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

 

 

 

 

Unaudited supplemental condensed consolidating financial information of

TEMBEC INC.

Quarters ended December 24, 2011 and December 25, 2010

 

 


TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
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 24, 2011, September 24, 2011 and December 25, 2010, and the statements of comprehensive earnings (loss) and cash flows for the quarters ended December 24, 2011 and December 25, 2010, 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), 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 unaudited interim consolidated financial statements for the quarter ended December 24, 2011.

TEMBEC Supplemental Information for first quarter 2012 1


TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
Supplemental condensed consolidating financial information
 

Condensed consolidated balance sheets

(unaudited)(in millions of Canadian dollars)

                      Quarter ended December 24, 2011  
    Parent     Subsidiary     Guarantor     Other     Consolidation        
    Company     Issuer     Subsidiaries     Subsidiaries     Adjustments     Consolidated  
ASSETS                                    
Current assets:                                    
   Cash and cash equivalents $  -   $  3   $  16   $  60   $  -   $  79  
   Cash held in trust   -     -     2     5     -     7  
   Trade and other receivables   36     345     252     50     (525 )   158  
   Inventories   -     -     233     28     -     261  
   Prepaid expenses   -     1     2     1     -     4  
   Assets held for sale   -     -     56     -     -     56  
    36     349     561     144     (525 )   565  
Investments   183     452     -     -     (635 )   -  
Property, plant and equipment   -     5     375     91     -     471  
Biological assets   -     -     5     -     -     5  
Employee future benefits   -     -     -     1     -     1  
Other long-term receivables   -     25     1     2     -     28  
Deferred tax assets   -     (1 )   -     13     -     12  
  $  219   $  830   $  942   $  251   $  (1,160 ) $  1,082  
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                    
Current liabilities:                                    
   Operating bank loans $  -   $  -   $  46   $  2   $  -   $  48  
   Trade, other payables
         and accrued charges 		  2     206     458     77     (525 )   218  
   Interest payable   -     1     -     -     -     1  
   Provisions   -     1     1     -     -     2  
   Current portion of long-term debt   4     -     -     14     -     18  
   Liabilities held for sale   -     -     22     -     -     22  
    6     208     527     93     (525 )   309  
Long-term debt   1     248     -     26     (6 )   269  
Provisions   -     5     10     -     -     15  
Employee future benefits   -     177     57     41     -     275  
Other long-term liabilities   -     -     2     -     -     2  
    7     638     596     160     (531 )   870  
                                     
Shareholders' equity:                                    
   Share capital   564     555     668     40     (1,263 )   564  
   Retained earnings (deficit)   (349 )   (360 )   (322 )   54     628     (349 )
   Accumulated other comprehensive
       earnings (loss) 		  (3 )   (3 )   -     (3 )   6     (3 )
    212     192     346     91     (629 )   212  
  $  219   $  830   $  942   $  251   $  (1,160 ) $  1,082  

TEMBEC Supplemental Information for first quarter 2012 2

TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
Supplemental condensed consolidating financial information
 

Condensed consolidated balance sheets (continued)

(unaudited)(in millions of Canadian dollars)

                            Year ended September 24, 2011  
    Parent     Subsidiary     Guarantor     Other     Consolidation        
    Company     Issuer     Subsidiaries      Subsidiaries      Adjustments     Consolidated  
ASSETS                                    
Current assets:                                    
   Cash and cash equivalents $  -   $  -   $  40   $  59   $  -   $  99  
   Cash held in trust   -     -     -     6     -     6  
   Trade and other receivables   35     339     100     49     (341 )   182  
   Inventories   -     -     232     29     -     261  
   Prepaid expenses   -     1     5     -     -     6  
   Assets held for sale   -     -     -     -     -     -  
    35     340     377     143     (341 )   554  
Investments   205     473     -     -     (678 )   -  
Property, plant and equipment   -     5     393     93     -     491  
Biological assets   -     -     4     -     -     4  
Employee future benefits   -     -     -     1     -     1  
Other long-term receivables   -     25     1     2     -     28  
Deferred tax assets   -     -     -     15     -     15  
  $  240   $  843   $  775   $  254   $  (1,019 ) $  1,093  
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                    
Current liabilities:                                    
   Operating bank loans $  -   $  -   $  -   $  6   $  -   $  6  
   Trade, other payables and
      accrued charges 		  -     191     313     83     (341 )   246  
   Interest payable   -     8     -     -     -     8  
   Provisions   -     -     8     -     -     8  
   Current portion of long-term debt   5     -     -     13     -     18  
   Liabilities held for sale   -     -     -     -     -     -  
    5     199     321     102     (341 )   286  
Long-term debt   2     249     -     26     (6 )   271  
Provisions   -     -     16     -     -     16  
Employee future benefits   -     181     62     42     -     285  
Other long-term liabilities   -     -     2     -     -     2  
    7     629     401     170     (347 )   860  
                                     
Shareholders' equity:                                    
   Share capital   564     555     668     40     (1,263 )   564  
   Retained earnings (deficit)   (333 )   (343 )   (294 )   42     595     (333 )
  Accumulated other comprehensive
       earnings (loss) 		  2     2     -     2     (4 )   2  
    233     214     374     84     (672 )   233  
  $  240   $  843   $  775   $  254   $  (1,019 ) $  1,093  

TEMBEC Supplemental Information for first quarter 2012 3

TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
Supplemental condensed consolidating financial information
 

Condensed consolidated balance sheets (continued)

(unaudited)(in millions of Canadian dollars)

                      Quarter ended December 25, 2010  
    Parent     Subsidiary     Guarantor     Other     Consolidation        
    Company     Issuer     Subsidiaries     Subsidiaries     Adjustments     Consolidated  
ASSETS                                    
Current assets:                                    
   Cash and cash equivalents $  -   $  2   $  12   $  42   $  -   $  56  
   Cash held in trust   -     -     -     5     -     5  
   Trade and other receivables   36     301     137     38     (344 )   168  
   Inventories   -     -     245     21     -     266  
   Prepaid expenses   -     1     5     1     -     7  
   Assets held for sale   -     -     -     -     -     -  
    36     304     399     107     (344 )   502  
Investments   263     504     -     -     (767 )   -  
Property, plant and equipment   -     5     403     80     -     488  
Biological assets   -     -     7     -     -     7  
Other long-term receivables   -     26     2     1     -     29  
Deferred tax assets   -     -     -     25     -     25  
  $  299   $  839   $  811   $  213   $  (1,111 ) $  1,051  
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                    
Current liabilities:                                    
   Operating bank loans $  -   $  -   $  -   $  3   $  -   $  3  
   Trade, other payables
       and accrued charges 		  -     180     285     87     (344 )   208  
   Interest payable   -     1     -     -     -     1  
   Provisions   -     -     6     -     -     6  
   Current portion of long-term debt   5     -     -     12     -     17  
   Liabilities held for sale   -     -     -     -     -     -  
    5     181     291     102     (344 )   235  
Long-term debt   4     243     -     22     (6 )   263  
Provisions   -     -     18     -     -     18  
Employee future benefits   -     145     53     43     -     241  
Other long-term liabilities   3     2     2     -     -     7  
    12     571     364     167     (350 )   764  
                                     
Shareholders' equity:                                    
   Share capital   564     551     668     34     (1,253 )   564  
   Retained earnings (deficit)   (275 )   (281 )   (221 )   14     488     (275 )
   Accumulated other comprehensive
      earnings (loss) 		  (2 )   (2 )   -     (2 )   4     (2 )
    287     268     447     46     (761 )   287  
  $  299   $  839   $  811   $  213   $  (1,111 ) $  1,051  

TEMBEC Supplemental Information for first quarter 2012 4

TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
Supplemental condensed consolidating financial information
 

Condensed consolidated statements of comprehensive earnings (loss)

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

                      Quarter ended December 24, 2011  
    Parent     Subsidiary     Guarantor     Other     Consolidation        
    Company     Issuer     Subsidiaries     Subsidiaries     Adjustments     Consolidated  
Sales $  -   $  -   $  339   $  66   $  (4 ) $  401  
Freight and other deductions   -     -     49     5     (1 )   53  
Lumber export taxes   -     -     2     -     -     2  
Cost of sales (excluding depreciation
   and amortization) 		  -     -     279     40     (3 )   316  
Selling, general and administrative   -     1     16     1     -     18  
Share-based compensation   -     -     -     -     -     -  
Depreciation and amortization   -     -     11     1     -     12  
Other items   (1 )   1     2     -     -     2  
Operating earnings (loss)   1     (2 )   (20 )   19     -     (2 )
Interest, foreign exchange and other   -     1     8     1     -     10  
Exchange loss on long-term debt   -     (2 )   -     -     -     (2 )
Net finance costs (income)   -     (1 )   8     1     -     8  
Earnings (loss) before income taxes and share
   of results significantly influenced companies 		  1     (1 )   (28 )   18     -     (10 )
Income tax expense   -     -     -     6     -     6  
Share of results significantly
    influenced companies 		  (17 )   (16 )   -     -     33     -  
Net earnings (loss)   (16 )   (17 )   (28 )   12     33     (16 )
Other comprehensive earnings:                                    
Foreign currency translation differences
   for foreign operations 		  (5 )   (5 )   -     (5 )   10     (5 )
Total comprehensive earnings (loss) $  (21 ) $  (22 ) $  (28 ) $  7   $  43   $  (21 )
Basic and diluted net loss in dollars per share                               $  (0.16 )

TEMBEC Supplemental Information for first quarter 2012 5

TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
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 25, 2010  
    Parent     Subsidiary     Guarantor     Other     Consolidation        
    Company     Issuer     Subsidiaries     Subsidiaries     Adjustments     Consolidation  
Sales $  -   $  1   $  378   $  47   $  (4 ) $  422  
Freight and other deductions   -     -     55     4     (2 )   57  
Lumber export taxes   -     -     3     -     -     3  
Cost of sales (excluding depreciation
   and amortization) 		  -     -     293     37     (2 )   328  
Selling, general and administrative   -     2     15     1     -     18  
Share-based compensation   -     4     -     -     -     4  
Depreciation and amortization   -     -     11     2     -     13  
Other items   -     1     1     -     -     2  
Operating earnings (loss)   -     (6 )   -     3     -     (3 )
Interest, foreign exchange and other   (1 )   3     9     1     -     12  
Exchange loss on long-term debt   -     (5 )   -     -     -     (5 )
Net finance costs (income)   (1 )   (2 )   9     1     -     7  
Earnings (loss) before income taxes and share
   of results significantly influenced companies 		  1     (4 )   (9 )   2     -     (10 )
Income tax expense   -     -     -     1     -     1  
Share of results significantly
   influenced companies 		  (11 )   (7 )   -     -     18     -  
Net earnings (loss)   (10 )   (11 )   (9 )   1     18     (11 )
Other comprehensive earnings:                                    
    Foreign currency translation differences
          for foreign operations 		  (2 )   (2 )   -     (2 )   4     (2 )
Total comprehensive earnings (loss) $  (12 ) $  (13 ) $  (9 ) $  (1 ) $  22   $  (13 )
Basic and diluted net loss in dollars per share                               $  (0.11 )

TEMBEC Supplemental Information for first quarter 2012 6

TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
Supplemental condensed consolidating financial information
 

Condensed consolidated statements of cash flows

(unaudited)(in millions of Canadian dollars)

                      Quarter ended December 24, 2011  
    Parent     Subsidiary     Guarantor     Other     Consolidated        
    Company     Issuer     Subsidiaries     Subsidiaries     Adjustments     Consolidated  
Cash flows from operating activities:                                    
   Net earnings (loss) $  (16 ) $  (17 ) $  (28 ) $  12   $  33   $  (16 )
   Adjustments for:                                    
       Depreciation and amortization   -     -     11     1     -     12  
       Net finance costs   -     (1 )   8     1     -     8  
       Income tax expense   -     -     -     6     -     6  
       Excess cash contributions over 
          employee future benefits expense 		  -     (5 )   (4 )   (1 )   -     (10 )
       Share of results of significantly 
          influenced companies 		  17     16     -     -     (33 )   -  
       Other   (1 )   11     (8 )   -     -     2  
    -     4     (21 )   19     -     2  
Change in non-cash working capital:                                    
   Trade and other receivables   -     (6 )   (9 )   (1 )   30     14  
   Inventories   -     -     (34 )   -     -     (34 )
   Prepaid expenses   -     -     3     (1 )   -     2  
   Trade, other payables and accrued charges   1     17     3     (8 )   (30 )   (17 )
    1     11     (37 )   (10 )   -     (35 )
    1     15     (58 )   9     -     (33 )
Cash flows from investing activities:                                    
   Additions to property, plant and equipment   -     -     (19 )   (4 )   -     (23 )
   Proceeds on sale of assets   1     3     13     -     -     17  
   Other   -     -     (3 )   -     -     (3 )
    1     3     (9 )   (4 )   -     (9 )
Cash flow from financing activities:                                    
   Change in operating bank loans   -     -     46     (4 )   -     42  
   Cash held in trust   -           (2 )   -     -     (2 )
   Increase in long-term debt   -     -     -     4     -     4  
   Repayments of long-term debt   (2 )   -     -     (1 )   -     (3 )
   Interest paid   -     (15 )   -     -     -     (15 )
   Other   -     -     (1 )   -     -     (1 )
    (2 )   (15 )   43     (1 )   -     25  
    -     3     (24 )   4     -     (17 )
Foreign exchange gain on cash and 
       cash equivalents held in foreign currencies 		  -     -     -     (3 )   -     (3 )
Net decrease in cash and cash equivalents   -     3     (24 )   1     -     (20 )
Cash and cash equivalents, 
       beginning of period 		  -     -     40     59     -     99  
Cash and cash equivalents, end of period $  -   $  3   $  16   $  60   $  -   $  79  

TEMBEC Supplemental Information for first quarter 2012 7

TEMBEC INC.
SUPPLEMENTAL INFORMATION
 
Quarter ended December 24, 2011
 
Supplemental condensed consolidating financial information
 

Condensed consolidated statements of cash flows (continued)

(unaudited)(in millions of Canadian dollars)

                      Quarter ended December 25, 2010  
    Parent     Subsidiary     Guarantor     Other     Consolidated        
    Company     Issuer     Subsidiaries     Subsidiaries     Adjustments     Consolidated  
Cash flows from operating activities:                                    
   Net earnings (loss) $  (10 ) $  (11 ) $  (9 ) $  1   $  18   $  (11 )
   Adjustments for:                                    
       Depreciation and amortization   -     -     11     2     -     13  
       Net finance costs   (1 )   (2 )   9     1     -     7  
       Income tax expense   -     -     -     1     -     1  
       Excess cash contributions over 
          employee future benefits expense 		  -     (1 )   (2 )   (1 )   -     (4 )
       Share of results of significantly 
          influenced companies 		  11     7     -     -     (18 )   -  
       Other   -     4     (9 )   2     -     (3 )
    -     (3 )   -     6     -     3  
Change in non-cash working capital:                                    
   Trade and other receivables   2     (12 )   36     2     10     38  
   Inventories   -     -     (14 )   2     -     (12 )
   Prepaid expenses   -     -     1     -     -     1  
   Trade, other payables and accrued charges   -     26     (32 )   (6 )   (10 )   (22 )
    2     14     (9 )   (2 )   -     5  
    2     11     (9 )   4     -     8  
Cash flows from investing activities:                                    
   Additions to property, plant and equipment   -     -     (4 )   (4 )   -     (8 )
   Proceeds on sale of assets   -     -     -     -     -     -  
   Other   -     -     1     -     -     1  
    -     -     (3 )   (4 )   -     (7 )
Cash flow from financing activities:                                    
   Change in operating bank loans   -     -     -     2     -     2  
   Cash held in trust   -     -     -     -     -     -  
   Increase in long-term debt   -     -     -     -     -     -  
   Repayments of long-term debt   (2 )   -     -     -     -     (2 )
   Interest paid   -     (9 )   -     -     -     (9 )
   Other   -     -     -     (2 )   -     (2 )
    (2 )   (9 )   -     -     -     (11 )
    -     2     (12 )   -     -     (10 )
Foreign exchange gain on cash and cash
   equivalents held in foreign currencies 		  -     -     -     (2 )   -     (2 )
Net decrease in cash and cash equivalents   -     2     (12 )   (2 )   -     (12 )
Cash and cash equivalents, beginning of period   -     -     24     44     -     68  
Cash and cash equivalents, end of period $  -   $  2   $  12   $  42   $  -   $  56  

TEMBEC Supplemental Information for first quarter 2012 8