EX-99.5 6 exhibit99-5.htm EXHIBIT 99.5 Tembec Inc.: Exhibit 99.5 - Filed by newsfilecorp.com

Exhibit 99.5

Unaudited supplemental condensed consolidating financial information of

TEMBEC INC.

Quarters ended December 28, 2013 and December 29, 2012


TEMBEC INC.
SUPPLEMENTAL INFORMATION
December 28, 2013

Supplemental condensed consolidating financial information

The following condensed consolidating financial information is prepared in compliance with National Instrument 51-102 – Continuous Disclosure Obligations, under Canadian securities laws.

The senior secured notes (the “Notes”) of Tembec Industries Inc. (the "Subsidiary Issuer") are fully and unconditionally guaranteed on a joint and several basis by Tembec Inc. (the "Parent Company") and most of the Subsidiary Issuer’s subsidiaries located in Canada (the “Guarantor Subsidiaries”). The Subsidiary Issuer and each of the Guarantor Subsidiaries are 100% owned by the Parent Company. The Notes are not guaranteed by the Company’s other subsidiaries (the “Other Subsidiaries”).

The following supplemental condensed consolidating financial information sets forth, on an unconsolidated basis, the balance sheets as at December 28, 2013 and December 29, 2012, the statements of comprehensive earnings (loss) and the statements of cash flows for the quarters then ended, for the Parent Company and for the Subsidiary Issuer. It also provides the same information on a combined basis for the Guarantor Subsidiaries and the Other Subsidiaries.

The supplemental condensed consolidating financial information, which has been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), reflects the investments of the Parent Company in the Subsidiary Issuer using the equity method. Investments of the Subsidiary Issuer in the Guarantor Subsidiaries and Other Subsidiaries are also accounted for using this method.

More information on the Company and its significant accounting policies are included in the audited consolidated financial statements for the year ended September 28, 2013. The Company adopted the amended IAS 19, Employee Benefits, and has restated its comparative period results accordingly. Details on the effect of adopting amended IAS 19 are included in note 2 of the unaudited interim consolidated financial statements for the quarter ended December 28, 2013.

TEMBEC Supplemental Information for first quarter 2014 1


TEMBEC INC.
SUPPLEMENTAL INFORMATION
December 28, 2013
Supplemental condensed consolidating financial information

Condensed Consolidated Balance Sheets

(unaudited)(in millions of Canadian dollars)

December 28, 2013  
    Parent      Subsidiary      Guarantor     Other      Consolidation         
    Company     Issuer       Subsidiaries      Subsidiaries      Adjustments     Consolidated    
ASSETS                                    
Current assets:                                    
   Cash and cash equivalents $  -   $  -   $  7   $  37   $  -   $  44  
   Restricted cash   -     -     5     3     -     8  
   Trade and other receivables   36     321     301     103     (587 )   174  
   Inventories   -     -     218     29     -     247  
   Prepaid expenses   -     1     2     2     -     5  
   Assets classified as held for sale   -     -     7     -     -     7  
    36     322     540     174     (587 )   485  
                                     
Investments   308     510     -     -     (818 )   -  
Property, plant and equipment   -     6     392     134     -     532  
Biological assets   -     -     2     -     -     2  
Employee future benefits   -     7     33     -     -     40  
Other long-term receivables   -     8     -     2     -     10  
Deferred tax assets   -     -     -     6     -     6  
  $  344   $  853   $  967   $  316   $  (1,405 ) $  1,075  
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                
Current liabilities:                                    
   Operating bank loans $  -   $  -   $  56   $  5   $  -   $  61  
   Trade, other payables and accrued charges   88     218     414     58     (587 )   191  
   Interest payable   -     1     1     -     -     2  
   Income tax payable   -     -     -     9     -     9  
   Provisions   -     6     -     -     -     6  
   Current portion of long-term debt   1     -     1     14     -     16  
    89     225     472     86     (587 )   285  
                                     
Long-term debt   1     316     86     15     (4 )   414  
Provisions   -     -     12     -     -     12  
Employee future benefits   -     76     15     17     -     108  
Other long-term liabilities   -     -     2     -     -     2  
    90     617     587     118     (591 )   821  
                                     
Shareholders' equity:                                    
   Share capital   567     555     744     34     (1,333 )   567  
   Retained earnings (deficit)   (330 )   (336 )   (364 )   147     553     (330 )
   Accumulated other comprehensive earnings (loss)   17     17     -     17     (34 )   17  
    254     236     380     198     (814 )   254  
  $  344   $  853   $  967   $  316   $  (1,405 ) $  1,075  

TEMBEC Supplemental Information for first quarter 2014 2


TEMBEC INC.
SUPPLEMENTAL INFORMATION
December 28, 2013
Supplemental condensed consolidating financial information

Condensed Consolidated Balance Sheets (continued)

(unaudited)(in millions of Canadian dollars)

September 28, 2013 (restated(1) )  
    Parent      Subsidiary      Guarantor     Other     Consolidation          
    Company     Issuer      Subsidiaries       Subsidiaries      Adjustments     Consolidated    
ASSETS                                    
Current assets:                                    
   Cash and cash equivalents $  -   $  -   $  19   $  54   $  -   $  73  
   Restricted cash   -     -     -     1     -     1  
   Trade and other receivables   36     311     273     76     (539 )   157  
   Inventories   -     -     200     37     -     237  
   Prepaid expenses   -     1     4     1     -     6  
   Assets classified as held for sale   -     -     7     -     -     7  
    36     312     503     169     (539 )   481  
                                     
Investments   256     462     -     -     (718 )   -  
Property, plant and equipment   -     7     366     123     -     496  
Biological assets   -     -     5     -     -     5  
Employee future benefits   -     6     18     -     -     24  
Other long-term receivables   -     8     -     2     -     10  
Deferred tax assets   -     -     -     5     -     5  
  $  292   $  795   $  892   $  299   $  (1,257 ) $  1,021  
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                
Current liabilities:                                    
   Operating bank loans $  -   $  -   $  53   $  4   $  -   $  57  
   Trade, other payables and accrued charges   71     187     416     60     (539 )   195  
   Interest payable   -     10     -     -     -     10  
   Income tax payable   -     (1 )   -     9     -     8  
   Provisions   -     6     -     -     -     6  
   Current portion of long-term debt   1     -     1     14     -     16  
    72     202     470     87     (539 )   292  
                                     
Long-term debt   1     303     53     15     (3 )   369  
Provisions   -     -     12     -     -     12  
Employee future benefits   -     91     16     20     -     127  
Other long-term liabilities   -     -     2     -     -     2  
    73     596     553     122     (542 )   802  
                                     
Shareholders' equity:                                    
   Share capital   567     555     731     34     (1,320 )   567  
   Retained earnings (deficit)   (354 )   (362 )   (392 )   137     617     (354 )
   Accumulated other comprehensive earnings (loss)   6     6     -     6     (12 )   6  
    219     199     339     177     (715 )   219  
  $  292   $  795   $  892   $  299   $  (1,257 ) $  1,021  

(1) See note 2 of the unaudited interim consolidated financial statements for the quarter ended December 28, 2013

TEMBEC Supplemental Information for first quarter 2014 3


TEMBEC INC.
SUPPLEMENTAL INFORMATION  
December 28, 2013
Supplemental condensed consolidating financial information

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)(in millions of Canadian dollars, unless otherwise noted)

Quarter ended December 28, 2013  
    Parent     Subsidiary       Guarantor     Other     Consolidation        
    Company     Issuer     Subsidiaries     Subsidiaries       Adjustments     Consolidated    
Sales $  -   $  -   $  291   $  67   $  (4 ) $  354  
Freight and other deductions   -     -     41     4     (1 )   44  
Lumber export taxes   -     -     1     -     -     1  
Cost of sales (excluding depreciation and amortization)   -     -     231     50     (3 )   278  
Selling, general and administrative   -     2     12     3     -     17  
Share-based compensation   -     1     -     -     -     1  
Depreciation and amortization   -     -     6     2     -     8  
Other items   -     3     (17 )   -     -     (14 )
Operating earnings (loss)   -     (6 )   17     8     -     19  
Interest, foreign exchange and other   4     4     3     (2 )   -     9  
Exchange loss on long-term debt   -     12     -     -     -     12  
Net finance costs (income)   4     16     3     (2 )   -     21  
Earnings (loss) before income taxes and share of results for equity accounting   (4 )   (22 )   14     10     -     (2 )
Income tax expense (recovery)   -     (3 )   (4 )   3     -     (4 )
Share of results for equity accounting   6     23     -     -     (29 )   -  
Net earnings (loss)   2     4     18     7     (29 )   2  
Other comprehensive earnings (loss), net of income taxes:                                
   Defined benefit pension plans and other benefit plans   29     29     14     3     (46 )   29  
   Income tax recovery (expense)   (7 )   (7 )   (4 )   -     11     (7 )
   Foreign currency translation differences for foreign operations   11     11     -     11     (22 )   11  
    33     33     10     14     (57 )   33  
Total comprehensive earnings (loss) $  35   $  37   $  28   $  21   $  (86 ) $  35  
Basic and diluted net earnings in dollars per share                               $  0.02  

TEMBEC Supplemental Information for first quarter 2014 4


TEMBEC INC.  
SUPPLEMENTAL INFORMATION  
December 28, 2013
Supplemental condensed consolidating financial information

Condensed Consolidated Statements of Comprehensive Earnings (Loss) (continued)

(unaudited)(in millions of Canadian dollars, unless otherwise noted)

Quarter ended December 29, 2012 (restated(1) )  
    Parent     Subsidiary     Guarantor     Other      Consolidation         
    Company     Issuer     Subsidiaries      Subsidiaries      Adjustments     Consolidated    
Sales $  -   $  1   $  321   $  61   $  (7 ) $  376  
Freight and other deductions   -     -     47     4     (1 )   50  
Lumber export taxes   -     -     1     -     -     1  
Cost of sales (excluding depreciation and amortization)   -     -     258     34     (6 )   286  
Selling, general and administrative   -     3     13     3     -     19  
Share-based compensation   -     1     -     -     -     1  
Depreciation and amortization   -     -     9     2     -     11  
Other items   -     -     1     -     -     1  
Operating earnings (loss)   -     (3 )   (8 )   18     -     7  
Interest, foreign exchange and other   1     2     9     -     -     12  
Exchange loss on long-term debt   -     4     -     -     -     4  
Net finance costs   1     6     9     -     -     16  
Earnings (loss) before income taxes and share of results for equity accounting   (1 )   (9 )   (17 )   18     -     (9 )
Income tax expense (recovery)   -     -     -     6     -     6  
Share of results for equity accounting   (14 )   (5 )   -     -     19     -  
Net earnings (loss)   (15 )   (14 )   (17 )   12     19     (15 )
Other comprehensive earnings (loss), net of income taxes:                                
   Defined benefit pension plans and other benefit plans   5     5     2     1     (8 )   5  
   Income tax recovery (expense)   -     -     -     -     -     -  
   Foreign currency translation differences for foreign operations   6     6     -     6     (12 )   6  
    11     11     2     7     (20 )   11  
Total comprehensive earnings (loss) $  (4 ) $  (3 ) $  (15 ) $  19   $  (1 ) $  (4 )
Basic and diluted net loss in dollars per share                               $  (0.15 )

(1) See note 2 of the unaudited interim consolidated financial statements for the quarter ended December 28, 2013

TEMBEC Supplemental Information for first quarter 2014 5


 TEMBEC INC.
SUPPLEMENTAL INFORMATION  
December 28, 2013
Supplemental condensed consolidating financial information

Condensed Consolidated Statements of Cash Flows

(unaudited)(in millions of Canadian dollars)

Quarter ended December 28, 2013  
    Parent      Subsidiary      Guarantor     Other     Consolidation        
    Company     Issuer         Subsidiaries      Subsidiaries      Adjustments      Consolidated   
Cash flows from operating activities:                                    
   Net earnings (loss) $  2   $  4   $  18   $  7   $  (29 ) $  2  
   Adjustments for:                                    
         Depreciation and amortization   -     -     6     2     -     8  
         Net finance costs   4     16     3     (2 )   -     21  
         Income tax expense (recovery)   -     (3 )   (4 )   3     -     (4 )
         Income tax paid   -     -     -     (3 )   -     (3 )
         Excess cash contributions over employee future benefits expense   -     (5 )   (2 )   (1 )   -     (8 )
         Share of results for equity accounting   (6 )   (23 )   -     -     29     -  
         Gain on sale of assets   -     -     (20 )   -     -     (20 )
         Other   -     1     4     -     -     5  
    -     (10 )   5     6     -     1  
Change in non-cash working capital:                                    
   Trade and other receivables   -     (9 )   (31 )   (25 )   48     (17 )
   Inventories   -     -     (18 )   9     -     (9 )
   Prepaid expenses   -     -     2     (1 )   -     1  
   Trade, other payables and accrued charges   15     31     2     2     (48 )   2  
    15     22     (45 )   (15 )   -     (23 )
    15     12     (40 )   (9 )   -     (22 )
Cash flows from investing activities:                                    
   Disbursements for property, plant and equipment   -     -     (33 )   (9 )   -     (42 )
   Proceeds from sale of assets   -     -     23     -     -     23  
   Change in restricted cash   -     -     (5 )   (2 )   -     (7 )
   Investments in a subsidiary   (13 )   -     -     -     13     -  
   Interest received   -     6     3     -     (9 )   -  
    (13 )   6     (12 )   (11 )   4     (26 )
Cash flow from financing activities:                                    
   Change in operating bank loans   -     -     3     1     -     4  
   Increase in long-term debt   -     -     33     -     -     33  
   Repayments of long-term debt   -     -     -     (1 )   -     (1 )
   Proceeds from issue of share capital   -     -     13     -     (13 )   -  
   Interest paid   (2 )   (18 )   (9 )   -     9     (20 )
    (2 )   (18 )   40     -     (4 )   16  
    -     -     (12 )   (20 )   -     (32 )
Foreign exchange gain on cash and cash equivalents held in foreign currencies   -     -     -     3     -     3  
Net decrease in cash and cash equivalents   -     -     (12 )   (17 )   -     (29 )
                                     
Cash and cash equivalents, beginning of period   -     -     19     54     -     73  
Cash and cash equivalents, end of period $  -   $  -   $  7   $  37   $  -   $  44  

TEMBEC Supplemental Information for first quarter 2014 6


 TEMBEC INC.
SUPPLEMENTAL INFORMATION  
December 28, 2013
Supplemental condensed consolidating financial information

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)(in millions of Canadian dollars)

Quarter ended December 29, 2012 (restated(1) )  
    Parent      Subsidiary      Guarantor     Other     Consolidation        
    Company     Issuer     Subsidiaries         Subsidiaries       Adjustments      Consolidated   
Cash flows from operating activities:                                    
   Net earnings (loss) $  (15 ) $  (14 ) $  (17 ) $  12   $  19   $  (15 )
   Adjustments for:                                    
         Depreciation and amortization   -     -     9     2     -     11  
         Net finance costs   1     6     9     -     -     16  
         Income tax expense (recovery)   -     -     -     6     -     6  
         Income tax paid   -     -     -     (2 )   -     (2 )
         Excess cash contributions over employee future benefits expense   -     (11 )   -     -     -     (11 )
         Share of results for equity accounting   14     5     -     -     (19 )   -  
         Gain on sale of assets   -     -     (2 )   -     -     (2 )
         Other   -     1     (2 )   (3 )   -     (4 )
    -     (13 )   (3 )   15     -     (1 )
Change in non-cash working capital:                                    
   Trade and other receivables   -     (19 )   (16 )   (20 )   79     24  
   Inventories   -     -     5     (3 )   -     2  
   Prepaid expenses   -     -     3     (1 )   -     2  
   Trade, other payables and accrued charges   18     40     4     (14 )   (79 )   (31 )
    18     21     (4 )   (38 )   -     (3 )
    18     8     (7 )   (23 )   -     (4 )
Cash flows from investing activities:                                    
   Disbursements for property, plant and equipment   -     -     (39 )   (1 )   -     (40 )
   Proceeds from sale of assets   -     -     2     -     -     2  
   Change in restricted cash   -     -     4     -     -     4  
   Investments in a subsidiary   (17 )   -     -     -     17     -  
   Interest received   -     9     1     -     (10 )   -  
    (17 )   9     (32 )   (1 )   7     (34 )
Cash flow from financing activities:                                    
   Change in operating bank loans   -     -     1     -     -     1  
   Increase in long-term debt   -     -     24     -     -     24  
   Repayments of long-term debt   -     -     -     (1 )   -     (1 )
   Proceeds from issue of share capital   -     -     17     -     (17 )   -  
   Interest paid   (1 )   (17 )   (10 )   -     10     (18 )
    (1 )   (17 )   32     (1 )   (7 )   6  
    -     -     (7 )   (25 )   -     (32 )
Foreign exchange gain on cash and cash equivalents held in foreign currencies   -     -     -     1     -     1  
Net decrease in cash and cash equivalents   -     -     (7 )   (24 )   -     (31 )
Cash and cash equivalents, beginning of period   -     1     29     57     -     87  
Cash and cash equivalents, end of period $  -   $  1   $  22   $  33   $  -   $  56  

(1) See note 2 of the unaudited interim consolidated financial statements for the quarter ended December 28, 2013

TEMBEC Supplemental Information for first quarter 2014 7