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 March 29, 2014 and March 30, 2013


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
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 March 29, 2014 and March 30, 2013, the statements of comprehensive earnings (loss) and the statements of cash flows for the six-month period 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 March 29, 2014.

TEMBEC Supplemental Information for second quarter 2014 1


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
Supplemental condensed consolidating financial information

Condensed Consolidated Balance Sheets

(unaudited)(in millions of Canadian dollars)

March 29, 2014

 

 

  Parent     Subsidiary      Guarantor     Other      Consolidation         

 

  Company     Issuer       Subsidiaries      Subsidiaries      Adjustments     Consolidated    

ASSETS

                                   

Current assets:

                                   

   Cash and cash equivalents

$  -   $  -   $  3   $  20   $  -   $  23  

   Restricted cash

  -     -     5     3     -     8  

   Trade and other receivables

  36     404     354     114     (758 )   150  

   Income tax receivable

  -     1     -     2     -     3  

   Inventories

  -     -     279     33     -     312  

   Biological assets

  -     -     -     -     -     -  

   Prepaid expenses

  -     2     5     1     -     8  

   Assets classified as held for sale

  -     -     7     -     -     7  

 

  36     407     653     173     (758 )   511  

 

                                   

Investments

  280     486     -     -     (766 )   -  

Property, plant and equipment

  -     6     428     138     -     572  

Biological assets

  -     -     2     -     -     2  

Employee future benefits

  -     4     28     -     -     32  

Other long-term receivables

  -     8     -     2     -     10  

Deferred tax assets

  -     -     -     6     -     6  

 

$  316   $  911   $  1,111   $  319   $  (1,524 ) $  1,133  

 

                                   

LIABILITIES AND SHAREHOLDERS' EQUITY

                               

Current liabilities:

                                   

   Operating bank loans

$  -   $  -   $  77   $  4   $  -   $  81  

   Trade, other payables and accrued charges

  96     277     547     70     (758 )   232  

   Interest payable

  -     11     -     -     -     11  

   Income tax payable

  -     -     -     -     -     -  

   Provisions

  -     5     -     -     -     5  

   Current portion of long-term debt

  1     -     1     17     -     19  

   Liabilities classified as held for sale

  -     -     -     -     -     -  

 

  97     293     625     91     (758 )   348  

 

                                   

Long-term debt

  1     326     93     14     (4 )   430  

Provisions

  -     -     11     -     -     11  

Employee future benefits

  -     90     16     18     -     124  

Other long-term liabilities

  -     -     2     -     -     2  

 

  98     709     747     123     (762 )   915  

 

                                   

Shareholders' equity:

                                   

   Share capital

  567     555     749     34     (1,338 )   567  

   Retained earnings (deficit)

  (373 )   (377 )   (385 )   138     624     (373 )

   Accumulated other comprehensive earnings (loss)

  24     24     -     24     (48 )   24  

 

  218     202     364     196     (762 )   218  

 

$  316   $  911   $  1,111   $  319   $  (1,524 ) $  1,133  

TEMBEC Supplemental Information for second quarter 2014 2


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
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  

   Income tax receivable

  -     -     -     -     -     -  

   Inventories

  -     -     200     37     -     237  

   Biological assets

  -     -     -     -     -     -  

   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  

   Liabilities classified as held for sale

  -     -     -     -     -     -  

 

  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 March 29, 2014

TEMBEC Supplemental Information for second quarter 2014 3


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
Supplemental condensed consolidating financial information

Condensed Consolidated Balance Sheets (continued)

(unaudited)(in millions of Canadian dollars)

March 30, 2013 (restated(1))

 

 

  Parent      Subsidiary      Guarantor     Other     Consolidation          

 

  Company     Issuer     Subsidiaries       Subsidiaries       Adjustments      Consolidated   

ASSETS

                                   

Current assets:

                                   

   Cash and cash equivalents

$  -   $  1   $  4   $  29   $  -   $  34  

   Restricted cash

  -     -     1     -     -     1  

   Trade and other receivables

  36     367     234     100     (570 )   167  

   Income tax receivable

  -     -     -     -     -     -  

   Inventories

  -     -     235     35     -     270  

   Biological assets

  -     -     1     -     -     1  

   Prepaid expenses

  -     2     7     1     -     10  

   Assets classified as held for sale

  -     -     126     -     -     126  

 

  36     370     608     165     (570 )   609  
                                     

Investments

  153     373     -     -     (526 )   -  

Property, plant and equipment

  -     6     318     109     -     433  

Biological assets

  -     -     5     -     -     5  

Employee future benefits

  -     -     -     -     -     -  

Other long-term receivables

  -     9     -     2     -     11  

Deferred tax assets

  -     (1 )   -     3     -     2  

 

$  189   $  757   $  931   $  279   $  (1,096 ) $  1,060  

 

                                   

LIABILITIES AND SHAREHOLDERS' EQUITY

                                   

Current liabilities:

                                   

   Operating bank loans

$  -   $  -   $  78   $  8   $  -   $  86  

   Trade, other payables and accrued charges

  53     184     478     66     (570 )   211  

   Interest payable

  -     10     -     -     -     10  

   Income tax payable

  -     -     -     5     -     5  

   Provisions

  -     1     1     -     -     2  

   Current portion of long-term debt

  1     -     -     15     -     16  

   Liabilities classified as held for sale

  -     13     20     -     -     33  

 

  54     208     577     94     (570 )   363  
                                     

Long-term debt

  1     299     39     22     (8 )   353  

Provisions

  -     5     12     -     -     17  

Employee future benefits

  -     133     26     32     -     191  

Other long-term liabilities

  -     -     2     -     -     2  

 

  55     645     656     148     (578 )   926  

 

                                   

Shareholders' equity:

                                   

   Share capital

  567     555     717     40     (1,312 )   567  

   Retained earnings (deficit)

  (428 )   (438 )   (442 )   96     784     (428 )

   Accumulated other comprehensive earnings (loss)

  (5 )   (5 )   -     (5 )   10     (5 )

 

  134     112     275     131     (518 )   134  

 

$  189   $  757   $  931   $  279   $  (1,096 ) $  1,060  
(1)  See note 2 of the unaudited interim consolidated financial statements for the quarter ended March 29, 2014

TEMBEC Supplemental Information for second quarter 2014 4


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
Supplemental condensed consolidating financial information

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

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

Six months ended March 29, 2014

 

 

  Parent      Subsidiary      Guarantor     Other     Consolidation        

 

  Company     Issuer     Subsidiaries     Subsidiaries     Adjustments     Consolidated   

Sales

$  -   $  -   $  591   $  133   $  (8 ) $  716  

Freight and other deductions

  -     -     82     6     -     88  

Lumber export taxes

  -     -     -     -     -     -  

Cost of sales (excluding depreciation and amortization)

  -     -     477     93     (8 )   562  

Selling, general and administrative

  -     4     24     7     -     35  

Share-based compensation

  -     -     -     -     -     -  

Depreciation and amortization

  -     -     13     4     -     17  

Other items

  -     10     (18 )   -     -     (8 )

Operating earnings (loss)

  -     (14 )   13     23     -     22  
                                     

Interest, foreign exchange and other

  7     (12 )   8     (4 )   19     18  

Exchange loss on long-term debt

  -     23     -     -     -     23  

Net finance costs (income)

  7     11     8     (4 )   19     41  

Earnings (loss) before income taxes and share of results for equity accounting

  (7 )   (25 )   5     27     (19 )   (19 )

Income tax expense (recovery)

  -     (1 )   (1 )   9     -     7  

Share of results for equity accounting

  (19 )   2     -     -     17     -  

Net earnings (loss)

  (26 )   (22 )   6     18     (2 )   (26 )
                                 

Other comprehensive earnings (loss), net of income taxes:

                               

   Defined benefit pension plans and other benefit plans

  9     9     3     2     (14 )   9  

   Income tax recovery (expense)

  (2 )   (2 )   (2 )   -     4     (2 )

   Foreign currency translation differences for foreign operations

  18     18     -     18     (36 )   18  

 

  25     25     1     20     (46 )   25  

Total comprehensive earnings (loss)

$  (1 ) $  3   $  7   $  38   $  (48 ) $  (1 )

Basic and diluted net loss in dollars per share

                              $  (0.26 )

TEMBEC Supplemental Information for second quarter 2014 5


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
Supplemental condensed consolidating financial information

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

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

Six months ended March 30, 2013 (restated(1))

 

 

  Parent      Subsidiary      Guarantor     Other     Consolidation          

 

  Company     Issuer     Subsidiaries      Subsidiaries      Adjustments     Consolidated    

Sales

$  -   $  1   $  670   $  124   $  (12 ) $  783  

Freight and other deductions

  -     -     98     9     (3 )   104  

Lumber export taxes

  -     -     1     -     -     1  

Cost of sales (excluding depreciation and amortization)

  -     -     533     72     (9 )   596  

Selling, general and administrative

  -     5     27     6     -     38  

Share-based compensation

  -     1     -     -     -     1  

Depreciation and amortization

  -     -     16     4     -     20  

Other items

  -     1     23     1     -     25  

Operating earnings (loss)

  -     (6 )   (28 )   32     -     (2 )
                                     

Interest, foreign exchange and other

  1     (7 )   12     -     16     22  

Exchange loss on long-term debt

  -     10     -     -     -     10  

Net finance costs (income)

  1     3     12     -     16     32  

Earnings (loss) before income taxes and share of results for equity accounting

  (1 )   (9 )   (40 )   32     (16 )   (34 )

Income tax expense (recovery)

  -     -     -     12     -     12  

Share of results for equity accounting

  (45 )   (37 )   -     -     82     -  

Net earnings (loss)

  (46 )   (46 )   (40 )   20     66     (46 )
                                 

Other comprehensive earnings (loss), net of income taxes:

                               

   Defined benefit pension plans and other benefit plans

  73     73     27     7     (107 )   73  

   Income tax recovery (expense)

  -     -     -     -     -     -  

   Foreign currency translation differences for foreign operations

  4     4     -     4     (8 )   4  

 

  77     77     27     11     (115 )   77  

Total comprehensive earnings (loss)

$  31   $  31   $  (13 ) $  31   $  (49 ) $  31  

Basic and diluted net loss in dollars per share

                              $  (0.46 )
(1)   See note 2 of the unaudited interim consolidated financial statements for the quarter ended March 29, 2014

TEMBEC Supplemental Information for second quarter 2014 6


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
Supplemental condensed consolidating financial information

Condensed Consolidated Statements of Cash Flows

(unaudited)(in millions of Canadian dollars)

Six months ended March 29, 2014

 

 

  Parent     Subsidiary       Guarantor     Other     Consolidation        

 

  Company     Issuer       Subsidiaries      Subsidiaries      Adjustments       Consolidated   

Cash flows from operating activities:

                                   

   Net earnings (loss)

$  (26 ) $  (22 ) $  6   $  18   $  (2 ) $  (26 )

   Adjustments for:

                                   

         Depreciation and amortization

  -     -     13     4     -     17  

         Net finance costs

  7     11     8     (4 )   19     41  

         Income tax expense (recovery)

  -     (1 )   (1 )   9     -     7  

         Income tax paid

  -     -     -     (20 )   -     (20 )

         Excess cash contributions over employee future benefits expense

  -     (8 )   (3 )   (2 )   -     (13 )

         Impairment loss

  -     -     -     -     -     -  

         Share of results for equity accounting

  19     (2 )   -     -     (17 )   -  

         Gain on sale of assets

  -     -     (21 )   -     -     (21 )

         Settlement loss on pension plan

  -     7     -     -     -     7  

         Other

  -     -     4     -     -     4  

 

  -     (15 )   6     5     -     (4 )

Change in non-cash working capital:

                                   

   Trade and other receivables

  -     (72 )   (84 )   (34 )   195     5  

   Inventories

  -     -     (81 )   7     -     (74 )

   Prepaid expenses

  -     -     (1 )   (1 )   -     (2 )

   Trade, other payables and accrued charges

  22     91     121     (1 )   (195 )   38  

 

  22     19     (45 )   (29 )   -     (33 )

 

  22     4     (39 )   (24 )   -     (37 )

Cash flows from investing activities:

                                   

   Disbursements for property, plant and equipment

  -     -     (64 )   (11 )   -     (75 )

   Proceeds from sale of assets

  -     1     23     -     -     24  

   Change in restricted cash

  -     -     (5 )   (2 )   -     (7 )

   Investments in a subsidiary

  (18 )   -     -     -     18     -  

   Interest received

  -     15     6     1     (22 )   -  

   Other

  -     -     -     -     -     -  

 

  (18 )   16     (40 )   (12 )   (4 )   (58 )

Cash flow from financing activities:

                                   

   Change in operating bank loans

  -     -     24     (1 )   -     23  

   Increase in long-term debt

  -     -     40     1     -     41  

   Repayments of long-term debt

  -     -     -     (2 )   -     (2 )

   Proceeds from issue of share capital

  -     -     18     -     (18 )   -  

   Interest paid

  (4 )   (20 )   (19 )   -     22     (21 )

 

  (4 )   (20 )   63     (2 )   4     41  

 

  -     -     (16 )   (38 )   -     (54 )

Foreign exchange gain on cash and cash equivalents held in foreign currencies

  -     -     -     4     -     4  

Net decrease in cash and cash equivalents

  -     -     (16 )   (34 )   -     (50 )

 

                                   

Cash and cash equivalents, beginning of period

  -     -     19     54     -     73  

Cash and cash equivalents, end of period

$  -   $  -   $  3   $  20   $  -   $  23  

TEMBEC Supplemental Information for second quarter 2014 7


TEMBEC INC.
SUPPLEMENTAL INFORMATION
March 29, 2014
Supplemental condensed consolidating financial information

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)(in millions of Canadian dollars)

Six months ended March 30, 2013 (restated(1))

 

 

  Parent     Subsidiary     Guarantor     Other     Consolidation        

 

  Company     Issuer      Subsidiaries     Subsidiaries     Adjustments     Consolidated   

Cash flows from operating activities:

                                   

   Net earnings (loss)

$  (46 ) $  (46 ) $  (40 ) $  20   $  66   $  (46 )

   Adjustments for:

                                   

         Depreciation and amortization

  -     -     16     4     -     20  

         Net finance costs

  1     3     12     -     16     32  

         Income tax expense (recovery)

  -     -     -     12     -     12  

         Income tax paid

  -     -     -     (8 )   -     (8 )

         Excess cash contributions over employee future benefits expense

  -     (15 )   (1 )   (1 )   -     (17 )

         Impairment loss

  -     -     22     -     -     22  

         Share of results for equity accounting

  45     37     -     -     (82 )   -  

         Gain on sale of assets

  -     -     (2 )   -     -     (2 )

         Settlement loss on pension plan

  -     -     -     -     -     -  

         Other

  -     2     (2 )   (3 )   -     (3 )

 

  -     (19 )   5     24     -     10  

Change in non-cash working capital:

                                   

   Trade and other receivables

  -     (45 )   (55 )   (34 )   138     4  

   Inventories

  -     -     (23 )   (8 )   -     (31 )

   Prepaid expenses

  -     (1 )   (3 )   (1 )   -     (5 )

   Trade, other payables and accrued charges

  18     70     61     (9 )   (138 )   2  

 

  18     24     (20 )   (52 )   -     (30 )

 

  18     5     (15 )   (28 )   -     (20 )

Cash flows from investing activities:

                                   

   Disbursements for property, plant and equipment

  -     (1 )   (57 )   (4 )   -     (62 )

   Proceeds from sale of assets

  -     -     2     -     -     2  

   Change in restricted cash

  -     -     4     -     -     4  

   Investments in a subsidiary

  (17 )   -     -     -     17     -  

   Interest received

  -     12     -     -     (12 )   -  

   Other

  -     1     -     -     -     1  

 

  (17 )   12     (51 )   (4 )   5     (55 )

Cash flow from financing activities:

                                   

   Change in operating bank loans

  -     -     12     6     -     18  

   Increase in long-term debt

  -     -     24     -     -     24  

   Repayments of long-term debt

  -     -     -     (2 )   -     (2 )

   Proceeds from issue of share capital

  -     -     17     -     (17 )   -  

   Interest paid

  (1 )   (17 )   (12 )   (1 )   12     (19 )

 

  (1 )   (17 )   41     3     (5 )   21  

 

  -     -     (25 )   (29 )   -     (54 )

Foreign exchange gain on cash and cash equivalents held in foreign currencies

  -     -     -     1     -     1  

Net decrease in cash and cash equivalents

  -     -     (25 )   (28 )   -     (53 )
                                     

Cash and cash equivalents, beginning of period

  -     1     29     57     -     87  

Cash and cash equivalents, end of period

$  -   $  1   $  4   $  29   $  -   $  34  
(1)    See note 2 of the unaudited interim consolidated financial statements for the quarter ended March 29, 2014

TEMBEC Supplemental Information for second quarter 2014 8