Norampac net income in 2004 was up to $59.7 million compares to $30.9 million in 2003

Consolidated selected information

(in millions of Canadian dollars)

	Fourth quarter		Third quarter
	2004	2003	2004
Sales	305.4	295.2	341.3
Operating income 1	36.0	12.1	27.8
Operating income excluding specific items 1	28.3	12.1	35.5
Net income	26.5	2.7	23.0
Net income (loss) excluding specific items 1	15.8	(3.5)	20.0

1 – see note on supplemental information on non-GAAP measures

Commenting on the results, Mr. Marc-Andre Depin, President and Chief Executive Officer, stated: “As is customary, demand in the fourth quarter was at its lowest, therefore, our North American containerboard mills were less busy than during our exceptional third quarter, nonetheless, the operating rate for the fourth quarter was over 95%. The benefits of higher prices in the fourth quarter were more than offset by the surging Canadian dollar. We are currently working on different investment programs in order to ensure our cost competitiveness in the market place.”

Quarterly Highlights

• Compared to the third quarter, average reported Canadian selling prices were lower in both the containerboard and the corrugated products segments due to a stronger Canadian dollar;
• Unrealized gain of $7.7 million on financial instruments related to some commodity contracts due to the new CICA guidelines on hedge accounting;
• Settlement of the strike at the Burnaby containerboard mill;
• Investment of $17.5 million at the Etobicoke and St. Marys corrugated products plants following the decision of closing down the Concord corrugated products plant;
• Opening of a new water treatment plant at the Mississauga containerboard mill;
• The Company’s North American primary mill capacity utilisation rates, excluding the Burnaby containerboard mill which was on strike for part of the quarter, was over 95%, up from 90% in 2003; and
• The Company’s North American integration level increased to 64%, up from 60% compared to the same period in 2003.

Sales amounted to $305 million in the fourth quarter of 2004, compared to $295 million for the corresponding quarter in 2003. Not taking into account shipments from the Burnaby containerboard mill, which was on strike from April 10, 2004 to November 30, 2004, shipments of containerboard were up by 5.6% compared to the same quarter in 2003, but were down by 7.9% compared to the third quarter of 2004. Shipments of corrugated products for the fourth quarter of 2004 were approximately at the same level compared to the same quarter in 2003, despite additional volume related to the recent acquisitions of the Thompson and Lancaster corrugated products facilities respectively acquired in April 2004 and August 2004.

Operating income amounted to $36.0 million in the fourth quarter of 2004, compared to $12.1 million for the corresponding quarter in 2003. The 2004 operating income includes an unrealized gain on derivative financial instruments of $7.7 million. The increase in operating income is mainly attributable to higher selling prices in both the containerboard and the corrugated products segments, partially offset by a stronger Canadian dollar combined with higher freight, fibre, profit sharing and maintenance costs.

Year Ended December 31, 2004

Net income for the year ended December 31, 2004 was $59.7 million or $48.2 million excluding specific items. This compares to net income of $30.9 million or $15.2 million excluding specific items for the same period in 2003.

For the year ended December 31, 2004, sales were $1.3 billion, approximately at the same level as 2003. For the year ended December 31, 2004, shipments of containerboard also remained at the same level compared to the same period in 2003, despite the strike at the Burnaby containerboard mill. Shipments of corrugated products were up by 1.5% compared to the same period in 2003, which is mainly attributable to the volume of the Schenectady corrugated products plant acquired in April 2003 and the recent acquisitions of the Thompson and Lancaster corrugated products facilities.

For the year ended December 31, 2004, operating income amounted to $97.4 million, compared to $85.4 million for the same period in 2003. The 2004 operating income includes an unrealized gain on derivative financial instruments of $4.4 million. In comparing the two years, the increase is attributable to higher selling prices in both the containerboard and the corrugated products segments along with lower chemical and energy costs which were partially offset by a stronger Canadian dollar combined with higher freight costs.

Supplemental Information on Non-GAAP Measures

Operating income, operating income excluding specific items and net income excluding specific items are non-GAAP measures. The Company believes that it is useful for investors to be aware of specific items that adversely or positively affect its GAAP measures. The above mentioned non-GAAP measures provide investors with a measure of performance to compare the Company’s results between periods without regard to these specific items. The Company’s measures excluding specific items should not be considered in isolation as they have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies.

Specific items are defined as items such as debt restructuring charges, unrealized gain or loss on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gain or loss on long-term debt and other significant items of an unusual or non-recurring nature.

Net income, which is a performance measure defined by Canadian GAAP, is reconciled to operating income in the following table. This table also reconciles the specific items to their nearest measure as computed on the statement of earnings:

(in millions of Canadian dollars)	Fourth quarter		Third quarter
	2004	2003	2004
Net income	26.5	2.7	23.0
Share of income of equity accounted investments	-	(0.2)	(0.2)
Income tax expense	11.0	10.6	8.5
Interests	4.8	6.0	5.8
Amortization of financing costs	0.4	0.4	0.4
Foreign exchange gain on long term debt	(6.7)	(7.4)	(9.7)
Operating income	36.0	12.1	27.8
Specific item:
Unrealized loss (gain) on derivative financial Instruments	(7.7)	-	7.7
Operating income excluding specific item	28.3	12.1	35.5
Net income	26.5	2.7	23.0
Specific items:
Unrealized loss (gain) on derivative financial instruments net of related income taxes	(5.1)	-	5.1
Foreign exchange gain on long-term debt net of related income taxes	(5.6)	(6.2)	(8.1)
Net income (loss) excluding specific items	15.8	(3.5)	20.0

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