believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the Corporation’s long-term strategy to manage the plans efficiently. Plan assets are diversified, so the failure of an individual stock would not have a big impact on the plan assets taken as a whole. The pension plans do not face a significant currency risk.

Changes in bond yields

A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings, particularly for plans in a good financial position that have a greater proportion of bonds.

Inflation risk

The benefits paid are not indexed. Only future benefits for active members are based on salaries. Therefore, this risk is not significant.

Life expectancy

The majority of the plans’ obligations are to provide benefits for the member's lifetime, so increases in life expectancy will result in an increase in the plans’ liabilities.

Each sensitivity analysis disclosed in this note is based on changing one assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to variations in significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated using the projected unit credit method at the end of the reporting period) has been applied as for calculating the liability recognized in the consolidated balance sheet.

As at December 31, 2017, the aggregate surplus of the Corporation’s funded pension plans (mostly in Canada) amounted to $29 million (a surplus of $39 million as at December 31, 2016). The Corporation will make special payments of $1 million for past service to fund the Canadian pension plan deficit over ten years. Current agreed expected service contributions amount to $8 million and will be made in the normal course of business. As for the cash flow requirement, these pension plans are expected to require a net contribution of approximately $9 million in 2018.

The weighted average duration of the defined benefit obligation is 11 years (2016 - 12 years).

Expected maturity analysis of undiscounted pension and other post-employment benefits:

(in millions of Canadian dollars)	LESS THAN A YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	OVER FIVE YEARS	TOTAL
Pension benefits	29	29	89	743	890
Post-employment benefits other than defined benefit pension plans	5	8	24	115	152
As at December 31, 2017	34	37	113	858	1,042

These amounts represent all the benefits payable to current members during the following years and thereafter without limitations. The majority of benefit payments are payable from trustee administered funds. The difference will come from future investment returns expected on plan assets and future contributions that will be made by the Corporation for services rendered after December 31, 2017.

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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Taxes [Abstract]

Income Taxes

INCOME TAXES

a. The provision for (recovery of) income taxes is as follows:

(in millions of Canadian dollars)	2017		2016
Current taxes	10		11
Deferred taxes	(91	)	34
	(81	)	45

b. The provision for (recovery of) income taxes based on the effective income tax rate differs from the provision for income taxes based on the combined basic rate for the following reasons:

(in millions of Canadian dollars)	NOTE	2017		2016
Provision for income taxes based on the combined basic Canadian and provincial income tax rate		117		48
Adjustment for income taxes arising from the following:
Difference in statutory income tax rate of foreign operations		10		2
Prior years reassessment		3		1
Reversal of deferred income tax liabilities related to our previously held investment in Greenpac	5	(70	)	—
Permanent difference on revaluation of previously held equity interest - Greenpac associate	5	(57	)	—
Non-taxable portion of capital gain on revaluation of previously held equity interest - Boralex associate	8	(24	)	—
Change in future income taxes resulting from enacted tax rate change		(57	)	2
Unrealized capital gain on long-term debt		(3	)	—
Permanent differences		(6	)	(5	)
Change in deferred income tax assets relating to capital tax loss		6		(3	)
		(198	)	(3	)
Provision for (recovery of) income taxes		(81	)	45

Weighted average income tax rate for the year ended December 31, 2017, was 28.6% (2016 - 27.4%).

In conjunction with the acquisition of Greenpac, the Corporation recorded an income tax recovery of $70 million representing deferred income taxes on its investment prior to the acquisition on April 4, 2017. Also, there was no income tax provision recorded on the gain of $156 million generated by the business combination of Greenpac, since it is included in the fair value of assets and liabilities acquired as described in Note 5.

The income tax provision on Boralex revaluation gain was calculated at the rate of capital gains. Also, consequently with the sale of its participation in Boralex in July 2017, the Corporation has reassessed the probability of recovering unrealized capital losses on long-term debt due to foreign exchange fluctuations. As a result, $6 million of tax assets was unrecognized and recorded in the consolidated statement of earnings.

Under the Tax Cuts and Jobs Act, which was substantially enacted on December 22, 2017, the U.S. statutory federal income tax rate was reduced to 21% from the previous rate of 35%. The impact of the change in tax rate resulted in a reduction of $57 million of the net deferred tax liability position for the year ended December 31, 2017.

c. The provision for income taxes relating to components of other comprehensive income is as follows:

(in millions of Canadian dollars)	2017		2016
Foreign currency translation related to hedging activities	4		3
Cash flow hedge	—		3
Included in share of other comprehensive income of associates	3		—
Actuarial gain (loss) on post-employment benefit obligations	(3	)	3
	4		9

d. The analysis of deferred tax assets and deferred tax liabilities, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

(in millions of Canadian dollars)	2017		2016
Deferred income tax assets:
Deferred income tax assets to be recovered after more than twelve months	223		279
Deferred income tax liabilities:
Deferred income tax liabilities to be used after more than twelve months	260		319
	(37	)	(40	)

The movement of the deferred income tax account is as follows:

(in millions of Canadian dollars)	NOTE	2017		2016
As at January 1		(40	)	(8	)
Through statement of earnings		91		(34	)
Variance of income tax credit, net of related income tax		4		5
Through statement of comprehensive income		(4	)	(9	)
Through business combinations	5	(91	)	—
Others		(7	)	—
Exchange differences		10		6
As at December 31		(37	)	(40	)

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

DEFERRED INCOME TAX ASSET

(in millions of Canadian dollars)	RECOGNIZED TAX BENEFIT ARISING FROM INCOME TAX LOSSES		EMPLOYEE FUTURE BENEFITS		EXPENSE ON RESEARCH		UNUSED TAX CREDITS		FINANCIAL INSTRUMENTS		FOREIGN EXCHANGE LOSS ON LONG-TERM DEBT		OTHERS	TOTAL
As at January 1, 2016	141		25		38		39		16		23		15	297
Through statement of earnings	19		2		(23	)	(3	)	(8	)	(2	)	1	(14	)
Variance of income tax credit	—		—		—		5		—		—		—	5
Through statement of comprehensive income	—		(3	)	—		—		(3	)	(3	)	—	(9	)
Exchange differences	(1	)	—		—		—		—		1		—	—
As at December 31, 2016	159		24		15		41		5		19		16	279
Through statement of earnings	(25	)	(6	)	(10	)	(6	)	(5	)	(12	)	5	(59	)
Variance of income tax credit	—		—		—		4		—		—		—	4
Through statement of comprehensive income	—		3		—		—		1		(5	)	—	(1	)
As at December 31, 2017	134		21		5		39		1		2		21	223

DEFERRED INCOME TAX LIABILITIES

(in millions of Canadian dollars)	NOTE	PROPERTY, PLANT AND EQUIPMENT		INTANGIBLE ASSETS		INVESTMENTS		OTHERS	TOTAL
As at January 1, 2016		169		51		84		1	305
Through statement of earnings		14		3		3		—	20
Exchange differences		(3	)	(1	)	(2	)	—	(6	)
As at December 31, 2016		180		53		85		1	319
Through statement of earnings		(51	)	(14	)	(85	)	—	(150	)
Included in share of other comprehensive income of associates		—		—		3		—	3
Through business combinations	5	80		11		—		—	91
Others		5		2		—		—	7
Exchange differences		(9	)	(1	)	—		—	(10	)
As at December 31, 2017		205		51		3		1	260

When taking into consideration the offsetting of balances within the same tax jurisdiction, the net deferred tax liability of $37 million is presented on the consolidated balance sheet as $149 million of “Deferred income tax asset” amounts and $186 million of “Deferred income tax liabilities”.

e. The Corporation has recognized accumulated losses for income tax purposes amounting to approximately $515 million, which may be carried forward to reduce taxable income in future years. The future tax benefit of $134 million resulting from the deferral of these losses has been recognized in the accounts as a deferred income tax asset. Deferred income tax assets are recognized for tax loss carry forward to the extent that the realization of the related tax benefits through future taxable profits is probable. Income tax losses as at December 31, 2017 are detailed as follows:

(in millions of Canadian dollars)	RECOGNIZED TAX LOSSES	MATURITY
Canada	8	2026
	14	2027
	2	2029
	1	2030
	77	2032
	82	2033
	126	2034
	63	2035
	53	2036
	3	2037
	429
United States	7	2019
	5	2020
	2	2029
	2	2031
	3	2032
	2	2033
	13	2035
	1	2036
	46	2037
	81
Europe	5	Indefinitely
	515

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Capital Stock

12 Months Ended

Dec. 31, 2017

Share Capital, Reserves And Other Equity Interest [Abstract]

Capital Stock

CAPITAL STOCK

A. CAPITAL MANAGEMENT

Capital is defined as long-term debt, bank loans and advances net of cash and cash equivalents and Shareholders' equity, which includes capital stock.

(in millions of Canadian dollars)	2017		2016
Cash and cash equivalents	(89	)	(62	)
Bank loans and advances	35		28
Long-term debt, including current portion	1,576		1,566
	1,522		1,532
Total equity	1,601		1,074
Total capital	3,123		2,606

The Corporation's objectives when managing capital are:

• to safeguard the Corporation's ability to continue as a going concern in order to provide returns to Shareholders;

• to maintain an optimal capital structure and reduce the cost of capital;

• to make proper capital investments that are significant to ensure that the Corporation remains competitive; and

• to redeem common shares based on an annual redemption program.

The Corporation sets the amount of capital in proportion to risk. The Corporation manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to Shareholders, return capital to Shareholders, issue new shares and acquire or sell assets to improve its financial performance and flexibility.

The Corporation monitors capital on a monthly and quarterly basis based on different financial ratios and non-financial performance indicators. Also, the Corporation must conform to certain financial ratios under its various credit agreements. These ratios are calculated on an adjusted consolidated basis of restricted subsidiaries only. These are a maximum ratio of funded debt to capitalization of 65% and a minimum interest coverage ratio of 2.25x. The Corporation must also comply with a consolidated interest coverage ratio to incur additional debt. Funded debt is defined as liabilities as per the consolidated balance sheet, including guarantees and liens granted in respect of funded debt of another person but excluding other long-term liabilities, trade accounts payable, obligations under operating leases and other accrued obligations (2017 - $1,307 million; 2016 - $1,512 million). The capitalization ratio is calculated as “Shareholders' equity” as shown in the consolidated balance sheet plus the funded debt. Shareholders' equity is adjusted to add back the effect of IFRS adjustments as at December 31, 2010, in the amount of $208 million. The interest coverage ratio is defined as operating income before depreciation and amortization (OIBD) to financing expense. The OIBD is defined as net earnings of the last four quarters plus financing expense, income taxes, amortization and depreciation, expense for stock options and dividends received from a person who is not a credit party (2017 - $296 million; 2016 - $379 million). Excluded from net earnings are the share of results of equity investments and gains or losses from non-recurring items. Financing expense is calculated as interest and financial charges determined in accordance with IFRS plus any capitalized interest but excluding the amortization of deferred financing costs, up-front and financing costs and unrealized gains or losses arising from hedging agreements. It also excludes any gains or losses on the translation of long-term debt denominated in a foreign currency. The consolidated interest coverage ratio to incur additional debt is calculated as defined in the Senior notes indentures dated June 19, 2014 and May 19, 2015.

As at December 31, 2017, the funded debt-to-capitalization ratio stood at 44.01% and the interest coverage ratio was 3.88x. The Corporation is in compliance with the ratio requirements of its lenders.

The Corporation's credit facility is subject to terms and conditions for loans of this nature, including limits on incurring additional indebtedness and granting liens or selling assets without the consent of the lenders.

The unsecured senior notes are subject to customary covenants restricting the Corporation's ability to, among other things, incur additional debt, pay dividends and make other restricted payments as defined in the Indentures dated June 19, 2014 and May 19, 2015.

The Corporation historically invests between $150 million and $250 million annually on purchases of property, plant and equipment. These amounts are carefully reviewed during the course of the year in relation to operating results and strategic actions approved by the Board of Directors. These investments, combined with annual maintenance, enhance the stability of the Corporation's business units and improve cost competitiveness through new technology and improved process procedures.

The Corporation has an annual share redemption program in place to redeem its outstanding common shares when the market price is judged appropriate by Management. In addition to limitations on the normal course issuer bid, the Corporation's ability to redeem common shares is limited by its senior notes indenture.

B. ISSUED AND OUTSTANDING

The authorized capital stock of the Corporation consists of an unlimited number of common shares, without nominal value, and an unlimited number of Class A and B shares issuable in series without nominal value. Over the past two years, the common shares have fluctuated as follows:

		2017		2016
	NOTE	NUMBER OF COMMON SHARES	IN MILLIONS OF CANADIAN DOLLARS	NUMBER OF COMMON SHARES		IN MILLIONS OF CANADIAN DOLLARS
Balance - beginning of year		94,526,516	487	95,310,923		490
Common shares issued on exercise of stock options	18(d)	461,442	5	262,836		2
Redemption of common shares	18(c)	—	—	(1,047,243	)	(5	)
Balance - end of year		94,987,958	492	94,526,516		487

C. REDEMPTION OF COMMON SHARES

In 2017, in the normal course of business, the Corporation renewed its redemption program of a maximum of 946,066 common shares with the Toronto Stock Exchange, said shares representing approximately 1% of issued and outstanding common shares. The redemption authorization is valid from March 17, 2017 to March 16, 2018. In 2017, the Corporation redeemed no common share under this program (2016 - 1,047,243 common shares for an amount of $9 million).

D. COMMON SHARE ISSUANCE

The Corporation issued 461,442 common shares upon the exercise of options for an amount of $4 million (2016 - $2 million for 262,836 common shares issued).

E. NET EARNINGS PER COMMON SHARE

The basic and diluted net earnings per common share are calculated as follows:

	2017		2016
Net earnings available to common shareholders (in millions of Canadian dollars)	507		135
Weighted average number of basic common shares outstanding (in millions)	95		95
Weighted average number of diluted common shares outstanding (in millions)	98		97
Basic net earnings per common share (in Canadian dollars)	$	5.35	$	1.42
Diluted net earnings per common share (in Canadian dollars)	$	5.19	$	1.39

As at December 31, 2017, 240,880 stock options have an antidilutive effect (2016 - nil). As of February 28, 2018, no common share had been redeemed by the Corporation since the beginning of the financial year.

F. DETAILS OF DIVIDENDS DECLARED PER COMMON SHARE ARE AS FOLLOWS

	2017		2016
Dividends declared per common share	$	0.16	$	0.16

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2017

Share-based Payment Arrangements [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

a. Under the terms of a share option plan adopted on December 15, 1998, amended on March 15, 2013, and approved by Shareholders on May 8, 2013, a remaining balance of 1,990,554 common shares is specifically reserved for issuance for officers and key employees of the Corporation. Each option will expire at a date not to exceed 10 years following the grant date of the option. The exercise price of an option shall not be lower than the market value of the share at the date of grant, determined as the average of the closing price of the share on the Toronto Stock Exchange on the five trading days preceding the date of grant. The terms for exercising the options are 25% of the number of shares under option within 12 months after the first anniversary date of grant, and up to an additional 25% every 12 months after the second, third and fourth anniversaries of grant date. Options cannot be exercised if the market value of the share at exercise date is lower than the book value at the date of grant. Options exercised are settled in shares. The stock-based compensation cost related to these options amounted to $1 million in 2017 (2016 - $1 million).

Changes in the number of options outstanding as at December 31, 2017 and 2016 are as follows:

	2017			2016
	NUMBER OF OPTIONS		WEIGHTED AVERAGE EXERCISE PRICE ($)	NUMBER OF OPTIONS		WEIGHTED AVERAGE EXERCISE PRICE ($)
Beginning of year	5,216,063		6.16	5,385,323		6.15
Granted	240,880		14.28	351,461		9.75
Exercised	(461,442	)	8.28	(262,836	)	5.51
Expired	—		—	(257,885	)	11.49
Forfeited	(5,381	)	9.75	—		—
End of year	4,990,120		6.35	5,216,063		6.16
Options exercisable - end of year	4,170,259		5.63	4,166,339		5.78

The weighted average share price at the time of exercise of the options was $14.23 (2016 - $12.14).

The following options were outstanding as at December 31, 2017:

	OPTIONS OUTSTANDING		OPTIONS EXERCISABLE
YEAR GRANTED	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE ($)	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE ($)	EXPIRATION DATE
2007	95,064	11.83	95,064	11.83	2018
2008	326,166	7.81	326,166	7.81	2018
2009	968,333	3.92	968,333	3.92	2019
2010	444,124	6.43	444,124	6.43	2020
2011	492,432	6.26	492,432	6.26	2020 - 2021
2012	842,524	4.46	842,524	4.46	2018 - 2022
2013	426,392	5.18	426,392	5.18	2018 - 2023
2014	423,974	6.10	308,134	6.10	2020 - 2024
2015	390,185	7.66	185,244	7.66	2020 - 2025
2016	340,046	9.75	81,846	9.75	2020 - 2026
2017	240,880	14.28	—	—	2027
	4,990,120		4,170,259

FAIR VALUE OF THE SHARE OPTIONS GRANTED

Options were priced using the Black-Scholes option pricing model. Expected volatility is based on the historical share price volatility over the past six years. The following weighted average assumptions were used to estimate the fair value of $4.22 (2016 - $2.75) as at the date of grant of each option issued to employees:

	2017			2016
Grant date share price	$	14.26		$	10.09
Exercise price	$	14.28		$	9.75
Risk-free interest rate	1.77		%	1.04		%
Expected dividend yield	1.12		%	1.58		%
Expected life of options	6 years			6 years
Expected volatility	32		%	31		%

b. The Corporation offers its Canadian employees a share purchase plan for its common shares. Employees can voluntarily contribute up to a maximum of 5% of their salary and, if certain conditions are met, the Corporation will contribute 25% of the employee's contribution to the plan.

The shares are purchased on the market on a predetermined date each month. For the year ended December 31, 2017, the Corporation's contribution to the plan amounted to $1 million (2016 - $1 million).

c. The Corporation has a Performance Share Unit (PSU) Plan for the benefit of officers and key employees, allowing them to receive a portion of their annual compensation in the form of PSUs. A PSU is a notional unit equivalent in value to the Corporation's common share. Periodically, the number of PSUs forming part of the award shall be adjusted depending upon the three-year average return on capital employed of the Corporation (ROCE). Such adjusted number shall be obtained by multiplying the number of PSUs forming part of the award by the applicable multiplier based on the ROCE level. Participants are entitled to receive the payment of their PSUs in the form of cash based on the average price of the Corporation's common shares as traded on the open market during the five days before the vesting date.

The PSUs vest over a period of two years starting on the award date. The expense and the related liability are recorded during the vesting period. The liability is adjusted periodically to reflect any variation in the market value of the common shares, the expected average ROCE and the passage of time. As at December 31, 2017, the Corporation had a total of 581,785 PSUs outstanding (2016 - 761,367 PSUs), representing a liability of $1 million (2016 - $5 million). In 2017, the Corporation made payments totaling $7 million in relation to PSUs (2016 - $5 million).

d. The Corporation has a Deferred Share Unit Plan for the benefit of its external directors, allowing them to receive all or a portion of their annual compensation in the form of Deferred Share Units (DSUs). A DSU is a notional unit equivalent in value to the Corporation's common share. Upon resignation from the Board of Directors, participants are entitled to receive the payment of their cumulated DSUs in the form of cash based on the average price of the Corporation's common shares as traded on the open market during the five days before the date of the participant's resignation.

The DSU expense and the related liability are recorded at the grant date. The liability is adjusted periodically to reflect any variation in the market value of the common shares. As at December 31, 2017, the Corporation had a total of 247,276 DSUs outstanding (2016 - 205,773 DSUs), representing a long-term liability of $4 million (2016 - $3 million). On January 15, 2018, the Corporation issued 44,579 DSUs and had a total of 291,855 DSUs outstanding.

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Accumulated Other Comprehensive Loss

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Accumulated Other Comprehensive Loss

ACCUMULATED OTHER COMPREHENSIVE LOSS

(in millions of Canadian dollars)	2017		2016
Foreign currency translation, net of hedging activities and related income tax of $12 million (December 31, 2016 - $16million)	(30	)	(13	)
Unrealized gain arising from foreign exchange forward contracts designated as cash flow hedges, net of related income taxes of nil (December 31, 2016 - nil)	1		—
Unrealized loss arising from commodity derivative financial instruments designated as cash flow hedges, net of related income taxes of $2 million (December 31, 2016 - $2 million)	(4	)	(5	)
Unrealized loss on available-for-sale financial assets, net of related income taxes of nil (December31,2016-nil)	(2	)	(1	)
Unrealized loss on share of other comprehensive income of associates, net of related income taxes of nil (December31, 2016 - $9 million)	—		(12	)
	(35	)	(31	)

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Cost of Sales by Nature

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Cost of Sales by Nature

COST OF SALES BY NATURE

(in millions of Canadian dollars)	2017	2016
Raw material	1,751	1,612
Wages and employee benefits expenses	689	662
Energy	259	248
Delivery	331	269
Depreciation and amortization	215	192
Other	463	397
	3,708	3,380

SELLING AND ADMINISTRATIVE EXPENSES BY NATURE

(in millions of Canadian dollars)	2017	2016
Wages and employee benefits expenses	287	271
Information technology	60	46
Publicity and marketing	16	15
Other	77	70
	440	402

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Employee Benefits Expenses

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Employee Benefits Expenses

EMPLOYEE BENEFITS EXPENSES

(in millions of Canadian dollars)	NOTE	2017	2016
Wages and employee benefits expenses	21	976	933
Share options granted to directors and employees	19(a)	1	1
Pension costs - defined benefit plans	16	7	7
Pension costs - defined contribution plans	16	21	20
Post-employment benefits other than defined benefit pension plans	16	4	5
		1,009	966

KEY MANAGEMENT COMPENSATION

Key management includes the members of the Board of Directors, Presidents and Vice Presidents of the Corporation (same as disclosed in annual information form in section 8.3). The compensation paid or payable to key management for their services is shown below:

(in millions of Canadian dollars)	2017	2016
Salaries and other short-term benefits	11	11
Post-employment benefits	1	—
Share-based payments	6	4
	18	15

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Gain on Acquisitions, Disposals and Others

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Gain on Acquisitions, Disposals and Others

GAIN ON ACQUISITIONS, DISPOSALS AND OTHERS

(in millions of Canadian dollars)	2017		2016
Gain on disposal of assets	(8	)	(4	)

2017

The Containerboard Packaging segment sold a piece of land in Ontario, Canada, and recorded a gain of $7 million.

The Corporate Activities realized a $1 million gain from the sale of some assets.

2016

The Specialty Products segment recorded a $3 million gain on the sale of pieces of land close to the former fine paper plant located in St-Jérôme, Québec. The segment also recorded a $3 million environmental provision mainly related to closed plants in Québec, closed in previous years. Finally, the segment recorded a $4 million gain on the sale of assets following the closure of its de-inked pulp mill located in Auburn, Maine.

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Impairment Charges and Restructuring Costs

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Impairment Charges and Restructuring Costs

IMPAIRMENT CHARGES AND RESTRUCTURING COSTS

A. IMPAIRMENT CHARGES (REVERSALS) ON PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS WITH FINITE USEFUL LIFE AND OTHER ASSETS

The Corporation recorded net impairment charges totaling $11 million in 2017 and net impairment charges of $3 million in 2016. The recoverable amount of CGUs was determined using a fair value less cost of disposal sell model based on the income approach, unless otherwise indicated. Level 2 inputs are used to measure fair value. Impairments are detailed as follows:

	2017
	PACKAGING PRODUCTS
(in millions of Canadian dollars)	CONTAINER-BOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	SUB-TOTAL	TISSUE PAPERS	CORPORATE ACTIVITIES		TOTAL
Property, plant and equipment	—	—	—	—	2	—		2
Intangible assets with finite useful life and other assets	11	—	—	11	—	(2	)	9
	11	—	—	11	2	(2	)	11

	2016
	PACKAGING PRODUCTS
(in millions of Canadian dollars)	CONTAINER-BOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS		SUB-TOTAL		TISSUE PAPERS	CORPORATE ACTIVITIES	TOTAL
Property, plant and equipment	2	—	(3	)	(1	)	4	—	3

2017

The Containerboard Packaging segment recorded an impairment charge of $11 million on deferred revenues related to the management agreement of Greenpac since the beginning of the mill construction, which was recorded in “Other assets”. Following the acquisition and consolidation of Greenpac described in Note 5, expected future cash flows related to this asset will not materialize on a consolidated basis.

The Tissue Papers segment incurred a $2 million impairment charge on unused assets following the reassessment of its recoverable amount based on estimated selling price.

The Corporate Activities recorded a $2 million reversal of impairment following the collection of a note receivable that had been written off in previous years.

2016

The Containerboard Packaging segment recorded a $2 million impairment charge on the assets of its converting plant in Connecticut which were not part of the disposal related to the Rand-Whitney - Newtown plant acquisition.

The Specialty Products segment sold the building of its closed de-inked pulp mill located in Auburn, Maine, and recorded a $2 million reversal of impairment. This segment also sold a piece of land related to a closed plant and recorded a $1 million reversal of impairment.

The Tissue Papers segment incurred an additional impairment charge of $4 million related to the revaluation of some equipment following the closure of its Toronto converting plant in the second quarter.

B. GOODWILL AND OTHER INDEFINITE USEFUL LIFE INTANGIBLE ASSETS

Allocation of goodwill and other indefinite useful life intangible assets is as follows:

• Containerboard Packaging segment goodwill of $469 million is allocated to all Containerboard CGUs;

• Specialty Products segment goodwill is allocated to all Cascades Recovery CGUs, $13 million, and the Partitioning activities CGU, $3 million;

• Tissue Papers segment goodwill of $36 million is allocated to all Tissue Papers CGUs;

• Water rights of $7 million are allocated to Reno de Medici CGU.

Annually, the Corporation must test all of its goodwill for impairment, except if the following three conditions are met:

• the assets and liabilities making up the unit have not changed significantly since the most recent recoverable amount calculation;

• the most recent recoverable amount calculation resulted in an amount that exceeded the carrying amount of the unit by a substantial margin; and

• based on an analysis of events that have occurred and circumstances that have changed since the most recent recoverable amount calculation, the likelihood that a current recoverable amount determination would be less than the current carrying amount of the unit is remote.

All three conditions were met for all goodwill but Tissue's. Therefore, the Corporation tested its Tissue Papers segment goodwill for impairment. As a result of this impairment test, the Corporation concluded that the recoverable amount of the CGUs was in excess of $305 million over their carrying amount, thus no impairment charge was necessary. With all other variables held constant, a rise in the discounting rate of 3% would reduce the excess of $305 million to nil.

The Corporation applied the income approach in determining fair value less cost of disposal and used the following key assumptions (level 2 inputs):

	TISSUE PAPERS
Discounting rate	9.75		%
Terminal exchange rate (CA$/US$)	$	1.25
Terminal shipments	673,000 s.t.

C. RESTRUCTURING COSTS (GAINS)

Restructuring costs (gains) are detailed as follows:

(in millions of Canadian dollars)	2017	2016
Containerboard	2	(1	)
Boxboard Europe	1	2
Specialty Products	—	1
Tissue Papers	2	7
Corporate Activities	1	—
	6	9

2017

The Containerboard Packaging segment announced the forthcoming closure of its New York converting plant and recorded severance expenses totaling $2 million.

The Boxboard Europe segment recorded severances costs of $1 million following the restructuring of its sales activities.

The Tissue Papers segment incurred $2 million of restructuring costs following the review of provisions related to the transfer of the converting operations of the Toronto plant to other Tissue segment sites announced in 2016.

The Corporate Activities recorded a severance cost of $1 million following the closure of a sales division.

2016

The Containerboard Packaging segment recorded a $1 million gain on the reversal of a provision for an onerous lease contract in relation to the restructuring of its Ontario converting activities in 2012.

The Boxboard Europe segment recorded restructuring costs of $2 million in relation to the reorganization of its activities following the transfer of the virgin fibre boxboard mill located in La Rochette, France, to our Reno de Medici subsidiary.

The Specialty Products segment recorded restructuring costs of $1 million following the closure of its de-inked pulp mill located in Auburn, Maine.

The Tissue Papers segment recorded a $3 million provision for an onerous lease as a consequence of the closure of its Toronto converting plant. This segment also incurred $4 million of severance costs following the transfer of the converting operations of the Toronto plant to other Tissue Papers segment sites.

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Additional Information

12 Months Ended

Dec. 31, 2017

Cash Flow Statement [Abstract]

Additional Information

ADDITIONAL INFORMATION

A. CHANGES IN NON-CASH WORKING CAPITAL COMPONENTS ARE DETAILED AS FOLLOWS:

(in millions of Canadian dollars)	2017		2016
Accounts receivable	31		(6	)
Current income tax assets	—		(1	)
Inventories	(46	)	(2	)
Trade and other payables	(71	)	66
Current income tax liabilities	(1	)	(1	)
	(87	)	56

B. FNANCING EXPENSE AND INTEREST EXPENSE ON EMPLOYEE FUTURE BENEFITS

(in millions of Canadian dollars)	2017		2016
Interest on long-term debt	89		83
Interest income	(3	)	(1	)
Amortization of financing costs	3		3
Other interest and banking fees	3		3
Interest expense on employee future benefits	5		5
	97		93

C. TOTAL LIABILITIES FROM FINANCING ACTIVITIES

(in millions of Canadian dollars)	CASH AND CASH EQUIVALENT		BANK LOANS AND ADVANCES		LONG-TERM DEBT		NET DEBT
As at January 1, 2016	(60	)	37		1,744		1,721
Cash flow
Change in cash and cash equivalents	(5	)	—		—		(5	)
Bank loans and advances	—		(8	)	—		(8	)
Change in revolving credit facilities	—		—		(146	)	(146	)
Increase in other long-term debt	—		—		40		40
Payments of other long-term debt	—		—		(47	)	(47	)
Non-cash changes
Foreign exchange gain on long-term debt and financial instruments	—		—		(35	)	(35	)
Capital lease acquisitions	—		—		18		18
Amortization of financing costs	—		—		2		2
Other	—		—		3		3
Exchange differences	3		(1	)	(13	)	(11	)
As at December 31, 2016	(62	)	28		1,566		1,532
Cash flow
Change in cash and cash equivalents	(25	)	—		—		(25	)
Bank loans and advances	—		8		—		8
Change in revolving credit facilities	—		—		114		114
Repurchase of unsecured senior notes	—		—		(257	)	(257	)
Increase in other long-term debt	—		—		11		11
Payments of other long-term debt	—		—		(47	)	(47	)
Non-cash changes
Business combinations	—		—		257		257
Foreign exchange gain on long-term debt and financial instruments	—		—		(62	)	(62	)
Capital lease acquisitions	—		—		11		11
Amortization of financing costs	—		—		2		2
Write off of unamortized financing costs following repurchase of unsecured senior notes	—		—		3		3
Other	—		—		(1	)	(1	)
Exchange differences	(2	)	(1	)	(21	)	(24	)
As at December 31, 2017	(89	)	35		1,576		1,522

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Financial Instruments

12 Months Ended

Dec. 31, 2017

Financial Instruments [Abstract]

Financial Instruments

FINANCIAL INSTRUMENTS

26.1 FAIR VALUE OF FINANCIAL INSTRUMENTS

The classification of financial instruments as at December 31, 2017 and 2016, along with the respective carrying amounts and fair values, is as follows:

		2017				2016
(in millions of Canadian dollars)	NOTE	CARRYING AMOUNT		FAIR VALUE		CARRYING AMOUNT		FAIR VALUE
Financial assets at fair value through profit or loss
Derivatives	26.4	27		27		10		10
Financial assets available for sale
Other investments		1		1		2		2
Financial liabilities at fair value through profit or loss
Derivatives	26.4	(4	)	(4	)	(31	)	(31	)
Financial liabilities at amortized cost
Long-term debt		(1,576	)	(1,626	)	(1,566	)	(1,612	)
Derivatives designated as hedge
Asset derivatives		4		4		2		2
Liability derivatives		(33	)	(33	)	(8	)	(8	)

26.2 DETERMINING THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount of consideration that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as at the measurement date.

(i) The fair values of cash and cash equivalents, accounts receivable, notes receivable, bank loans and advances, trade and other payables and provisions approximate their carrying amounts due to their relatively short maturities.

(ii) The fair value of investment in shares is based on observable market data and represents the Corporation's investment in Junex Inc. which is quoted on the Toronto Stock Exchange.

(iii) The fair value of long-term debt is based on observable market data and on the calculation of discounted cash flows. Discount rates were determined based on local government bond yields adjusted for the risks specific to each of the borrowings and the credit market liquidity conditions.

26.3 HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

The following table presents information about the Corporation's financial assets and financial liabilities measured at fair value on a recurring basis as at December 31, 2017 and 2016, and indicates the fair value hierarchy of the Corporation's valuation techniques to determine such fair value. Three levels of inputs that may be used to measure fair value are:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar

assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for

substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect Management's estimates of assumptions that market participants would

use in pricing the asset or liability.

				2017
(in millions of Canadian dollars)	CARRYING AMOUNT		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)	SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Financial assets
Available-for-sale investments	1		1	—		—
Derivative financial assets	31		—	31		—
	32		1	31		—
Financial liabilities
Derivative financial liabilities	(37	)	—	(37	)	—
	(37	)	—	(37	)	—

				2016
(in millions of Canadian dollars)	CARRYING AMOUNT		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)	SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Financial assets
Available-for-sale investments	2		1	1		—
Derivative financial assets	12		—	12		—
	14		1	13		—
Financial liabilities
Derivative financial liabilities	(39	)	—	(39	)	—
	(39	)	—	(39	)	—

26.4 FINANCIAL RISK MANAGEMENT

The Corporation's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Corporation's overall risk management program focuses on the unpredictability of the financial market and seeks to minimize potential adverse effects on the Corporation's financial performance. The Corporation uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by a central treasury department and a management committee acting under policies approved by the Board of Directors. They identify, evaluate and hedge financial risks in close cooperation with the business units. The Board provides guidance for overall risk management, covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

Summary

		2017
(in millions of Canadian dollars)		ASSETS			LIABILITIES
RISK	NOTE	SHORT-TERM	LONG-TERM	TOTAL	SHORT-TERM		LONG-TERM		TOTAL
Currency risk	26.4 A) (i)	5	1	6	(10	)	(15	)	(25	)
Price risk	26.4 A) (ii)	4	21	25	(7	)	(1	)	(8	)
Interest risk	26.4 A) (iii)	—	—	—	(2	)	(2	)	(4	)
		9	22	31	(19	)	(18	)	(37	)

		2016
(in millions of Canadian dollars)		ASSETS			LIABILITIES
RISK	NOTE	SHORT-TERM	LONG-TERM	TOTAL	SHORT-TERM		LONG-TERM		TOTAL
Currency risk	26.4 A) (i)	2	—	2	(20	)	(13	)	(33	)
Price risk	26.4 A) (ii)	1	9	10	(3	)	(3	)	(6	)
		3	9	12	(23	)	(16	)	(39	)

A. MARKET RISK

(i) Currency risk

The Corporation operates internationally and is exposed to foreign exchange risks arising from various currencies as a result of its export of goods produced in Canada, the United States, France, Italy and Germany. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities, and net investments in foreign operations. These risks are partially covered by purchases and debt.

The Corporation manages the foreign exchange exposure by entering into various foreign exchange forward contracts and currency option instruments related to anticipated sales, purchases, interest expense and repayment of long-term debt. Management has implemented a policy for managing foreign exchange risk against its functional currency. The Corporation's risk management policy is to hedge 25% to 90% of anticipated cash flows in each major foreign currency for the next 12 months and to hedge 0% to 75% for the subsequent 24 months. The Corporation may designate these foreign exchange forward contracts as a cash flow hedge of future anticipated sales, purchases, interest expense and repayment of long-term debt denominated in foreign currencies. Gains or losses from these derivative financial instruments designated as hedges are recorded in “Accumulated other comprehensive income” net of related income taxes and are reclassified to earnings as adjustments to sales, cost of sales, interest expense or foreign exchange loss (gain) on long-term debt in the period in which the respective hedged item affected earnings.

In 2017, approximately 23% of sales from Canadian operations were made to the United States and 13% of sales from European operations were made in countries whose currencies were other than the euro.

The following table summarizes the Corporation's commitments to buy and sell foreign currencies as at December 31, 2017 and 2016:

	2017
	EXCHANGE RATE	MATURITY	NOTIONAL AMOUNT (IN MILLIONS)		FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Repayment of long-term debt
Derivatives at fair value through profit or loss and classified in Foreign exchange loss (gain) on long-term debt:
Foreign exchange forward contracts to buy US$ for CAN$	1.06	January 2020	US$	50	9
Currency option sold to sell US$ for CAN$	1.15	January 2020	US$	100	(11	)
Currency option sold to buy US$ for CAN$	1.0225	January 2020	US$	200	(1	)
Cross currency swap US$ for CAN$	1.33	July 2023	US$	102	(12	)
					(15	)
Net investment hedge
Cross currency swap CAN$ for €	1.4263	December 2018	€	95	(6	)
Forecasted sales
Derivatives at fair value through profit or loss and classified in Loss on derivative financial instruments:
Foreign exchange forward contracts to buy US$ for CAN$	1.3260	0 to 12 months	US$	10	1
Foreign exchange forward contracts to buy US$ for CAN$	1.3260	13 to 24 months	US$	5	—
Currency option instruments to sell US$ for CAN$	1.3171	0 to 12 months	US$ 48 to 70		2
Currency option instruments to sell US$ for CAN$	1.3214	13 to 36 months	US$ 43 to 80		—
					3
					(18	)

In 2017, the Corporation offset $9 million in derivative assets against $11 million in derivative liabilities as we intend to settle the derivatives on a net basis with one counterparty. During the year, the Corporation also paid $12 million related to the settlement of a portion of its 2017 derivatives related to repayment of long-term debt.

	2016
	EXCHANGE RATE	MATURITY	NOTIONAL AMOUNT (IN MILLIONS)		FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Repayment of long-term debt
Derivatives at fair value through profit or loss and classified in Foreign exchange loss (gain) on long-term debt:
Foreign exchange forward contracts to buy US$ for CAN$	1.06	January 2020	US$	50	13
Currency option sold to sell US$ for CAN$	1.15	December 2017	US$	75	(14	)
Currency option sold to sell US$ for CAN$	1.15	January 2020	US$	100	(19	)
Currency option sold to buy US$ for CAN$	1.0225	January 2020	US$	200	(2	)
Cross currency swap US$ for CAN$	1.329	July 2023	US$	102	(2	)
					(24	)
Net investment hedge
Cross currency swap CAN$ for €	1.4263	December 2018	€	95	1
Forecasted sales
Derivatives at fair value through profit or loss and classified in Loss on derivative financial instruments:
Foreign exchange forward contracts to buy US$ for CAN$	1.3543	0 to 12 months	US$	20	—
Currency option instruments to sell US$ for CAN$	1.2709 to 1.2962	0 to 12 months	US$ 48 to 92		(6	)
Currency option instruments to sell US$ for CAN$	1.3042 to 1.3461	13 to 24 months	US$ 15 to 40		(2	)
					(8	)
					(31	)

In 2016, the Corporation offset $12 millionin derivative assets against $19 million in derivative liabilities as we intend to settle the derivatives on a net basis with one counterparty. During the year, the Corporation also received $3 million on related to the settlement of a portion of its 2017 derivatives related to repayment of long-term debt.

The fair values of foreign exchange forward contracts and currency options are determined using the discounted value of the difference between the value of the contract at expiry calculated using the contracted exchange rate and the exchange rate the financial institution would use if it renegotiated the same contract under the same conditions as at the consolidated balance sheet date. The discount rates are adjusted for the credit risk of the Corporation or of the counterparty, as applicable. When determining credit risk adjustments, the Corporation considers master netting agreements, if applicable.

In 2017, if the Canadian dollar had strengthened by $0.01 against the US dollar on average for the year with all other variables held constant, operating income before depreciation for the year would have been approximately $3 million lower. This is based on the net exposure of total US sales less US purchases of the Corporation's Canadian operations, and operating income before depreciation of the Corporation's US operations, but excludes the effect of this change on the denominated working capital components. The interest expense would have remained relatively stable.

In 2017, if the Canadian dollar had strengthened by $0.02 against the euro with all other variables held constant, operating income before depreciation for the year would have been approximately $1 million lower following the translation of operating income of the Corporation's European operations.

CURRENCY RISK ON TRANSLATION OF SELF-SUSTAINING FOREIGN SUBSIDIARIES

The Corporation has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk. The Corporation may designate part of its long-term debt denominated in foreign currencies as a hedge of the net investment in self-sustaining foreign subsidiaries. Gains or losses resulting from the translation to Canadian dollars of long-term debt denominated in foreign currencies and designated as net investment hedges are recorded in “Accumulated other comprehensive income”, net of related income taxes.

The table below shows the effect on consolidated equity of a 10% change in the value of the Canadian dollar against the US dollar and the euro as at December 31, 2017 and 2016. The calculation includes the effect of currency hedges of net investment in US foreign entities and assumes that no changes occurred other than a single currency exchange rate movement.

The exposures used in the calculations are the foreign currency-denominated equity and the hedging level as at December 31, 2017 and 2016, with the hedging instruments being the long-term debt denominated in US dollars.

Consolidated Shareholders' equity: Currency effect before tax of a 10% change:

	2017			2016
(in millions of Canadian dollars)	BEFORE HEDGES	HEDGES	NET IMPACT	BEFORE HEDGES	HEDGES	NET IMPACT
10% change in the CAN$/US$ rate	75	75	—	107	73	34
10% change in the CAN$/euro rate	16	14	2	13	13	—

(ii) Price risk

The Corporation is exposed to commodity price risk on old corrugated containers, electricity and natural gas. The Corporation uses derivative commodity contracts to help manage its production costs. The Corporation may designate these derivatives as cash flow hedges of anticipated purchases of raw material, natural gas and electricity. Gains or losses from these derivative financial instruments designated as hedges are recorded in “Accumulated other comprehensive income” net of related income taxes, and are reclassified to earnings as adjustments to “Cost of sales” in the same period, as the respective hedged item affects earnings.

The fair value of these contracts is as follows:

	2017
	QUANTITY	MATURITY	FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Forecasted purchases
Derivatives designated as held for trading and reclassified in “Cost of sales”
Electricity	197,100 MWh	2018 to 2019	(1	)
Derivatives designated as cash flow hedges and reclassified in “Cost of sales” (effective portion)
Natural gas:
Canadian portfolio	3,095,029 GJ	2018 to 2022	(5	)
US portfolio	4,847,660 mmBtu	2018 to 2023	(1	)
			(7	)

	2016
	QUANTITY	MATURITY	FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Forecasted purchases
Derivatives designated as held for trading and reclassified in “Cost of sales”
Electricity	109,500 MWh	2017 to 2018	(1	)
Derivatives designated as cash flow hedges and reclassified in “Cost of sales” (effective portion)
Natural gas:
Canadian portfolio	4,658,660 GJ	2017 to 2021	(4	)
US portfolio	4,722,800 mmBtu	2017 to 2021	(1	)
			(6	)

In 2013, the Corporation entered into an agreement to purchase steam. The agreement includes an embedded derivative and the fair value as at December 31, 2017 was $8 million (2016 - $10 million). Greenpac also has an agreement to purchase steam that includes an embedded derivative with a fair value of $16 million as at December 31, 2017.

The fair value of derivative financial instruments other than options is established utilizing a discounted future expected cash flows method. Future expected cash flows are determined by reference to the forward price or rate prevailing on the assessment date of the underlying financial index (exchange or interest rate or commodity price) according to the contractual terms of the instrument. Future expected cash flows are discounted at an interest rate reflecting both the maturity of each flow and the credit risk of the party to the contract for which it represents a liability (subject to the application of relevant credit support enhancements). The fair value of derivative financial instruments that represent options is established utilizing similar methods that reflect the impact of the potential volatility of the financial index underlying the option on future expected cash flows.

The table below shows the effect of changes in the price of old corrugated containers, natural gas and electricity as at December 31, 2017 and 2016. The calculation includes the effect of price hedges of these commodities and assumes that no changes occurred other than a single change in price.

The exposures used in the calculations are the commodity consumption and the hedging level as at December 31, 2017 and 2016, with the hedging instruments being derivative commodity contracts.

Consolidated commodity consumption: Price change effect before tax:

	2017			2016
(in millions of Canadian dollars1)	BEFORE HEDGES	HEDGES	NET IMPACT	BEFORE HEDGES	HEDGES	NET IMPACT
US$15/s.t. change in brown grades recycled paper price	29	—	29	32	—	32
US$30/s.t. change in commercial pulp price	6	—	6	6	—	6
US$1/mmBTU. change in natural gas price	10	5	5	12	6	6
US$1/MWh change in electricity price	2	—	2	2	—	2

1 Sensitivity calculated with an exchange rate of 1.26 CAN$/US$ for 2017 and 1.33 CAN$/US$ for 2016.

(iii) Interest rate risk

The Corporation has no significant interest-bearing assets.

The Corporation's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Corporation to cash flow interest rate risk. Borrowings issued at fixed rates expose the Corporation to fair value interest rate risk.

When appropriate, the Corporation analyzes its interest rate risk exposure. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Corporation calculates the impact on earnings of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions. As at December 31, 2017, approximately 29% (2016 - 9%) of the Corporation's long-term debt was at variable rates.

Based on the outstanding long-term debt as at December 31, 2017, the impact on interest expense of a 1% change in rate would be approximately $5 million (impact on net earnings is approximately $4 million).

The Corporation holds interest rate swaps through RDM and Greenpac. RDM swaps are contracted to fix the interest rate on a notional amount of €32 million and are maturing from 2020 to 2023. Greenpac swaps are contracted to fix the interest rate on a notional amount of US$81 million maturing in 2020. Some of these swaps have decreasing notional amount to match expected debt level. Fair value of these agreements is a liability of $3 million as at December 31, 2017 (December 31, 2016 - nil).

(iv) Gain on derivative financial instruments is as follows:

(in millions of Canadian dollars)	2017		2016
Unrealized gain on derivative financial instruments	(8	)	(18	)
Realized loss on derivative financial instruments	2		12
	(6	)	(6	)

B. CREDIT RISK

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. The Corporation reduces this risk by dealing with credit worthy financial institutions.

The Corporation is exposed to credit risk on the accounts receivable from its customers. In order to reduce this risk, the Corporation's credit policies include the analysis of the financial position of its customers and the regular review of their credit limits. In addition, the Corporation believes there is no particular concentration of credit risk due to the geographic diversity of customers and the procedures for the management of commercial risks. Derivative financial instruments include an element of credit risk should the counterparty be unable to meet its obligations.

Trade receivables are recognized initially at fair value and are subsequently measured at amortized cost using the effective interest method, less provision for doubtful accounts. An allowance for doubtful accounts of trade receivables is established when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. Each trade receivable balance is evaluated separately to identify impairment. The amount of the allowance for doubtful accounts is the difference between the asset's carrying amount and the present value of estimated cash flows. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recorded in the consolidated statement of earnings in “Selling and administrative expenses”. When a trade receivable is not collectable, it is written off against the “Provision for doubtful accounts”. Subsequent recoveries of amounts previously written off are credited against “Selling and administrative expenses” in the consolidated statement of earnings.

Loans and notes receivables from business disposals are recognized at fair value. There is no past due amount as at December 31, 2017.

C. LIQUIDITY RISK

Liquidity risk is the risk that the Corporation will not be able to meet its obligations as they fall due. The following are the contractual maturities of financial liabilities as at December 31, 2017 and 2016:

	2017
(in millions of Canadian dollars)	CARRYING AMOUNT	CONTRACTUAL CASH FLOWS	LESS THAN ONE YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	MORE THAN FIVE YEARS
Non-derivative financial liabilities:
Bank loans and advances	35	35	35	—	—	—
Trade and other payables	638	638	638	—	—	—
Revolving credit facility	195	218	7	6	205	—
Unsecured senior notes	1,004	1,284	56	56	906	266
Other debts of subsidiaries	66	77	16	13	31	17
Other debts without recourse to the Corporation	321	329	44	41	230	14
Derivative financial liabilities	37	37	19	2	4	12
	2,296	2,618	815	118	1,376	309

	2016
(in millions of Canadian dollars)	CARRYING AMOUNT	CONTRACTUAL CASH FLOWS	LESS THAN ONE YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	MORE THAN FIVE YEARS
Non-derivative financial liabilities:
Bank loans and advances	28	28	28	—	—	—
Trade and other payables	661	661	661	—	—	—
Revolving credit facility	90	95	2	2	91	—
Unsecured senior notes	1,324	1,735	74	74	464	1,123
Other debts of subsidiaries	62	71	14	13	25	19
Other debts without recourse to the Corporation	105	110	28	24	44	14
Derivative financial liabilities	39	39	23	5	9	2
	2,309	2,739	830	118	633	1,158

As at December 31, 2017, the Corporation had unused credit facilities of $651 million (December 31, 2016 - $768 million), net of outstanding letters of credit of $24 million (December 31, 2016 - $26 million).

D. OTHER RISK

FACTORING OF ACCOUNTS RECEIVABLE

The Corporation sells its accounts receivable from one of its European subsidiaries through a factoring contract with a financial institution. The Corporation uses factoring of accounts receivable as a source of financing by reducing its working capital requirements. When the accounts receivable are sold, the Corporation removes them from the balance sheet, recognizes the amount received as the consideration for the transfer and records a loss on factoring, which is included in “Financing expense”. As at December 31, 2017, the off-balance sheet impact of the factoring of accounts receivable amounted to $39 million (€26 million). The Corporation expects to continue to sell accounts receivable on an ongoing basis. Should it decide to discontinue this contract, its working capital and bank debt requirements would increase.

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Commitments

12 Months Ended

Dec. 31, 2017

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Commitments

COMMITMENTS

a. The Corporation leases various properties, vehicles, equipment and others under non-cancellable operating lease agreements.

Future minimum payments under operating leases are as follows:

(in millions of Canadian dollars)	2017	2016
No later than one year	28	23
Later than one year but no later than five years	37	33
More than five years	5	9

b. Capital and raw material commitments

Capital expenditures and raw material contracted at the end of the reporting date but not yet incurred are as follows:

	2017		2016
(in millions of Canadian dollars)	PROPERTY, PLANT AND EQUIPMENT	INTANGIBLE ASSETS	PROPERTY, PLANT AND EQUIPMENT	INTANGIBLE ASSETS	RAW MATERIAL
No later than one year	51	8	36	2	73
Later than one year but no later than five years	—	14	—	3	258
More than five years	—	—	—	1	—
	51	22	36	6	331

c. In 2017, the Corporation entered into a lease agreement for the building of its new containerboard converting plant in New Jersey. The building is currently under construction by the lessor and the lease will commence upon delivery of the building in 2018 for a period of 20 years. The lease will be accounted for as a finance lease and total payments will be $96 million for the duration of the lease.

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Related Party Transactions

12 Months Ended

Dec. 31, 2017

Related Party [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

The Corporation entered into the following transactions with related parties:

(in millions of Canadian dollars)	JOINT VENTURES	ASSOCIATES
2017
Sales to related parties	183	85
Purchases from related parties	16	90
2016
Sales to related parties	155	89
Purchases from related parties	13	168

These transactions occurred in the normal course of operations and are measured at fair value.

The following balances were outstanding at the end of the reporting period:

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Receivables from related parties
Joint ventures	13	18
Associates	22	21
Payables to related parties
Joint ventures	3	2
Associates	4	42

The receivables from related parties arise mainly from sale transactions. The receivables are unsecured in nature and bear no interest. There are no provision held against receivables from related parties. The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

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Events After The Reporting Period

12 Months Ended

Dec. 31, 2017

Disclosure of events after reporting period [Abstract]

Events After The Reporting Period

EVENTS AFTER THE REPORTING PERIOD

On January 1, 2018, the Corporation acquired PAC Service S.p.A., a boxboard converter for the packaging, publishing, cosmetics and food industries and will be fully consolidated. The Corporation already had a 33.33% equity participation through its 57.8% equity ownership in Reno de Medici S.p.A., in the Boxboard Europe segment. The consideration for the acquisition of the remaining 66.67% shares consists of cash totaling €10 million ($15 million) and was deposited on December 19, 2017. Due to the limited period of time between the acquisition of PAC Service S.p.A and the publication of the audited consolidated financial statements of the Corporation, certain items required for the disclosure of asset acquisitions have not been provided, particularly the preliminary purchase price allocation. The Corporation is currently assessing the fair value of assets acquired and liabilities assumed and will publish the preliminary purchase price allocation in its 2018 first quarter unaudited condensed interim consolidated financial statements.

On January 31, 2018, the Corporation completed the sale of the building and land of its plant located in Maspeth, New York, for US$72 million ($90 million) of which US$68 million ($85 million) was received at closing and US$4 million ($5 million) is held in escrow. Release of the escrow is contingent upon certain conditions being met over the next three years. The Corporation will continue to use the facility until December 31, 2018, the date the plant is scheduled to close. The book value of $13 million of the building and land of the facility are classified as “Assets held for sale” on the consolidated balance sheet. The volumes will be progressively redeployed to other Cascades units over the course of the year.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Basis of Presentation and Basis of Measurement

BASIS OF PRESENTATION

The Corporation prepares its financial statements in accordance with Canadian generally accepted accounting principles (GAAP) as set forth in Part I of the Chartered Professional Accountants of Canada (CPA Canada) Handbook – Accounting, which incorporates IFRS as issued by the International Accounting Standards Board. The key accounting policies applied in the preparation of these consolidated financial statements are described below. These policies have been consistently applied to all years presented, unless otherwise stated.

BASIS OF MEASUREMENT

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial assets and liabilities, including derivative instruments, which are measured at fair value.

Subsidiaries

SUBSIDIARIES

Subsidiaries are all entities over which the Corporation has control, where control is defined as the power to direct decisions about relevant activities. The Corporation does not have any interest in a structured entity. The existence and effect of potential voting rights that are exercisable or convertible are considered when assessing whether the Corporation controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Corporation. They are deconsolidated from the date on which control ceases. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the policies adopted by the Corporation. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Corporation. Results of operations are consolidated commencing on the date of acquisition. The purchase consideration is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The transaction costs directly attributable to the acquisition are expensed. Identifiable assets acquired, as well as liabilities and contingent liabilities assumed in a business combination, are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. The excess of the purchase consideration over the fair value of the Corporation's share of the identifiable net assets acquired is recorded as goodwill. If the purchase consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statement of earnings. Intercompany transactions, balances and unrealized gains on transactions between subsidiaries are eliminated.

Transactions and Change in Ownership

TRANSACTIONS AND CHANGE IN OWNERSHIP

Acquisitions or disposals of equity interests that do not result in the Corporation obtaining or losing control are treated as equity transactions. When the Corporation obtains or loses control, the revaluation of the previously held interest or the non-controlling interests that results in gains or losses for the Corporation is recognized in the consolidated statement of earnings.

Associates

ASSOCIATES

Associates are all entities over which the Corporation has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Corporation's investment from associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

Unrealized gains on transactions between the Corporation and its associates are eliminated to the extent of the Corporation's interest in the associates. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Corporation. Dilution gains and losses arising in investments in associates are recognized in the consolidated statement of earnings.

The Corporation assesses, at each year-end, whether there is any objective evidence that its interest in associates is impaired. If impaired, the carrying value of the Corporation's share of the underlying assets of associates is written down to its estimated recoverable amount (being the higher of fair value less cost of disposal or value in use) and charged to the consolidated statement of earnings.

Joint Ventures

JOINT VENTURES

A joint venture is an entity in which the Corporation holds a long-term interest and for which it shares joint control over decisions regarding relevant activities. The Corporation reports its interests in joint ventures using the equity method. Accounting policies of joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the Corporation.

Revenue Recognition

REVENUE RECOGNITION

The Corporation recognizes its sales, which consist of product sales, when it is probable that the economic benefits will flow to the Corporation, the goods are shipped and the significant risks and benefits of ownership are transferred, the amount of revenue can be measured reliably, and collection of the resulting receivable is reasonably assured.

Revenue is measured based on the price specified in the sales contract, net of discounts and estimated returns at the time of sale. Historical experience is used to estimate and provide for discounts and returns. Volume discounts are assessed based on anticipated annual sales.

Financial Instruments and Hedging Relationships

FINANCIAL INSTRUMENTS AND HEDGING RELATIONSHIPS

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instrument. Financial assets are unrecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Corporation has transferred substantially all risks and rewards of ownership. Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Classification

CLASSIFICATION

The Corporation classifies its financial instruments in the following categories: at fair value through profit or loss, held to maturity (HTM), loans and receivables, available for sale (AFS) and other liabilities. The classification depends on the purpose for which the financial instruments were acquired or issued. Management determines the classification of its financial assets and financial liabilities at initial recognition. Settlement date accounting is used by the Corporation for all financial assets.

Financial Assets and Liabilities at Fair Value through Profit Loss

FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

A financial asset or financial liability is classified in this category if it is acquired principally for the purpose of selling or repurchasing in the short term. Derivatives are also included in this category unless they are designated as hedges. Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs are expensed in the consolidated statement of earnings. Gains and losses arising from changes in fair value are presented in the consolidated statement of earnings in “Loss (gain) on derivative financial instruments” in the period in which they arise. Financial assets and financial liabilities at fair value through profit or loss are classified as current, except for the portion expected to be realized or paid beyond 12 months of the consolidated balance sheet date, which is classified as long-term.

Available for Sale Financial Assets

AVAILABLE-FOR-SALE FINANCIAL ASSETS

AFS investments are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. AFS investments are recognized initially at fair value plus transaction costs, and are subsequently carried at fair value. Gains or losses arising from changes in fair value are recognized in the statement of other comprehensive income. AFS investments are classified as long-term, unless the investment matures within 12 months, or Management expects to dispose of them within 12 months.

Interest on AFS investments, calculated using the effective interest method, is recognized in the consolidated statement of earnings as part of financing expense. Dividends on AFS equity instruments are recognized in the consolidated statement of earnings as part of financing expense when the Corporation's right to receive payment is established. When an AFS investment is sold or impaired, the accumulated gains or losses are moved from “Accumulated other comprehensive income” to the consolidated statement of earnings and included in “Loss (gain) on derivative financial instruments”.

Loans and Receivables

LOANS AND RECEIVABLES

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Corporation's loans and receivables comprise accounts receivable, notes receivable from business disposals and cash and cash equivalents. Loans and receivables are initially recognized at fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment.

Financial Liabilities

FINANCIAL LIABILITIES AT AMORTIZED COST

Financial liabilities at amortized cost include bank loans and advances, trade and other payables, and long-term debt. Financial liabilities at amortized cost are initially recognized at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently, they are measured at amortized cost using the effective interest method. They are classified as current liabilities if payment is due within 12 months. Otherwise, they are presented as long-term liabilities.

Impairment of Financial Assets

IMPAIRMENT OF FINANCIAL ASSETS

At each report date, the Corporation assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Corporation recognizes an impairment loss, as follows:

i) Financial assets carried at amortized cost: The impairment loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument's original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

ii) AFS financial assets: The impairment loss is the difference between the original cost of the asset and its permanent fair value decrease at the measurement date, less any impairment losses previously recognized in the consolidated statement of earnings. This amount represents the cumulative loss in “Accumulated other comprehensive income” that is reclassified to net earnings.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on AFS equity instruments are not reversed.

Derivative Financial Instruments and Hedging Relationships

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and, if so, the nature of the item being hedged. The Corporation designates certain derivative financial instruments as either:

i) hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge);

ii) hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge); or

iii) hedges of a net investment in a foreign operation (net investment hedge).

The Corporation formally documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Corporation also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The full fair value of a hedging derivative is classified as a long-term asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.

A. FAIR VALUE HEDGE

The periodic change in fair value of the hedging derivative is recorded in net income. The periodic change in the cumulative gain or loss on the hedged item is recorded as an adjustment to its carrying amount on the balance sheet and is also recorded in net income. Hedging ineffectiveness is automatically recorded to net income as the difference between the above amounts recorded in net income. Realized gains and losses on the hedging item, resulting from the difference between the interest payments on the receive leg and the pay leg of the hedging derivative, are recorded on an accrual basis in net income as interest income or expense.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity using a recalculated effective interest rate.

B. CASH FLOW HEDGE

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of earnings.

Amounts accumulated in equity are reclassified to profit or loss in the period when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the consolidated statement of earnings on the same line as the hedged item. The gain or loss relating to the ineffective portion is recognized in the consolidated statement of earnings as part of loss (gain) on derivative financial instruments. However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or property, plant and equipment), the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognized in Cost of goods sold in the case of inventory or in Depreciation in the case of property, plant and equipment.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the consolidated statement of earnings. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the consolidated statement of earnings.

C. NET INVESTMENT HEDGE

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in the statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of earnings. Gains and losses accumulated in equity are included in the consolidated statement of earnings when the foreign operation is partially disposed of or sold.

The Corporation also uses cross-currency interest rate swaps to manage the currency fluctuations risk associated with forecasted cash flows in foreign currency. These cross-currency interest rate swaps are designated as foreign exchange hedge of its net investment in foreign operations. The portion of the gains and losses arising from the translation of those derivatives that are determined to be an effective hedge is recognized in other comprehensive income, counterbalancing gains and losses arising from the translation of the Corporation's net investment in its foreign operations.

Cash and Cash Equivalents

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, bank balances and short-term liquid investments with original maturities of three months or less.

Accounts Receivable

ACCOUNTS RECEIVABLE

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less a provision for doubtful accounts that is based on expected collectability.

Inventories

INVENTORIES

Inventories of finished goods are valued at the lower of cost, determined by either average production cost or retail method, and net realizable value. Inventories of raw material and supplies are valued at the lower of cost and replacement value, which is the best available measure of their net realizable value. Cost of raw material and supplies is determined using the average cost and first-in, first-out methods respectively. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

Property, Plant and Equipment and Depreciation

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment are recorded at cost less accumulated depreciation and net impairment losses, including interest incurred during the construction period of qualifying property, plant and equipment. Repairs and maintenance costs are charged to the consolidated statement of earnings during the period in which they are incurred. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.

Depreciation is calculated on a straight-line basis as follows:

Buildings                Between 10 and 33 years

Machinery and equipment        Between 3 and 30 years

Automotive equipment        Between 5 and 10 years

Other property, plant and equipment    Between 3 and 10 years

Grants and Investment Tax Credit

GRANTS AND INVESTMENT TAX CREDITS

Grants and investment tax credits for property, plant and equipment are accounted for using the cost reduction method and are amortized to earnings as a reduction of depreciation, using the same basis as that used to depreciate the related property, plant and equipment.

Borrowing Costs

BORROWING COSTS

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until all the activities necessary to prepare the asset for its intended use are complete. All other borrowing costs are recognized in the consolidated statement of earnings in the period in which they are incurred.

Intangible Assets

INTANGIBLE ASSETS

Intangible assets consist primarily of customer relationships and client lists, application software and favourable leases. They are recorded at cost less accumulated amortization and impairment losses and amortized on a straight-line basis over the estimated useful lives as follows:

Customer relationships and client lists    Between 2 and 20 years

Other finite-life intangible assets    Between 2 and 20 years

Application software    Between 3 and 10 years

Enterprise Resource Planning (ERP)    7 years

Favourable leases    Term of the lease

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

Impairment of Assets

IMPAIRMENT

A. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS WITH FINITE USEFUL LIFE

At the end of each reporting period, the Corporation assesses whether there is an indicator that the carrying amount of an asset or a group of assets may be higher than its recoverable amount which is described in section C hereunder. For that purpose, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash generating units (CGUs)). If there is any indication that an individual asset may be impaired, the recoverable amount shall be estimated for the individual asset.

When the recoverable amount is lower than the carrying amount, the carrying amount is reduced to the recoverable amount. Impairment losses are recorded immediately in the consolidated statement of earnings in the line item Impairment charges and restructuring costs. Impairment losses are evaluated for potential reversals when events or changes in circumstances warrant such consideration. The revalued carrying value is the lower of the estimated recoverable amount and the carrying amount that would have been determined had no impairment loss been recognized and depreciation had been taken previously on the asset or CGU. A reversal of impairment loss is recorded directly in the consolidated statement of earnings in the line item “Impairment charges and restructuring costs”.

B. GOODWILL AND OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE

Goodwill and other intangible assets with an indefinite useful life are recognized at cost less any accumulated impairment losses. They have an indefinite useful life due to their permanent nature since they are acquired rights or not subject to wear and tear. They are reviewed for impairment annually on December 31 or when an event or a circumstance occurs and indicates that the value could be permanently impaired. Goodwill is allocated to CGUs for the purpose of impairment testing based on the level at which Management monitors it, which is not higher than an operating segment. The allocation is made to CGUs that are expected to benefit from the business combination in which the goodwill and other intangible assets with an indefinite useful life arose. Impairment loss on goodwill is not reversed.

C. RECOVERABLE AMOUNTS

A recoverable amount is the higher of fair value less cost of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or CGU. When determining fair value less cost of disposal, the Corporation considers if there is a market price for the asset being evaluated. Otherwise, the Corporation uses the income approach.

Leases

LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the consolidated statement of earnings on a straight-line basis over the term of the lease.

The Corporation leases certain property, plant and equipment. Leases of property, plant and equipment for which the Corporation has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease's commencement at the lower of the fair value of the leased property or the present value of the minimum lease payments. Property, plant and equipment acquired under a finance lease are depreciated over the shorter of the estimated useful life of the asset or the lease term using the straight-line method. Each lease payment is allocated between the liability and the financing expense so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of financing expense, are included in long-term debt.

Provision for Contingencies and Charges

PROVISIONS FOR CONTINGENCIES AND CHARGES

Provisions for contingencies include mainly legal and other claims. A provision is recognized when the Corporation has a legal or constructive obligation as a result of a past event and it is probable that settlement of the obligation will require a financial payment or cause a financial loss, and a reliable estimate of the amount of the obligation can be made.

If some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recorded in the consolidated balance sheet as a separate asset, but only if it is virtually certain that the reimbursement will be received.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as a financing expense.

Environmental Restoration Obligation and Environmental Costs

ENVIRONMENTAL RESTORATION OBLIGATIONS AND ENVIRONMENTAL COSTS

An obligation to incur restoration and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a plant or landfill site. Such costs arising from the installation of a plant and other site preparation work are provided for and capitalized at the start of each project, or as soon as the obligation to incur such costs arises. Decommissioning costs are recorded at the estimated amount at which the obligation could be settled at the consolidated balance sheet date, and are charged against profit over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. The discount rate is the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Costs for restoring subsequent site damage which is created on an ongoing basis during production are provided for at their present values and charged against profit as the obligation arises.

Changes in the measurement of a liability relating to the decommissioning of a plant or other site preparation work that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate, are added to, or deducted from, the cost of the related asset in the current year. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in the consolidated statement of earnings. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy for impairment testing.

Long-term Debt

LONG-TERM DEBT

Long-term debt is recognized initially at fair value, net of financing costs incurred. Long-term debt is subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of earnings over the period of the term of the debt using the effective interest method.

Financing costs paid on establishment of the revolving credit facility are recognized as deferred financing costs and amortized on a straight-line basis over the anticipated period of the credit facility.

Employee Benefits

EMPLOYEE BENEFITS

The Corporation offers funded and unfunded defined benefit pension plans, defined contribution pension plans and group registered retirement savings plans (RRSPs) that provide retirement benefit payments for most of its employees. The defined benefit pension plans are usually contributory and are based on the number of years of service and, in most cases, the average salaries or compensation at the end of a career. Retirement benefits are not adjusted based on inflation. The Corporation also offers its employees some post-employment benefit plans, such as a retirement allowance, group life insurance and medical and dental plans. However, these benefits, other than pension plans, are not funded. Furthermore, the medical and dental plans upon retirement are being phased out and are no longer offered to the majority of new retirees, and the retirement allowance is not offered to those who do not meet certain criteria.

The liability recognized in the consolidated balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated at least every three years by independent actuaries using the projected unit credit method, and updated regularly by management for any material transactions and changes in circumstances, including changes in market prices and interest rates up to the end of the reporting period.

As well, when an asset is recorded for a pension plan, its carrying value cannot be greater than the future economic benefit that the Corporation will get from the asset. The future economic benefit includes the suspension of contribution if the pension plan provisions allow for it under the minimum funding requirements. When there is a minimum funding requirement, it can increase the liability recorded. All special contributions legally required to fund a plan deficit are considered. For plans for which an actuarial evaluation is required as at December 31, 2017, a schedule of contributions is estimated to establish the minimum funding requirement. For other plans, we have used contributions from the most recent actuarial report.

Actuarial gains and losses that arise in calculating the present value of the defined benefit obligation and the fair value of plan assets are recorded in the statement of other comprehensive income and recognized immediately in retained earnings without recycling to the consolidated statement of earnings. Past service costs are recognized immediately in the consolidated statement of earnings.

When restructuring a plan results in a curtailment and settlement occurring at the same time, the curtailment is accounted for before the settlement.

Interest costs on pension and other post-employment benefits are recognized in the consolidated statement of earnings as Interest expense on employee future benefits. The measurement date of employee future benefit plans is December 31 of each year. An actuarial evaluation is performed at least every three years. Based on their balances as at December 31, 2017, 87% of the plans were evaluated on December 31, 2016 (18% in 2015).

Income Taxes

INCOME TAXES

The Corporation uses the liability method to recognize deferred income taxes. According to this method, deferred income taxes are determined using the difference between the accounting and tax bases of assets and liabilities. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates at the consolidated balance sheet date that are expected to apply when the deferred income taxes are expected to be recovered or settled. Deferred income tax assets are recognized when it is probable that the asset will be realized.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Foreign Currency Translation

FOREIGN CURRENCY TRANSLATION

Items included in the financial statements of each of the Corporation's entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Canadian dollars, which is Cascades' functional currency.

A. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in currencies other than the business unit's functional currency are recorded at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the consolidated balance sheet date. Unrealized gains and losses on translation of monetary assets and liabilities are reflected in the consolidated statement of earnings for the year.

B. FOREIGN OPERATIONS

The assets and liabilities of foreign operations are translated into Canadian dollars at the exchange rate prevailing at the consolidated balance sheet date. Revenues and expenses are translated at the average monthly exchange rate. Translation gains or losses are deferred and included in “Accumulated other comprehensive income”.

Share-based Payments

SHARE-BASED PAYMENTS

The Corporation uses the fair value method of accounting for stock-based compensation awards granted to officers and key employees. This method consists in recording expenses to earnings based on the vesting period of each tranche of options granted. The fair value of each tranche is calculated based on the Black-Scholes option pricing model. This model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. When stock options are exercised, any considerations paid by employees, as well as the related stock-based compensation, are credited to capital stock.

Dividend Distribution

DIVIDEND DISTRIBUTION

Dividend distribution to the Corporation's Shareholders is recognized as a liability in the consolidated financial statements in the period in which the dividends are approved by the Corporation's Board of Directors.

Earnings Per Share Policy

EARNINGS PER COMMON SHARE

Basic earnings per common share are determined using the weighted average number of common shares outstanding during the period. Diluted earnings per common share are determined by adjusting the weighted average number of common shares outstanding for dilutive instruments, which are primarily stock options, using the treasury stock method to evaluate the dilutive effect of stock options. Under this method, instruments with a dilutive effect, which is when the average market price of a share for the period exceeds the exercise price, are considered to have been exercised at the beginning of the period and the proceeds received are considered to have been used to redeem common shares of the Corporation at the average market price for the period.

New IFRS Adopted

IAS 7 STATEMENT OF CASH FLOWS

In January 2016, the IASB published amendments to IAS 7 Statement of Cash Flows. The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity’s financing activities. They are effective for annual periods beginning on or after January 1, 2017. To comply with the new requirements, a reconciliation of total liabilities arising from financing activities has been added to Note 25.

Recent IFRS Pronouncements Not Yet Adopted

IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15 Revenue from Contracts with Customers. IFRS 15 replaces all previous revenue recognition standards, including IAS 18 Revenue, and related interpretations. such as IFRIC 13 Customer Loyalty Programs. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual periods beginning on or after January 1, 2018. The standard will not have a significant impact on the timing of the Corporation's revenues since there is typically only one performance obligation per customer contract. The adoption of the standard will, however, have an impact on the contract liabilities classification. which can no longer be presented against accounts receivable. As well, IFRS 15 will require further disclosure, such as a disaggregation of revenues from contracts with customers in categories that depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. To comply with this requirement, the Corporation will segregate its four segments' sales by country on a quarterly basis. The Corporation will apply the new standard retrospectively. Apart from the balance sheet reclassification discussed above, this standard has no material impact on the Corporation's consolidated financial statements.

IFRS 9 FINANCIAL INSTRUMENTS

In July 2014, the IASB released the final version of IFRS 9 Financial Instruments. This standard addresses classification and measurement of financial assets and replaces the multiple category and measurement models for debt instruments in IAS 39 Financial Instruments: Recognition and Measurement, with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are recognized either at fair value through profit or loss or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends are recognized in profit or loss insofar as they do not clearly represent a return on investment; however, other gains and losses (including impairments) associated with such instruments remain in accumulated comprehensive income indefinitely. Requirements for financial liabilities carry forward existing requirements in IAS 39, except that fair value changes due to credit risk for liabilities designated at fair value through profit and loss would generally be recorded in the statement of other comprehensive income. It also includes guidance on hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. The new standard will have no material impact on the Corporation's consolidated financial statements.

IFRS 16 LEASES

In January 2016, the IASB released IFRS 16 Leases, which supersedes IAS 17 Leases, and the related interpretations on leases: IFRIC 4 Determining whether an Arrangement Contains a Lease, SIC 15 Operating Leases - Incentives and SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease. The standard is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for companies that also apply IFRS 15 Revenue from Contracts with Customers. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. The new standard requires lessees to recognize a lease liability reflecting future lease payments and a “right-of-use asset” for virtually all lease contracts, and record it on the balance sheet, except with respect to lease contracts that meet limited exception criteria, such as when the underlying asset is of low value or the maturity of the lease is short term. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements. As at December 31, 2017, operating lease commitments would have translated into an estimated additional lease liability of$70 million.

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Segmented Information (Tables)

12 Months Ended

Dec. 31, 2017

Operating Segments [Abstract]

Disclosure of operating segments

	SALES
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	1,652		1,370
Boxboard Europe	838		796
Specialty Products	703		620
Intersegment sales	(105	)	(61	)
	3,088		2,725
Tissue Papers	1,268		1,305
Intersegment sales and Corporate Activities	(35	)	(29	)
	4,321		4,001

	OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	238		214
Boxboard Europe	67		51
Specialty Products	67		71
	372		336
Tissue Papers	90		139
Corporate	(72	)	(62	)
Operating income before depreciation and amortization	390		413
Depreciation and amortization	(215	)	(192	)
Financing expense and interest expense on employee future benefits	(97	)	(93	)
Loss on repurchase of long-term debt	(14	)	—
Foreign exchange gain on long-term debt and financial instruments	23		22
Fair value revaluation gain on investments	315		—
Share of results of associates and joint ventures	39		32
Earnings before income taxes	441		182

	PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT
(in millions of Canadian dollars)	2017		2016
Packaging Products
Containerboard	65		51
Boxboard Europe	27		26
Specialty Products	32		26
	124		103
Tissue Papers	64		77
Corporate	19		26
Total acquisitions	207		206
Proceeds from disposals of property, plant and equipment	(15	)	(5	)
Capital lease acquisitions	(11	)	(18	)
	181		183
Acquisitions for property, plant and equipment included in “Trade and other payables”
Beginning of year	25		19
End of year	(28	)	(25	)
Payments for property, plant and equipment net of proceeds from disposals	178		177

	TOTAL ASSETS
(in millions of Canadian dollars)	December 31, 2017		December 31, 2016
Packaging Products
Containerboard	1,995		1,285
Boxboard Europe	609		567
Specialty Products	383		336
	2,987		2,188
Tissue Papers	919		922
Corporate	459		400
Intersegment eliminations	(68	)	(37	)
	4,297		3,473
Investments in associates and joint ventures	78		335
Other investments	7		5
	4,382		3,813

Disclosure of geographical areas

Information by geographic segment is as follows:

For the years ended December 31 (in millions of Canadian dollars)	2017	2016
Sales
Operations located in Canada
Within Canada	1,629	1,511
To the United States	488	505
Other countries	11	14
	2,128	2,030
Operations located in the United States
Within the United States	1,217	1,065
To Canada	73	45
Other countries	1	2
	1,291	1,112
Operations located in Italy
Within Italy	279	241
Other countries	138	140
	417	381
Operations located in other countries
Within Europe	411	399
Other countries	74	79
	485	478
	4,321	4,001

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Property, plant and equipment
Canada	840	840
United States	967	512
Italy	183	179
Other countries	114	104
	2,104	1,635

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Goodwill, customer relationships and client lists, and other finite and indefinite useful life intangible assets
Canada	449	441
United States	278	71
Italy	13	9
	740	521

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Disclosure of principal subsidiaries

The following are the principal subsidiaries of the Corporation:

	PERCENTAGE OWNED (%)	JURISDICTION
Cascades Canada ULC	100	Canada
Cascades USA Inc.	100	Delaware
Greenpac Holding LLC 1	59.7	Delaware
Reno de Medici S.p.A. (RDM)	57.8	Italy

^{1 For accounting purposes, percentage stands at 82.83% including indirect ownership.See Note 5 for more details.}

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Business Combinations (Tables)

12 Months Ended

Dec. 31, 2017

Business Combinations1 [Abstract]

Assets acquired and liabilities assumed

Assets acquired and liabilities assumed were as follows:

(in millions of Canadian dollars)		2017
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Greenpac Holding LLC
Fair values of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		34
Accounts receivable		20
Inventories		23
Current portion of financial assets		4
Property, plant and equipment		512
Financial assets		16
Intangible assets with finite useful life (client list)		39
Goodwill		190
Total assets		838
Trade and other payables		(39	)
Current portion of long-term debt		(15	)
Current portion of financial liabilities and other liabilities		(90	)
Long-term debt		(238	)
Financial liabilities		(4	)
Deferred income tax liabilities		(91	)
Net assets acquired		361
Non-controlling interests		(57	)
		304
Total non-cash consideration
Previously held interest		187
Revaluation gain on previously held interest on April 4, 2017		156
Settlement of net liabilities with acquiree before the transaction		(39	)
		304

Assets acquired and liabilities assumed were as follows:

(in millions of Canadian dollars)		2017
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Coyle Plants
Fair values of identifiable assets acquired and liabilities assumed:
Accounts receivable		12
Inventories		1
Property, plant and equipment		10
Intangible assets with finite useful life (client list)		7
Goodwill		4
Total assets		34
Trade and other payables		(4	)
Current portion of long-term debt		(1	)
Long-term debt		(3	)
Net assets acquired		26
Cash paid		25
Non-cash provision for working capital purchase price adjustment		1
Total consideration		26

Assets acquired were as follows:

(in millions of Canadian dollars)		2016
	BUSINESS SEGMENT:	CONTAINERBOARD PACKAGING
	ACQUIRED COMPANY:	Rand-Whitney Newtown Plant
Fair values of identifiable assets acquired:
Property, plant and equipment		10
Client list		1
Goodwill		7
		18
Cash paid		15
Fair market value of assets exchanged		3
Total consideration		18

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Accounts Receivable (Tables)

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Schedule of Trade and Other Receivables

(in millions of Canadian dollars)	NOTE	2017		2016
Accounts receivable - Trade		526		465
Receivables from related parties	28	35		39
Less: provision for doubtful accounts		(7	)	(6	)
Trade receivables - net		554		498
Provisions for volume rebates		(45	)	(35	)
Other		54		61
		563		524

Aging Trade Receivables

The aging of these trade receivables at each reporting date is as follows:

(in millions of Canadian dollars)	2017	2016
Past due 1-30 days	73	69
Past due 31-60 days	30	22
Past due 61-90 days	10	8
Past due 91 days and over	30	19
	143	118

Schedule of Allowance for Doubtful Accounts

Movements in the Corporation's allowance for doubtful accounts are as follows:

(in millions of Canadian dollars)	2017		2016
Balance at beginning of year	6		12
Provision for doubtful accounts, net of unused beginning balance	2		(3	)
Receivables written off during the year as uncollectable	(1	)	(3	)
Balance at end of year	7		6

XML

Inventories (Tables)

12 Months Ended

Dec. 31, 2017

Inventories [Abstract]

Schedule of Inventory

(in millions of Canadian dollars)	2017	2016
Finished goods	249	219
Raw material	124	107
Supplies and spare parts	150	134
	523	460

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Investments in Associates and Joint Ventures (Tables)

12 Months Ended

Dec. 31, 2017

Interests In Other Entities [Abstract]

Disclosure of interests in associates

The Corporation's financial information from its principal associates (100%), and translated in millions of Canadian dollars if required, is as follows:

	2017			2016
(in millions of Canadian dollars)	BORALEX INC. (results up to March 10, 2017)		GREENPAC HOLDING LLC (results up to April 4, 2017)	BORALEX INC.		GREENPAC HOLDING LLC
Condensed balance sheet
Cash and cash equivalents	N/A		N/A	100		28
Current assets (other than cash and cash equivalents and current financial assets)	N/A		N/A	288		103
Current financial assets	N/A		N/A	1		1
Long-term assets (other than long-term financial assets)	N/A		N/A	2,311		513
Long-term financial assets	N/A		N/A	2		11
Current liabilities (other than current financial liabilities)	N/A		N/A	131		41
Current financial liabilities	N/A		N/A	321		19
Long-term liabilities (other than long-term financial liabilities)	N/A		N/A	131		—
Long-term financial liabilities	N/A		N/A	1,605		251
Condensed statements of earnings
Sales	96		99	299		340
Depreciation and amortization	31		7	116		28
Financing expense	19		3	76		27
Provision for (recovery of) income taxes	6		—	(9	)	—
Net earnings	13		9	2		22
Other comprehensive income (loss)
Translation adjustment	1		—	(12	)	—
Cash flow hedges	(1	)	1	—		4
	—		1	(12	)	4
Total comprehensive income (loss)	13		10	(10	)	26
Condensed cash flow
Dividends received from associates	2		—	7		—

INVESTMENT IN JOINT VENTURES

The following are the principal joint ventures of the Corporation and the Corporation's percentage of equity owned:

	PERCENTAGE EQUITY OWNED (%)	PRINCIPAL ESTABLISHMENT
Cascades Sonoco US Inc.1	50	Birmingham, Alabama and Tacoma, Washington, United States
Cascades Sonoco inc.1	50	Kingsey Falls and Berthierville, Québec, Canada
Maritime Paper Products Limited Partnership (MPPLP) 2	40	Dartmouth, Nova Scotia, Canada
Tencorr Holdings Corporation 3	33.3	Brampton, Ontario, Canada

1 Joint ventures producing specialty paper packaging products such as headers, rolls and wrappers.

2 MPPLP is a Canadian corporation converting containerboard.

3 Tencorr Holdings Corporation operates as a supplier of corrugated sheet stock.

A. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ARE DETAILED AS FOLLOWS:

(in millions of Canadian dollars)	2017	2016
Investments in associates	16	281
Investments in joint ventures	62	54
	78	335

Disclosure of interests in joint arrangements

The Corporation's joint ventures information (100%), translated in millions of Canadian dollar if required, is as follows:

	2017
(in millions of Canadian dollars)	CASCADES SONOCO USINC.		CASCADES SONOCO INC.	MARITIME PAPER PRODUCTS LIMITED PARTNERSHIP	TENCORR HOLDINGS CORPORATION
Condensed balance sheet
Current assets (other than cash and cash equivalents and current financial assets)	30		28	25	20
Long-term assets (other than long-term financial assets)	31		17	28	12
Current liabilities (other than current financial liabilities)	10		6	4	14
Current financial liabilities	2		1	1	5
Long-term liabilities (other than long-term financial liabilities)	4		3	—	—
Long-term financial liabilities	14		3	4	1
Condensed statement of earnings
Sales	119		96	102	111
Depreciation and amortization	2		2	2	2
Financing expense	1		—	—	—
Provision for income taxes	1		1	—	—
Net earnings	8		4	7	1
Other comprehensive income (loss)
Translation adjustment	(2	)	—	—	—
Total comprehensive income	6		4	7	1
Condensed cash flow
Dividends received from joint ventures	4		1	1	—

	2016
(in millions of Canadian dollars)	CASCADES SONOCO USINC.		CASCADES SONOCO INC.	MARITIME PAPER PRODUCTS LIMITED PARTNERSHIP
Condensed balance sheet
Cash and cash equivalents	5		3	3
Current assets (other than cash and cash equivalents and current financial assets)	26		23	20
Long-term assets (other than long-term financial assets)	16		18	28
Current liabilities (other than current financial liabilities)	9		9	6
Current financial liabilities	1		—	1
Long-term liabilities (other than long-term financial liabilities)	4		3	—
Long-term financial liabilities	1		1	5
Condensed statement of earnings
Sales	119		88	96
Depreciation and amortization	2		2	2
Financing expense	1		—	1
Provision for income taxes	4		2	—
Net earnings	9		6	8
Other comprehensive income (loss)
Translation adjustment	(1	)	—	—
Total comprehensive income	8		6	8
Condensed cash flow
Dividends received from joint ventures	4		4	—

NON-SIGNIFICANT ASSOCIATES AND JOINT VENTURES

The carrying value of investments in associates and joint ventures that are not significant for the Corporation is as follows:

(in millions of Canadian dollars)	2017	2016
Non-significant associates	16	17
Non-significant joint ventures	16	14
	32	31

The shares of results of non-significant associates and joint ventures for the Corporation are as follows:

(in millions of Canadian dollars)	2017	2016
Non-significant associates	1	2
Non-significant joint ventures	3	4
	4	6

Disclosure of subsidiaries

SUBSIDIARIES WITH NON-CONTROLLING INTERESTS

The Corporation's information for its subsidiaries with significant non-controlling interests is as follows:

	2017				2016
(in millions of Canadian dollars, unless otherwise noted)	RENO DE MEDICI S.p.A.		GREENPAC HOLDING LLC (since April 4, 2017)		RENO DE MEDICI S.p.A.
Principal establishment	Milan, Italy		New York, United States		Milan, Italy
Percentage of shares held by non-controlling interests (accounting basis)	42.18	%	17.17	%	42.30	%
Net earnings attributable to non-controlling interests	9		5		2
Non-controlling interests accumulated at the end of the year	105		42		90
Dividends paid to non-controlling interests	1		4		1
Condensed balance sheet
Cash and cash equivalents	29		38		41
Current assets (other than cash and cash equivalents and current financial assets)	254		100		231
Current financial assets	—		3		—
Long-term assets (other than long-term financial assets)	335		568		299
Long-term financial assets	—		14		—
Current liabilities (other than current financial liabilities)	195		31		178
Current financial liabilities	30		106		23
Long-term liabilities (other than long-term financial liabilities)	72		—		68
Long-term financial liabilities	67		209		82
Condensed statement of earnings
Sales	838		278		702
Depreciation and amortization	33		22		32
Provision for income taxes	9		—		5
Net earnings	21		21		5
Condensed cash flow
Cash flows from operating activities	49		39		56
Cash flows used from investing activities	(48	)	(3	)	(39	)
Cash flows used for financing activities	(17	)	(30	)	(9	)

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of detailed information about property, plant and equipment [abstract]

Disclosure of detailed information about property, plant and equipment

(in millions of Canadian dollars)	NOTE	LAND		BUILDINGS		MACHINERY AND EQUIPMENT		AUTOMOTIVE EQUIPMENT		OTHERS		TOTAL
As at January 1, 2016
Cost		113		717		2,675		104		289		3,898
Accumulated depreciation and impairment		2		351		1,722		67		131		2,273
Net book amount		111		366		953		37		158		1,625
Year ended December 31, 2016
Opening net book amount		111		366		953		37		158		1,625
Additions		—		5		45		25		131		206
Disposals		(1	)	—		(1	)	—		(3	)	(5	)
Depreciation		—		(28	)	(116	)	(13	)	(13	)	(170	)
Business combination, net of assets transferred	5	1		7		—		—		—		8
Reversal of impairment (charges)	24	—		2		(3	)	—		(2	)	(3	)
Others		1		39		55		6		(98	)	3
Exchange differences		(2	)	(4	)	(22	)	—		(1	)	(29	)
Closing net book amount		110		387		911		55		172		1,635
As at December 31, 2016
Cost		110		740		2,553		126		299		3,828
Accumulated depreciation and impairment		—		353		1,642		71		127		2,193
Net book amount		110		387		911		55		172		1,635
Year ended December 31, 2017
Opening net book amount		110		387		911		55		172		1,635
Additions		11		6		24		18		148		207
Disposals		(3	)	(2	)	(1	)	(1	)	(1	)	(8	)
Depreciation		—		(31	)	(132	)	(15	)	(11	)	(189	)
Business combinations	5	7		90		397		1		27		522
Assets held for sale	29	(1	)	(8	)	—		—		(4	)	(13	)
Impairment charges	24	—		—		—		—		(2	)	(2	)
Others		(1	)	48		84		1		(133	)	(1	)
Exchange differences		1		(11	)	(29	)	(1	)	(7	)	(47	)
Closing net book amount		124		479		1,254		58		189		2,104
As at December 31, 2017
Cost		124		824		2,966		140		311		4,365
Accumulated depreciation and impairment		—		345		1,712		82		122		2,261
Net book amount		124		479		1,254		58		189		2,104

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Goodwill and Other Intangible Assets With Finite and Indefinite Useful Life (Tables)

12 Months Ended

Dec. 31, 2017

Intangible Assets [Abstract]

Disclosure of detailed information about goodwill and intangible assets

(in millions of Canadian dollars)	NOTE	APPLICATION SOFTWARE AND ERP		CUSTOMER RELATIONSHIPS AND CLIENT LISTS		OTHER INTANGIBLE ASSETS WITH FINITE USEFUL LIFE		TOTAL INTANGIBLE ASSETS WITH FINITE USEFUL LIFE		GOODWILL		OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE		TOTAL INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE
As at January 1, 2016
Cost		110		170		35		315		343		8		351
Accumulated amortization and impairment		34		78		29		141		4		1		5
Net book amount		76		92		6		174		339		7		346
Year ended December 31, 2016
Opening net book amount		76		92		6		174		339		7		346
Additions		17		—		—		17		—		—		—
Business combinations	5	—		1		—		1		7		—		7
Amortization		(10	)	(9	)	(3	)	(22	)	—		—		—
Others		—		—		1		1		—		(1	)	(1	)
Exchange differences		—		—		—		—		(2	)	—		(2	)
Closing net book amount		83		84		4		171		344		6		350
As at December 31, 2016
Cost		126		171		35		332		349		7		356
Accumulated amortization and impairment		43		87		31		161		5		1		6
Net book amount		83		84		4		171		344		6		350
Year ended December 31, 2017
Opening net book amount		83		84		4		171		344		6		350
Additions		24		—		—		24		—		—		—
Business combinations	5	—		46		—		46		194		—		194
Amortization		(13	)	(11	)	(2	)	(26	)	—		—		—
Exchange differences		—		(3	)	—		(3	)	(17	)	1		(16	)
Closing net book amount		94		116		2		212		521		7		528
As at December 31, 2017
Cost		150		208		32		390		523		7		530
Accumulated amortization and impairment		56		92		30		178		2		—		2
Net book amount		94		116		2		212		521		7		528

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Other Assets (Tables)

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of Other Assets

(in millions of Canadian dollars)	NOTE	2017		2016
Notes receivable from business disposals		6		9
Other investments		7		5
Other assets		30		27
Employee future benefits	16	37		46
		80		87
Less: Current portion, included in accounts receivables		(6	)	(15	)
		74		72

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Trade and Other Payables (Tables)

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of Trade and Other Payables

(in millions of Canadian dollars)	NOTE	2017	2016
Trade payables		488	472
Payables to related parties	28	7	44
Accrued expenses		143	145
		638	661

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Provisions for Contingencies and Charges (Tables)

12 Months Ended

Dec. 31, 2017

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Provisions for Contingencies and Charges

(in millions of Canadian dollars)	ENVIRONMENTAL RESTORATION OBLIGATIONS		ENVIRONMENTAL COSTS		LEGAL CLAIMS		SEVERANCES		ONEROUS CONTRACT		OTHERS		TOTAL PROVISIONS
As at January 1, 2016	9		14		3		2		5		6		39
Additional provision	—		5		1		7		3		4		20
Reversal of provision	—		(1	)	—		—		(1	)	—		(2	)
Payments	(3	)	(2	)	(1	)	(6	)	(1	)	(3	)	(16	)
Revaluation	2		—		—		—		—		—		2
As at December 31, 2016	8		16		3		3		6		7		43
Additional provision	(1	)	—		2		5		—		2		8
Payments	—		—		(1	)	(5	)	(3	)	(2	)	(11	)
Others	—		—		—		—		—		3		3
As at December 31, 2017	7		16		4		3		3		10		43

Analysis of total provisions:

(in millions of Canadian dollars)	2017	2016
Long-term	36	34
Current	7	9
	43	43

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Long-term Debt (Tables)

12 Months Ended

Dec. 31, 2017

Financial Instruments [Abstract]

Disclosure of detailed information about borrowings

(in millions of Canadian dollars)	NOTE	MATURITY	2017	2016
Revolving credit facility, weighted average interest rate of 3.39% as at December 31, 2017, consists of $5million and US$151 million (December 31, 2016 - $(19) million; US$82 million and €(1)million)	14(b)	2021	195	90
5.50% Unsecured senior notes of $250 million		2021	250	250
5.50% Unsecured senior notes of US$400 million (December 31,2016 - US$550 million)	14(a)	2022	503	738
5.75% Unsecured senior notes of US$200 million (December 31, 2016 - US$250 million)	14(a)	2023	252	336
Other debts of subsidiaries			66	62
Other debts without recourse to the Corporation			320	105
			1,586	1,581
Less: Unamortized financing costs			10	15
Total long-term debt			1,576	1,566
Less:
Current portion of debts of subsidiaries			14	13
Current portion of debts without recourse to the Corporation			45	23
			59	36
			1,517	1,530

Disclosure of finance lease and operating lease by lessee

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

	2017		2016
(in millions of Canadian dollars)	MINIMUM PAYMENTS	PRESENT VALUE OF PAYMENTS	MINIMUM PAYMENTS	PRESENT VALUE OF PAYMENTS
Within one year	11	9	8	7
Later than one year but no later than five years	22	18	19	15
More than five years	6	6	7	6
Total minimum lease payments	39	33	34	28
Less: amounts representing finance charges	6	—	6	—
Present value of minimum lease payments	33	33	28	28

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Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of Other Liabilities

(in millions of Canadian dollars)	NOTE	2017		2016
Employee future benefits	16	174		174
Greenpac equity holder put option (see Note 5 for more details)		80		—
Other		6		8
		260		182
Less: Current portion		(82	)	(4	)
		178		178

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Employee Future Benefits (Tables)

12 Months Ended

Dec. 31, 2017

Employee Benefits [Abstract]

Disclosure of Defined Benefit Plan

The amounts recognized in the consolidated balance sheet composed by country and by sector are determined as follows:

	2017
(in millions of Canadian dollars)	CANADA	UNITED STATES	EUROPE	TOTAL
Present value of unfunded obligations	73	4	24	101
Liabilities on consolidated balance sheet	73	4	24	101

	2017
(in millions of Canadian dollars)	CONTAINERBOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of unfunded obligations	38	24	6	12	21	101
Liabilities on consolidated balance sheet	38	24	6	12	21	101

	2016
(in millions of Canadian dollars)	CANADA	UNITED STATES	EUROPE	TOTAL
Present value of unfunded obligations	78	4	24	106
Liabilities on consolidated balance sheet	78	4	24	106

	2016
(in millions of Canadian dollars)	CONTAINERBOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of unfunded obligations	41	24	6	13	22	106
Liabilities on consolidated balance sheet	41	24	6	13	22	106

For Canadian pension plans, which represent 93% of all pension plans, these assumptions translate into an average life expectancy in years for a pensioner retiring at age 65:

	2017	2016
Retiring at the end of the year
Male	21.7	21.6
Female	24.1	24.1
Retiring 20 years after the end of the reporting year
Male	22.8	22.7
Female	25.1	25

The defined benefit obligation and plan assets are composed by country and by sector as follows:

	2017
(in millions of Canadian dollars)	CANADA		UNITED STATES	EUROPE	TOTAL
Present value of funded obligations	433		10	—	443
Fair value of plan assets	466		6	—	472
Deficit (surplus) of funded plans	(33	)	4	—	(29	)
Present value of unfunded obligations	37		—	28	65
Liabilities on consolidated balance sheet	4		4	28	36

	2017
(in millions of Canadian dollars)	CONTAINERBOARD		BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of funded obligations	405		—	—	37	1	443
Fair value of plan assets	437		—	—	34	1	472
Deficit (surplus) of funded plans	(32	)	—	—	3	—	(29	)
Present value of unfunded obligations	8		28	2	2	25	65
Liabilities (assets) on consolidated balance sheet	(24	)	28	2	5	25	36

	2016
(in millions of Canadian dollars)	CANADA		UNITED STATES	EUROPE	TOTAL
Present value of funded obligations	411		10	—	421
Fair value of plan assets	454		6	—	460
Deficit (surplus) of funded plans	(43	)	4	—	(39	)
Present value of unfunded obligations	37		—	24	61
Liabilities (assets) on consolidated balance sheet	(6	)	4	24	22

	2016
(in millions of Canadian dollars)	CONTAINERBOARD		BOXBOARD EUROPE	SPECIALTY PRODUCTS	TISSUE PAPERS	CORPORATE	TOTAL
Present value of funded obligations	385		—	—	35	1	421
Fair value of plan assets	427		—	—	32	1	460
Deficit (surplus) of funded plans	(42	)	—	—	3	—	(39	)
Present value of unfunded obligations	8		24	2	2	25	61
Liabilities (assets) on consolidated balance sheet	(34	)	24	2	5	25	22

The significant actuarial assumptions are as follows:

	2017						2016
	CANADA		UNITED STATES		EUROPE		CANADA		UNITED STATES		EUROPE
Discount rate obligation (ending period)	3.40	%	3.31	%	1.60	%	3.70	%	3.73	%	1.90	%
Discount rate obligation (beginning period)	3.70	%	3.73	%	1.90	%	3.90	%	3.90	%	2.10	%
Discount rate (current service cost)	3.50	%	3.73	%	1.90	%	3.90	%	3.90	%	2.10	%
Salary growth rate	Between 2.00%and 2.75%		N/A		N/A		Between 1.75% and 3.00%		N/A		N/A
Inflation rate	2.25	%	N/A		1.75	%	Between 2.25%and2.50%		N/A		1.75	%

The table below outlines where the Corporation’s post-employment amounts and activity are included in the consolidated financial statements.

(in millions of Canadian dollars)	NOTE	2017		2016
Consolidated balance sheet obligations for
Defined pension benefits	16(a)	36		22
Post-employment benefits other than defined benefit pension plans	16(b)	101		106
Net long-term liabilities on consolidated balance sheet		137		128
Income statement charge for
Defined pension benefits		7		7
Defined contribution benefits		21		20
Post-employment benefits other than defined benefit pension plans		4		5
		32		32
Remeasurements for
Defined pension benefits	16(a)	14		(13	)
Post-employment benefits other than defined benefit pension plans	16(b)	(1	)	2
		13		(11	)

Disclosure of Movement in Defined Benefit Obligation

The movement in the net defined benefit obligation and fair value of plan assets of pension plans over the year is as follows:

(in millions of Canadian dollars)	PRESENT VALUE OF OBLIGATION		FAIR VALUE OF PLAN ASSETS		TOTAL		IMPACT OF MINIMUM FUNDING REQUIREMENT (ASSET CEILING)		TOTAL
As at January 1, 2016	484		(454	)	30		6		36
Current service cost	5		—		5		—		5
Interest expense (income)	18		(16	)	2		—		2
Impact on profit or loss	23		(16	)	7		—		7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	—		(9	)	(9	)	—		(9	)
Loss from change in financial assumptions	11		—		11		—		11
Experience gains	(9	)	—		(9	)	—		(9	)
Change in asset ceiling, excluding amounts included in interest expense	—		—		—		(6	)	(6	)
Impact of remeasurements on other comprehensive income	2		(9	)	(7	)	(6	)	(13	)
Exchange differences	(1	)	—		(1	)	—		(1	)
Contributions
Employers	—		(7	)	(7	)	—		(7	)
Plan participants	2		(2	)	—		—		—
Benefit payments	(28	)	28		—		—		—
As at December 31, 2016	482		(460	)	22		—		22
Current service cost	5		—		5		—		5
Interest expense (income)	17		(15	)	2		—		2
Impact on profit or loss	22		(15	)	7		—		7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	—		(14	)	(14	)	—		(14	)
Loss from change in demographic assumptions	2		—		2		—		2
Loss from change in financial assumptions	14		—		14		—		14
Experience loss	12		—		12		—		12
Impact of remeasurements on other comprehensive income	28		(14	)	14		—		14
Exchange differences	1		—		1		—		1
Contributions
Employers	—		(8	)	(8	)	—		(8	)
Plan participants	2		(2	)	—		—		—
Benefit payments	(27	)	27		—		—		—
As at December 31, 2017	508		(472	)	36		—		36

The movement in the net defined benefit obligation for post-employment benefits over the year is as follows:

(in millions of Canadian dollars)	PRESENT VALUE OF OBLIGATION		FAIR VALUE OF PLAN ASSET		TOTAL
As at January 1, 2016	105		—		105
Current service cost	2		—		2
Interest expense	3		—		3
Impact on profit or loss	5		—		5
Remeasurements
Loss from change in financial assumptions	2		—		2
Impact of remeasurements on other comprehensive income	2		—		2
Exchange differences	(1	)	—		(1	)
Contributions and premiums paid by the employer	—		(5	)	(5	)
Benefit payments	(5	)	5		—
As at December 31, 2016	106		—		106
Current service cost	2		—		2
Interest expense	3		—		3
Curtailments	(1	)	—		(1	)
Impact on profit or loss	4		—		4
Remeasurements
Loss from change in financial assumptions	1		—		1
Experience gains	(2	)	—		(2	)
Impact of remeasurements on other comprehensive income	(1	)	—		(1	)
Exchange differences	1		—		1
Contributions and premiums paid by the employer	—		(9	)	(9	)
Benefit payments	(9	)	9		—
As at December 31, 2017	101		—		101

Disclosure of Sensitivity Analysis For Actuarial Assumptions

The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented.

	IMPACT ON OBLIGATION FOR POST-EMPLOYMENT BENEFITS
	CHANGE IN ASSUMPTION		INCREASE IN ASSUMPTION		DECREASE IN ASSUMPTION
Discount rate	0.25	%	(2.20	)%	2.30	%
Salary growth rate	0.25	%	0.50	%	(0.40	)%
Health care cost increase	1.00	%	2.00	%	(1.70	)%
			INCREASE / DECREASE BY 1 YEAR IN ASSUMPTION
Life expectancy			0.80			%

The sensitivity of the Canadian defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented.

	IMPACT ON DEFINED BENEFIT OBLIGATION
	CHANGE IN ASSUMPTION		INCREASE IN ASSUMPTION		DECREASE IN ASSUMPTION
Discount rate	0.25	%	(2.90	)%	3.10	%
Salary growth rate	0.25	%	0.40	%	(0.30	)%
			INCREASE / DECREASE BY 1 YEAR IN ASSUMPTION
Life expectancy			3.00			%

Disclosure of Fair Value of Plan Assets

Plan assets, which are funding the Corporation’s defined pension plans, are comprised as follows:

	2017
(in millions of Canadian dollars)	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL	%
Cash and short-term investments	5	—	—	5	1.1	%
Bonds
Canadian bonds	92	81	—	173	36.7	%
Shares
Canadian shares	34	—	—	34
Foreign shares	6	—	—	6
				40	8.5	%
Mutual funds
Foreign bond mutual funds	—	6	—	6
Canadian equity mutual funds	7	1	—	8
Foreign equity mutual funds	—	54	—	54
Alternative investments funds	—	22	—	22
				90	19.1	%
Other
Insured annuities	—	164	—	164
				164	34.6	%
	144	328	—	472

	2016
(in millions of Canadian dollars)	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL	%
Cash and short-term investments	9	—	—	9	2.0	%
Bonds
Canadian bonds	47	67	—	114	24.8	%
Shares
Canadian shares	71	—	—	71
Foreign shares	14	—	—	14
				85	18.5	%
Mutual funds
Foreign bond mutual funds	—	2	—	2
Canadian equity mutual funds	16	3	—	19
Foreign equity mutual funds	—	109	—	109
Alternative investments funds	—	21	—	21
				151	32.8	%
Other
Insured annuities	—	94	—	94
Derivatives contract, net	7	—	—	7
				101	21.9	%
	164	296	—	460

Defined Benefit Obligation Expected Maturity

Expected maturity analysis of undiscounted pension and other post-employment benefits:

(in millions of Canadian dollars)	LESS THAN A YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	OVER FIVE YEARS	TOTAL
Pension benefits	29	29	89	743	890
Post-employment benefits other than defined benefit pension plans	5	8	24	115	152
As at December 31, 2017	34	37	113	858	1,042

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes [Abstract]

Provision for Income Taxes

The provision for (recovery of) income taxes is as follows:

(in millions of Canadian dollars)	2017		2016
Current taxes	10		11
Deferred taxes	(91	)	34
	(81	)	45

Disclosure of Effective Income Tax Rate Reconciliation

The provision for (recovery of) income taxes based on the effective income tax rate differs from the provision for income taxes based on the combined basic rate for the following reasons:

(in millions of Canadian dollars)	NOTE	2017		2016
Provision for income taxes based on the combined basic Canadian and provincial income tax rate		117		48
Adjustment for income taxes arising from the following:
Difference in statutory income tax rate of foreign operations		10		2
Prior years reassessment		3		1
Reversal of deferred income tax liabilities related to our previously held investment in Greenpac	5	(70	)	—
Permanent difference on revaluation of previously held equity interest - Greenpac associate	5	(57	)	—
Non-taxable portion of capital gain on revaluation of previously held equity interest - Boralex associate	8	(24	)	—
Change in future income taxes resulting from enacted tax rate change		(57	)	2
Unrealized capital gain on long-term debt		(3	)	—
Permanent differences		(6	)	(5	)
Change in deferred income tax assets relating to capital tax loss		6		(3	)
		(198	)	(3	)
Provision for (recovery of) income taxes		(81	)	45

Disclosure of Income Tax Relating to Other Comprehensive Income

The provision for income taxes relating to components of other comprehensive income is as follows:

(in millions of Canadian dollars)	2017		2016
Foreign currency translation related to hedging activities	4		3
Cash flow hedge	—		3
Included in share of other comprehensive income of associates	3		—
Actuarial gain (loss) on post-employment benefit obligations	(3	)	3
	4		9

Disclosure of Temporary Differences, Unused Tax Losses and Unused Tax Credits

The analysis of deferred tax assets and deferred tax liabilities, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

(in millions of Canadian dollars)	2017		2016
Deferred income tax assets:
Deferred income tax assets to be recovered after more than twelve months	223		279
Deferred income tax liabilities:
Deferred income tax liabilities to be used after more than twelve months	260		319
	(37	)	(40	)

The movement of the deferred income tax account is as follows:

(in millions of Canadian dollars)	NOTE	2017		2016
As at January 1		(40	)	(8	)
Through statement of earnings		91		(34	)
Variance of income tax credit, net of related income tax		4		5
Through statement of comprehensive income		(4	)	(9	)
Through business combinations	5	(91	)	—
Others		(7	)	—
Exchange differences		10		6
As at December 31		(37	)	(40	)

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

DEFERRED INCOME TAX ASSET

(in millions of Canadian dollars)	RECOGNIZED TAX BENEFIT ARISING FROM INCOME TAX LOSSES		EMPLOYEE FUTURE BENEFITS		EXPENSE ON RESEARCH		UNUSED TAX CREDITS		FINANCIAL INSTRUMENTS		FOREIGN EXCHANGE LOSS ON LONG-TERM DEBT		OTHERS	TOTAL
As at January 1, 2016	141		25		38		39		16		23		15	297
Through statement of earnings	19		2		(23	)	(3	)	(8	)	(2	)	1	(14	)
Variance of income tax credit	—		—		—		5		—		—		—	5
Through statement of comprehensive income	—		(3	)	—		—		(3	)	(3	)	—	(9	)
Exchange differences	(1	)	—		—		—		—		1		—	—
As at December 31, 2016	159		24		15		41		5		19		16	279
Through statement of earnings	(25	)	(6	)	(10	)	(6	)	(5	)	(12	)	5	(59	)
Variance of income tax credit	—		—		—		4		—		—		—	4
Through statement of comprehensive income	—		3		—		—		1		(5	)	—	(1	)
As at December 31, 2017	134		21		5		39		1		2		21	223

DEFERRED INCOME TAX LIABILITIES

(in millions of Canadian dollars)	NOTE	PROPERTY, PLANT AND EQUIPMENT		INTANGIBLE ASSETS		INVESTMENTS		OTHERS	TOTAL
As at January 1, 2016		169		51		84		1	305
Through statement of earnings		14		3		3		—	20
Exchange differences		(3	)	(1	)	(2	)	—	(6	)
As at December 31, 2016		180		53		85		1	319
Through statement of earnings		(51	)	(14	)	(85	)	—	(150	)
Included in share of other comprehensive income of associates		—		—		3		—	3
Through business combinations	5	80		11		—		—	91
Others		5		2		—		—	7
Exchange differences		(9	)	(1	)	—		—	(10	)
As at December 31, 2017		205		51		3		1	260

Disclosure of Recognized Accumulated Losses

The Corporation has recognized accumulated losses for income tax purposes amounting to approximately $515 million, which may be carried forward to reduce taxable income in future years. The future tax benefit of $134 million resulting from the deferral of these losses has been recognized in the accounts as a deferred income tax asset. Deferred income tax assets are recognized for tax loss carry forward to the extent that the realization of the related tax benefits through future taxable profits is probable. Income tax losses as at December 31, 2017 are detailed as follows:

(in millions of Canadian dollars)	RECOGNIZED TAX LOSSES	MATURITY
Canada	8	2026
	14	2027
	2	2029
	1	2030
	77	2032
	82	2033
	126	2034
	63	2035
	53	2036
	3	2037
	429
United States	7	2019
	5	2020
	2	2029
	2	2031
	3	2032
	2	2033
	13	2035
	1	2036
	46	2037
	81
Europe	5	Indefinitely
	515

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Capital Stock (Tables)

12 Months Ended

Dec. 31, 2017

Share Capital, Reserves And Other Equity Interest [Abstract]

Capital Management

CAPITAL MANAGEMENT

Capital is defined as long-term debt, bank loans and advances net of cash and cash equivalents and Shareholders' equity, which includes capital stock.

(in millions of Canadian dollars)	2017		2016
Cash and cash equivalents	(89	)	(62	)
Bank loans and advances	35		28
Long-term debt, including current portion	1,576		1,566
	1,522		1,532
Total equity	1,601		1,074
Total capital	3,123		2,606

Disclosure of classes of share capital

The authorized capital stock of the Corporation consists of an unlimited number of common shares, without nominal value, and an unlimited number of Class A and B shares issuable in series without nominal value. Over the past two years, the common shares have fluctuated as follows:

		2017		2016
	NOTE	NUMBER OF COMMON SHARES	IN MILLIONS OF CANADIAN DOLLARS	NUMBER OF COMMON SHARES		IN MILLIONS OF CANADIAN DOLLARS
Balance - beginning of year		94,526,516	487	95,310,923		490
Common shares issued on exercise of stock options	18(d)	461,442	5	262,836		2
Redemption of common shares	18(c)	—	—	(1,047,243	)	(5	)
Balance - end of year		94,987,958	492	94,526,516		487

Earnings Per Share

The basic and diluted net earnings per common share are calculated as follows:

	2017		2016
Net earnings available to common shareholders (in millions of Canadian dollars)	507		135
Weighted average number of basic common shares outstanding (in millions)	95		95
Weighted average number of diluted common shares outstanding (in millions)	98		97
Basic net earnings per common share (in Canadian dollars)	$	5.35	$	1.42
Diluted net earnings per common share (in Canadian dollars)	$	5.19	$	1.39

Disclosure of dividends

	2017		2016
Dividends declared per common share	$	0.16	$	0.16

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2017

Share-based Payment Arrangements [Abstract]

Summary of Changes in Options Outstanding

Changes in the number of options outstanding as at December 31, 2017 and 2016 are as follows:

	2017			2016
	NUMBER OF OPTIONS		WEIGHTED AVERAGE EXERCISE PRICE ($)	NUMBER OF OPTIONS		WEIGHTED AVERAGE EXERCISE PRICE ($)
Beginning of year	5,216,063		6.16	5,385,323		6.15
Granted	240,880		14.28	351,461		9.75
Exercised	(461,442	)	8.28	(262,836	)	5.51
Expired	—		—	(257,885	)	11.49
Forfeited	(5,381	)	9.75	—		—
End of year	4,990,120		6.35	5,216,063		6.16
Options exercisable - end of year	4,170,259		5.63	4,166,339		5.78

The following options were outstanding as at December 31, 2017:

	OPTIONS OUTSTANDING		OPTIONS EXERCISABLE
YEAR GRANTED	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE ($)	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE ($)	EXPIRATION DATE
2007	95,064	11.83	95,064	11.83	2018
2008	326,166	7.81	326,166	7.81	2018
2009	968,333	3.92	968,333	3.92	2019
2010	444,124	6.43	444,124	6.43	2020
2011	492,432	6.26	492,432	6.26	2020 - 2021
2012	842,524	4.46	842,524	4.46	2018 - 2022
2013	426,392	5.18	426,392	5.18	2018 - 2023
2014	423,974	6.10	308,134	6.10	2020 - 2024
2015	390,185	7.66	185,244	7.66	2020 - 2025
2016	340,046	9.75	81,846	9.75	2020 - 2026
2017	240,880	14.28	—	—	2027
	4,990,120		4,170,259

Disclosure of Assumptions Used to Estimate Value of Options Granted During Period

The following weighted average assumptions were used to estimate the fair value of $4.22 (2016 - $2.75) as at the date of grant of each option issued to employees:

	2017			2016
Grant date share price	$	14.26		$	10.09
Exercise price	$	14.28		$	9.75
Risk-free interest rate	1.77		%	1.04		%
Expected dividend yield	1.12		%	1.58		%
Expected life of options	6 years			6 years
Expected volatility	32		%	31		%

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Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of Accumulated Other Comprehensive Loss

(in millions of Canadian dollars)	2017		2016
Foreign currency translation, net of hedging activities and related income tax of $12 million (December 31, 2016 - $16million)	(30	)	(13	)
Unrealized gain arising from foreign exchange forward contracts designated as cash flow hedges, net of related income taxes of nil (December 31, 2016 - nil)	1		—
Unrealized loss arising from commodity derivative financial instruments designated as cash flow hedges, net of related income taxes of $2 million (December 31, 2016 - $2 million)	(4	)	(5	)
Unrealized loss on available-for-sale financial assets, net of related income taxes of nil (December31,2016-nil)	(2	)	(1	)
Unrealized loss on share of other comprehensive income of associates, net of related income taxes of nil (December31, 2016 - $9 million)	—		(12	)
	(35	)	(31	)

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Cost of Sales by Nature (Tables)

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Cost of Sales

COST OF SALES BY NATURE

(in millions of Canadian dollars)	2017	2016
Raw material	1,751	1,612
Wages and employee benefits expenses	689	662
Energy	259	248
Delivery	331	269
Depreciation and amortization	215	192
Other	463	397
	3,708	3,380

Selling and Administrative Expenses

SELLING AND ADMINISTRATIVE EXPENSES BY NATURE

(in millions of Canadian dollars)	2017	2016
Wages and employee benefits expenses	287	271
Information technology	60	46
Publicity and marketing	16	15
Other	77	70
	440	402

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Employee Benefits Expenses (Tables)

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Disclosure of employee related expenses

EMPLOYEE BENEFITS EXPENSES

(in millions of Canadian dollars)	NOTE	2017	2016
Wages and employee benefits expenses	21	976	933
Share options granted to directors and employees	19(a)	1	1
Pension costs - defined benefit plans	16	7	7
Pension costs - defined contribution plans	16	21	20
Post-employment benefits other than defined benefit pension plans	16	4	5
		1,009	966

KEY MANAGEMENT COMPENSATION

Key management includes the members of the Board of Directors, Presidents and Vice Presidents of the Corporation (same as disclosed in annual information form in section 8.3). The compensation paid or payable to key management for their services is shown below:

(in millions of Canadian dollars)	2017	2016
Salaries and other short-term benefits	11	11
Post-employment benefits	1	—
Share-based payments	6	4
	18	15

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Gain on Acquisitions, Disposals and Others (Tables)

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Gain on Acquisitions, Disposals and Others

(in millions of Canadian dollars)	2017		2016
Gain on disposal of assets	(8	)	(4	)

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Impairment Charges and Restructuring Costs (Tables)

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Schedule of Impaired Assets

Impairments are detailed as follows:

	2017
	PACKAGING PRODUCTS
(in millions of Canadian dollars)	CONTAINER-BOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS	SUB-TOTAL	TISSUE PAPERS	CORPORATE ACTIVITIES		TOTAL
Property, plant and equipment	—	—	—	—	2	—		2
Intangible assets with finite useful life and other assets	11	—	—	11	—	(2	)	9
	11	—	—	11	2	(2	)	11

	2016
	PACKAGING PRODUCTS
(in millions of Canadian dollars)	CONTAINER-BOARD	BOXBOARD EUROPE	SPECIALTY PRODUCTS		SUB-TOTAL		TISSUE PAPERS	CORPORATE ACTIVITIES	TOTAL
Property, plant and equipment	2	—	(3	)	(1	)	4	—	3

Goodwill Fair Value Assumptions

The Corporation applied the income approach in determining fair value less cost of disposal and used the following key assumptions (level 2 inputs):

	TISSUE PAPERS
Discounting rate	9.75		%
Terminal exchange rate (CA$/US$)	$	1.25
Terminal shipments	673,000 s.t.

Restructuring and Related Costs

Restructuring costs (gains) are detailed as follows:

(in millions of Canadian dollars)	2017	2016
Containerboard	2	(1	)
Boxboard Europe	1	2
Specialty Products	—	1
Tissue Papers	2	7
Corporate Activities	1	—
	6	9

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Additional Information (Tables)

12 Months Ended

Dec. 31, 2017

Cash Flow Statement [Abstract]

Changes in Non-cash Working Capital Components and Financing Expense and Interest Expense on Employee Benefits

A. CHANGES IN NON-CASH WORKING CAPITAL COMPONENTS ARE DETAILED AS FOLLOWS:

(in millions of Canadian dollars)	2017		2016
Accounts receivable	31		(6	)
Current income tax assets	—		(1	)
Inventories	(46	)	(2	)
Trade and other payables	(71	)	66
Current income tax liabilities	(1	)	(1	)
	(87	)	56

B. FNANCING EXPENSE AND INTEREST EXPENSE ON EMPLOYEE FUTURE BENEFITS

(in millions of Canadian dollars)	2017		2016
Interest on long-term debt	89		83
Interest income	(3	)	(1	)
Amortization of financing costs	3		3
Other interest and banking fees	3		3
Interest expense on employee future benefits	5		5
	97		93

Disclosure Total Liabilities From Financing Activities

TOTAL LIABILITIES FROM FINANCING ACTIVITIES

(in millions of Canadian dollars)	CASH AND CASH EQUIVALENT		BANK LOANS AND ADVANCES		LONG-TERM DEBT		NET DEBT
As at January 1, 2016	(60	)	37		1,744		1,721
Cash flow
Change in cash and cash equivalents	(5	)	—		—		(5	)
Bank loans and advances	—		(8	)	—		(8	)
Change in revolving credit facilities	—		—		(146	)	(146	)
Increase in other long-term debt	—		—		40		40
Payments of other long-term debt	—		—		(47	)	(47	)
Non-cash changes
Foreign exchange gain on long-term debt and financial instruments	—		—		(35	)	(35	)
Capital lease acquisitions	—		—		18		18
Amortization of financing costs	—		—		2		2
Other	—		—		3		3
Exchange differences	3		(1	)	(13	)	(11	)
As at December 31, 2016	(62	)	28		1,566		1,532
Cash flow
Change in cash and cash equivalents	(25	)	—		—		(25	)
Bank loans and advances	—		8		—		8
Change in revolving credit facilities	—		—		114		114
Repurchase of unsecured senior notes	—		—		(257	)	(257	)
Increase in other long-term debt	—		—		11		11
Payments of other long-term debt	—		—		(47	)	(47	)
Non-cash changes
Business combinations	—		—		257		257
Foreign exchange gain on long-term debt and financial instruments	—		—		(62	)	(62	)
Capital lease acquisitions	—		—		11		11
Amortization of financing costs	—		—		2		2
Write off of unamortized financing costs following repurchase of unsecured senior notes	—		—		3		3
Other	—		—		(1	)	(1	)
Exchange differences	(2	)	(1	)	(21	)	(24	)
As at December 31, 2017	(89	)	35		1,576		1,522

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Financial Instruments [Abstract]

Disclosure of financial assets

The classification of financial instruments as at December 31, 2017 and 2016, along with the respective carrying amounts and fair values, is as follows:

		2017				2016
(in millions of Canadian dollars)	NOTE	CARRYING AMOUNT		FAIR VALUE		CARRYING AMOUNT		FAIR VALUE
Financial assets at fair value through profit or loss
Derivatives	26.4	27		27		10		10
Financial assets available for sale
Other investments		1		1		2		2
Financial liabilities at fair value through profit or loss
Derivatives	26.4	(4	)	(4	)	(31	)	(31	)
Financial liabilities at amortized cost
Long-term debt		(1,576	)	(1,626	)	(1,566	)	(1,612	)
Derivatives designated as hedge
Asset derivatives		4		4		2		2
Liability derivatives		(33	)	(33	)	(8	)	(8	)

Disclosure of fair value measurement of liabilities

The following table presents information about the Corporation's financial assets and financial liabilities measured at fair value on a recurring basis as at December 31, 2017 and 2016, and indicates the fair value hierarchy of the Corporation's valuation techniques to determine such fair value. Three levels of inputs that may be used to measure fair value are:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar

assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for

substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect Management's estimates of assumptions that market participants would

use in pricing the asset or liability.

				2017
(in millions of Canadian dollars)	CARRYING AMOUNT		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)	SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Financial assets
Available-for-sale investments	1		1	—		—
Derivative financial assets	31		—	31		—
	32		1	31		—
Financial liabilities
Derivative financial liabilities	(37	)	—	(37	)	—
	(37	)	—	(37	)	—

				2016
(in millions of Canadian dollars)	CARRYING AMOUNT		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)	SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Financial assets
Available-for-sale investments	2		1	1		—
Derivative financial assets	12		—	12		—
	14		1	13		—
Financial liabilities
Derivative financial liabilities	(39	)	—	(39	)	—
	(39	)	—	(39	)	—

Disclosure of risk management strategy related to hedge accounting

		2017
(in millions of Canadian dollars)		ASSETS			LIABILITIES
RISK	NOTE	SHORT-TERM	LONG-TERM	TOTAL	SHORT-TERM		LONG-TERM		TOTAL
Currency risk	26.4 A) (i)	5	1	6	(10	)	(15	)	(25	)
Price risk	26.4 A) (ii)	4	21	25	(7	)	(1	)	(8	)
Interest risk	26.4 A) (iii)	—	—	—	(2	)	(2	)	(4	)
		9	22	31	(19	)	(18	)	(37	)

		2016
(in millions of Canadian dollars)		ASSETS			LIABILITIES
RISK	NOTE	SHORT-TERM	LONG-TERM	TOTAL	SHORT-TERM		LONG-TERM		TOTAL
Currency risk	26.4 A) (i)	2	—	2	(20	)	(13	)	(33	)
Price risk	26.4 A) (ii)	1	9	10	(3	)	(3	)	(6	)
		3	9	12	(23	)	(16	)	(39	)

Disclosure of derivative financial instruments

The fair value of these contracts is as follows:

	2017
	QUANTITY	MATURITY	FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Forecasted purchases
Derivatives designated as held for trading and reclassified in “Cost of sales”
Electricity	197,100 MWh	2018 to 2019	(1	)
Derivatives designated as cash flow hedges and reclassified in “Cost of sales” (effective portion)
Natural gas:
Canadian portfolio	3,095,029 GJ	2018 to 2022	(5	)
US portfolio	4,847,660 mmBtu	2018 to 2023	(1	)
			(7	)

	2016
	QUANTITY	MATURITY	FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Forecasted purchases
Derivatives designated as held for trading and reclassified in “Cost of sales”
Electricity	109,500 MWh	2017 to 2018	(1	)
Derivatives designated as cash flow hedges and reclassified in “Cost of sales” (effective portion)
Natural gas:
Canadian portfolio	4,658,660 GJ	2017 to 2021	(4	)
US portfolio	4,722,800 mmBtu	2017 to 2021	(1	)
			(6	)

The following table summarizes the Corporation's commitments to buy and sell foreign currencies as at December 31, 2017 and 2016:

	2017
	EXCHANGE RATE	MATURITY	NOTIONAL AMOUNT (IN MILLIONS)		FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Repayment of long-term debt
Derivatives at fair value through profit or loss and classified in Foreign exchange loss (gain) on long-term debt:
Foreign exchange forward contracts to buy US$ for CAN$	1.06	January 2020	US$	50	9
Currency option sold to sell US$ for CAN$	1.15	January 2020	US$	100	(11	)
Currency option sold to buy US$ for CAN$	1.0225	January 2020	US$	200	(1	)
Cross currency swap US$ for CAN$	1.33	July 2023	US$	102	(12	)
					(15	)
Net investment hedge
Cross currency swap CAN$ for €	1.4263	December 2018	€	95	(6	)
Forecasted sales
Derivatives at fair value through profit or loss and classified in Loss on derivative financial instruments:
Foreign exchange forward contracts to buy US$ for CAN$	1.3260	0 to 12 months	US$	10	1
Foreign exchange forward contracts to buy US$ for CAN$	1.3260	13 to 24 months	US$	5	—
Currency option instruments to sell US$ for CAN$	1.3171	0 to 12 months	US$ 48 to 70		2
Currency option instruments to sell US$ for CAN$	1.3214	13 to 36 months	US$ 43 to 80		—
					3
					(18	)

In 2017, the Corporation offset $9 million in derivative assets against $11 million in derivative liabilities as we intend to settle the derivatives on a net basis with one counterparty. During the year, the Corporation also paid $12 million related to the settlement of a portion of its 2017 derivatives related to repayment of long-term debt.

	2016
	EXCHANGE RATE	MATURITY	NOTIONAL AMOUNT (IN MILLIONS)		FAIR VALUE (IN MILLIONS OF CANADIAN DOLLARS)
Repayment of long-term debt
Derivatives at fair value through profit or loss and classified in Foreign exchange loss (gain) on long-term debt:
Foreign exchange forward contracts to buy US$ for CAN$	1.06	January 2020	US$	50	13
Currency option sold to sell US$ for CAN$	1.15	December 2017	US$	75	(14	)
Currency option sold to sell US$ for CAN$	1.15	January 2020	US$	100	(19	)
Currency option sold to buy US$ for CAN$	1.0225	January 2020	US$	200	(2	)
Cross currency swap US$ for CAN$	1.329	July 2023	US$	102	(2	)
					(24	)
Net investment hedge
Cross currency swap CAN$ for €	1.4263	December 2018	€	95	1
Forecasted sales
Derivatives at fair value through profit or loss and classified in Loss on derivative financial instruments:
Foreign exchange forward contracts to buy US$ for CAN$	1.3543	0 to 12 months	US$	20	—
Currency option instruments to sell US$ for CAN$	1.2709 to 1.2962	0 to 12 months	US$ 48 to 92		(6	)
Currency option instruments to sell US$ for CAN$	1.3042 to 1.3461	13 to 24 months	US$ 15 to 40		(2	)
					(8	)
					(31	)

Disclosure of gain (loss) on derivative financial instruments

ain on derivative financial instruments is as follows:

(in millions of Canadian dollars)	2017		2016
Unrealized gain on derivative financial instruments	(8	)	(18	)
Realized loss on derivative financial instruments	2		12
	(6	)	(6	)

Sensitivity analysis for types of market risk

Consolidated commodity consumption: Price change effect before tax:

	2017			2016
(in millions of Canadian dollars1)	BEFORE HEDGES	HEDGES	NET IMPACT	BEFORE HEDGES	HEDGES	NET IMPACT
US$15/s.t. change in brown grades recycled paper price	29	—	29	32	—	32
US$30/s.t. change in commercial pulp price	6	—	6	6	—	6
US$1/mmBTU. change in natural gas price	10	5	5	12	6	6
US$1/MWh change in electricity price	2	—	2	2	—	2

1 Sensitivity calculated with an exchange rate of 1.26 CAN$/US$ for 2017 and 1.33 CAN$/US$ for 2016.

Consolidated Shareholders' equity: Currency effect before tax of a 10% change:

	2017			2016
(in millions of Canadian dollars)	BEFORE HEDGES	HEDGES	NET IMPACT	BEFORE HEDGES	HEDGES	NET IMPACT
10% change in the CAN$/US$ rate	75	75	—	107	73	34
10% change in the CAN$/euro rate	16	14	2	13	13	—

Disclosure of maturity analysis for non-derivative financial liabilities

Liquidity risk is the risk that the Corporation will not be able to meet its obligations as they fall due. The following are the contractual maturities of financial liabilities as at December 31, 2017 and 2016:

	2017
(in millions of Canadian dollars)	CARRYING AMOUNT	CONTRACTUAL CASH FLOWS	LESS THAN ONE YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	MORE THAN FIVE YEARS
Non-derivative financial liabilities:
Bank loans and advances	35	35	35	—	—	—
Trade and other payables	638	638	638	—	—	—
Revolving credit facility	195	218	7	6	205	—
Unsecured senior notes	1,004	1,284	56	56	906	266
Other debts of subsidiaries	66	77	16	13	31	17
Other debts without recourse to the Corporation	321	329	44	41	230	14
Derivative financial liabilities	37	37	19	2	4	12
	2,296	2,618	815	118	1,376	309

	2016
(in millions of Canadian dollars)	CARRYING AMOUNT	CONTRACTUAL CASH FLOWS	LESS THAN ONE YEAR	BETWEEN ONE AND TWO YEARS	BETWEEN TWO AND FIVE YEARS	MORE THAN FIVE YEARS
Non-derivative financial liabilities:
Bank loans and advances	28	28	28	—	—	—
Trade and other payables	661	661	661	—	—	—
Revolving credit facility	90	95	2	2	91	—
Unsecured senior notes	1,324	1,735	74	74	464	1,123
Other debts of subsidiaries	62	71	14	13	25	19
Other debts without recourse to the Corporation	105	110	28	24	44	14
Derivative financial liabilities	39	39	23	5	9	2
	2,309	2,739	830	118	633	1,158

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Commitments (Tables)

12 Months Ended

Dec. 31, 2017

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Operating Lease Minimum Payment

The Corporation leases various properties, vehicles, equipment and others under non-cancellable operating lease agreements.

Future minimum payments under operating leases are as follows:

(in millions of Canadian dollars)	2017	2016
No later than one year	28	23
Later than one year but no later than five years	37	33
More than five years	5	9

Capital and Raw Material Commitments

Capital and raw material commitments

Capital expenditures and raw material contracted at the end of the reporting date but not yet incurred are as follows:

	2017		2016
(in millions of Canadian dollars)	PROPERTY, PLANT AND EQUIPMENT	INTANGIBLE ASSETS	PROPERTY, PLANT AND EQUIPMENT	INTANGIBLE ASSETS	RAW MATERIAL
No later than one year	51	8	36	2	73
Later than one year but no later than five years	—	14	—	3	258
More than five years	—	—	—	1	—
	51	22	36	6	331

c. In 2017, the Corporation entered into a lease agreement for the building of its new containerboard converting plant in New Jersey. The building is currently under construction by the lessor and the lease will commence upon delivery of the building in 2018 for a period of 20 years. The lease will be accounted for as a finance lease and total payments will be $96 million for the duration of the lease.

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2017

Related Party [Abstract]

Disclosure of transactions between related parties

The Corporation entered into the following transactions with related parties:

(in millions of Canadian dollars)	JOINT VENTURES	ASSOCIATES
2017
Sales to related parties	183	85
Purchases from related parties	16	90
2016
Sales to related parties	155	89
Purchases from related parties	13	168

he following balances were outstanding at the end of the reporting period:

(in millions of Canadian dollars)	December 31, 2017	December 31, 2016
Receivables from related parties
Joint ventures	13	18
Associates	22	21
Payables to related parties
Joint ventures	3	2
Associates	4	42

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Segmented Information (Narratives) (Details)	12 Months Ended
	Dec. 31, 2017 segment
Operating Segments [Abstract]
Number of operating segments	4

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Segmented Information - Sales (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments
Sales	$ 4,321	$ 4,001
PACKAGING PRODUCTS
Disclosure of operating segments
Sales	3,088	2,725
Operating segments | CONTAINERBOARD
Disclosure of operating segments
Sales	1,652	1,370
Operating segments | BOXBOARD EUROPE
Disclosure of operating segments
Sales	838	796
Operating segments | SPECIALTY PRODUCTS
Disclosure of operating segments
Sales	703	620
Operating segments | TISSUE PAPERS
Disclosure of operating segments
Sales	1,268	1,305
Intersegment
Disclosure of operating segments
Sales	(105)	(61)
Intersegment sales and Corporate Activities
Disclosure of operating segments
Sales	$ (35)	$ (29)

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Segmented Information - Operating Income (Loss) (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments
Operating income before depreciation and amortization	$ 390	$ 413
Depreciation and amortization	(215)	(192)
Financing expense and interest expense on employee future benefits	(97)	(93)
Loss on repurchase of long-term debt	(14)	0
Foreign exchange gain on long-term debt and financial instruments	23	22
Fair value revaluation gain on investments	315	0
Share of results of associates and joint ventures	39	32
Profit (loss) before tax	441	182
Operating segments | PACKAGING PRODUCTS
Disclosure of operating segments
Operating income before depreciation and amortization	372	336
Operating segments | CONTAINERBOARD
Disclosure of operating segments
Operating income before depreciation and amortization	238	214
Operating segments | BOXBOARD EUROPE
Disclosure of operating segments
Operating income before depreciation and amortization	67	51
Operating segments | SPECIALTY PRODUCTS
Disclosure of operating segments
Operating income before depreciation and amortization	67	71
Operating segments | TISSUE PAPERS
Disclosure of operating segments
Operating income before depreciation and amortization	90	139
Corporate
Disclosure of operating segments
Operating income before depreciation and amortization	$ (72)	$ (62)

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Segmented Information - Payment for Property, Plant, and Equipment (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments
Purchase of property, plant and equipment, gross	$ 207	$ 206
Proceeds from disposals of property, plant and equipment	(15)	(5)
Capital lease acquisitions	(11)	(18)
Payments for property, plant and equipment net of proceeds from disposals	181	183
Beginning of year	25	19
End of year	(28)	(25)
Payments for property, plant and equipment net of proceeds from disposals	178	177
Operating segments | PACKAGING PRODUCTS
Disclosure of operating segments
Purchase of property, plant and equipment, gross	124	103
Operating segments | CONTAINERBOARD
Disclosure of operating segments
Purchase of property, plant and equipment, gross	65	51
Operating segments | BOXBOARD EUROPE
Disclosure of operating segments
Purchase of property, plant and equipment, gross	27	26
Operating segments | SPECIALTY PRODUCTS
Disclosure of operating segments
Purchase of property, plant and equipment, gross	32	26
Operating segments | TISSUE PAPERS
Disclosure of operating segments
Purchase of property, plant and equipment, gross	64	77
Corporate
Disclosure of operating segments
Purchase of property, plant and equipment, gross	$ 19	$ 26

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Segmented Information - Assets (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments
Assets excluding investments	$ 4,297	$ 3,473
Investments in associates and joint ventures	78	335
Other investments	7	5
Assets	4,382	3,813
Operating segments | PACKAGING PRODUCTS
Disclosure of operating segments
Assets excluding investments	2,987	2,188
Operating segments | CONTAINERBOARD
Disclosure of operating segments
Assets excluding investments	1,995	1,285
Operating segments | BOXBOARD EUROPE
Disclosure of operating segments
Assets excluding investments	609	567
Operating segments | SPECIALTY PRODUCTS
Disclosure of operating segments
Assets excluding investments	383	336
Operating segments | TISSUE PAPERS
Disclosure of operating segments
Assets excluding investments	919	922
Corporate
Disclosure of operating segments
Assets excluding investments	459	400
Intersegment
Disclosure of operating segments
Assets excluding investments	$ (68)	$ (37)

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Segmented Information - Geographic Sales (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of geographical areas
Sales	$ 4,321	$ 4,001
CANADA
Disclosure of geographical areas
Sales	2,128	2,030
CANADA | Within Canada
Disclosure of geographical areas
Sales	1,629	1,511
CANADA | To the United States
Disclosure of geographical areas
Sales	488	505
CANADA | Other countries
Disclosure of geographical areas
Sales	11	14
UNITED STATES
Disclosure of geographical areas
Sales	1,291	1,112
UNITED STATES | Within Canada
Disclosure of geographical areas
Sales	73	45
UNITED STATES | To the United States
Disclosure of geographical areas
Sales	1,217	1,065
UNITED STATES | Other countries
Disclosure of geographical areas
Sales	1	2
Italy
Disclosure of geographical areas
Sales	417	381
Italy | Within Italy
Disclosure of geographical areas
Sales	279	241
Italy | Other countries
Disclosure of geographical areas
Sales	138	140
Other Countries
Disclosure of geographical areas
Sales	485	478
Other Countries | Other countries
Disclosure of geographical areas
Sales	74	79
Other Countries | Within Europe
Disclosure of geographical areas
Sales	$ 411	$ 399

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Segmented Information - Geographic Property, Plant and Equipment (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of geographical areas
Property, plant and equipment	$ 2,104	$ 1,635	$ 1,625
CANADA
Disclosure of geographical areas
Property, plant and equipment	840	840
UNITED STATES
Disclosure of geographical areas
Property, plant and equipment	967	512
Italy
Disclosure of geographical areas
Property, plant and equipment	183	179
Other Countries
Disclosure of geographical areas
Property, plant and equipment	$ 114	$ 104

XML

Segmented Information - Geographic Goodwill and Other Intangible Assets (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of geographical areas
Goodwill, customer relationships and client lists, and other finite and indefinite useful life intangible assets	$ 740	$ 521
CANADA
Disclosure of geographical areas
Goodwill, customer relationships and client lists, and other finite and indefinite useful life intangible assets	449	441
UNITED STATES
Disclosure of geographical areas
Goodwill, customer relationships and client lists, and other finite and indefinite useful life intangible assets	278	71
Italy
Disclosure of geographical areas
Goodwill, customer relationships and client lists, and other finite and indefinite useful life intangible assets	$ 13	$ 9

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Summary of Significant Accounting Policies - Subsidiaries (Details)	1 Months Ended	8 Months Ended	12 Months Ended
	Dec. 31, 2017	Nov. 30, 2017	Dec. 31, 2017
Cascades Canada ULC
Disclosure of subsidiaries
Proportion of ownership interest in subsidiary			100.00%
Cascades USA Inc.
Disclosure of subsidiaries
Proportion of ownership interest in subsidiary			100.00%
Greenpac Holding LLC
Disclosure of subsidiaries
Proportion of ownership interest in subsidiary	59.70%		59.70%
Percentage of taxable income	82.83%	62.50%
Reno de Medici S.p.A. (RDM)
Disclosure of subsidiaries
Proportion of ownership interest in subsidiary			57.80%

XML

Summary of Significant Accounting Policies - Property, Plant and Equipment and Depreciation (Details)	12 Months Ended
	Dec. 31, 2017
Buildings | Top of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	33 years
Buildings | Bottom of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	10 years
Machinery and equipment | Top of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	30 years
Machinery and equipment | Bottom of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	3 years
Automotive equipment | Top of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	10 years
Automotive equipment | Bottom of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	5 years
Other property, plant and equipment | Top of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	10 years
Other property, plant and equipment | Bottom of range
Disclosure of detailed information about property, plant and equipment
Property, plant and equipment (useful life)	3 years

XML

Summary of Significant Accounting Policies - Intangible Assets (Details)	12 Months Ended
	Dec. 31, 2017
Enterprise Resource Planning (ERP)
Disclosure of intangible assets with indefinite useful life
Finite lived intangible asset useful life (useful life)	7 years
Bottom of range | Customer relationships and client lists
Disclosure of intangible assets with indefinite useful life
Finite lived intangible asset useful life (useful life)	2 years
Bottom of range | Other finite-lived intangible assets
Disclosure of intangible assets with indefinite useful life
Finite lived intangible asset useful life (useful life)	2 years
Bottom of range | Application software
Disclosure of intangible assets with indefinite useful life
Finite lived intangible asset useful life (useful life)	3 years
Top of range | Customer relationships and client lists
Disclosure of intangible assets with indefinite useful life
Finite lived intangible asset useful life (useful life)	20 years
Top of range | Other finite-lived intangible assets
Disclosure of intangible assets with indefinite useful life
Finite lived intangible asset useful life (useful life)	20 years
Top of range | Application software
Disclosure of intangible assets with indefinite useful life
Finite lived intangible asset useful life (useful life)	10 years

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Summary of Significant Accounting Policies - Benefit Plan (Details)	Dec. 31, 2016	Dec. 31, 2015
Corporate Information And Statement Of IFRS Compliance [Abstract]
Percentageof employee benefit plan evaluated	87.00%	18.00%

XML

Changes in Accounting Policy and Disclosures (Details) $ in Millions	Dec. 31, 2018 CAD ($)
IFRS16 | Pro Forma
Disclosure of voluntary change in accounting policy
Minimum capital lease payments payable, at present value	$ 70

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Critical Accounting Estimates (Details) - Greenpac Holding LLC	12 Months Ended
	Dec. 31, 2017
Disclosure of changes in accounting estimates
Proportion of ownership interest in associate	59.70%
Decision making ownership percentage requirement	80.00%

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Business Combinations - 2017 Coyle Family Parts (Details) - Coyle Family Plants	1 Months Ended	12 Months Ended
	Dec. 31, 2017 CAD ($)	Dec. 31, 2017 CAD ($)	Nov. 30, 2017 CAD ($) plant
Disclosure of detailed information about business combination
Number of plants acquired | plant			3
Total consideration including non-cash debt assumed			$ 30,000,000
Cash paid			25,000,000
Liabilities incurred			4,000,000
Goodwill expected to be deductible for tax purposes			3,000,000
Fair values of identifiable assets acquired and liabilities assumed:
Accounts receivable			12,000,000
Inventories			1,000,000
Property, plant and equipment			10,000,000
Intangible assets with finite useful life (client list)			7,000,000
Goodwill			4,000,000
Total assets			34,000,000
Trade and other payables			(4,000,000)
Current portion of long-term debt			(1,000,000)
Long-term debt			(3,000,000)
Net assets acquired			26,000,000
Total non-cash consideration
Cash paid			25,000,000
Non-cash provision for working capital purchase price adjustment	$ 1,000,000	$ 1,000,000	1,000,000
Total consideration transferred			$ 26,000,000
Revenue of acquiree since acquisition date	4,000,000
Profit (loss) of acquiree since acquisition date	0
Revenue of acquiree as if combination occurred at beginning of period		4,369,000,000
Profit (loss) of combined entity as if combination occurred at beginning of period		506,000,000
At fair value
Fair values of identifiable assets acquired and liabilities assumed:
Accounts receivable	$ 12,000,000	$ 12,000,000

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Business Combinations - 2017 Greenpac Holding LLC (Details) $ in Millions			1 Months Ended	8 Months Ended	9 Months Ended	12 Months Ended
	Nov. 30, 2017 USD ($) shares	Apr. 04, 2017 CAD ($)	Dec. 31, 2017	Nov. 30, 2017 USD ($)	Dec. 31, 2017 CAD ($)	Dec. 31, 2017 CAD ($)	Dec. 31, 2016	Nov. 30, 2017 CAD ($)	Sep. 30, 2017 CAD ($)
Disclosure of detailed information about business combination
Indirect ownership interest in subsidiary						33.33%
Greenpac Holding LLC
Disclosure of detailed information about business combination
Cash paid		$ 0
Goodwill		190,000,000							$ 190,000,000
Share repurchase commitment		85,000,000
Gain recognized on remeasurement of equity interest in business		156,000,000
Accumulated other comprehensive loss reclassified to net earnings		(4,000,000)
Income tax recovery		70,000,000
Revenue of acquiree since acquisition date					$ 200,000,000
Profit (loss) of acquiree since acquisition date					$ 17,000,000
Consolidated sales if combination occurred at beginning of period						$ 4,392,000,000
Fair value of acquired receivables		20,000,000
Previously held interest									187,000,000
Fair values of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents									34,000,000
Accounts receivable									20,000,000
Inventories									23,000,000
Current portion of financial assets									4,000,000
Property, plant and equipment									512,000,000
Financial assets									16,000,000
Intangible assets with finite useful life (client list)									39,000,000
Goodwill		190,000,000							190,000,000
Total assets									838,000,000
Trade and other payables									(39,000,000)
Current portion of long-term debt		(15,000,000)							(15,000,000)
Current portion of financial liabilities and other liabilities									(90,000,000)
Long-term debt		$ (235,000,000)							(238,000,000)
Financial liabilities									(4,000,000)
Deferred income tax liabilities									(91,000,000)
Net assets acquired									361,000,000
Non-controlling interests									(57,000,000)
Net assets acquired, less portion attributable to non-controlling interest									304,000,000
Total non-cash consideration
Previously held interest									187,000,000
Revaluation gain on previously held interest on April 4, 2017									156,000,000
Settlement of net liabilities with acquiree before the transaction									(39,000,000)
Total non-cash consideration									$ 304,000,000
Greenpac Holding LLC | Containerboard Partners (Ontario) Inc.
Disclosure of detailed information about business combination
Cash paid	$ 15			$ 15				$ 19,000,000
Proportion of ownership interest in subsidiary	53.00%						23.00%
Additional shares acquired (shares) | shares	90
Indirect ownership interest in subsidiary	3.60%						6.40%
Greenpac Holding LLC
Disclosure of detailed information about business combination
Ownership interest accounting basis			82.83%	78.30%
Proportion of ownership interest in subsidiary			59.70%			59.70%
Percentage of taxes associated to related party			71.80%
Percentage of taxable income			82.83%	62.50%

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Business Combinations - 2016 Rand-Whitney Newtown Plant (Details) - Rand-Whitney Container LLC $ in Millions		3 Months Ended	12 Months Ended
	May 31, 2016 CAD ($)	Dec. 31, 2016 CAD ($)	Dec. 31, 2016 CAD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 CAD ($)
Disclosure of detailed information about business combination
Acquisition-related costs for transaction recognised separately from acquisition of assets and assumption of liabilities in business combination	$ 1,000,000
Fair values of identifiable assets acquired and liabilities assumed:
Property, plant and equipment	10,000,000
Intangible assets with finite useful life (client list)	1,000,000
Goodwill	7,000,000
Total assets	18,000,000
Cash paid	15,000,000			$ 12	$ 15,000,000
Other tangible or intangible assets transferred	3,000,000				3,000,000
Total consideration transferred	18,000,000				$ 18,000,000
Revenue of acquiree since acquisition date		$ 35,000,000
Profit (loss) of acquiree since acquisition date		$ 0
Goodwill expected to be deductible for tax purposes	$ 7,000,000
Revenue of acquiree as if combination occurred at beginning of period			$ 60,000,000

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Accounts Receivable - Summary of Accounts Receivable (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Subclassifications of assets, liabilities and equities [abstract]
Accounts receivable - Trade	$ 526	$ 465
Receivables from related parties	35	39
Less: provision for doubtful accounts	(7)	(6)
Trade receivables - net	554	498
Provisions for volume rebates	(45)	(35)
Other	54	61
Trade receivables	$ 563	$ 524

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Accounts Receivable - Aging Trade Receivables (Details) - Trade receivables - Financial assets past due but not impaired - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets that are either past due or impaired
Trade receivables	$ 143	$ 118
Past due 1-30 days
Disclosure of financial assets that are either past due or impaired
Trade receivables	73	69
Past due 31-60 days
Disclosure of financial assets that are either past due or impaired
Trade receivables	30	22
Past due 61-90 days
Disclosure of financial assets that are either past due or impaired
Trade receivables	10	8
Past due 91 days and over
Disclosure of financial assets that are either past due or impaired
Trade receivables	$ 30	$ 19

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Accounts Receivable - Allowance for Doubtful Accounts (Details) - Trade receivables - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of changes in allowance account for credit losses of financial assets
Balance at beginning of year	$ 6	$ 12
Provision for doubtful accounts, net of unused beginning balance	2	(3)
Receivables written off during the year as uncollectable	(1)	(3)
Balance end of year	$ 7	$ 6

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Inventories (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Classes of current inventories
Finished goods	$ 249	$ 219
Raw material	124	107
Supplies and spare parts	150	134
Inventories	$ 523	$ 460

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Inventories - Narratives (Details) - CAD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Inventory Current
Reversal of inventory write-down	$ 0	$ 0
Raw material	1,751,000,000	1,612,000,000
Finished Goods
Inventory Current
Accumulated adjustments to net realizable value	8,000,000	7,000,000
Inventories, at net realisable value	14,000,000	9,000,000
Raw material
Inventory Current
Accumulated adjustments to net realizable value	1,000,000	0
Inventories, at net realisable value	0	0
Supplies
Inventory Current
Accumulated adjustments to net realizable value	0	0
Inventories, at net realisable value	$ 0	$ 0

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Investments in Associates and Joint Ventures - Investments in Associates and Joint Ventures (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Associates And Joint Ventures
Investments in associates	$ 16	$ 281
Investments in joint ventures	62	54
Investments in associates and joint ventures	78	335
Joint ventures | Associates
Disclosure Of Associates And Joint Ventures
Goodwill	$ 3	$ 28

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Investments in Associates and Joint Ventures - Investments In Associates Narrative (Details) $ in Millions, $ in Millions								12 Months Ended
	Nov. 30, 2017 USD ($)	Jul. 27, 2017 CAD ($)	Mar. 21, 2017 USD ($)	Mar. 21, 2017 CAD ($)	Mar. 10, 2017 CAD ($)	Jan. 18, 2017 CAD ($)	May 06, 2016	Dec. 31, 2017	Dec. 31, 2016 CAD ($)
Boralex Inc.
Disclosure of associates
Proportion of ownership interest in associate						17.37%
Gain on sales of associate						$ 15
Gains (losses) arising from re-evaluated at fair value					$ 155
Accumulated other comprehensive loss reclassified to net earnings					$ (10)
Containerboard Partners (Ontario) Inc.
Disclosure of associates
Proportion of ownership interest in associate			23.00%	23.00%
Purchase of interest in associate	$ 19		$ 12	$ 16
Associates membership interest in acquired associate			12.10%	12.10%
Greenpac Holding LLC
Disclosure of associates
Proportion of ownership interest in associate								59.70%
Borrowings term							5 years
Decrease in interest rate							2.25%
Equity investments | Boralex Inc.
Disclosure of associates
Proceeds from disposal of available-for-sale investments		$ 288
Reclassification adjustments on available-for-sale investments		18
Dividends from equity method investment		$ 2
Equity investments | At fair value
Disclosure of associates
Financial assets available-for-sale									$ 252
Containerboard Partners (Ontario) Inc.
Disclosure of associates
Percentage of voting equity interests acquired	30.00%
Greenpac Holding LLC
Disclosure of associates
Indirect ownership percentage			6.40%	6.40%
Ownership percentage, including indirect ownership								66.10%

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Investments in Associates and Joint Ventures - Financial Disclosures of Principal Associates (Details) - CAD ($) $ in Millions	2 Months Ended	3 Months Ended	12 Months Ended
	Mar. 10, 2017	Apr. 04, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Condensed balance sheet
Cash and cash equivalents			$ 89	$ 62	$ 60
Current portion of financial assets			9	3
Long-term financial assets			22	10
Current liabilities (other than current financial liabilities)			82	4
Current financial liabilities			101	27
Other liabilities			178	178
Condensed statements of earnings
Sales			4,321	4,001
Depreciation and amortization			215	192
Financing expense			92	88
Provision for (recovery of) income taxes			(81)	45
Net earnings			522	137
Other comprehensive income (loss)
Other comprehensive loss			(11)	(2)
Comprehensive income including non-controlling interests for the year			$ 511	135
Boralex Inc.
Condensed balance sheet
Cash and cash equivalents				100
Current assets (other than cash and cash equivalents and current financial assets)				288
Current portion of financial assets				1
Other assets				2,311
Long-term financial assets				2
Current liabilities (other than current financial liabilities)				131
Current financial liabilities				321
Other liabilities				131
Long-term financial liabilities				1,605
Condensed statements of earnings
Sales	$ 96			299
Depreciation and amortization	31			116
Financing expense	19			76
Provision for (recovery of) income taxes	6			(9)
Net earnings	13			2
Other comprehensive income (loss)
Translation adjustment	1			(12)
Cash flow hedges	(1)			0
Other comprehensive loss	0			(12)
Comprehensive income including non-controlling interests for the year	13			(10)
Condensed cash flow
Dividends received from associates	$ 2			7
Greenpac Holding LLC
Condensed balance sheet
Cash and cash equivalents				28
Current assets (other than cash and cash equivalents and current financial assets)				103
Current portion of financial assets				1
Other assets				513
Long-term financial assets				11
Current liabilities (other than current financial liabilities)				41
Current financial liabilities				19
Other liabilities				0
Long-term financial liabilities				251
Condensed statements of earnings
Sales		$ 99		340
Depreciation and amortization		7		28
Financing expense		3		27
Provision for (recovery of) income taxes		0		0
Net earnings		9		22
Other comprehensive income (loss)
Translation adjustment		0		0
Cash flow hedges		1		4
Other comprehensive loss		1		4
Comprehensive income including non-controlling interests for the year		10		26
Condensed cash flow
Dividends received from associates		$ 0		$ 0

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Investments in Associates and Joint Ventures - Investments in Joint Ventures (Details) - CAD ($) $ in Millions		12 Months Ended
	Nov. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Disclosure of joint ventures
Payables to related parties		$ 7	$ 44
Cascades Sonoco US Inc.
Disclosure of joint ventures
PERCENTAGE EQUITY OWNED (%)		50.00%
Cascades Sonoco Inc.
Disclosure of joint ventures
PERCENTAGE EQUITY OWNED (%)		50.00%
Maritime Paper Products Limited Partnership
Disclosure of joint ventures
PERCENTAGE EQUITY OWNED (%)		40.00%
Tencorr Holdings Corporation
Disclosure of joint ventures
PERCENTAGE EQUITY OWNED (%)	33.30%	33.30%
Consideration paid	$ 5
Payables to related parties	$ 3

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Investments in Associates and Joint Ventures - Financial Disclosures of Joint Ventures (Details) - CAD ($) $ in Millions		12 Months Ended
	Nov. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Condensed balance sheet
Cash and cash equivalents		$ 89	$ 62	$ 60
Current liabilities (other than current financial liabilities)		82	4
Current financial liabilities		101	27
Other liabilities		178	178
Condensed statements of earnings
Sales		4,321	4,001
Depreciation and amortization		215	192
Financing expense		92	88
Provision for (recovery of) income taxes		(81)	45
Net earnings		522	137
Other comprehensive income (loss)
Comprehensive income including non-controlling interests for the year		511	135
Cascades Sonoco US Inc.
Condensed balance sheet
Cash and cash equivalents			5
Current assets (other than cash and cash equivalents and current financial assets)		30	26
Other assets		31	16
Current liabilities (other than current financial liabilities)		10	9
Current financial liabilities		2	1
Other liabilities		4	4
Long-term financial liabilities		14	1
Condensed statements of earnings
Sales		119	119
Depreciation and amortization		2	2
Financing expense		1	1
Provision for (recovery of) income taxes		1	4
Net earnings		8	9
Other comprehensive income (loss)
Translation adjustment		(2)	(1)
Comprehensive income including non-controlling interests for the year		6	8
Condensed cash flow
Dividend received from associates		$ 4	4
Proportion of ownership interest in joint venture		50.00%
Cascades Sonoco Inc.
Condensed balance sheet
Cash and cash equivalents			3
Current assets (other than cash and cash equivalents and current financial assets)		$ 28	23
Other assets		17	18
Current liabilities (other than current financial liabilities)		6	9
Current financial liabilities		1	0
Other liabilities		3	3
Long-term financial liabilities		3	1
Condensed statements of earnings
Sales		96	88
Depreciation and amortization		2	2
Financing expense		0	0
Provision for (recovery of) income taxes		1	2
Net earnings		4	6
Other comprehensive income (loss)
Translation adjustment		0	0
Comprehensive income including non-controlling interests for the year		4	6
Condensed cash flow
Dividend received from associates		$ 1	4
Proportion of ownership interest in joint venture		50.00%
Maritime Paper Products Limited Partnership
Condensed balance sheet
Cash and cash equivalents			3
Current assets (other than cash and cash equivalents and current financial assets)		$ 25	20
Other assets		28	28
Current liabilities (other than current financial liabilities)		4	6
Current financial liabilities		1	1
Other liabilities		0	0
Long-term financial liabilities		4	5
Condensed statements of earnings
Sales		102	96
Depreciation and amortization		2	2
Financing expense		0	1
Provision for (recovery of) income taxes		0	0
Net earnings		7	8
Other comprehensive income (loss)
Translation adjustment		0	0
Comprehensive income including non-controlling interests for the year		7	8
Condensed cash flow
Dividend received from associates		$ 1	$ 0
Proportion of ownership interest in joint venture		40.00%
Tencorr Holdings Corporation
Condensed balance sheet
Current assets (other than cash and cash equivalents and current financial assets)		$ 20
Other assets		12
Current liabilities (other than current financial liabilities)		14
Current financial liabilities		5
Other liabilities		0
Long-term financial liabilities		1
Condensed statements of earnings
Sales		111
Depreciation and amortization		2
Financing expense		0
Provision for (recovery of) income taxes		0
Net earnings		1
Other comprehensive income (loss)
Translation adjustment		0
Comprehensive income including non-controlling interests for the year		1
Condensed cash flow
Dividend received from associates		$ 0
Proportion of ownership interest in joint venture	33.30%	33.30%

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Investments in Associates and Joint Ventures - Subsidiaries with Non-controlling Interests (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of subsidiaries
Net earnings attributable to non-controlling interests	$ (15)	$ (2)
Non-controlling interests	146	90
Condensed balance sheet
Cash and cash equivalents	89	62	$ 60
Current financial assets	9	3
Long-term financial assets	22	10
Current liabilities (other than current financial liabilities)	82	4
Current financial liabilities	101	27
Other liabilities	178	178
Condensed statements of earnings
Sales	4,321	4,001
Depreciation and amortization	215	192
Provision for (recovery of) income taxes	(81)	45
Net earnings	522	137
Condensed cash flow
Cash flows from operating activities	173	372
Cash flows used from investing activities	70	(185)
Cash flows used for financing activities	$ (218)	$ (182)
RENO DE MEDICI S.p.A.
Disclosure of subsidiaries
Percentage of shares held by non-controlling interests (accounting basis)	42.18%	42.30%
Net earnings attributable to non-controlling interests	$ 9	$ 2
Non-controlling interests	105	90
Dividends paid to non-controlling interests	1	1
Condensed balance sheet
Cash and cash equivalents	29	41
Current assets (other than cash and cash equivalents and current financial assets)	254	231
Current financial assets	0	0
Other assets	335	299
Long-term financial assets	0	0
Current liabilities (other than current financial liabilities)	195	178
Current financial liabilities	30	23
Other liabilities	72	68
Non-current financial liabilities	67	82
Condensed statements of earnings
Sales	838	702
Depreciation and amortization	33	32
Provision for (recovery of) income taxes	9	5
Net earnings	21	5
Condensed cash flow
Cash flows from operating activities	49	56
Cash flows used from investing activities	(48)	(39)
Cash flows used for financing activities	$ (17)	$ (9)
Greenpac Holding LLC
Disclosure of subsidiaries
Percentage of shares held by non-controlling interests (accounting basis)	17.17%
Net earnings attributable to non-controlling interests	$ 5
Non-controlling interests	42
Dividends paid to non-controlling interests	4
Condensed balance sheet
Cash and cash equivalents	38
Current assets (other than cash and cash equivalents and current financial assets)	100
Current financial assets	3
Other assets	568
Long-term financial assets	14
Current liabilities (other than current financial liabilities)	31
Current financial liabilities	106
Other liabilities	0
Non-current financial liabilities	209
Condensed statements of earnings
Sales	278
Depreciation and amortization	22
Provision for (recovery of) income taxes	0
Net earnings	21
Condensed cash flow
Cash flows from operating activities	39
Cash flows used from investing activities	(3)
Cash flows used for financing activities	$ (30)

XML

Investments in Associates and Joint Ventures - Investments in Non-Significant Associates and Joint Ventures (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Associates And Joint Ventures
Investments in associates	$ 16	$ 281
Investments in joint ventures	62	54
Investments in associates and joint ventures	78	335
Share of results of associates and joint ventures	39	32
Non-significant joint ventures
Disclosure Of Associates And Joint Ventures
Investments in joint ventures	16	14
Share of profit (loss) of joint ventures accounted for using equity method	3	4
Non-significant associates
Disclosure Of Associates And Joint Ventures
Investments in associates	16	17
Share of profit (loss) of associates accounted for using equity method	1	2
Non-significant associates | Non-significant joint ventures
Disclosure Of Associates And Joint Ventures
Investments in associates and joint ventures	32	31
Share of results of associates and joint ventures	4	6
Dividends received from investments accounted for using equity method, classified as investing activities	$ 2	$ 3

XML

Property, Plant and Equipment (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	$ 1,635	$ 1,625
Additions	207	206
Disposals	(8)	(5)
Depreciation	(189)	(170)
Business combination, net of assets transferred	522	8
Assets held for sale	(13)
Reversal of impairment (charges)	(2)	(3)
Others	(1)	3
Exchange differences	(47)	(29)
Property, plant and equipment, ending balance	2,104	1,635
Cost
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	3,828	3,898
Property, plant and equipment, ending balance	4,365	3,828
Accumulated depreciation and impairment
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	(2,193)	(2,273)
Property, plant and equipment, ending balance	(2,261)	(2,193)
LAND
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	110	111
Additions	11	0
Disposals	(3)	(1)
Depreciation	0	0
Business combination, net of assets transferred	7	1
Assets held for sale	(1)
Reversal of impairment (charges)	0	0
Others	(1)	1
Exchange differences	1	(2)
Property, plant and equipment, ending balance	124	110
LAND | Cost
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	110	113
Property, plant and equipment, ending balance	124	110
LAND | Accumulated depreciation and impairment
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	0	(2)
Property, plant and equipment, ending balance	0	0
BUILDINGS
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	387	366
Additions	6	5
Disposals	(2)	0
Depreciation	(31)	(28)
Business combination, net of assets transferred	90	7
Assets held for sale	(8)
Reversal of impairment (charges)	0	2
Others	48	39
Exchange differences	(11)	(4)
Property, plant and equipment, ending balance	479	387
BUILDINGS | Cost
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	740	717
Property, plant and equipment, ending balance	824	740
BUILDINGS | Accumulated depreciation and impairment
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	(353)	(351)
Property, plant and equipment, ending balance	(345)	(353)
MACHINERY AND EQUIPMENT
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	911	953
Additions	24	45
Disposals	(1)	(1)
Depreciation	(132)	(116)
Business combination, net of assets transferred	397	0
Assets held for sale	0
Reversal of impairment (charges)	0	(3)
Others	84	55
Exchange differences	(29)	(22)
Property, plant and equipment, ending balance	1,254	911
MACHINERY AND EQUIPMENT | Cost
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	2,553	2,675
Property, plant and equipment, ending balance	2,966	2,553
MACHINERY AND EQUIPMENT | Accumulated depreciation and impairment
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	(1,642)	(1,722)
Property, plant and equipment, ending balance	(1,712)	(1,642)
AUTOMOTIVE EQUIPMENT
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	55	37
Additions	18	25
Disposals	(1)	0
Depreciation	(15)	(13)
Business combination, net of assets transferred	1	0
Assets held for sale	0
Reversal of impairment (charges)	0	0
Others	1	6
Exchange differences	(1)	0
Property, plant and equipment, ending balance	58	55
AUTOMOTIVE EQUIPMENT | Cost
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	126	104
Property, plant and equipment, ending balance	140	126
AUTOMOTIVE EQUIPMENT | Accumulated depreciation and impairment
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	(71)	(67)
Property, plant and equipment, ending balance	(82)	(71)
OTHERS
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	172	158
Additions	148	131
Disposals	(1)	(3)
Depreciation	(11)	(13)
Business combination, net of assets transferred	27	0
Assets held for sale	(4)
Reversal of impairment (charges)	(2)	(2)
Others	(133)	(98)
Exchange differences	(7)	(1)
Property, plant and equipment, ending balance	189	172
OTHERS | Cost
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	299	289
Property, plant and equipment, ending balance	311	299
OTHERS | Accumulated depreciation and impairment
Reconciliation of changes in property, plant and equipment
Property, plant and equipment, beginning balance	(127)	(131)
Property, plant and equipment, ending balance	$ (122)	$ (127)

XML

Property, Plant and Equipment - Narratives (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Property, plant and equipment [abstract]
Property, plant and equipment in process of construction	$ 81	$ 90
Deposits on property, plant and equipment	18	7
Recognised finance lease as assets	31	24
Interest costs capitalised	$ 2	$ 2
Weighted average capitalization rate (percent)	5.56%	5.56%

XML

Goodwill and Other Intangible Assets With Finite and Indefinite Useful Life (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	$ 521
Ending balance	740	$ 521
TOTAL INTANGIBLE ASSETS WITH FINITE USEFUL LIFE
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	171	174
Additions	24	17
Business combinations	46	1
Amortization	(26)	(22)
Others		1
Exchange differences	(3)	0
Ending balance	212	171
TOTAL INTANGIBLE ASSETS WITH FINITE USEFUL LIFE | Cost
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	332	315
Ending balance	390	332
TOTAL INTANGIBLE ASSETS WITH FINITE USEFUL LIFE | Accumulated depreciation and impairment
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	(161)	(141)
Ending balance	(178)	(161)
APPLICATION SOFTWARE AND ERP
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	83	76
Additions	24	17
Business combinations	0	0
Amortization	(13)	(10)
Others		0
Exchange differences	0	0
Ending balance	94	83
APPLICATION SOFTWARE AND ERP | Cost
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	126	110
Ending balance	150	126
APPLICATION SOFTWARE AND ERP | Accumulated depreciation and impairment
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	(43)	(34)
Ending balance	(56)	(43)
CUSTOMER RELATIONSHIPS AND CLIENT LISTS
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	84	92
Additions	0	0
Business combinations	46	1
Amortization	(11)	(9)
Others		0
Exchange differences	(3)	0
Ending balance	116	84
CUSTOMER RELATIONSHIPS AND CLIENT LISTS | Cost
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	171	170
Ending balance	208	171
CUSTOMER RELATIONSHIPS AND CLIENT LISTS | Accumulated depreciation and impairment
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	(87)	(78)
Ending balance	(92)	(87)
OTHER INTANGIBLE ASSETS WITH FINITE USEFUL LIFE
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	4	6
Additions	0	0
Business combinations	0	0
Amortization	(2)	(3)
Others		1
Exchange differences	0	0
Ending balance	2	4
OTHER INTANGIBLE ASSETS WITH FINITE USEFUL LIFE | Cost
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	35	35
Ending balance	32	35
OTHER INTANGIBLE ASSETS WITH FINITE USEFUL LIFE | Accumulated depreciation and impairment
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	(31)	(29)
Ending balance	(30)	(31)
TOTAL INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	350	346
Additions	0	0
Business combinations	194	7
Amortization	0	0
Others		(1)
Exchange differences	(16)	(2)
Ending balance	528	350
TOTAL INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE | Cost
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	356	351
Ending balance	530	356
TOTAL INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE | Accumulated depreciation and impairment
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	(6)	(5)
Ending balance	(2)	(6)
GOODWILL
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	344	339
Additions	0	0
Business combinations	194	7
Amortization	0	0
Others		0
Exchange differences	(17)	(2)
Ending balance	521	344
GOODWILL | Cost
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	349	343
Ending balance	523	349
GOODWILL | Accumulated depreciation and impairment
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	(5)	(4)
Ending balance	(2)	(5)
OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	6	7
Additions	0	0
Business combinations	0	0
Amortization	0	0
Others		(1)
Exchange differences	1	0
Ending balance	7	6
OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE | Cost
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	7	8
Ending balance	7	7
OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE | Accumulated depreciation and impairment
Reconciliation of changes in intangible assets and goodwill [abstract]
Beginning balance	(1)	(1)
Ending balance	$ 0	$ (1)

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Other Assets (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Subclassifications of assets, liabilities and equities [abstract]
Notes receivable from business disposals	$ 6	$ 9
Other investments	7	5
Other assets	30	27
Employee future benefits	37	46
Gross non current assets	80	87
Less: Current portion, included in accounts receivables	(6)	(15)
Other assets	$ 74	$ 72

XML

Other Assets - Narratives (Details) € in Millions	3 Months Ended	12 Months Ended
	Jun. 30, 2017 CAD ($)	Dec. 31, 2017 CAD ($)	Dec. 31, 2016 CAD ($)	Dec. 31, 2017 EUR (€)	Dec. 19, 2017 CAD ($)	Dec. 19, 2017 EUR (€)
Other Assets
Impairment charges (reversals)		$ 11,000,000	$ 3,000,000
PAC Service S.p.A
Other Assets
Cash paid		15,000,000		€ 10	$ 15,000,000	€ 10
Greenpac Holding LLC
Other Assets
Deferred income		0	$ 12,000,000
Receipts from supervision of greenpac		$ 1,000,000
Greenpac Holding LLC | CONTAINERBOARD | Other assets
Other Assets
Write-downs of other assets	$ 11,000,000

XML

Trade and Other Payables (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Subclassifications of assets, liabilities and equities [abstract]
Trade payables	$ 488	$ 472
Payables to related parties	7	44
Accrued expenses	143	145
Trade and other current payables	$ 638	$ 661

XML

Provisions for Contingencies and Charges - Provisions Rollforward (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Provisions
Beginning of period	$ 43	$ 39
Additional provision	8	20
Reversal of provision		(2)
Payments	(11)	(16)
Revaluation		2
Others	3
End of period	43	43
ENVIRONMENTAL RESTORATION OBLIGATIONS
Provisions
Beginning of period	8	9
Additional provision	(1)	0
Reversal of provision		0
Payments	0	(3)
Revaluation		2
Others	0
End of period	7	8
ENVIRONMENTAL COSTS
Provisions
Beginning of period	16	14
Additional provision	0	5
Reversal of provision		(1)
Payments	0	(2)
Revaluation		0
Others	0
End of period	16	16
LEGAL CLAIMS
Provisions
Beginning of period	3	3
Additional provision	2	1
Reversal of provision		0
Payments	(1)	(1)
Revaluation		0
Others	0
End of period	4	3
SEVERANCES
Provisions
Beginning of period	3	2
Additional provision	5	7
Reversal of provision		0
Payments	(5)	(6)
Revaluation		0
Others	0
End of period	3	3
ONEROUS CONTRACT
Provisions
Beginning of period	6	5
Additional provision	0	3
Reversal of provision		(1)
Payments	(3)	(1)
Revaluation		0
Others	0
End of period	3	6
OTHERS
Provisions
Beginning of period	7	6
Additional provision	2	4
Reversal of provision		0
Payments	(2)	(3)
Revaluation		0
Others	3
End of period	$ 10	$ 7

XML

Provisions for Contingencies and Charges - Analysis of Total Provisions (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]
Long-term	$ 36	$ 34
Current	7	9
Provisions	$ 43	$ 43	$ 39

XML

Long-term Debt (Details)	Dec. 12, 2017 USD ($)	Dec. 12, 2017 CAD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 CAD ($)	Sep. 30, 2017 CAD ($)	Jun. 01, 2017 CAD ($)	Apr. 04, 2017 CAD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 CAD ($)	Dec. 31, 2016 EUR (€)
Disclosure of detailed information about borrowings [line items]
Current portion of long-term debt				$ 59,000,000					$ 36,000,000
Long-term debt				1,517,000,000					1,530,000,000
Accounts receivable and inventory pledged as collateral				748,000,000					715,000,000
Property, plant and equipment pledged as collateral				237,000,000					250,000,000
Greenpac Holding LLC
Disclosure of detailed information about borrowings [line items]
Current portion of long-term debt recognised as part of acquisition					$ 15,000,000		$ 15,000,000
Long-term debt recognised as part of acquisition					$ 238,000,000		235,000,000
Payables to related parties							$ 3,000,000
Total long-term debt
Disclosure of detailed information about borrowings [line items]
Borrowings				1,576,000,000					1,566,000,000
Revolving credit facility
Disclosure of detailed information about borrowings [line items]
Notional amount				$ 5,000,000					(19,000,000)
Line of credit maximum borrowing capacity						$ 750,000,000
Revolving credit facility | Weighted average
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate			3.39%	3.39%
Revolving credit facility 2
Disclosure of detailed information about borrowings [line items]
Notional amount			$ 151,000,000					$ 82,000,000
Revolving credit facility 3
Disclosure of detailed information about borrowings [line items]
Notional amount | €										€ (1,000,000)
5.50% Unsecured senior notes of $250 million
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate			5.50%	5.50%
Notional amount				$ 250,000,000
5.50% Unsecured senior notes of US$400 million (December 31,2016 - US$550 million)
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate	5.50%		5.50%	5.50%
Notional amount			$ 400,000,000					550,000,000
Debt repurchased	$ 150,000,000
Repayments of non-current borrowings	156,000,000	$ 201,000,000
Payment of debt premium	$ 6,000,000	8,000,000
5.75% Unsecured senior notes of US$200 million (December 31, 2016 - US$250 million)
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate	5.75%		5.75%	5.75%
Notional amount			$ 200,000,000					$ 250,000,000
Debt repurchased	$ 50,000,000
Repayments of non-current borrowings	52,000,000	67,000,000
Payment of debt premium	$ 2,000,000	3,000,000
Debt written off during period		$ 3,000,000
Other debts of subsidiaries
Disclosure of detailed information about borrowings [line items]
Current portion of long-term debt				$ 14,000,000					13,000,000
Other debts without recourse to the Corporation
Disclosure of detailed information about borrowings [line items]
Current portion of long-term debt				45,000,000					23,000,000
Gross carrying amount
Disclosure of detailed information about borrowings [line items]
Borrowings				1,586,000,000					1,581,000,000
Gross carrying amount | Revolving credit facility
Disclosure of detailed information about borrowings [line items]
Borrowings				195,000,000					90,000,000
Gross carrying amount | 5.50% Unsecured senior notes of $250 million
Disclosure of detailed information about borrowings [line items]
Borrowings				250,000,000					250,000,000
Gross carrying amount | 5.50% Unsecured senior notes of US$400 million (December 31,2016 - US$550 million)
Disclosure of detailed information about borrowings [line items]
Borrowings				503,000,000					738,000,000
Gross carrying amount | 5.75% Unsecured senior notes of US$200 million (December 31, 2016 - US$250 million)
Disclosure of detailed information about borrowings [line items]
Borrowings				252,000,000					336,000,000
Gross carrying amount | Other debts of subsidiaries
Disclosure of detailed information about borrowings [line items]
Borrowings				66,000,000					62,000,000
Gross carrying amount | Other debts without recourse to the Corporation
Disclosure of detailed information about borrowings [line items]
Borrowings				320,000,000					105,000,000
Less: Unamortized financing costs
Disclosure of detailed information about borrowings [line items]
Borrowings				$ 10,000,000					$ 15,000,000

XML

Long-term Debt - Minimum Lease Payments (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of finance lease and operating lease by lessee
Minimum finance lease payments payable	$ 39	$ 34
Less: amounts representing finance charges	6	6
Minimum finance lease payments payable, at present value	33	28
No later than one year
Disclosure of finance lease and operating lease by lessee
Minimum finance lease payments payable	11	8
Minimum finance lease payments payable, at present value	9	7
Later than one year but no later than five years
Disclosure of finance lease and operating lease by lessee
Minimum finance lease payments payable	22	19
Minimum finance lease payments payable, at present value	18	15
More than five years
Disclosure of finance lease and operating lease by lessee
Minimum finance lease payments payable	6	7
Minimum finance lease payments payable, at present value	$ 6	$ 6

XML

Other Liabilities (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Subclassifications of assets, liabilities and equities [abstract]
Employee future benefits	$ 174	$ 174
Greenpac equity holder put option (see Note 5 for more details)	80	0
Other	6	8
Gross non current liabilities	260	182
Less: Current portion	(82)	(4)
Other liabilities	$ 178	$ 178

XML

Employee Future Benefits - Employee Future Benefits (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of defined benefit plans [line items]
Net long-term liabilities on consolidated balance sheet	$ 137	$ 128
Pension costs - defined benefit plans	7	7
Pension costs - defined contribution plans	21	20
Postemployment Benefit Expense, Defined Benefit And Defined Contribution Plans	32	32
Gain (loss) on remeasurement, net defined benefit liability (asset)	13	(11)
Defined Benefit Pension Plan
Disclosure of defined benefit plans [line items]
Net long-term liabilities on consolidated balance sheet	36	22
Pension costs - defined benefit plans	7	7
Gain (loss) on remeasurement, net defined benefit liability (asset)	14	(13)
Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of defined benefit plans [line items]
Net long-term liabilities on consolidated balance sheet	101	106
Pension costs - defined benefit plans	4	5
Gain (loss) on remeasurement, net defined benefit liability (asset)	$ (1)	$ 2

XML

Employee Future Benefits - Rollforward of Net Defined Benefit Obligation and Fair Value of Plan Asset (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Net Defined Benefit Liability (Asset)
Pension costs - defined benefit plans	$ 7	$ 7
Remeasurements
Impact of remeasurements on other comprehensive income	13	(11)
Defined Benefit Pension Plan
Net Defined Benefit Liability (Asset)
Beginning balance	22	36
Current service cost	5	5
Interest expense (income)	2	2
Pension costs - defined benefit plans	7	7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	(14)	(9)
Loss from change in demographic assumptions	2
Loss from change in financial assumptions	14	11
Experience gains	12	(9)
Change in asset ceiling, excluding amounts included in interest expense		(6)
Impact of remeasurements on other comprehensive income	14	(13)
Exchange differences	1	(1)
Contributions
Employers	(8)	(7)
Plan participants	0	0
Benefit payments	0	0
Ending balance	36	22
Post Employment Benefit Obligation and Other Benefit Obligation
Net Defined Benefit Liability (Asset)
Beginning balance	106	105
Current service cost	2	2
Interest expense (income)	3	3
Curtailments	(1)
Pension costs - defined benefit plans	4	5
Remeasurements
Loss from change in financial assumptions	1	2
Experience gains	(2)
Impact of remeasurements on other comprehensive income	(1)	2
Exchange differences	1	(1)
Contributions
Employers	(9)	(5)
Benefit payments	0	0
Ending balance	101	106
TOTAL | Defined Benefit Pension Plan
Net Defined Benefit Liability (Asset)
Beginning balance	22	30
Current service cost	5	5
Interest expense (income)	2	2
Pension costs - defined benefit plans	7	7
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	(14)	(9)
Loss from change in demographic assumptions	2
Loss from change in financial assumptions	14	11
Experience gains	12	(9)
Change in asset ceiling, excluding amounts included in interest expense		0
Impact of remeasurements on other comprehensive income	14	(7)
Exchange differences	1	(1)
Contributions
Employers	(8)	(7)
Plan participants	0	0
Benefit payments	0	0
Ending balance	36	22
PRESENT VALUE OF OBLIGATION | Defined Benefit Pension Plan
Net Defined Benefit Liability (Asset)
Beginning balance	482	484
Current service cost	5	5
Interest expense (income)	17	18
Pension costs - defined benefit plans	22	23
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	0	0
Loss from change in demographic assumptions	2
Loss from change in financial assumptions	14	11
Experience gains	12	(9)
Change in asset ceiling, excluding amounts included in interest expense		0
Impact of remeasurements on other comprehensive income	28	2
Exchange differences	1	(1)
Contributions
Employers	0	0
Plan participants	2	2
Benefit payments	(27)	(28)
Ending balance	508	482
PRESENT VALUE OF OBLIGATION | Post Employment Benefit Obligation and Other Benefit Obligation
Net Defined Benefit Liability (Asset)
Beginning balance	106	105
Current service cost	2	2
Interest expense (income)	3	3
Curtailments	(1)
Pension costs - defined benefit plans	4	5
Remeasurements
Loss from change in financial assumptions	1	2
Experience gains	(2)
Impact of remeasurements on other comprehensive income	(1)	2
Exchange differences	1	(1)
Contributions
Employers	0	0
Benefit payments	(9)	(5)
Ending balance	101	106
FAIR VALUE OF PLAN ASSETS | Defined Benefit Pension Plan
Net Defined Benefit Liability (Asset)
Beginning balance	(460)	(454)
Current service cost	0	0
Interest expense (income)	(15)	(16)
Pension costs - defined benefit plans	(15)	(16)
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	(14)	(9)
Loss from change in demographic assumptions	0
Loss from change in financial assumptions	0	0
Experience gains	0	0
Change in asset ceiling, excluding amounts included in interest expense		0
Impact of remeasurements on other comprehensive income	(14)	(9)
Exchange differences	0	0
Contributions
Employers	(8)	(7)
Plan participants	(2)	(2)
Benefit payments	27	28
Ending balance	(472)	(460)
FAIR VALUE OF PLAN ASSETS | Post Employment Benefit Obligation and Other Benefit Obligation
Net Defined Benefit Liability (Asset)
Beginning balance	0	0
Current service cost	0	0
Interest expense (income)	0	0
Curtailments	0
Pension costs - defined benefit plans	0	0
Remeasurements
Loss from change in financial assumptions	0	0
Experience gains	0
Impact of remeasurements on other comprehensive income	0	0
Exchange differences	0	0
Contributions
Employers	(9)	(5)
Benefit payments	9	5
Ending balance	0	0
IMPACT OF MINIMUM FUNDING REQUIREMENT (ASSET CEILING) | Defined Benefit Pension Plan
Net Defined Benefit Liability (Asset)
Beginning balance	0	6
Current service cost	0	0
Interest expense (income)	0	0
Pension costs - defined benefit plans	0	0
Remeasurements
Return on plan assets, excluding amounts included in interest expense (income)	0	0
Loss from change in demographic assumptions	0
Loss from change in financial assumptions	0	0
Experience gains	0	0
Change in asset ceiling, excluding amounts included in interest expense		(6)
Impact of remeasurements on other comprehensive income	0	(6)
Exchange differences	0	0
Contributions
Employers	0	0
Plan participants	0	0
Benefit payments	0	0
Ending balance	$ 0	$ 0

XML

Employee Future Benefits - Amounts Recognized in the Balance Sheet by Country and Sector (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Pension Plan
Disclosure of defined benefit plans [line items]
Present value of funded obligations	$ 443	$ 421
Fair value of plan assets	472	460
Deficit (surplus) of funded plans	(29)	(39)
Present value of unfunded obligations	65	61
Liabilities (assets) on consolidated balance sheet	36	22	$ 36
Defined Benefit Pension Plan | CANADA
Disclosure of defined benefit plans [line items]
Present value of funded obligations	433	411
Fair value of plan assets	466	454
Deficit (surplus) of funded plans	(33)	(43)
Present value of unfunded obligations	37	37
Liabilities (assets) on consolidated balance sheet	4	(6)
Defined Benefit Pension Plan | UNITED STATES
Disclosure of defined benefit plans [line items]
Present value of funded obligations	10	10
Fair value of plan assets	6	6
Deficit (surplus) of funded plans	4	4
Present value of unfunded obligations	0	0
Liabilities (assets) on consolidated balance sheet	4	4
Defined Benefit Pension Plan | Europe
Disclosure of defined benefit plans [line items]
Present value of funded obligations	0	0
Fair value of plan assets	0	0
Deficit (surplus) of funded plans	0	0
Present value of unfunded obligations	28	24
Liabilities (assets) on consolidated balance sheet	28	24
Defined Benefit Pension Plan | Operating segments | CONTAINERBOARD
Disclosure of defined benefit plans [line items]
Present value of funded obligations	405	385
Fair value of plan assets	437	427
Deficit (surplus) of funded plans	(32)	(42)
Present value of unfunded obligations	8	8
Liabilities (assets) on consolidated balance sheet	(24)	(34)
Defined Benefit Pension Plan | Operating segments | BOXBOARD EUROPE
Disclosure of defined benefit plans [line items]
Present value of funded obligations	0	0
Fair value of plan assets	0	0
Deficit (surplus) of funded plans	0	0
Present value of unfunded obligations	28	24
Liabilities (assets) on consolidated balance sheet	28	24
Defined Benefit Pension Plan | Operating segments | SPECIALTY PRODUCTS
Disclosure of defined benefit plans [line items]
Present value of funded obligations	0	0
Fair value of plan assets	0	0
Deficit (surplus) of funded plans	0	0
Present value of unfunded obligations	2	2
Liabilities (assets) on consolidated balance sheet	2	2
Defined Benefit Pension Plan | Operating segments | TISSUE PAPERS
Disclosure of defined benefit plans [line items]
Present value of funded obligations	37	35
Fair value of plan assets	34	32
Deficit (surplus) of funded plans	3	3
Present value of unfunded obligations	2	2
Liabilities (assets) on consolidated balance sheet	5	5
Defined Benefit Pension Plan | Corporate
Disclosure of defined benefit plans [line items]
Present value of funded obligations	1	1
Fair value of plan assets	1	1
Deficit (surplus) of funded plans	0	0
Present value of unfunded obligations	25	25
Liabilities (assets) on consolidated balance sheet	25	25
Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of defined benefit plans [line items]
Present value of funded obligations	101	106
Liabilities (assets) on consolidated balance sheet	101	106	$ 105
Post Employment Benefit Obligation and Other Benefit Obligation | CANADA
Disclosure of defined benefit plans [line items]
Present value of funded obligations	73	78
Liabilities (assets) on consolidated balance sheet	73	78
Post Employment Benefit Obligation and Other Benefit Obligation | UNITED STATES
Disclosure of defined benefit plans [line items]
Present value of funded obligations	4	4
Liabilities (assets) on consolidated balance sheet	4	4
Post Employment Benefit Obligation and Other Benefit Obligation | Europe
Disclosure of defined benefit plans [line items]
Present value of funded obligations	24	24
Liabilities (assets) on consolidated balance sheet	24	24
Post Employment Benefit Obligation and Other Benefit Obligation | Operating segments | CONTAINERBOARD
Disclosure of defined benefit plans [line items]
Present value of funded obligations	38	41
Liabilities (assets) on consolidated balance sheet	38	41
Post Employment Benefit Obligation and Other Benefit Obligation | Operating segments | BOXBOARD EUROPE
Disclosure of defined benefit plans [line items]
Present value of funded obligations	24	24
Liabilities (assets) on consolidated balance sheet	24	24
Post Employment Benefit Obligation and Other Benefit Obligation | Operating segments | SPECIALTY PRODUCTS
Disclosure of defined benefit plans [line items]
Present value of funded obligations	6	6
Liabilities (assets) on consolidated balance sheet	6	6
Post Employment Benefit Obligation and Other Benefit Obligation | Operating segments | TISSUE PAPERS
Disclosure of defined benefit plans [line items]
Present value of funded obligations	12	13
Liabilities (assets) on consolidated balance sheet	12	13
Post Employment Benefit Obligation and Other Benefit Obligation | Corporate
Disclosure of defined benefit plans [line items]
Present value of funded obligations	21	22
Liabilities (assets) on consolidated balance sheet	$ 21	$ 22

XML

Employee Future Benefits - Actuarial Assumptions (Details) - Defined Benefit Pension Plan	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CANADA
Disclosure of defined benefit plans [line items]
Discount rate obligation	3.40%	3.70%	3.90%
Actuarial assumption of discount rates (service cost)	3.50%	3.90%
Inflation rate	2.25%
CANADA | Bottom of range
Disclosure of defined benefit plans [line items]
Salary growth rate	2.00%	1.75%
Inflation rate		2.25%
CANADA | Top of range
Disclosure of defined benefit plans [line items]
Salary growth rate	2.75%	3.00%
Inflation rate		2.50%
UNITED STATES
Disclosure of defined benefit plans [line items]
Discount rate obligation	3.31%	3.73%	3.90%
Actuarial assumption of discount rates (service cost)	3.73%	3.90%
Europe
Disclosure of defined benefit plans [line items]
Discount rate obligation	1.60%	1.90%	2.10%
Actuarial assumption of discount rates (service cost)	1.90%	2.10%
Inflation rate	1.75%	1.75%

XML

Employee Future Benefits - Forecasted Employees Retiring (Details) - CANADA - Defined Benefit Pension Plan - year	Dec. 31, 2017	Dec. 31, 2016
Disclosure of defined benefit plans [line items]
Percentage of all pension plans	93.00%
Male
Disclosure of defined benefit plans [line items]
Retiring at the end of the year	21.7	21.6
Retiring 20 years after the end of the reporting year	22.8	22.7
Female
Disclosure of defined benefit plans [line items]
Retiring at the end of the year	24.1	24.1
Retiring 20 years after the end of the reporting year	25.1	25

XML

Employee Future Benefits - Sensitivity Analysis (Details)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Actuarial assumption of medical cost trend rates	4.50%	4.50%
Discount rate | Defined Benefit Pension Plan
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage decrease in assumption	0.25%
Discount rate | Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage increase in assumption	0.25%
Percentage decrease in assumption	0.25%
Impact on defined benefit obligation, increase in assumption	(2.20%)
Impact on defined benefit obligation, decrease in assumption	2.30%
Salary growth rate | Defined Benefit Pension Plan
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage decrease in assumption	0.25%
Salary growth rate | Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage increase in assumption	0.25%
Percentage decrease in assumption	0.25%
Impact on defined benefit obligation, increase in assumption	0.50%
Impact on defined benefit obligation, decrease in assumption	(0.40%)
Health care cost increase | Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage increase in assumption	1.00%
Impact on defined benefit obligation, increase in assumption	2.00%
Impact on defined benefit obligation, decrease in assumption	(1.70%)
Life expectancy | Defined Benefit Pension Plan
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Duration increase in assumption	1 year
Duration decrease in assumption	1 year
Impact on defined benefit obligation, decrease in assumption	2.80%
Life expectancy | Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Duration increase in assumption	1 year
Duration decrease in assumption	1 year
Impact on defined benefit obligation, increase in assumption	0.80%
Impact on defined benefit obligation, decrease in assumption	1.30%
CANADA | Discount rate | Defined Benefit Pension Plan
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage increase in assumption	0.25%
Impact on defined benefit obligation, increase in assumption	(2.90%)
Impact on defined benefit obligation, decrease in assumption	3.10%
CANADA | Salary growth rate | Defined Benefit Pension Plan
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage increase in assumption	0.25%
Impact on defined benefit obligation, increase in assumption	0.40%
Impact on defined benefit obligation, decrease in assumption	(0.30%)
CANADA | Life expectancy | Defined Benefit Pension Plan
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Impact on defined benefit obligation, increase in assumption	3.00%

XML

Employee Future Benefits - Fair Value of Plan Assets (Details) - Defined Benefit Pension Plan - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of fair value of plan assets [line items]
Cash and short-term investments	$ 5	$ 9
Shares	40	85
Mutual funds	90	151
Other	164	101
Assets, amount contributed to fair value of plan assets	$ 472	$ 460
Percentage of allocation. cash and short-term investments	1.10%	2.00%
Percentage of allocation bonds	65.00%
Percentage of allocation. equity investments	8.50%	18.50%
Percentage of allocation. mutual funds	19.10%	32.80%
Percentage of allocation. other	34.60%	21.90%
Entity's shares included in fair value of plan assets	$ 1
Annual annuities pledged by insurance contracts	164
Foreign bond mutual funds
Disclosure of fair value of plan assets [line items]
Mutual funds	6	$ 2
Alternative investments
Disclosure of fair value of plan assets [line items]
Mutual funds	22	21
Insured annuities
Disclosure of fair value of plan assets [line items]
Other	164	94
Derivatives contract, net
Disclosure of fair value of plan assets [line items]
Other		7
LEVEL 1
Disclosure of fair value of plan assets [line items]
Cash and short-term investments	5	9
Assets, amount contributed to fair value of plan assets	144	164
LEVEL 1 | Foreign bond mutual funds
Disclosure of fair value of plan assets [line items]
Mutual funds	0	0
LEVEL 1 | Alternative investments
Disclosure of fair value of plan assets [line items]
Mutual funds	0	0
LEVEL 1 | Insured annuities
Disclosure of fair value of plan assets [line items]
Other	0	0
LEVEL 1 | Derivatives contract, net
Disclosure of fair value of plan assets [line items]
Other		7
LEVEL 2
Disclosure of fair value of plan assets [line items]
Cash and short-term investments	0	0
Assets, amount contributed to fair value of plan assets	328	296
LEVEL 2 | Foreign bond mutual funds
Disclosure of fair value of plan assets [line items]
Mutual funds	6	2
LEVEL 2 | Alternative investments
Disclosure of fair value of plan assets [line items]
Mutual funds	22	21
LEVEL 2 | Insured annuities
Disclosure of fair value of plan assets [line items]
Other	164	94
LEVEL 2 | Derivatives contract, net
Disclosure of fair value of plan assets [line items]
Other		0
LEVEL 3
Disclosure of fair value of plan assets [line items]
Cash and short-term investments	0	0
Assets, amount contributed to fair value of plan assets	0	0
LEVEL 3 | Foreign bond mutual funds
Disclosure of fair value of plan assets [line items]
Mutual funds	0	0
LEVEL 3 | Alternative investments
Disclosure of fair value of plan assets [line items]
Mutual funds	0	0
LEVEL 3 | Insured annuities
Disclosure of fair value of plan assets [line items]
Other	0	0
LEVEL 3 | Derivatives contract, net
Disclosure of fair value of plan assets [line items]
Other		0
Canadian
Disclosure of fair value of plan assets [line items]
Bonds	173	114
Shares	$ 34	$ 71
Percentage of allocation bonds	36.70%	24.80%
Canadian | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	$ 8	$ 19
Canadian | LEVEL 1
Disclosure of fair value of plan assets [line items]
Bonds	92	47
Shares	34	71
Canadian | LEVEL 1 | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	7	16
Canadian | LEVEL 2
Disclosure of fair value of plan assets [line items]
Bonds	81	67
Shares	0	0
Canadian | LEVEL 2 | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	1	3
Canadian | LEVEL 3
Disclosure of fair value of plan assets [line items]
Bonds	0	0
Shares	0	0
Canadian | LEVEL 3 | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	0	0
Foreign
Disclosure of fair value of plan assets [line items]
Shares	6	14
Foreign | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	54	109
Foreign | LEVEL 1
Disclosure of fair value of plan assets [line items]
Shares	6	14
Foreign | LEVEL 1 | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	0	0
Foreign | LEVEL 2
Disclosure of fair value of plan assets [line items]
Shares	0	0
Foreign | LEVEL 2 | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	54	109
Foreign | LEVEL 3
Disclosure of fair value of plan assets [line items]
Shares	0	0
Foreign | LEVEL 3 | Other investments
Disclosure of fair value of plan assets [line items]
Mutual funds	$ 0	$ 0

XML

Employee Future Benefits - Asset Volatility (Details) - Defined Benefit Pension Plan $ in Millions	Dec. 31, 2017 CAD ($)
Disclosure of defined benefit plans [line items]
Percentage of allocation bonds	65.00%
Annual annuities pledged by insurance contracts	$ 164
CANADA
Disclosure of defined benefit plans [line items]
Percentage of all pension plans	93.00%

XML

Employee Future Benefits - Expected Maturities (Details) $ in Millions	12 Months Ended
	Dec. 31, 2017 CAD ($) year	Dec. 31, 2016 CAD ($) year
Disclosure of defined benefit plans [line items]
Weighted average duration of defined benefit obligation | year	11	12
Expected maturity analysis of undiscounted plans	$ 1,042
LESS THAN A YEAR
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	34
BETWEEN ONE AND TWO YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	37
BETWEEN TWO AND FIVE YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	113
OVER FIVE YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	858
Defined Benefit Pension Plan
Disclosure of defined benefit plans [line items]
Surplus (deficit) in plan	29	$ 39
Estimate of special payments to be made over 10 years	1
Estimate of service contributions in normal course of business	8
Estimate of contributions expected to be paid in 2018	9
Expected maturity analysis of undiscounted plans	890
Defined Benefit Pension Plan | LESS THAN A YEAR
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	29
Defined Benefit Pension Plan | BETWEEN ONE AND TWO YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	29
Defined Benefit Pension Plan | BETWEEN TWO AND FIVE YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	89
Defined Benefit Pension Plan | OVER FIVE YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	743
Post Employment Benefit Obligation and Other Benefit Obligation
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	152
Post Employment Benefit Obligation and Other Benefit Obligation | LESS THAN A YEAR
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	5
Post Employment Benefit Obligation and Other Benefit Obligation | BETWEEN ONE AND TWO YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	8
Post Employment Benefit Obligation and Other Benefit Obligation | BETWEEN TWO AND FIVE YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	24
Post Employment Benefit Obligation and Other Benefit Obligation | OVER FIVE YEARS
Disclosure of defined benefit plans [line items]
Expected maturity analysis of undiscounted plans	$ 115

XML

Income Taxes - Provision for Income Taxes (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Income Taxes [Abstract]
Current taxes	$ 10	$ 11
Deferred taxes	(91)	34
Provision for (recovery of) income taxes	$ (81)	$ 45

XML

Income Taxes - Provision for Income Taxes Based on the Effective Income Tax Rate (Details) - CAD ($) $ in Millions		1 Months Ended	12 Months Ended
	Apr. 04, 2017	Jul. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Income Taxes [Abstract]
Tax expense (income) at applicable tax rate			$ 117	$ 48
Adjustment for income taxes arising from the following:
Difference in statutory income tax rate of foreign operations			10	2
Prior years reassessment			3	1
Reversal of deferred income tax liabilities related to our previously held investment in Greenpac			(70)	0
Permanent difference on revaluation of previously held equity interest - Greenpac associate			(57)	0
Non-taxable portion of capital gain on revaluation of previously held equity interest - Boralex associate		$ 6	(24)	0
Change in future income taxes resulting from enacted tax rate change			(57)	2
Unrealized capital gain on long-term debt			(3)	0
Permanent differences			(6)	(5)
Change in deferred income tax assets relating to capital tax loss			6	(3)
Adjustment of provision for income taxes			(198)	(3)
Provision for (recovery of) income taxes			$ (81)	$ 45
Average effective tax rate			28.60%	27.40%
Disclosure of detailed information about business combination
Tax Cuts And Jobs Act Of 2017, effect on deferred tax liability			$ 57
Greenpac Holding LLC
Disclosure of detailed information about business combination
Income tax recovery	$ 70
Gain (loss) recognised as result of remeasuring to fair value equity interest in acquiree held by acquirer before business combination	$ 156

XML

Income Taxes - Provision for Income Taxes Relating to Components of Other Comprehensive Income (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Income Taxes [Abstract]
Foreign currency translation related to hedging activities	$ 4	$ 3
Cash flow hedge	0	3
Included in share of other comprehensive income of associates	3	0
Actuarial gain (loss) on post-employment benefit obligations	(3)	3
Income tax relating to components of other comprehensive income	$ 4	$ 9

XML

Income Taxes - Analysis of Deferred Tax Assets and Deferred Tax Liabilities (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Taxes
Deferred income tax assets	$ 149	$ 179
Deferred income tax liabilities	186	219
Deferred tax liability	(37)	(40)	$ (8)
Before Offset
Income Taxes
Deferred income tax assets	223	279
Deferred income tax liabilities	$ 260	$ 319

XML

Income Taxes - Movement of Deferred Income Tax (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of changes in deferred tax liability (asset) [abstract]
As at January 1	$ (40)	$ (8)
Through statement of earnings	91	(34)
Variance of income tax credit, net of related income tax	4	5
Through statement of comprehensive income	(4)	(9)
Through business combinations	(91)	0
Others	(7)	0
Exchange differences	10	6
As at December 31	$ (37)	$ (40)

XML

Income Taxes - Deferred Income Tax Assets (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	$ (40)	$ (8)
Deferred tax expense (income) recognised in profit or loss	(91)	34
Variance of income tax credit, net of related income tax	4	5
Income tax relating to components of other comprehensive income	(4)	(9)
Increase (decrease) through net exchange differences, deferred tax liability (asset)	10	6
As at December 31	(37)	(40)
Deferred Tax Asset, Before Offset
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	279	297
Deferred tax expense (income) recognised in profit or loss	(59)	(14)
Variance of income tax credit, net of related income tax	4	5
Income tax relating to components of other comprehensive income	(1)	(9)
As at December 31	223	279
Deferred Tax Asset, Before Offset | RECOGNIZED TAX BENEFIT ARISING FROM INCOME TAX LOSSES
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	159	141
Deferred tax expense (income) recognised in profit or loss	(25)	19
Income tax relating to components of other comprehensive income	0
Increase (decrease) through net exchange differences, deferred tax liability (asset)		(1)
As at December 31	134	159
Deferred Tax Asset, Before Offset | EMPLOYEE FUTURE BENEFITS
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	24	25
Deferred tax expense (income) recognised in profit or loss	(6)	2
Income tax relating to components of other comprehensive income	3	(3)
As at December 31	21	24
Deferred Tax Asset, Before Offset | EXPENSE ON RESEARCH
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	15	38
Deferred tax expense (income) recognised in profit or loss	(10)	(23)
Income tax relating to components of other comprehensive income	0
As at December 31	5	15
Deferred Tax Asset, Before Offset | UNUSED TAX CREDITS
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	41	39
Deferred tax expense (income) recognised in profit or loss	(6)	(3)
Variance of income tax credit, net of related income tax	4	5
Income tax relating to components of other comprehensive income	0
As at December 31	39	41
Deferred Tax Asset, Before Offset | FINANCIAL INSTRUMENTS
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	5	16
Deferred tax expense (income) recognised in profit or loss	(5)	(8)
Income tax relating to components of other comprehensive income	1	(3)
As at December 31	1	5
Deferred Tax Asset, Before Offset | FOREIGN EXCHANGE LOSS ON LONG-TERM DEBT
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	19	23
Deferred tax expense (income) recognised in profit or loss	(12)	(2)
Income tax relating to components of other comprehensive income	(5)	(3)
Increase (decrease) through net exchange differences, deferred tax liability (asset)		1
As at December 31	2	19
Deferred Tax Asset, Before Offset | OTHERS
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	16	15
Deferred tax expense (income) recognised in profit or loss	5	1
Income tax relating to components of other comprehensive income	0
As at December 31	$ 21	$ 16

XML

Income Taxes - Deferred Income Tax Liabilities (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	$ 40	$ 8
Deferred tax expense (income) recognised in profit or loss	(91)	34
Through business combinations	91	0
Others	7	0
Exchange differences	(10)	(6)
As at December 31	37	40
Deferred income tax assets	149	179
Deferred income tax liabilities	186	219
Deferred Tax Liability, Before Offset
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	319	305
Deferred tax expense (income) recognised in profit or loss	(150)	20
Included in share of other comprehensive income of associates	3
Through business combinations	91
Others	7
Exchange differences	(10)	(6)
As at December 31	260	319
Deferred Tax Liability, Before Offset | PROPERTY, PLANT AND EQUIPMENT
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	180	169
Deferred tax expense (income) recognised in profit or loss	(51)	14
Included in share of other comprehensive income of associates	0
Through business combinations	80
Others	5
Exchange differences	(9)	(3)
As at December 31	205	180
Deferred Tax Liability, Before Offset | INTANGIBLE ASSETS
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	53	51
Deferred tax expense (income) recognised in profit or loss	(14)	3
Included in share of other comprehensive income of associates	0
Through business combinations	11
Others	2
Exchange differences	(1)	(1)
As at December 31	51	53
Deferred Tax Liability, Before Offset | INVESTMENTS
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	85	84
Deferred tax expense (income) recognised in profit or loss	(85)	3
Included in share of other comprehensive income of associates	3
Through business combinations	0
Others	0
Exchange differences	0	(2)
As at December 31	3	85
Deferred Tax Liability, Before Offset | OTHERS
Disclosure of temporary difference, unused tax losses and unused tax credits
As at January 1	1	1
Deferred tax expense (income) recognised in profit or loss	0	0
Included in share of other comprehensive income of associates	0
Through business combinations	0
Others	0
Exchange differences	0	0
As at December 31	$ 1	$ 1

XML

Income Taxes - Income Tax Losses (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	$ 515
Deferred tax asset	(37)	$ (40)	$ (8)
CANADA
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	429
CANADA | Maturity Year 2026
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	8
CANADA | Maturity Year 2027
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	14
CANADA | Maturity Year 2029
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	2
CANADA | Maturity Year 2030
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	1
CANADA | Maturity Year 2032
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	77
CANADA | Maturity Year 2033
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	82
CANADA | Maturity Year 2034
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	126
CANADA | Maturity Year 2035
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	63
CANADA | Maturity Year 2036
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	53
CANADA | Maturity Year 2037
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	3
UNITED STATES
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	81
UNITED STATES | Maturity Year 2019
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	7
UNITED STATES | Maturity Year 2020
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	5
UNITED STATES | Maturity Year 2029
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	2
UNITED STATES | Maturity Year 2031
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	2
UNITED STATES | Maturity Year 2032
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	3
UNITED STATES | Maturity Year 2033
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	2
UNITED STATES | Maturity Year 2035
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	13
UNITED STATES | Maturity Year 2036
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	1
UNITED STATES | Maturity Year 2037
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	46
Europe
Disclosure of temporary difference, unused tax losses and unused tax credits
RECOGNIZED TAX LOSSES	5
Deferred Tax Asset, Before Offset
Disclosure of temporary difference, unused tax losses and unused tax credits
Deferred tax asset	223	279	297
Deferred Tax Asset, Before Offset | RECOGNIZED TAX BENEFIT ARISING FROM INCOME TAX LOSSES
Disclosure of temporary difference, unused tax losses and unused tax credits
Deferred tax asset	$ 134	$ 159	$ 141

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Capital Stock - Capital Management (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2010	Dec. 31, 2015
Share Capital, Reserves And Other Equity Interest [Abstract]
Cash and cash equivalents	$ (89)	$ (62)		$ (60)
Bank loans and advances	35	28
Long-term debt, including current portion	1,576	1,566
Net debt	1,522	1,532
Total equity	1,601	1,074		$ 963
Total capital	$ 3,123	2,606
Disclosure of classes of share capital
Maximum debt to capitalization ratio	65.00%
Minimum interest coverage ratio	2.25
Funded debt	$ 1,307	1,512
IFRS adjustment			$ 208
Dividends received	$ 296	$ 379
Debt to capitalization ratio	44.01%
Interest coverage ratio	3.88
Bottom of range
Disclosure of classes of share capital
Cash reserves for capital acquisitions	$ 150
Top of range
Disclosure of classes of share capital
Cash reserves for capital acquisitions	$ 250

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Capital Stock - Issued and Outstanding (Details) - CAD ($) $ in Millions		12 Months Ended
	Feb. 28, 2018	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of number of shares outstanding
Common shares issued on exercise of stock options (shares)		461,442	262,836
Redemption of common shares (shares)	0	0	(1,047,243)
Changes in number of shares outstanding
Balance - Beginning of year		$ 1,074	$ 963
Common shares issued on exercise of stock options		4	1
Redemption of common shares			(9)
Balance - End of year		$ 1,601	$ 1,074
CAPITAL STOCK
Reconciliation of number of shares outstanding
Beginning balance (shares)		94,526,516	95,310,923
Common shares issued on exercise of stock options (shares)		461,442	262,836
Redemption of common shares (shares)		0	(1,047,243)
Ending balance (shares)		94,987,958	94,526,516
Changes in number of shares outstanding
Balance - Beginning of year		$ 487	$ 490
Common shares issued on exercise of stock options		5	2
Redemption of common shares		0	(5)
Balance - End of year		$ 492	$ 487

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Capital Stock - Redemption of Common Shares and Common Stock Issuance (Details) - CAD ($) $ in Millions		12 Months Ended
	Feb. 28, 2018	Dec. 31, 2017	Dec. 31, 2016
Disclosure of classes of share capital
Maximum authorized redeemable shares (shares)		946,066
Maximum authorized redeemable shares percentage		1.00%
Redemption of common shares (shares)	0	0	1,047,243
Redemption of common shares			$ 9
Common shares issued on exercise of stock options (shares)		461,442	262,836
Issuance of common share upon exercise of stock options		$ 4	$ 1
common stock
Disclosure of classes of share capital
Redemption of common shares (shares)		0	1,047,243
Redemption of common shares		$ 0	$ 5
Common shares issued on exercise of stock options (shares)		461,442	262,836
Issuance of common share upon exercise of stock options		$ 5	$ 2

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Capital Stock - Earnings Per Share (Details) - CAD ($) $ / shares in Units, $ in Millions		12 Months Ended
	Feb. 28, 2018	Dec. 31, 2017	Dec. 31, 2016
Share Capital, Reserves And Other Equity Interest [Abstract]
Net earnings available to common shareholders (in millions of Canadian dollars)		$ 507	$ 135
Weighted average basic number of common shares outstanding (shares)		94,680,598	94,709,048
Weighted average number of diluted common shares (shares)		97,598,900	96,933,338
Basic net earnings per common share (in Canadian dollars), (per share)		$ 5.35	$ 1.42
Diluted net earnings per common share (in Canadian dollars), (per share)		$ 5.19	$ 1.39
Antidilutive securities excluded from computation of earnings per share (shares)		240,880	0
Disclosure of non-adjusting events after reporting period
Redemption of common shares (shares)	0	0	1,047,243

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Capital Stock - Dividends Declared (Details) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Share Capital, Reserves And Other Equity Interest [Abstract]
Dividends declared per common share (cad per share)	$ 0.16	$ 0.16

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Stock-Based Compensation - Narrative (Details)			12 Months Ended
	Jan. 15, 2018 shares	May 08, 2013 shares	Dec. 31, 2017 CAD ($) shares	Dec. 31, 2016 CAD ($) shares
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of shares reserved for issuance for officers and key employees | shares		1,990,554
Expiration period (in years)		10 years
Expense for share-based payment			$ 1,000,000	$ 1,000,000
Weighted average price of options exercised			14.23	12.14
Weighted average fair value estimate (in C$/option)			$ 4.22	2.75
Share Options
Disclosure of terms and conditions of share-based payment arrangement [line items]
Market value of shares average trading days			5 days
Expense for share-based payment			$ 1,000,000	1,000,000
Share Options | Tranche 1
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting percentage		25.00%
Share Options | Tranche 2
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting percentage		25.00%
Share Options | Tranche 3
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting percentage		25.00%
Share Options | Tranche 4
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting percentage		25.00%
Employee Share Purchase Plan
Disclosure of terms and conditions of share-based payment arrangement [line items]
Expense for share-based payment			$ 1,000,000	$ 1,000,000
Maximum employee voluntary contribution rate			5.00%
Corporation matching contribution rate			25.00%
DSU
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of other equity instruments outstanding | shares			247,276	205,773
Long term liability from share-based payment transactions			$ 4,000,000	$ 3,000,000
DSU | Major ordinary share transactions
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of other equity instruments outstanding | shares	291,855
Number of other equity instruments granted | shares	44,579
PSU
Disclosure of terms and conditions of share-based payment arrangement [line items]
Expense for share-based payment			$ 7,000,000	$ 5,000,000
Number of other equity instruments outstanding | shares			581,785	761,367
Long term liability from share-based payment transactions			$ 1,000,000	$ 5,000,000
Vesting period (in years)			2 years

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Stock-Based Compensation - Changes in the Number of Operations Outstanding (Details)	12 Months Ended
	Dec. 31, 2017 CAD ($) shares	Dec. 31, 2016 CAD ($) shares
Share-based Payment Arrangements [Abstract]
Number of options, beginning of period | shares	5,216,063	5,385,323
Number of options, granted | shares	240,880	351,461
Number of options, exercised | shares	(461,442)	(262,836)
Number of options, expired | shares	0	(257,885)
Number of options, forfeited | shares	(5,381)	0
Number of options, end of period | shares	4,990,120	5,216,063
Number of options, exercisable | shares	4,170,259	4,166,339
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 6.16	$ 6.15
Weighted average exercise price of share options granted in share-based payment arrangement (in C$/option) | $	14.28	9.75
Weighted average exercise price of share options exercised in share-based payment arrangement (in C$/option) | $	8.28	5.51
Weighted average exercise price of share options expired in share-based payment arrangement (in C$/option) | $	0.00	11.49
Weighted average exercise price of share options forfeited in share-based payment arrangement (in C$/option) | $	9.75	0.00
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	6.35	6.16
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 5.63	$ 5.78

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Stock-Based Compensation - Options Outstanding and Options Exercisable (Details)	Dec. 31, 2017 CAD ($) shares	Dec. 31, 2016 CAD ($) shares	Dec. 31, 2015 CAD ($) shares
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	4,990,120	5,216,063	5,385,323
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 6.35	$ 6.16	$ 6.15
Number of options, exercisable | shares	4,170,259	4,166,339
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 5.63	$ 5.78
2007
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	95,064
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 11.83
Number of options, exercisable | shares	95,064
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 11.83
2008
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	326,166
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 7.81
Number of options, exercisable | shares	326,166
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 7.81
2009
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	968,333
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 3.92
Number of options, exercisable | shares	968,333
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 3.92
2010
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	444,124
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 6.43
Number of options, exercisable | shares	444,124
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 6.43
2011
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	492,432
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 6.26
Number of options, exercisable | shares	492,432
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 6.26
2012
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	842,524
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 4.46
Number of options, exercisable | shares	842,524
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 4.46
2013
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	426,392
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 5.18
Number of options, exercisable | shares	426,392
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 5.18
2014
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	423,974
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 6.10
Number of options, exercisable | shares	308,134
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 6.10
2015
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	390,185
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 7.66
Number of options, exercisable | shares	185,244
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 7.66
2016
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	340,046
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 9.75
Number of options, exercisable | shares	81,846
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 9.75
2017
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options outstanding | shares	240,880
Weighted average exercise price of share options outstanding in share-based payment arrangement (in C$/option) | $	$ 14.28
Number of options, exercisable | shares	0
Weighted average exercise price of share options exercisable in share-based payment arrangement (in C$/option) | $	$ 0.00

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Stock-Based Compensation - Fair Value of the Share Options Granted (Details)	12 Months Ended
	Dec. 31, 2017 CAD ($) year	Dec. 31, 2016 CAD ($) year
Share-based Payment Arrangements [Abstract]
Exercise price (in $C per option)	$ 14.26	$ 10.09
Weighted average exercise price of share options granted in share-based payment arrangement (in C$/option)	$ 14.28	$ 9.75
Risk-free interest rate	1.77%	1.04%
Expected dividend yield	1.12%	1.58%
Expected life of options (in years) | year	6	6
Expected volatility (as a percentage)	32.00%	31.00%

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Accumulated Other Comprehensive Loss (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Subclassifications of assets, liabilities and equities [abstract]
Foreign currency translation, net of hedging activities and related income tax of $12 million (December 31, 2016 - $16 million)	$ (30)	$ (13)
Unrealized gain arising from foreign exchange forward contracts designated as cash flow hedges, net of related income taxes of nil (December 31, 2016 - nil)	1	0
Unrealized loss arising from commodity derivative financial instruments designated as cash flow hedges, net of related income taxes of $2 million (December 31, 2016 - $2 million)	(4)	(5)
Unrealized loss on available-for-sale financial assets, net of related income taxes of nil (December 31, 2016 - nil)	(2)	(1)
Reserve of gains and losses from investments in equity instruments	0	(12)
Accumulated other comprehensive loss	(35)	(31)
Foreign currency translation, tax	12	16
Unrealized gain arising from foreign exchange forward contracts designated as cash flow hedges, tax	0	0
Unrealized loss arising from commodity derivative financial instruments designated as cash flow hedges, tax	2	2
Unrealized gain (loss) on available-for-sale financial assets, tax	0	0
Unrealized loss on share of other comprehensive income of associates, tax	$ 0	$ 9

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Cost of Sales by Nature - Cost of Sales by Nature (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Analysis of income and expense [abstract]
Raw material	$ 1,751	$ 1,612
Wages and employee benefits expenses	689	662
Energy	259	248
Delivery	331	269
Depreciation and amortization	215	192
Other	463	397
Cost of sales	$ 3,708	$ 3,380

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Cost of Sales by Nature - Selling and Administrative Expenses, by Nature (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Analysis of income and expense [abstract]
Wages and employee benefits expenses	$ 287	$ 271
Information technology	60	46
Publicity and marketing	16	15
Other	77	70
Selling, general and administrative expense	$ 440	$ 402

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Employee Benefits Expenses - Employee Benefits Expenses (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Analysis of income and expense [abstract]
Wages and employee benefits expenses	$ 976	$ 933
Share options granted to directors and employees	1	1
Pension costs - defined benefit plans	7	7
Pension costs - defined contribution plans	21	20
Post-employment benefits other than defined benefit pension plans	4	5
Wages and employee benefits expenses	$ 1,009	$ 966

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Employee Benefits Expenses - Key Management Compensation (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Analysis of income and expense [abstract]
Salaries and other short-term benefits	$ 11	$ 11
Post-employment benefits	1	0
Share-based payments	6	4
Key management compensation	$ 18	$ 15

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Gain on Acquisitions, Disposals and Others (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Analysis of income and expense [abstract]
Gain on disposal of assets	$ (8)	$ (4)

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Gain on Acquisitions, Disposals and Others (Narratives) (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments
Gain (loss) on disposal of assets	$ 8	$ 4
Corporate
Disclosure of operating segments
Gain (loss) on disposal of assets	1
CONTAINERBOARD | Operating segments
Disclosure of operating segments
Gain (loss) on disposal of assets	$ 7
SPECIALTY PRODUCTS | Operating segments
Disclosure of operating segments
Gain (loss) on disposal of assets		(3)
SPECIALTY PRODUCTS | Operating segments | Plant Located in St-Jérôme, Québec
Disclosure of operating segments
Gain (loss) on disposal of assets		3
SPECIALTY PRODUCTS | Operating segments | Property in Auburn, Maine
Disclosure of operating segments
Gain (loss) on disposal of assets		$ 4

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Impairment Charges and Restructuring Costs - Schedule of Impaired Assets (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	$ 11	$ 3
Operating segments | PACKAGING PRODUCTS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	11
Operating segments | CONTAINERBOARD
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	11
Operating segments | BOXBOARD EUROPE
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0
Operating segments | SPECIALTY PRODUCTS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0
Operating segments | TISSUE PAPERS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	2
Corporate
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	(2)
Property, plant and equipment
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	2	3
Property, plant and equipment | Operating segments | PACKAGING PRODUCTS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0	(1)
Property, plant and equipment | Operating segments | CONTAINERBOARD
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0	2
Property, plant and equipment | Operating segments | BOXBOARD EUROPE
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0	0
Property, plant and equipment | Operating segments | SPECIALTY PRODUCTS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0	(3)
Property, plant and equipment | Operating segments | SPECIALTY PRODUCTS | Property in Auburn, Maine
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)		(2)
Property, plant and equipment | Operating segments | TISSUE PAPERS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	2	4
Property, plant and equipment | Corporate
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0	0
Intangible assets with finite useful life and other assets
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	9
Intangible assets with finite useful life and other assets | Operating segments | PACKAGING PRODUCTS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	11
Intangible assets with finite useful life and other assets | Operating segments | CONTAINERBOARD
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	11
Intangible assets with finite useful life and other assets | Operating segments | BOXBOARD EUROPE
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0
Intangible assets with finite useful life and other assets | Operating segments | SPECIALTY PRODUCTS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0
Intangible assets with finite useful life and other assets | Operating segments | TISSUE PAPERS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	0
Intangible assets with finite useful life and other assets | Corporate
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)	$ (2)
Land | Operating segments | SPECIALTY PRODUCTS
Disclosure of impairment loss and reversal of impairment loss
Impairment charges (reversals)		$ (1)

XML

Impairment Charges and Restructuring Costs - Goodwill and Other Indefinite Useful Life Intangible Assets (Details)	Dec. 31, 2017 CAD ($)
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Amount by which fair value would exceed carrying value due to an increase in discount rate by 3%	$ 0
Containerboard CGU
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Goodwill	469,000,000
Recovery CGU
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Goodwill	13,000,000
Partitioning Activities CGU
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Goodwill	3,000,000
Tissue Papers CGU
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Goodwill	36,000,000
Water Rights | Reno de Medici CGU
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Intangible assets other than goodwill	7,000,000
TISSUE PAPERS | Operating segments
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Amount by which unit's recoverable amount exceeds its carrying amount	$ 305,000,000
Amount by which value assigned to key assumption must change in order for unit's recoverable amount to be equal to carrying amount	0.03

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Impairment Charges and Restructuring Costs - Fair Value Assumptions (Details)	Dec. 31, 2017 $ / $ short_ton	Dec. 31, 2016 $ / $
Disclosure of information for cash-generating units
Exchange rate	1.26	1.33
Operating segments | TISSUE PAPERS | LEVEL 2
Disclosure of information for cash-generating units
Discount rate applied to cash flow projections	9.75%
Exchange rate	1.25
Terminal shipments | short_ton	673,000

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Impairment Charges and Restructuring Costs - Summary of Restructuring Costs (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments
Restructuring costs	$ 6	$ 9
Operating segments | CONTAINERBOARD
Disclosure of operating segments
Restructuring costs	2	(1)
Operating segments | BOXBOARD EUROPE
Disclosure of operating segments
Restructuring costs	1	2
Operating segments | SPECIALTY PRODUCTS
Disclosure of operating segments
Restructuring costs	0	1
Operating segments | TISSUE PAPERS
Disclosure of operating segments
Restructuring costs	2	7
Operating segments | TISSUE PAPERS | Lease termination
Disclosure of operating segments
Restructuring costs		3
Operating segments | TISSUE PAPERS | Facility closing
Disclosure of operating segments
Restructuring costs		4
Corporate
Disclosure of operating segments
Restructuring costs	$ 1	$ 0

XML

Additional Information - Change in Non-cash Working Capital Components (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Cash Flow Statement [Abstract]
Accounts receivable	$ 31	$ (6)
Current income tax assets	0	(1)
Inventories	(46)	(2)
Trade and other payables	(71)	66
Current income tax liabilities	(1)	(1)
Change in in working capital	$ (87)	$ 56

XML

Additional Information - Financing Expenses and Interest Expense on Employee Future Expenses (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Cash Flow Statement [Abstract]
Interest on long-term debt	$ 89	$ 83
Interest income	(3)	(1)
Amortization of financing costs	3	3
Other interest and banking fees	3	3
Interest expense on employee future benefits	5	5
Financing expense and interest expense on employee future benefits	$ 97	$ 93

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Additional Information - Total Liabilities From Financing Activtiies (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities arising from financing activities	$ 1,532	$ 1,721
Changes in liabilities arising from financing activities [abstract]
Change in cash and cash equivalents	(25)	(5)
Cash flows from (used in) increase (decrease) in current borrowings	8	(8)
Change in revolving credit facilities	114	(146)
Repurchase of unsecured senior notes	(257)	0
Increase in other long-term debt	11	40
Payments of other long-term debt	(47)	(47)
Business combinations	257
Foreign exchange gain on long-term debt and financial instruments	(62)	(35)
Increase through new leases, liabilities arising from financing activities	11	18
Amortization of financing costs	2	2
Write off of unamortized financing costs following repurchase of unsecured senior notes	3	3
Other	(1)	3
Exchange differences	(24)	(11)
Liabilities arising from financing activities	1,522	1,532
CASH AND CASH EQUIVALENT
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities arising from financing activities	(62)	(60)
Changes in liabilities arising from financing activities [abstract]
Change in cash and cash equivalents	(25)	(5)
Exchange differences	(2)	3
Liabilities arising from financing activities	(89)	(62)
BANK LOANS AND ADVANCES
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities arising from financing activities	28	37
Changes in liabilities arising from financing activities [abstract]
Cash flows from (used in) increase (decrease) in current borrowings	8	(8)
Exchange differences	(1)	(1)
Liabilities arising from financing activities	35	28
LONG-TERM DEBT
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Liabilities arising from financing activities	1,566	1,744
Changes in liabilities arising from financing activities [abstract]
Change in revolving credit facilities	114	(146)
Repurchase of unsecured senior notes	(257)
Increase in other long-term debt	11	40
Payments of other long-term debt	(47)	(47)
Business combinations	257
Foreign exchange gain on long-term debt and financial instruments	(62)	(35)
Increase through new leases, liabilities arising from financing activities	11	18
Amortization of financing costs	2	2
Write off of unamortized financing costs following repurchase of unsecured senior notes	3
Other	(1)	3
Exchange differences	(21)	(13)
Liabilities arising from financing activities	$ 1,576	$ 1,566

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Financial Instruments - Fair Value of Financial Instruments (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Financial liabilities at fair value through profit or loss | Derivatives contract, net
Disclosure Of Financial Assets And Liabilities [Line Items]
Financial liabilities	$ (4)	$ (31)
Financial liabilities, at fair value	(4)	(31)
Financial liabilities at amortized cost | Total long-term debt
Disclosure Of Financial Assets And Liabilities [Line Items]
Financial liabilities	(1,576)	(1,566)
Financial liabilities, at fair value	(1,626)	(1,612)
Financial Liabilities At Fair Value Through Other Comprehensive Income, Category [Member]
Disclosure Of Financial Assets And Liabilities [Line Items]
Financial liabilities	(33)	(8)
Financial liabilities, at fair value	(33)	(8)
Financial assets at fair value through profit or loss | Derivatives contract, net
Disclosure Of Financial Assets And Liabilities [Line Items]
Financial assets	27	10
Financial assets, at fair value	27	10
Financial assets available for sale | Equity investments
Disclosure Of Financial Assets And Liabilities [Line Items]
Financial assets	1	2
Financial assets, at fair value	1	2
Financial assets at fair value through other comprehensive income, category [member]
Disclosure Of Financial Assets And Liabilities [Line Items]
Financial assets	4	2
Financial assets, at fair value	$ 4	$ 2

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Financial Instruments - Fair Value Measurement (Details) - Recurring - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets	$ 32	$ 14
Financial liabilities	(37)	(39)
Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities	(37)	(39)
Available-for-sale Investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets	1	2
Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets	31	12
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	1	1
Financial liabilities, at fair value	0	0
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1) | Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities, at fair value	0	0
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1) | Available-for-sale Investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	1	1
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1) | Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	0	0
SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	31	13
Financial liabilities, at fair value	(37)	(39)
SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities, at fair value	(37)	(39)
SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | Available-for-sale Investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	0	1
SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	31	12
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	0	0
Financial liabilities, at fair value	0	0
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities, at fair value	0	0
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | Available-for-sale Investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	0	0
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | Derivatives contract, net
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial assets, at fair value	$ 0	$ 0

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Financial Instruments - Financial Risk Management (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Short-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	$ 19	$ 23
Long-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	18	16
Financial Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	37	39
Short-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	9	3
Long-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	22	9
Financial Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	31	12
Currency risk | Short-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	10	20
Currency risk | Long-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	15	13
Currency risk | Financial Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	25	33
Currency risk | Short-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	5	2
Currency risk | Long-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	1	0
Currency risk | Financial Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	6	2
Price risk | Short-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	7	3
Price risk | Long-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	1	3
Price risk | Financial Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	8	6
Price risk | Short-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	4	1
Price risk | Long-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	21	9
Price risk | Financial Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	25	$ 10
Interest risk | Short-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	2
Interest risk | Long-Term Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	2
Interest risk | Financial Liabilities
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	4
Interest risk | Short-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	0
Interest risk | Long-Term Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	0
Interest risk | Financial Assets
Disclosure of nature and extent of risks arising from financial instruments
Risk exposure associated with instruments sharing characteristic	$ 0

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Financial Instruments - Currency Risk (Details)	12 Months Ended
	Dec. 31, 2017 CAD ($)	Dec. 31, 2016 CAD ($)	Dec. 31, 2017 USD ($) $ / $	Dec. 31, 2017 CAD ($) $ / $	Dec. 31, 2017 EUR (€) $ / $	Dec. 31, 2016 USD ($) $ / $ $ / €	Dec. 31, 2016 CAD ($) $ / $ $ / €	Dec. 31, 2016 EUR (€) $ / $ $ / €
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $			1.26	1.26	1.26	1.33	1.33	1.33
Settlement of derivative financial instruments	$ (12,000,000)	$ 3,000,000
Currency risk
Disclosure of detailed information about financial instruments [line items]
Fair Value (in Millions of Canadian Dollars)				$ (18,000,000)			$ (31,000,000)
Currency risk | Derivatives
Disclosure of detailed information about financial instruments [line items]
Derivative assets offset against derivative liabilities				9,000,000			12,000,000
Gross derivative liabilities with offsetting derivative asset				11,000,000			19,000,000
Settlement of derivative financial instruments	$ 12,000,000	$ 3,000,000
Currency risk | Derivatives at fair value through profit or loss and classified in Foreign exchange loss (gain) on long-term debt:
Disclosure of detailed information about financial instruments [line items]
Fair Value (in Millions of Canadian Dollars)				$ (15,000,000)			$ (24,000,000)
Currency risk | Foreign exchange forward contracts to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $			1.06	1.06	1.06	1.06	1.06	1.06
Notional Amount (In millions)			$ 50,000,000			$ 50,000,000
Fair Value (in Millions of Canadian Dollars)				$ 9,000,000			$ 13,000,000
Currency risk | Currency option sold to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $						1.15	1.15	1.15
Notional Amount (In millions)						$ 75,000,000
Fair Value (in Millions of Canadian Dollars)							$ (14,000,000)
Currency risk | Currency option sold to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $			1.15	1.15	1.15	1.15	1.15	1.15
Notional Amount (In millions)			$ 100,000,000			$ 100,000,000
Fair Value (in Millions of Canadian Dollars)				$ (11,000,000)			$ (19,000,000)
Currency risk | Currency option sold to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $			1.0225	1.0225	1.0225	1.0225	1.0225	1.0225
Notional Amount (In millions)			$ 200,000,000			$ 200,000,000
Fair Value (in Millions of Canadian Dollars)				$ (1,000,000)			$ (2,000,000)
Currency risk | Cross currency swap US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $			1.33	1.33	1.33	1.329	1.329	1.329
Notional Amount (In millions)			$ 102,000,000			$ 102,000,000
Fair Value (in Millions of Canadian Dollars)				$ (12,000,000)			$ (2,000,000)
Currency risk | Derivatives at fair value through profit or loss and classified in Loss on derivative financial instruments:
Disclosure of detailed information about financial instruments [line items]
Fair Value (in Millions of Canadian Dollars)				$ 3,000,000			$ (8,000,000)
Currency risk | Foreign exchange forward contracts to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $			1.3260	1.3260	1.3260	1.3543	1.3543	1.3543
Notional Amount (In millions)			$ 10,000,000			$ 20,000,000
Fair Value (in Millions of Canadian Dollars)				$ 1,000,000			$ 0
Currency risk | Foreign exchange forward contracts to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $			1.3260	1.3260	1.3260
Notional Amount (In millions)			$ 5,000,000
Fair Value (in Millions of Canadian Dollars)				$ 0
Currency risk | Currency option instruments to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate			1.3171	1.3171	1.3171
Fair Value (in Millions of Canadian Dollars)				$ 2,000,000			(6,000,000)
Currency risk | Currency option instruments to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Fair Value (in Millions of Canadian Dollars)							$ (2,000,000)
Currency risk | Currency option instruments to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate			1.3214	1.3214	1.3214
Fair Value (in Millions of Canadian Dollars)				$ 0
Currency risk | Bottom of range
Disclosure of detailed information about financial instruments [line items]
Percent hedged of anticipated cash flows in each major foreign currency for next 12 months			25.00%	25.00%	25.00%
Percent hedged of anticipated cash flows in each major foreign currency for subsequent 24 months			0.00%	0.00%	0.00%
Currency risk | Bottom of range | Foreign exchange forward contracts to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Maturity	0 months	0 months
Currency risk | Bottom of range | Foreign exchange forward contracts to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Maturity	13 months
Currency risk | Bottom of range | Currency option instruments to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $						1.2709	1.2709	1.2709
Maturity	0 months	0 months
Notional Amount (In millions)			$ 48,000,000			$ 48,000,000
Currency risk | Bottom of range | Currency option instruments to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $						1.3042	1.3042	1.3042
Maturity	13 months	13 months
Notional Amount (In millions)			$ 43,000,000			$ 15,000,000
Currency risk | Top of range
Disclosure of detailed information about financial instruments [line items]
Percent hedged of anticipated cash flows in each major foreign currency for next 12 months			90.00%	90.00%	90.00%
Percent hedged of anticipated cash flows in each major foreign currency for subsequent 24 months			75.00%	75.00%	75.00%
Currency risk | Top of range | Foreign exchange forward contracts to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Maturity	12 months	12 months
Currency risk | Top of range | Foreign exchange forward contracts to buy US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Maturity	24 months
Currency risk | Top of range | Currency option instruments to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $						1.2962	1.2962	1.2962
Maturity	12 months	12 months
Notional Amount (In millions)			$ 70,000,000			$ 92,000,000
Currency risk | Top of range | Currency option instruments to sell US$ for CAN$
Disclosure of detailed information about financial instruments [line items]
Exchange rate | $ / $						1.3461	1.3461	1.3461
Maturity	36 months	24 months
Notional Amount (In millions)			$ 80,000,000			$ 40,000,000
Currency risk | Net investment hedge | Cross currency swap CAN$ for €
Disclosure of detailed information about financial instruments [line items]
Exchange rate			1.4263	1.4263	1.4263	1.4263	1.4263	1.4263
Notional Amount (In millions) | €					€ 95,000,000			€ 95,000,000
Fair Value (in Millions of Canadian Dollars)				$ (6,000,000)			$ 1,000,000
Currency risk | United States of America, Dollars
Disclosure of detailed information about financial instruments [line items]
Reasonably possible change in risk variable amount	$ 0.01
Reasonable possible change change in risk variable, impact on earnings	3,000,000
Currency risk | Euro Member Countries, Euro
Disclosure of detailed information about financial instruments [line items]
Reasonably possible change in risk variable amount	0.02
Reasonable possible change change in risk variable, impact on earnings	$ 1,000,000
UNITED STATES
Disclosure of detailed information about financial instruments [line items]
Percentage of entity's revenue	23.00%
Europe
Disclosure of detailed information about financial instruments [line items]
Percentage of entity's revenue	13.00%

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Financial Instruments - Currency Risk on Translation of Self-Sustaining Foreign Subsidiaries (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of nature and extent of risks arising from financial instruments
Reasonable possible change in risk variable percent	10.00%	10.00%
Currency risk | United States of America, Dollars
Disclosure of nature and extent of risks arising from financial instruments
Possible change in discount rate impact on equity, before hedges	$ 75	$ 107
Possible change in discount rate impact on equity, hedges	75	73
Possible change in discount rate impact on equity, net hedge impact	0	34
Currency risk | Euro Member Countries, Euro
Disclosure of nature and extent of risks arising from financial instruments
Possible change in discount rate impact on equity, before hedges	16	13
Possible change in discount rate impact on equity, hedges	14	13
Possible change in discount rate impact on equity, net hedge impact	$ 2	$ 0

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Financial Instruments - Price Risk Forecasted Purchases (Details) $ in Millions	12 Months Ended
	Dec. 31, 2017 CAD ($) MMBTU $ / $ $ / MWh kJ $ / MMBTU $ / short_ton MWh	Dec. 31, 2016 CAD ($) MMBTU $ / $ kJ MWh
Disclosure of nature and extent of risks arising from financial instruments
Closing foreign exchange rate | $ / $	1.26	1.33
Commodity price risk | Recycled Paper
Disclosure of nature and extent of risks arising from financial instruments
Reasonably possible change in risk variable | $ / short_ton	15
Possible change in discount rate impact on equity, before hedges	$ 29	$ 32
Possible change in discount rate impact on equity, hedges	0	0
Possible change in discount rate impact on equity, net hedge impact	$ 29	32
Commodity price risk | Commercial Pulp
Disclosure of nature and extent of risks arising from financial instruments
Reasonably possible change in risk variable | $ / short_ton	30
Possible change in discount rate impact on equity, before hedges	$ 6	6
Possible change in discount rate impact on equity, hedges	0	0
Possible change in discount rate impact on equity, net hedge impact	$ 6	6
Commodity price risk | Natural Gas
Disclosure of nature and extent of risks arising from financial instruments
Reasonably possible change in risk variable | $ / MMBTU	1
Possible change in discount rate impact on equity, before hedges	$ 10	12
Possible change in discount rate impact on equity, hedges	5	6
Possible change in discount rate impact on equity, net hedge impact	$ 5	6
Commodity price risk | Electricity
Disclosure of nature and extent of risks arising from financial instruments
Reasonably possible change in risk variable | $ / MWh	1
Possible change in discount rate impact on equity, before hedges	$ 2	2
Possible change in discount rate impact on equity, hedges	0	0
Possible change in discount rate impact on equity, net hedge impact	2	2
Commodity price risk | Embedded Derivative
Disclosure of nature and extent of risks arising from financial instruments
Fair Value (in Millions of Canadian Dollars)	8	10
Commodity price risk | Embedded Derivative | Greenpac Holding LLC
Disclosure of nature and extent of risks arising from financial instruments
Fair Value (in Millions of Canadian Dollars)	16
Commodity price risk | Forecasted Purchases
Disclosure of nature and extent of risks arising from financial instruments
Fair Value (in Millions of Canadian Dollars)	(7)	(6)
Commodity price risk | Electricity
Disclosure of nature and extent of risks arising from financial instruments
Fair Value (in Millions of Canadian Dollars)	$ (1)	$ (1)
Quantity | MWh	197,100	109,500
Commodity price risk | Cash flow hedges | Natural Gas Canadian Portfolio
Disclosure of nature and extent of risks arising from financial instruments
Fair Value (in Millions of Canadian Dollars)	$ (5)	$ (4)
Quantity | kJ	3,095,029	4,658,660
Commodity price risk | Cash flow hedges | Natural Gas US Portfolio
Disclosure of nature and extent of risks arising from financial instruments
Fair Value (in Millions of Canadian Dollars)	$ (1)	$ (1)
Quantity | MMBTU	4,847,660	4,722,800

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Financial Instruments - Interest Rate Risk (Details) € in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 CAD ($)	Dec. 31, 2016 CAD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 CAD ($)	Dec. 31, 2017 EUR (€)
Disclosure of nature and extent of risks arising from financial instruments
Reasonable possible change in risk variable percent	10.00%	10.00%
Interest rate risk
Disclosure of nature and extent of risks arising from financial instruments
Reasonable possible change in risk variable percent	1.00%
Reasonable possible change in risk variable, impact on interest expense	$ 5,000,000
Reasonable possible change change in risk variable, impact on earnings	$ 4,000,000
Fair Value of derivative liability (in Millions of Canadian Dollars)		$ 0		$ 3,000,000
Interest rate risk | Reno de Medici S.p.A. (RDM)
Disclosure of nature and extent of risks arising from financial instruments
Notional Amount (In millions) | €					€ 32
Interest rate risk | Greenpac Holding LLC
Disclosure of nature and extent of risks arising from financial instruments
Notional Amount (In millions)			$ 81
Floating interest rate | Interest rate risk
Disclosure of nature and extent of risks arising from financial instruments
Concentration risk percentage		9.00%	29.00%	29.00%	29.00%

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Financial Instruments - Loss (Gain) on Financial Instruments (Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Financial Instruments [Abstract]
Unrealized gain on derivative financial instruments	$ 8	$ 18
Realized loss on derivative financial instruments	(2)	(12)
Gain on derivative financial instruments	$ 6	$ 6

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Financial Instruments - Liquidity Risk (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Bank loans and advances, current borrowings	$ 35	$ 28
Long-term debt, including current portion	1,576	1,566
Undrawn borrowing facilities	651	768
Letters of credit outstanding	24	26
Liquidity risk
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Bank loans and advances, current borrowings	35	28
Bank loans and advances, contractual cash flows	35	28
Trade and other payables, carrying amount	638	661
Trade and other payables, contractual cash flows	638	661
Derivative financial liabilities, carrying amount	37	39
Derivative financial liabilities, contractual cash flows	37	39
Financial liabilities, carrying amount	2,296	2,309
Financial liabilities, contractual cash flows	2,618	2,739
Liquidity risk | No later than one year
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Bank loans and advances, contractual cash flows	35	28
Trade and other payables, contractual cash flows	638	661
Derivative financial liabilities, contractual cash flows	19	23
Financial liabilities, contractual cash flows	815	830
Liquidity risk | Later than one year and not later than two years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Bank loans and advances, contractual cash flows	0	0
Trade and other payables, contractual cash flows	0	0
Derivative financial liabilities, contractual cash flows	2	5
Financial liabilities, contractual cash flows	118	118
Liquidity risk | Later than two years and not later than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Bank loans and advances, contractual cash flows	0	0
Trade and other payables, contractual cash flows	0	0
Derivative financial liabilities, contractual cash flows	4	9
Financial liabilities, contractual cash flows	1,376	633
Liquidity risk | More than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Bank loans and advances, contractual cash flows	0	0
Trade and other payables, contractual cash flows	0	0
Derivative financial liabilities, contractual cash flows	12	2
Financial liabilities, contractual cash flows	309	1,158
Liquidity risk | Revolving credit facility
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, including current portion	195	90
Long-term debt, contractual cash flows	218	95
Liquidity risk | Revolving credit facility | No later than one year
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	7	2
Liquidity risk | Revolving credit facility | Later than one year and not later than two years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	6	2
Liquidity risk | Revolving credit facility | Later than two years and not later than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	205	91
Liquidity risk | Revolving credit facility | More than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	0	0
Liquidity risk | Unsecured senior notes
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, including current portion	1,004	1,324
Long-term debt, contractual cash flows	1,284	1,735
Liquidity risk | Unsecured senior notes | No later than one year
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	56	74
Liquidity risk | Unsecured senior notes | Later than one year and not later than two years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	56	74
Liquidity risk | Unsecured senior notes | Later than two years and not later than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	906	464
Liquidity risk | Unsecured senior notes | More than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	266	1,123
Liquidity risk | Other debts of subsidiaries
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, including current portion	66	62
Long-term debt, contractual cash flows	77	71
Liquidity risk | Other debts of subsidiaries | No later than one year
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	16	14
Liquidity risk | Other debts of subsidiaries | Later than one year and not later than two years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	13	13
Liquidity risk | Other debts of subsidiaries | Later than two years and not later than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	31	25
Liquidity risk | Other debts of subsidiaries | More than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	17	19
Liquidity risk | Other debts without recourse to the Corporation
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, including current portion	321	105
Long-term debt, contractual cash flows	329	110
Liquidity risk | Other debts without recourse to the Corporation | No later than one year
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	44	28
Liquidity risk | Other debts without recourse to the Corporation | Later than one year and not later than two years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	41	24
Liquidity risk | Other debts without recourse to the Corporation | Later than two years and not later than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	230	44
Liquidity risk | Other debts without recourse to the Corporation | More than five years
Disclosure Of Maturity Analysis For Derivative And Non-derivative Financial Liabilities [Line Items]
Long-term debt, contractual cash flows	$ 14	$ 14

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Financial Instruments - Other Risks (Details) - Dec. 31, 2017 € in Millions, $ in Millions	CAD ($)	EUR (€)
Other Risk
Disclosure of nature and extent of risks arising from financial instruments
Off-balance sheet impact of the factoring of receivables	$ 39	€ 26

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Commitments - Operating Lease Minimum Payment (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
No later than one year
Disclosure of finance lease and operating lease by lessee
Future minimum payments under operating leases	$ 28	$ 23
Later than one year but no later than five years
Disclosure of finance lease and operating lease by lessee
Future minimum payments under operating leases	37	33
More than five years
Disclosure of finance lease and operating lease by lessee
Future minimum payments under operating leases	$ 5	$ 9

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Commitments - Capital and Raw Material Commitment (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Contractual Commitments
PROPERTY, PLANT AND EQUIPMENT	$ 51	$ 36
INTANGIBLE ASSETS	22	6
RAW MATERIAL		331
Plant in New Jersey
Disclosure Of Contractual Commitments
Minimum finance lease payments payable, at present value	96
No later than one year
Disclosure Of Contractual Commitments
PROPERTY, PLANT AND EQUIPMENT	51	36
INTANGIBLE ASSETS	8	2
RAW MATERIAL		73
Later than one year but no later than five years
Disclosure Of Contractual Commitments
PROPERTY, PLANT AND EQUIPMENT	0	0
INTANGIBLE ASSETS	14	3
RAW MATERIAL		258
More than five years
Disclosure Of Contractual Commitments
PROPERTY, PLANT AND EQUIPMENT	0	0
INTANGIBLE ASSETS	$ 0	1
RAW MATERIAL		$ 0

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Related Party Transactions - Summary of Transactions with Related Parties(Details) - CAD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Joint ventures where entity is venturer
Disclosure of transactions between related parties
Sales to related parties	$ 183	$ 155
Purchases from related parties	16	13
Associates
Disclosure of transactions between related parties
Sales to related parties	85	89
Purchases from related parties	$ 90	$ 168

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Related Party Transactions - Summary of Receivables and Payable with Related Parties (Details) - CAD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of transactions between related parties
Interest rate on receivable	0.00%
Joint ventures where entity is venturer
Disclosure of transactions between related parties
Receivables from related parties	$ 13	$ 18
Payables to related parties	3	2
Associates
Disclosure of transactions between related parties
Receivables from related parties	22	21
Payables to related parties	$ 4	$ 42

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Events After The Reporting Period (Details) € in Millions, $ in Millions, $ in Millions			12 Months Ended
	Jan. 31, 2018 USD ($)	Jan. 31, 2018 CAD ($)	Dec. 31, 2017 CAD ($)	Dec. 31, 2016 CAD ($)	Dec. 31, 2017 EUR (€)	Dec. 19, 2017 CAD ($)	Dec. 19, 2017 EUR (€)
Disclosure of non-adjusting events after reporting period
Indirect ownership interest in subsidiary			33.33%
Proceeds from disposals of property, plant and equipment			$ 15	$ 5
Assets held for sale			$ 13	$ 0
Disposal of assets | Property in Maspeth, NY
Disclosure of non-adjusting events after reporting period
Proceeds from disposals of property, plant and equipment	$ 72	$ 90
Disposal of assets | Property in Maspeth, NY | Cash
Disclosure of non-adjusting events after reporting period
Proceeds from disposals of property, plant and equipment	68	85
Disposal of assets | Property in Maspeth, NY | Escrow
Disclosure of non-adjusting events after reporting period
Proceeds from disposals of property, plant and equipment	$ 4	$ 5
Third Party
Disclosure of non-adjusting events after reporting period
Proportion of ownership interest in subsidiary			66.67%
PAC Service S.p.A
Disclosure of non-adjusting events after reporting period
Cash paid			$ 15		€ 10	$ 15	€ 10
RENO DE MEDICI S.p.A.
Disclosure of non-adjusting events after reporting period
Proportion of ownership interest in subsidiary			57.80%