Transcontinental Inc — Audit Report / Information 2021

Dec 9, 2021

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KPMG LLP Telephone (514) 840-2100 600 de Maisonneuve Blvd. West Fax (514) 840-2187 Suite 1500, Tour KPMG Internet www.kpmg.ca Montréal (Québec) H3A 0A3 Canada

INDEPENDENT AUDITORS’ REPORT

To the Shareholder of Transcontinental Inc.

Opinion

We have audited the consolidated financial statements of Transcontinental Inc. (the "Entity"), which comprise:

• the consolidated statements of financial position as at October 31, 2021 and October 25, 2020

• the consolidated statements of earnings for the years then ended

• the consolidated statements of comprehensive income for the years then ended

• the consolidated statements of changes in equity for the years then ended

• the consolidated statements of cash flows for the years then ended

• and notes to the consolidated financial statements, including a summary of significant accounting policies

(hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at October 31, 2021 and October 25, 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the " Auditors’ Responsibilities for the Audit of the Financial Statements " section of our auditors’ report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended October 31, 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

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We have determined the matter described below to be the key audit matters to be communicated in our auditors’ report.

Assessment of the recoverable amount of groups of cash generating units ("CGU") to which goodwill has been allocated

Description of the matter

We draw attention to Notes 2(m) and (v), 7 and 16 to the consolidated financial statements. The goodwill balance is $1,086.6 million. Goodwill acquired in a business combination is allocated to CGU (or group of CGUs) that will benefit from the synergies of the combination.

A CGU (or group of CGUs) to which goodwill has been allocated is tested for impairment annually, or more frequently if changes in circumstances indicate a potential impairment. An impairment loss is recognized if the carrying amount of a CGU (or group of CGUs) exceeds its estimated recoverable amount. Impairment losses are recognized in net earnings. Impairment losses recognized are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (or group of CGUs) on a pro rata basis.

The recoverable amount of a CGU (or group of CGUs) is the higher of its value in use and its fair value less costs of disposal. In determining the recoverable amount of the CGU (or group of CGUs) on a fair value less costs of disposal basis, the Entity uses significant assumptions including capitalization multiples and the budgeted earnings before interest, taxes, depreciation and amortization (EBITDA).

Why the matter is a key audit matter

We identified the assessment of the recoverable amount of groups of CGU to which goodwill has been allocated as a key audit matter. This matter represented an area of significant risk of material misstatement for certain CGUs (or group of CGUs) due to the magnitude of the goodwill and the high degree of estimation uncertainty in determining the recoverable amount. In addition, significant auditor judgment and specialized skills and knowledge were required in evaluating the results of our audit procedures due to the sensitivity of the Entity’s determination of the recoverable amount of certain CGUs (or group of CGUs) to minor changes to significant assumptions.

How the matter was addressed in the audit

The following are the primary procedures we performed to address this key audit matter.

We evaluated the appropriateness of the cash flow projections and the budgeted EBITDA used to establish the recoverable amount of the CGUs (or group of CGUs) by comparing them to the Entity’s actual historical cash flows and EBITDA. We took into account the changes in conditions and events affecting the CGUs (or group of CGUs) to assess the adjustments or lack of adjustments, made by the Entity in arriving at cash flow projections and budgeted EBITDA to be generated by the CGUs (or group of CGUs).

We compared the historical forecasts of cash flow projections and budgeted EBITDA with actual results to assess the Entity’s ability to accurately predict cash flow projections and budgeted EBITDA.

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We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating:

• the appropriateness of capitalization multiples by comparing them to publicly available market data for comparable entities; and

• the reasonableness of the estimate of the recoverable amount of all CGUs (or group of CGUs) by comparing the sum of all recoverable amounts with the Entity’s market capitalization and by comparing the budgeted EBITDA multiple to published EBITDA multiples for comparable entities.

Other Information

Management is responsible for the other information. Other information comprises:

• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

• the information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled "2021 Annual Report".

Our opinion on the financial statements does not cover the other information, and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors’ report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report.

We have nothing to report in this regard.

The information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled "2021 Annual Report" is expected to be made available to us after the date of this auditors’ report. If, based on the work we will perform on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the 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 financial statements that are free from material misstatement, whether due to fraud or error.

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In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Entity to cease to continue as a going concern.

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• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

• Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this auditors’ report is Yvon Dupuis.

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Montréal, Canada December 9, 2021

*CPA auditor, CA, public accountancy permit No. A114306

CONSOLIDATED STATEMENTS OF EARNINGS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, except per share data)

CONSOLIDATED STATEMENTS OF EARNINGS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, except per share data)
		October 31,		October 25,
	Notes		2021		2020
Revenues		$	2,643.4	$	2,574.0
Operating expenses	5		2,188.5		2,074.6
Restructuring and other costs	6		12.7		41.4
Impairment of assets			0.7		—
Operating earnings before depreciation and amortization			441.5		458.0
Depreciation and amortization	8		207.7		216.6
Operating earnings			233.8		241.4
Net financial expenses	9		42.3		46.4
Earnings before income taxes			191.5		195.0
Income taxes	10		61.0		63.2
Net earnings			130.5		131.8
Non-controllinginterests			(0.1)		0.1
Net earnings attributable to shareholders of the Corporation		$	130.6	$	131.7
Net earningsper share - basic and diluted		$	1.50	$	1.51
Weighted average number of shares outstanding- basic and diluted(in millions)	23		87.0		87.1

The notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended October 31, 2021 and October 25, 2020

(in millions of Canadian dollars)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars)
	October 31,		October 25,
	Notes	2021		2020(1)
Net earnings	$	130.5	$	131.8
Other comprehensive income (loss)
Items that will be reclassified to net earnings
Net change related to cash flow hedges
Net change in the fair value of derivatives - Foreign exchange risk	30	5.4		1.3
Net change in the fair value of derivatives - Interest rate risk	19 & 30	3.2		(18.5)
Reclassification of the net change in the fair value of derivatives recognized in net earnings during the period		11.9		8.2
Related income taxes(recovery)		5.4		(2.4)
	25	15.1		(6.6)
Cumulative translation differences
Net unrealized exchange gains (losses) on the translation of the financial statements of foreign operations		(93.2)		9.2
Net gains (losses) on hedge of the net investment in foreign operations	19	39.3		(1.4)
Related income taxes(recovery)		4.1		(0.4)
	25	(58.0)		8.2
Items that will not be reclassified to net earnings
Changes related to defined benefit plans
Actuarial gains on defined benefit plans	28	21.7		12.9
Related income taxes		5.3		3.4
	25	16.4		9.5
Other comprehensive income(loss)	25	(26.5)		11.1
Comprehensive income	$	104.0	$	142.9

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

The notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars)

(in millions of Canadian dollars)
						Accumulated
							other			Non-
		Share	Contributed		Retained	comprehensive			controlling		Total
	Notes	capital		surplus	earnings	income	(loss)	Total		interests	equity
Balance as at October 25, 2020	$	640.0	$	0.9	$ 1,107.2	$	(14.8)	$ 1,733.3	$	5.3	$ 1,738.6
Net earnings		—		—	130.6		—	130.6		(0.1)	130.5
Other comprehensive income	25	—		—	—		(26.5)	(26.5)		—	(26.5)
Shareholders' contributions and
distributions to shareholders
Dividends	22	—		—	(78.3)		—	(78.3)		—	(78.3)
Balance as at October 31,2021	$	640.0	$	0.9	$ 1,159.5	$	(41.3)	$ 1,759.1	$	5.2	$ 1,764.3
Balance as at October 27, 2019	$	641.9	$	1.1	$ 1,069.9	$	(25.9)	$ 1,687.0	$	4.2	$ 1,691.2
Impact of the transition to IFRS 16		—		—	(13.2)		—	(13.2)		—	(13.2)
Balance as at October 27, 2019 - adjusted		641.9		1.1	1,056.7		(25.9)	1,673.8		4.2	1,678.0
Net earnings		—		—	131.7		—	131.7		0.1	131.8
Other comprehensive loss	25	—		—	—		11.1	11.1		—	11.1
Shareholders' contributions and
distributions to shareholders
Share redemptions	22	(3.8)		—	(3.3)		—	(7.1)		—	(7.1)
Exercise of stock options		1.9		(0.2)	—		—	1.7		—	1.7
Dividends	22	—		—	(77.9)		—	(77.9)		—	(77.9)
Business combinations		—		—	—		—	—		1.0	1.0
Balance as at October 25,2020	$	640.0	$	0.9	$ 1,107.2	$	(14.8)	$ 1,733.3	$	5.3	$ 1,738.6

The notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Years ended October 31, 2021 and October 25, 2020

(in millions of Canadian dollars)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars)
			As at		As at
		October 31,		October 25,
	Notes		2021		2020
Current assets
Cash		$	231.1	$	241.0
Accounts receivable	11		496.1		461.2
Income taxes receivable			16.9		13.4
Inventories	12		357.0		288.8
Prepaid expenses and other current assets			24.4		20.3
			1,125.5		1,024.7
Property, plant and equipment	13		689.7		712.4
Right-of-use assets	14		140.8		134.6
Intangible assets	15		513.0		568.5
Goodwill	16		1,086.6		1,098.8
Deferred taxes	10		18.6		24.2
Other assets	17		38.7		35.2
		$	3,612.9	$	3,598.4
Current liabilities
Accounts payable and accrued liabilities	18	$	439.2	$	399.7
Provisions	20		1.5		7.9
Income taxes payable			28.9		8.4
Deferred revenues and deposits			12.3		9.0
Current portion of long-term debt	19		187.3		229.7
Currentportion of lease liabilities	14		23.1		22.8
			692.3		677.5
Long-term debt	19		778.2		790.4
Lease liabilities	14		137.3		132.0
Deferred taxes	10		137.3		133.9
Provisions	20		0.6		0.3
Other liabilities	21		102.9		125.7
			1,848.6		1,859.8
Equity
Share capital	22		640.0		640.0
Contributed surplus			0.9		0.9
Retained earnings			1,159.5		1,107.2
Accumulated other comprehensive loss	25		(41.3)		(14.8)
Attributable to shareholders of the Corporation			1,759.1		1,733.3
Non-controllinginterests			5.2		5.3
			1,764.3		1,738.6
		$	3,612.9	$	3,598.4

The notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended October 31, 2021 and October 25, 2020

(in millions of Canadian dollars)

CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars)
	October 31,		October 25,
	Notes	2021		2020
Operating activities
Net earnings	$	130.5	$	131.8
Adjustments to reconcile net earnings and cash flows from operating activities:
Impairment of assets	7	0.7		—
Depreciation and amortization	8	227.3		237.5
Financial expenses on long-term debt and lease liabilities	9	38.7		47.1
Net losses on disposal of assets		0.6		3.1
Net losses on business acquisitions and disposals	6	—		3.1
Income taxes	10	61.0		63.2
Net foreign exchange differences and other		(2.3)		(3.9)
Cash flows generated by operating activities before changes in non-cash operating items and income taxes paid		456.5		481.9
Changes in non-cash operating items	26	(81.8)		(5.1)
Income taxespaid		(59.4)		(49.8)
Cash flows from operatingactivities		315.3		427.0
Investing activities
Business combinations, net of acquired cash	4	(43.7)		(9.4)
Business disposals	4	—		232.1
Acquisitions of property, plant and equipment	13	(115.0)		(79.2)
Disposals of property, plant and equipment	13	1.0		1.2
Increase in intangible assets	15	(23.3)		(18.3)
Cash flows from investingactivities		(181.0)		126.4
Financing activities
Increase in long-term debt, net of issuance costs	19 & 26	396.5		—
Reimbursement of long-term debt	19 & 26	(409.0)		(375.5)
Financial expenses paid on long-term debt		(32.3)		(42.6)
Repayment of principal on lease liabilities		(23.7)		(21.9)
Interest paid on lease liabilities	9	(3.3)		(3.1)
Exercise of stock options	24	—		1.7
Dividends	22	(78.3)		(77.9)
Share redemptions	22	—		(7.1)
Cash flows from financingactivities		(150.1)		(526.4)
Effect of exchange rate changes on cash denominated in foreign currencies		5.9		0.3
Net change in cash		(9.9)		27.3
Cash at beginningofyear		241.0		213.7
Cash at end ofyear	$	231.1	$	241.0
Non-cash investing activities
Net change in capital asset acquisitions financed byaccountspayable	$	(0.5)	$	2.5

The notes are an integral part of these consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

1 GENERAL INFORMATION

Transcontinental Inc. (the "Corporation") is incorporated under the Canada Business Corporations Act. Its Class A Subordinate Voting Shares and Class B Shares are traded on the Toronto Stock Exchange. The Corporation's head office is located at 1 Place Ville Marie, Suite 3240, Montreal, Quebec, Canada H3B 0G1.

The Corporation is a leader in flexible packaging in North America and Canada’s largest printer. The Corporation mainly conducts business in Canada, the United States, Latin America, the United Kingdom, Australia and New Zealand in three separate sectors: the Packaging Sector, the Printing Sector and the Media Sector. The Corporation’s main activities are described in Note 3 "Segmented Information".

The Corporation's Board of Directors approved these consolidated financial statements on December 9, 2021.

2 SIGNIFICANT ACCOUNTING POLICIES

Comparability between fiscal years

The fiscal years ended October 31, 2021 and October 25, 2020 comprise 53 weeks and 52 weeks. respectively.

Basis of presentation

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").

The accounting policies adopted in these annual consolidated financial statements are based on IFRS that were issued, in effect and adopted by the Corporation as at October 31, 2021. Any subsequent changes to the accounting policies that will be in effect in the Corporation’s consolidated financial statements after October 31, 2021 could result in a restatement of these annual consolidated financial statements.

The consolidated IFRS financial statements have been prepared in accordance with the following significant accounting policies:

a) Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis, except for the following items:

• derivative financial instruments and contingent considerations which have been measured at their fair value;

• the liability related to stock-based compensation which has been measured under IFRS 2 Share-based payments ,

• defined benefit liabilities, which are measured at the net amount of the fair value of defined benefit plan assets and the present value of the obligations related to these plans; and

• lease liabilities, which are measured at the present value of future lease payments.

b) Basis of consolidation

The consolidated financial statements include the accounts of the Corporation and its subsidiaries. The accounting policies described have been applied consistently by all the subsidiaries for all periods presented in these consolidated financial statements.

Subsidiaries are all entities controlled by the Corporation. There is control when the Corporation is exposed or has rights to variable returns from its involvement with the investee, and has the ability to use its power over the investee to significantly affect the amount of the returns it obtains. Subsidiaries are fully consolidated from the date the Corporation obtains control, and cease to be consolidated from the date that control ceases. Where necessary, adjustments are made to the financial statements of subsidiaries so that their accounting policies are consistent with those of the Corporation. An entity that is fully consolidated but that is not wholly owned by the Corporation results in a non-controlling interest, which is presented separately in the Consolidated Statement of Earnings and the Consolidated Statement of Financial Position. All intercompany balances and transactions have been eliminated upon consolidation.

The Corporation holds the following main subsidiaries:

The Corporation holds the following main subsidiaries:
	Holding
Transcontinental Printing Inc. (Canada)	100.0 %
Transcontinental Printing 2007 Inc. (Quebec)	100.0
Transcontinental Printing 2005 G.P. (Quebec)	100.0
Transcontinental Printing Corporation (Delaware)	100.0
Transcontinental Media Inc. (Quebec)	100.0
Transcontinental Media G.P. (Quebec)	100.0
TC Transcontinental Packaging Inc. (Delaware)	100.0
Transcontinental Holding Corp (Delaware)	100.0
Transcontinental US LLC(Delaware)	100.0

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6

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

c) Business combinations

Business combinations are accounted for using the acquisition method, and their operating results are included in the consolidated financial statements as of the acquisition date. The consideration transferred is the sum of the fair value of the assets acquired, equity instruments issued, liabilities incurred or assumed by the Corporation and contingent considerations, on the acquisition date, in exchange for control of the acquired entity. In the case of a business combination involving less than 100% of ownership interests, a non-controlling interest is measured either at fair value or at the non-controlling interest's proportionate share in the identifiable net assets of the acquiree. The basis of measurement is determined on a transaction-by-transaction basis.

The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the identifiable assets acquired and liabilities assumed is recognized as goodwill. If the fair value of the net assets acquired exceeds the cost of the business combination, the excess ("negative goodwill") is recognized directly in net earnings as gain from a bargain purchase. The transaction costs attributable to the acquisition are recognized in net earnings when they are incurred.

If the agreement includes a contingent consideration, such contingent consideration is measured at fair value as of the acquisition date and added to the consideration transferred, and a liability for the same amount is recognized. Any subsequent change to the fair value of the contingent consideration will be recognized in net earnings under "Restructuring and other costs (gains)".

If the initial accounting for the business combination is incomplete when the financial statements are issued for the period during which the acquisition occurred, the Corporation records provisional amounts for the items for which measurement is incomplete. Adjustments resulting from the completion of the measurement will be reflected as adjustments to the assets acquired and liabilities assumed during the measurement period, and the adjustments must be applied retroactively. The measurement period is the period from the acquisition date to the date on which the Corporation has received complete information on the facts and circumstances that existed as of the acquisition date.

If a business combination is achieved in stages, the Corporation remeasures the interest it held previously in the acquiree at fair value at the acquisition date and recognizes any resulting gain or loss in net earnings.

d) Revenue recognition

The Corporation recognizes revenues from the sale of goods or services when control over a good or service is transferred to the customer.

The Corporation determines revenues to be recognized using the following steps: 1) Identifying the contract with the customer; 2) Identifying the performance obligations in the contract; 3) Determining the transaction price; 4) Allocating the transaction price to performance obligations; and 5) Recognizing revenue when the Corporation satisfies a performance obligation. Revenues are recognized when the customer obtains control of the goods and services.

The Corporation has established that, for purposes of applying IFRS 15, a contract is usually a purchase order, including the related sales terms and conditions, or a combination of a purchase order and a contract. In the Printing Sector, certain contracts include more than one performance obligation, in particular when the contract provides for printing services as well as distribution and premedia services. In the Packaging Sector, contracts usually include only one performance obligation, namely the sale of finished goods. Several of the Corporation's contracts contain a variable consideration, which may take the form of an incentive program, a program providing for discounts based on quantities purchased or other rebates granted to customers. The Corporation estimates variable considerations using the most likely amount method and reduces revenues by the estimated amount. Given the nature of custom products sold by the Corporation, returns are not significant.

In the Packaging Sector and the Printing Sector, revenues are recognized as follows:

• Packaging products

• Revenues are recognized when control over the products is transferred to the customer, which is usually when the products are shipped or delivered in accordance with the customer agreement.

• Printing services

• Revenues from the sale of printing services are recognized when control over the products is transferred to the customer, which is usually when the products are shipped or delivered in accordance with the customer agreement.

• Distribution revenues

Door-to-door distribution revenues are recognized over time during the delivery of the advertising material.

• Premedia revenues

Premedia revenues are recognized at a point in time, when services are provided.

For certain contracts related to the sale of packaging products and printing services under which the Corporation provides custom products or services and for which it has an enforceable right to payment for performance completed, the criteria for revenue recognition over time are met and, consequently, revenues have to be recognized under that method. However, the Corporation has determined that the value of such contracts is not significant.

In the Media Sector, revenues are recognized as follows:

• Advertising, subscription, and newsstand and book revenues

• Revenues are recognized at the publication date in the case of advertising revenues, using the straight-line method in the case of subscription revenues, and at the time of delivery, net of a provision for returns, in the case of newsstand and book revenues.

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7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

e) Income taxes

The Corporation records income taxes using the liability method of accounting. Income tax expense represents the sum of current and deferred taxes. It is recognized in net earnings, except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

i) Current tax

Current tax is the expected tax payable or receivable on the period's taxable income, using tax rates that have been enacted or substantively enacted at the date of the financial statements, and any adjustment to tax expense or recovery in respect of previous years. Taxable income differs from earnings reported on the Consolidated Statement of Earnings due to items of income and expense that are taxable or deductible during other periods, or items that will never be taxable, or deductible.

ii) Deferred tax

Deferred tax is determined on the basis of temporary differences between the carrying amounts and the tax bases of assets and liabilities, and is measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the date of the financial statements.

Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for temporary differences arising on the initial recognition of goodwill. The carrying amount of deferred tax assets is reviewed at the end of each period and a reduction of the carrying amount is recognized when it is probable that these assets will not be realized.

f) Government assistance

Government assistance is recognized when there is reasonable assurance that the Corporation will comply with the requirements of the approved grant or subsidy program and the Corporation, based on management's judgment, is reasonably certain that the government assistance will be received. Government assistance related to operating expenses, including salary grants, is recorded as a reduction of such expenses. Investment tax credits related to the purchase of property, plant and equipment or intangible assets are recorded as a reduction of the cost of the underlying asset. Investment tax credits related to operating expenses are recorded as a reduction of such expenses. Government assistance related to publishing activities is recorded as a reduction of publishing costs.

g) Cash and cash equivalents

Cash and cash equivalents include cash and highly liquid investments with original maturities of less than three months.

h) Inventories

Inventories are valued at the lower of cost and net realizable value. Cost is determined using the first in, first out method, and includes the acquisition costs of raw materials and manufacturing costs, such as direct labor and a portion of manufacturing overhead. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

i) Supplier rebates

The Corporation records supplier rebates as a reduction of the price of products or services received and reduces operating expenses in the Consolidated Statements of Earnings and related inventory in the Consolidated Statements of Financial Position. These rebates are estimated based on anticipated purchases.

j) Property, plant, equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost includes expenditures directly attributable to the acquisition of property, plant and equipment.

The costs, such as borrowing costs, incurred directly for the acquisition or construction of property, plant and equipment, are capitalized until the asset is ready for its intended use, and are depreciated over the useful life of the related asset. Property, plant and equipment under construction are not depreciated as long as they have not been put in service.

Property, plant, equipment are depreciated on a straight-line basis over the following estimated useful lives:

Buildings	20-40 years
Leasehold improvements	Term of the lease
Machinery and equipment	3-15 years
Machinery and equipment under finance leases	3-15 years
Other equipment	2-5years

Major parts of an item of property, plant and equipment with different useful lives are accounted for as separate components of the asset, and depreciated over their respective useful lives.

Depreciation methods, useful lives and residual values are reviewed and adjusted prospectively, if applicable, at each reporting date.

Gains and losses on the disposal of an item of property, plant and equipment are determined as the difference between the fair value of net disposal proceeds and the carrying amount of the item of property, plant and equipment that is disposed of. They are recognized directly in net earnings under Restructuring and other costs (gains).

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8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

k) Leases

The Corporation must assess, at inception of a contract, whether the contract is, or contains, a lease by determining whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

At the commencement date of a lease, the Corporation must recognize a right-of-use asset and a lease obligation.

The right-of-use asset is initially measured at the cost of the corresponding lease liability, adjusted by any lease payments made at or before the commencement date, less any lease incentives received, plus if applicable, any initial direct costs incurred and an estimate of costs to be incurred for dismantling and removing the underlying asset and for restoring the site where it is located. The right-of-use asset is subsequently measured at cost less any accumulated depreciation and any accumulated impairment losses, if applicable. The right-of-use asset is depreciated on a straight-line basis from the commencement date until the end of the lease term, except if the lease transfers ownership of the underlying asset to the Corporation by the end of the lease term or if the cost of the right-to-use asset reflects that the Corporation will exercise a purchase option. In such case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses and adjusted for any remeasurements of the lease liability. Right-of-use assets are tested for impairment at each reporting date if there is any indication that they may be impaired.

The lease liability is initially measured at the present value of future lease payments using the Corporation's incremental borrowing rate at the inception date, except when it is possible to determine the interest rate implicit in the lease. Lease payments are discounted over the lease term, which includes the fixed term and the renewal and termination options that the Corporation is reasonably certain to exercise.

The main payments included in the initial measurement of the lease liability are fixed payments, less lease incentives receivable, and variable lease payments that depend on an index or a rate. The lease liability is subsequently measured at amortized cost using the effective rate method, which results in an increase in the carrying amount of the lease obligation to reflect interest and a reduction of the carrying amount to reflect the lease payments made.

The lease liability is remeasured, with a corresponding adjustment to the right-of-use asset, in the following cases:

• There is a change in the lease term and/or the assessment of the exercise of a purchase, extension or termination option, in which case the Corporation remeasures the lease liability by discounting the new future lease payments using a revised discount rate;

• A change is expected in future lease payments as a result of a change in an index or a rate used to determine variable payments, in which case the Corporation remeasures the lease liability by discounting the new future lease payments using the discount rate used for the initial measurement; and

• Any other modification that does not lead to the recognition of a separate lease, in which case the Corporation remeasures the lease liability by discounting the revised lease payments using a revised discount rate.

Variable lease payments that do not depend on an index or a rate, and that the Corporation elected to exclude from the definition of lease components under IFRS 16, are not taken into account in the initial measurement of neither the right-of-use asset nor the lease liability. These non-lease components continue to be recognized as expenses in the Consolidated Statement of Earnings, under "Operating expenses", when incurred.

As permitted by IFRS 16, the Corporation also elected to not recognize a right-of-use asset and a lease liability to all new short-term leases (defined as having a lease term of less than 12 months) or for new leases for which the underlying asset is of low value. These leases are recognized on a straight-line basis over the lease term with the corresponding expense reported in the Consolidated Statement of Earnings under "Operating expenses" when incurred.

In the Consolidated Statement of Cash Flows, cash outflows related to the interest expense on the lease liability and those related to the principal of the lease liability are presented in financing activities. Lease payments for short-term leases, leases for which the underlying asset is of low value and non-lease components are presented in operating activities.

l) Intangible assets

i) Identifiable intangible assets acquired in a business combination

Identifiable intangible assets acquired in a business combination are recorded at fair value at acquisition date, and subsequently recognized at cost less any accumulated amortization and accumulated impairment losses.

ii) Internally generated intangible assets

Internally generated intangible assets consist of book prepublication costs, technology project costs and new product development and creation costs. The cost of an internally generated intangible asset includes all the directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management.

Expenses incurred in research activities are expensed in the period in which they are incurred. Expenses incurred in development activities are also expensed in the period in which they are incurred, except if they meet all the criteria for capitalization. The initial amount recognized as an internally generated intangible asset is equal to the sum of expenses incurred from the date when the intangible asset first meets the criteria for capitalization.

Subsequent to initial recognition, internally generated intangible assets are stated at cost less accumulated amortization and accumulated impairment losses.

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9

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

• 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

l) Intangible assets (continued)

Intangible assets with finite useful lives are amortized according to the following methods and estimated useful lives:

	Term / Rate	Method
Customer relationships	4-12 years	Straight-line
Book prepublication costs	Maximum 7 years	Based on historical sales patterns
Educational book titles	6-9 years	Based on historical sales patterns
Acquired printing contracts	Term of the contract	Straight-line
Non-compete agreements	2-5 years	Straight-line
Technology project costs	3-7 years	Straight-line
Development costs	3years	Straight-line

Amortization methods, useful lives and residual values are reviewed and adjusted prospectively, if applicable, at each reporting date.

Intangible assets with indefinite useful lives are not amortized. They mainly consist of trade names acquired in business combinations for book publication activities. The value allocated to trade names is based on the reputation that a publication has built historically. Given that this value is not affected by the passage of time, it is impossible to allocate it systematically over time. Intangible assets with indefinite useful lives are tested for impairment annually or more frequently if changes in circumstances indicate a potential impairment.

iii) Goodwill

Goodwill is recognized at cost, which represents the amount by which the consideration transferred and any non-controlling interest in the acquiree exceed the fair value of the identifiable net assets of the acquiree, and at cost less accumulated impairment losses thereafter. Goodwill has an indefinite useful life and is not amortized. Goodwill is tested for impairment annually or more frequently if events indicate that it might be impaired.

m) Impairment of non-financial assets

The Corporation reviews the carrying amount of its non-financial assets, other than inventories and deferred tax assets, at each reporting date in order to determine whether there is an indication of potential impairment.

Intangible assets with indefinite useful lives acquired in business combinations are allocated to cash generating units ("CGU"), and assessed for impairment annually, or more frequently if changes in circumstances indicate potential impairment. In the presence of such changes, an estimate is made of the asset's recoverable amount.

Goodwill acquired in a business combination is allocated, beginning on the acquisition date, to the group of CGUs that will benefit from the synergies of the combination. For the purpose of impairment testing, non-financial assets that cannot be tested individually for impairment are aggregated to form the smallest group of assets that generates, through continuing use, cash flows that are largely independent of the cash flows from other assets. Each group of CGUs to which goodwill is allocated may not be larger than an operating segment, and represents the lowest level at which goodwill is monitored as part of internal management.

The recoverable amount of a CGU (or group of CGUs) is the higher of its value in use and its fair value less costs of disposal. Value in use is determined by discounting estimated future cash flows, using a discount rate that reflects current market assessments, the time value of money and the risks specific to the CGU (or group of CGUs).

Fair value less costs of disposal is determined by using an EBITDA (earnings before interest, taxes, depreciation and amortization) capitalization multiple of comparable companies whose activities are similar to those of each CGU (or group of CGUs).

The Corporation’s corporate assets do not generate separate cash inflows. They are tested for impairment at the lowest CGU aggregation level to which the corporate assets can be reasonably and consistently allocated. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU (or group of CGUs) to which the corporate asset has been allocated.

Except in the case of an impairment indicator identified earlier during the fiscal year which would require the Corporation to perform an impairment test at that date, the Corporation performs its annual test of impairment during the last quarter of its fiscal year, based on the Corporation's net carrying amount of assets as at the first day of the last quarter of each fiscal year.

The most recent detailed calculation made in a preceding period of the recoverable amount of a CGU (or group of CGUs) to which goodwill has been allocated may be used in the impairment test of that CGU (of group of CGUs) in the current period provided all of the following criteria are met:

• the assets and liabilities making up the CGU (or group of CGUs) 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 CGU (or group of CGUs) 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 CGU (or group of CGUs) is remote.

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10

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

m) Impairment of non-financial assets (continued)

An impairment loss is recognized if the carrying amount of an asset, a CGU (or group of CGUs) exceeds its estimated recoverable amount. Impairment losses are recognized in net earnings. Impairment losses recognized are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (or group of CGUs) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. Previously impaired non-financial assets are reassessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there have been changes to the estimates used to determine the recoverable amount, and that these changes will be supported in the future. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized.

n) Contract acquisition costs

Contract acquisition costs are amortized using the straight-line method over the related contract term, as reduction of revenues. Whenever significant changes occur that impact the related contract, including declines in anticipated profitability, the Corporation evaluates the realizable value of the contract acquisition costs to determine whether an impairment has occurred. These costs are included in other assets in the Consolidated Statement of Financial Position.

o) Provisions

Provisions are liabilities of uncertain timing or amount. Provisions are recognized when the Corporation has a present legal or constructive obligation arising from past events, when it is probable that an outflow of funds will be required to settle the obligation, and when a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the Corporation's best estimate of the present obligation at the end of the reporting period. When the effect of discounting is significant, the amount of the provision is determined by discounting the expected cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The Corporation's main provisions are related to restructuring costs and onerous contracts. Provisions are reviewed at each reporting date and any changes to estimates are reflected in the Consolidated Statement of Earnings.

i) Restructuring

A restructuring provision is recorded when the Corporation has a formal and detailed restructuring plan, and a valid expectation has been raised in those affected, either by starting to implement the plan or by announcing its main characteristics. Future operating losses are not subject to a provision.

ii) Onerous contracts

An onerous contract provision is recorded when the Corporation has a contract under which it is more likely than not that the unavoidable costs of meeting the contractual obligations will be greater than the economic benefits that the Corporation expects to receive under the contract. An onerous contract provision represents the lesser of the cost of exiting from the contract and the cost of fulfilling it.

p) Employee benefits

The Corporation offers various contributory and non-contributory defined benefit pension plans and other post-employment defined benefit plans, defined contribution pension plans and registered group savings plans to its employees. Since June 1, 2010, most employees participate only in defined contribution pension plans. The Corporation also offers other long-term employee benefit plans that provide for continued dental and health care benefits in case of long-term disability.

The Corporation participates in multi-employer pension plans accounted for as defined contribution plans. The Corporation's contributions to these plans are limited to the amounts established under the collective agreements. Contributions to the plans are recognized in net earnings when services are provided by employees.

i) Defined benefit plans

The cost of defined benefit pension plans and other post-employment defined benefit plans is established with the assistance of independent actuaries on each reporting date, using the Projected Unit Cost Method and based on the Corporation’s best estimates regarding the discount rate, expected rate of return of the plans’ investments, salary increases, changes in health care costs, the retirement age of employees and life expectancies. The discount rate is based on applicable market interest rates for investment-grade corporate bonds with maturities consistent with the timing of payment of benefits provided under the plans.

The defined benefit asset (liability) recognized in the Consolidated Statement of Financial Position is the present value of the defined benefit obligation, less the fair value of plan assets. The value of plan assets is limited to the total of unrecognized past service cost and the present value of the economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan ("effect of the asset ceiling"). Any surplus is immediately recognized in other comprehensive income ("OCI"). In addition, a minimum liability is recognized when the statutory minimum funding requirement for past service exceeds the economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

Net cumulative actuarial gains or losses related to plan assets and the defined benefit obligation, as well as the change in the asset ceiling and any minimum liability, are recognized in OCI during the period in which they occur, except for actuarial gains or losses on other post-employment benefits, which are recognized immediately in net earnings.

Past service cost is recognized as an expense in the Consolidated Statement of Earnings during the period in which it occurs. Current service cost and the interest cost on the net defined benefit obligation or asset are recognized in net earnings during the period in which they occur, under Operating expenses and Net financial expenses, respectively.

Gains or losses on the curtailment or settlement of a defined benefit plan are recognized when the curtailment or settlement occurs. When the restructuring of a defined benefit plan gives rise to the curtailment or settlement of obligations, the curtailment is recognized before the settlement.

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11

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

p) Employee benefits (continued)

ii) Defined contribution pension plans, group registered savings plans and state plans

Under the defined contribution pension plans, group registered savings plans and state plans, the Corporation makes contributions to the participating employees' plans using a predetermined percentage of the employee's salary and has no legal or constructive obligation to pay additional amounts. The cost for these plans is recorded when services are rendered by employees, which is generally at the same time the contributions are made. The Corporation's contributions that are paid to state plans are managed by government bodies.

q) Stock-based compensation

The Corporation has stock option and share unit plans for certain officers, senior executives and directors.

i) Stock option plan

Stock options are measured at fair value at the time they are granted using the Black-Scholes model, and are recognized in net earnings on a straight-line basis over the vesting period of the options at a rate of 25% per year, which is the vesting period of the options, and according to the Corporation's estimate of the number of options that will vest. On each reporting date, the Corporation revises its estimates of the number of options that are expected to vest and recognizes any impact of this revision in net earnings with a corresponding adjustment to contributed surplus.

ii) Share unit plan for certain officers and senior executives

Compensation costs related to share unit plans for certain officers and senior executives are recognized in net earnings on a straight-line basis over the vesting period, either on the achievement of performance targets for the units related to performance, or on tenure for other units. The liability for these units is measured at fair value based on the trading price of Class A Subordinate Voting Shares of the Corporation, and are remeasured on each reporting date, until settlement. Any changes in fair value are recognized in net earnings. On each reporting date, the Corporation revises its estimate of the number of units expected to vest and recognizes any impact of this revision in net earnings, under Operating expenses.

iii) Share unit plan for directors

Compensation costs related to share units for directors are recognized in net earnings at the time they are granted. These units are initially measured at fair value based on the trading price of Class A Subordinate Voting Shares of the Corporation, and are remeasured on each reporting date, until settlement. Any changes in fair value are recognized in net earnings, under operating expenses.

r) Foreign currency translation

The consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Corporation. The functional currency is the currency of the primary economic environment in which the Corporation operates. The functional currency of the operating foreign subsidiaries is mainly the U.S dollar.

Transactions denominated in a currency other than the functional currency of the Corporation or of a foreign subsidiary are accounted for using the exchange rate prevailing on the transaction date. On each reporting date, monetary items denominated in a foreign currency are translated using the exchange rate prevailing on that date, and nonmonetary items that are measured at historical cost are not adjusted. Exchange differences are recognized in net earnings in the period during which they occur.

The assets and liabilities of foreign subsidiaries whose functional currency is not the Canadian dollar are translated into Canadian dollars using the exchange rate prevailing as at the reporting date. Revenue and expense items are translated at the average exchange rate for the period.

Exchange differences are recognized in OCI under "Cumulative translation differences" and are accumulated in equity. The accumulated amount of exchange differences is reclassified to net earnings upon disposal or partial disposal of an interest in a foreign operation.

The Corporation designates certain foreign exchange forward contracts denominated in U.S. dollars and certain financial liabilities denominated in U.S. dollars as hedging instruments for an equivalent portion of its net investment in certain foreign operations that have the U.S. dollar as their functional currency. Thus, the effective portion of changes in the fair value of foreign exchange contracts as well as the foreign exchange fluctuation of financial liabilities denominated in U.S. dollars, net of related income taxes, is recognized in OCI and the ineffective portion is recognized in net earnings. Cumulative gains and losses recognized in accumulated OCI are reclassified to net earnings in the period in which the related net investment in a foreign operation is subject to a total or partial disposal.

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12

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

s) Financial instruments

i) Classification and measurement of financial assets and financial liabilities

Financial assets and liabilities are initially recognized at fair value and their subsequent measurement depends on their classification.

Financial assets and liabilities are classified and subsequently measured as follows:

	Category	Subsequent measurement
Cash and cash equivalents	Amortized cost	Amortized cost, at the effective interest rate
Accounts receivable and other receivables	Amortized cost	Amortized cost, at the effective interest rate
Accounts payable, other accrued liabilities and other financial liabilities	Amortized cost	Amortized cost, at the effective interest rate
Contingent consideration	Fair value through profit or loss	Fair value
Long-term debt	Amortized cost	Amortized cost, at the effective interest rate
Derivative financial instruments	Fair value throughprofit or loss	Fair value

Upon initial recognition, a financial asset is measured at amortized cost if the following two criteria are met: 1) it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and 2) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A financial liability is measured at amortized cost unless it is held for trading, it is a derivative or it is designated as such upon its initial recognition.

Transaction costs directly related to the acquisition or issuance of financial assets or liabilities are capitalized to the cost of financial assets and liabilities that are not classified as instruments at fair value through profit or loss. Thus, long-term debt issuance costs are classified as a reduction of long-term debt, and are amortized using the effective interest method.

Changes in fair value of financial instruments measured at fair value through profit or loss are recorded in the Consolidated Statement of Earnings in the appropriate period. Changes in fair value of derivative financial instruments designated as cash flow hedges are recorded, for the effective portion, in the Consolidated Statement of Comprehensive Income in the appropriate period until their realization, after which they are recorded in the Consolidated Statement of Earnings.

ii) Impairment of financial assets

The Corporation recognizes expected credit losses on financial assets, and changes in such losses, at each reporting date to reflect changes in credit risk since the initial recognition of the financial assets. For accounts receivable, the Corporation applies the simplified approach permitted by IFRS 9, under which lifetime expected credit losses must be recognized upon initial recognition. For loans classified under "other receivables", the Corporation measures credit risk based on the 12- month expected credit risk if there has not been a significant increase in credit risk since initial recognition.

t) Derivative financial instruments and hedge accounting

The Corporation identifies, evaluates and manages financial risks related to changes in interest rates and foreign exchange rates in order to minimize the effect on its results and financial position, using derivative financial instruments for which parameters have been defined and approved by the Board of Directors. If the Corporation did not use derivative financial instruments, exposure to market volatility would be greater.

When applying hedge accounting, the Corporation formally documents the relationship between the derivative financial instruments and the hedged items, as well as its objective and risk management strategy underlying its hedging activities, as well as the methods that will be used to assess hedge effectiveness. This process includes linking all derivative financial instruments designated as a hedge item to specific assets and liabilities, firm commitments or specific forecast transactions.

At the inception of the hedging relationship and throughout its duration, the Corporation must have reasonable assurance that the relationship will remain effective and in accordance with its risk management objective and strategy as initially documented.

For derivative financial instruments designated as cash flow hedges, the effective portion of the hedging relationship is recognized in OCI and the ineffective portion is recognized in the Consolidated Statement of Earnings. The effective portion of an interest rate risk hedging relationship is reclassified to net earnings during the period in which the hedged interest payments are recognized in net earnings. The effective portion of a currency risk hedging relationship related to foreign currency sales is reclassified to net earnings during the period in which the sales are recognized in net earnings.

Derivative financial instruments designated as a hedge of the net investment in foreign operations are accounted for similarly to cash flow hedges. The effective portion of the net investment hedging relationship is reclassified to net earnings on the disposal or partial disposal of the foreign operation.

The Corporation may also use total return swaps to hedge the market risk related to the change in the price of Class A Shares for purposes of measuring the stock-based compensation liability. In accordance with the requirements of IFRS 9, total return swaps are classified in the "Fair value through profit or loss" category with subsequent measurement at fair value.

The Corporation does not designate these derivative financial instruments as cash flow hedging instruments and, consequently, changes in fair value are recognized in the Consolidated Statement of Earnings for the period under "Operating expenses" against stock-based compensation expenses (gains).

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13

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

t) Derivative financial instruments and hedge accounting (continued)

When hedging instruments mature before maturity, any gains or losses, revenues or expenses associated with the hedging instrument that had previously been recognized in OCI as a result of applying hedge accounting are deferred and recognized in net earnings in the period during which the hedged item affects net earnings. If the hedged item ceases to exist due to its maturity, expiry, cancellation or exercise, any gains or losses, revenues or expenses associated with the hedging instrument that had previously been recognized in OCI as a result of applying hedge accounting are recognized in the reporting period's net earnings.

Other derivative financial instruments offering economic hedging without being qualified for hedge accounting are recognized at fair value with changes in fair value recorded in net earnings. The Corporation does not use derivative financial instruments for speculative or trading purposes.

u) Assets held for sale and discontinued operations

When a situation involves an asset disposal or disposal group, current and non-current assets are reclassified as held for sale if they are available for immediate sale in their present condition and their sale is deemed highly probable.

A discontinued operation is a component of the Corporation's activities that either has been disposed of, or is classified as held for sale, and represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.

v) Critical judgments and sources of estimation uncertainty

The preparation of financial statements in accordance with IFRS requires the Corporation's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and contingent liabilities on the reporting date, and amounts of revenues and expenses for the relevant period. Although management regularly reviews its estimates, actual results may differ. The impact of changes to accounting estimates is recognized in the period during which the change occurs, and in the affected future periods, when applicable. Areas in which the estimates and assumptions are significant or which are complex, are as follows:

i) Economic conditions

In the context of the COVID-19 pandemic and the related climate of economic uncertainty, the Corporation revised some of its most complex estimates and assumptions, including significant judgment areas, used in preparing the consolidated financial statements for the fiscal year ended October 31, 2021. The main estimates revised to reflect the impact of the COVID-19 pandemic on financial reporting were the determination of whether there was an indication that assets, CGUs or groups of CGUs may be impaired, the assumptions used in the establishment of their recoverable amount. when an impairment test was deemed necessary and for the annual impairment test of goodwill,and the assessment of the credit risk on receivables. Additional revisions might be required in the future depending on the development of the pandemic and its impact on the Corporation's results of operations and financial position, and this could have an impact on the final measurement of the carrying amount of the Corporation's assets.

ii) Business combinations

The determination of fair value associated with identifiable property, plant and equipment and intangible assets following a business combination requires management to make assumptions. More specifically, this is the case when the Corporation calculates fair values using appropriate valuation techniques, which are generally based on a forecast of expected future cash flows for intangible assets, and on a replacement cost approach, an income-based approach and/or a market-based approach for property, plant and equipment.

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14

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

v) Critical judgments and sources of estimation uncertainty (continued)

ii) Business combinations (continued)

These valuations are closely related to the assumptions made by management about the future return on the related assets and the discount rate applied. Significant changes to these assumptions could significantly change the fair values associated with identifiable intangible assets following a business combination, which would impact the amortization expense.

IFRS 3 also requires the Corporation to make judgments to establish if an acquisition meets the definition of a business for purposes of determining whether it should be accounted for as a business combination or as an asset acquisition.

iii) Impairment of non-financial assets

As part of assessing goodwill, property, plant and equipment and intangible assets for impairment, the recoverable amount of a CGU is determined using a complex valuation method that requires the use of a number of methods, including the discounted future cash flow method and the market-based method.

When the discounted future cash flow method is used, cash flow projections are established based on past experience, certain economic trends as well as industry and market trends, and represent management’s best estimates of future results. The recoverable amount of a CGU is also influenced by the discount rate used in the model, by the growth rate used to make the extrapolation and by the weighted average cost of capital.

When a market-based method is used, the Corporation estimates the fair value of the CGU by multiplying EBITDA by a capitalization multiple that is based on market data.

These methods rely on numerous assumptions and estimates that may have a significant impact on the recoverable amount of a CGU, and thereby, on the amount of impairment, if any. The impact of significant changes in assumptions and the revision of estimates, if any, is recognized in net earnings in the period in which the changes occur or the estimates are revised.

iv) Revenue recognition method

Judgment is required to determine whether revenues should be recognized over time or at a point in time. The Corporation evaluates contracts with customers for whom it manufactures packaging products or to whom it provides custom printing services to determine whether the contract confers upon the Corporation an enforceable right to payment, in which case revenues should be recognized over time rather than at a point in time. For the year ended October 31, 2021, no significant contract met the criteria for recognition over time.

v) Leases

IFRS 16 requires the Corporation to make judgments, estimates and assumptions, in particular in determining the lease term. To do so, the Corporation considers all relevant facts and circumstances that create an economic incentive to exercise an extension option (or not exercise a termination option). If it is assessed that it is reasonably certain that the Corporation will exercise an extension option in the future (or will not exercise a termination option), the period covered by such option will be included in the lease term. This assessment of whether it is reasonably certain that an option will be exercised or not is updated upon the occurrence of either a significant event or a significant change in circumstances.

The standard also involves considering new estimates and assumptions to determine the Corporation's incremental borrowing rate used to measure lease liabilities..

vi) Income taxes

The Corporation determines its income tax expense and its income tax assets and liabilities based on its interpretation of applicable tax legislation, including tax treaties between the various countries in which it operates, as well as underlying rules and regulations. Such interpretations involve judgments and estimates that may be challenged in government tax audits, to which the Corporation is regularly subject. New information may also become available, which would cause the Corporation to change its judgment regarding the adequacy of existing income tax assets and liabilities. Any such changes will have an impact on net earnings for the period in which they occur.

In the calculation of income taxes and deferred tax assets and liabilities, estimates must be used to determine the appropriate rates and amounts, and to take into account the probability of realization of tax assets. Deferred tax assets also reflect the benefit of unused tax losses and deductions that can be carried forward to reduce current income taxes in future years. This assessment requires the Corporation to make significant estimates in determining whether or not it is probable that the deferred tax assets can be recovered from future taxable income and therefore, that they can be recognized in the Corporation's consolidated financial statements. The Corporation relies, among other things, on its past experience to make this assessment.

Once the final amounts have been determined, they may result in adjustments to current and deferred tax assets and liabilities.

vii) Employee benefits

The costs of defined benefit pension plans and the defined pension benefit assets (liabilities) are measured using actuarial methods. Actuarial valuations are based on assumptions such as discount rates, expected rates of return on assets, compensation growth rates and mortality rates. Due to the long-term nature of these obligations, these estimates are subject to significant uncertainty. Management revises these assumptions annually and the impact of the revision, if any, is recognized in the Statement of Financial Position and in comprehensive income in the period in which the estimates are revised.

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15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

• 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

v) Critical judgments and sources of estimation uncertainty (continued)

The preparation of financial statements in accordance with IFRS also requires management to make judgments, other than those involving estimates, in the process of applying the Corporation's accounting policies. Areas in which judgments are significant are as follows:

viii) Impairment of non-financial assets

Goodwill acquired in a business combination is allocated, beginning on the acquisition date, to the group of CGUs that will benefit from the synergies of the combination. During this process, the Corporation makes judgments based on the objectives sought in the business combination and on how it manages its operations. Making a different judgment could lead to a different result in regards with the annual impairment test of non-financial assets.

The Corporation also uses its judgment to determine whether an impairment test must be performed due to the existence of potential impairment indicators. In making its judgments, the Corporation relies primarily on its knowledge of its business and the economic environment. The Corporation also uses its judgment to determine the level at which goodwill is monitored for internal management purposes.

ix) Foreign currency translation

In determining the functional currency of its foreign subsidiaries, the Corporation needs to evaluate different factors such as the currency that influences sales prices and costs, the economic environment and the degree of autonomy of the subsidiary. Following the evaluation of the different factors, when the functional currency is not obvious, the Corporation uses its judgment to determine the functional currency that most fairly represents the economic effects of the underlying transactions, events and conditions.

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16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

3 SEGMENTED INFORMATION

The Corporation's operating segments are aggregated by management into three separate sectors: Packaging, Printing and Media.

The Packaging Sector, which specializes in extrusion, lamination, printing and converting packaging solutions, generates revenues from the manufacturing and recycling of flexible plastic, including rollstock, bags and pouches, coextruded films, shrink films and bags, and advanced coatings. Its facilities are mainly located in the United States, Canada and Latin America.

The Printing Sector generates revenues from an integrated service offering for retailers, including premedia services, flyer and in-store marketing product printing, and doorto-door distribution, as well as an array of innovative print solutions for newspapers, magazines, 4-colour books and personalized and mass marketing products. Its facilities are located in Canada.

The "Other" column includes the Media Sector, certain head office costs as well as the elimination of inter-segment sales. The Media sector generates revenues from print and digital publishing products, in French and English, of the following type: educational books, specialized publications for professionals and newspapers. Inter-segment sales of the Corporation are recognized at agreed transfer prices, which approximate fair value. Transactions other than sales are recognized at carrying amount.

The following tables present the various segment components of the Consolidated Statements of Earnings:

							Consolidated	Consolidated
Year ended October 31, 2021		Packaging		Printing		Other		results
Revenues	$	1,449.7	$	1,132.6	$	61.1	$	2,643.4
Operating expenses		1,250.2		863.0		75.3		2,188.5
Restructuring and other costs		0.9		8.1		3.7		12.7
Impairment of assets		0.4		0.3		—		0.7
Operating earnings before depreciation and amortization		198.2		261.2		(17.9)		441.5
Depreciation and amortization		133.8		63.5		10.4		207.7
Operatingearnings(1)	$	64.4	$	197.7	$	(28.3)	$	233.8
Adjusted operating earnings before depreciation and amortization(2)	$	199.5	$	269.6	$	(14.2)	$	454.9
Adjusted operating earnings(1) & (2)		125.7		212.2		(24.4)		313.5
Acquisitions of non-current assets(3)	$	98.1	$	19.7	$	20.0	$	137.8

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17

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 SEGMENTED INFORMATION (CONTINUED)

							Consolidated	Consolidated
Year ended October 25,2020		Packaging		Printing		Other		results
Revenues	$	1,418.7	$	1,098.1	$	57.2	$	2,574.0
Operating expenses		1,191.2		829.4		54.0		2,074.6
Restructuringand other costs(gains)		(0.2)		32.1		9.5		41.4
Operating earnings before depreciation and amortization		227.7		236.6		(6.3)		458.0
Depreciation and amortization		142.5		63.0		11.1		216.6
Operatingearnings(1)	$	85.2	$	173.6	$	(17.4)	$	241.4
Adjusted operating earnings before depreciation and amortization(2)	$	227.5	$	268.7	$	3.2	$	499.4
Adjusted operating earnings(1) & (2)		150.1		210.5		(7.8)		352.8
Acquisitions of non-current assets(3)	$	54.7	$	27.9	$	17.4	$	100.0

(1)[Net financial expenses and income tax expense are managed on a centralized basis and, consequently, these line items are not allocated between the various sectors. As ] a result, the line items "Earnings before income taxes" and "Net earnings" are not presented by sector.

(2) The Corporation’s officers mainly make decisions and assess segment performance based on adjusted operating earnings. Adjusted operating earnings before depreciation and amortization and adjusted operating earnings exclude restructuring and other costs (gains), impairment of assets and amortization of intangible assets arising from business combinations (only for adjusted operating earnings as it relates to amortization of intangible assets arising from business combinations).

(3) These amounts include internally generated intangible assets and acquisitions of property, plant and equipment and intangible assets, excluding those acquired in business combinations, whether they were paid or not.

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18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

3 SEGMENTED INFORMATION (CONTINUED)

Additional information on revenues

The table below presents information on revenues disaggregated by type of products and geographical area, as well as a reconciliation with revenues by segment:

	October 31,	October 31,	October 25,	October 25,
		2021		2020(1)
Packaging products(1)
Revenues generated from plants located in Canada	$	148.2	$	115.2
Revenues generated from plants located in the United States		1,090.0		1,104.7
Revenuesgenerated fromplants located outside Canada and the United States		211.5		198.8
		1,449.7		1,418.7
Printing services(2)
Retailer-related services(3)		597.6		624.6
Marketing products		260.5		208.8
Magazines and books		181.9		167.3
Newspapers		92.6		97.4
		1,132.6		1,098.1
Media(2)		78.2		71.7
Inter-segment sales		(17.1)		(14.5)
	$	2,643.4	$	2,574.0

The Corporation's total assets by segment are as follows:

		As at		As at
	October 31,		October 25,
		2021		2020
Packaging	$	2,200.7	$	2,238.9
Printing		1,000.4		926.3
Other(4)		411.8		433.2
	$	3,612.9	$	3,598.4

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

(2) Revenues from printing services and media are mainly derived from transactions in Canada.

(3) Revenues from retailer-related services include printing, premedia and distribution services.

(4) This heading notably includes cash, income taxes receivable, property, plant and equipment, intangible assets, right-of-use assets, deferred taxes and defined benefit asset not allocated to segments.

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19

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 SEGMENTED INFORMATION (CONTINUED)

		As at		As at
	October 31,		October 25,
		2021		2020
Non-current assets(1)
Canada	$	865.0	$	824.8
United States		1,354.7		1,439.5
Other		230.5		270.3
	$	2,450.2	$	2,534.6

(1) These amounts include property, plant and equipment, intangible assets, right-of-use assets, goodwill and other non-current assets, and exclude derivative financial instruments, deferred taxes and defined benefit asset.

4 BUSINESS COMBINATIONS, ASSET ACQUISITION AND BUSINESS DISPOSALS

Business combinations

Transaction for the year ended October 31, 2021

• BGI Retail

On June 1, 2021, continuing its expansion in the in-store marketing product printing vertical, the Corporation acquired all the shares of BGI Retail Inc. ("BGI"), a full service in-store design and solution partner for retailers and global brands located in Paris, Ontario, for a total consideration of $53.9 million, subject to adjustments, including a cash contingent consideration, having a fair value of $10.0 million, of up to a maximum of $22.5 million to be paid if predetermined financial performance thresholds are met. This acquisition supports the growth objective for the Corporation's in-store marketing product vertical.

As at October 31, 2021, the provisional purchase price allocation for BGI, based on information available as at the date of these consolidated financial statements, led to the recognition of goodwill totaling $28.7 million. The recognized goodwill is not deductible for tax purposes. The purchase price allocation remains provisional for the year ended October 31, 2021 and will be finalized in the coming quarters.

The Corporation's Consolidated Statement of Earnings for the year ended October 31, 2021 include the operating results of BGI since its acquisition date, namely additional revenues of $11.4 million and operating earnings before depreciation and amortization of $2.4 million, including adjustments related to the accounting of this acquisition and excluding negligible transaction costs. The fair value of acquired accounts receivables of $4.8 million is included in current assets recognized as part of the provisional accounting of this business combination.

If the Corporation had acquired this entity at the beginning of the year ended October 31, 2021, revenues would have increased by $21.0 million and operating earnings before depreciation and amortization would have increased by $7.4 million.

Transaction for the year ended October 25, 2020

• Artisan Complete

On January 10, 2020, the Corporation acquired 100% of the shares of Artisan Complete Limited Inc. ("Artisan Complete"), a Markham, Ontario company specialized in the creation of engaging retail environments, point-of-purchase displays and large format printing. This transaction supports the Corporation's strategy to continue growing in the in-store marketing product printing vertical. The transaction was completed for a purchase price of $12.5 million, before deducting certain liabilities repaid by the Corporation and including a $1.0 million purchase price holdback payable 18 months after the transaction's closing date provided that no compensation for damages is claimed by the Corporation during the reference period. As at October 31, 2021, the Corporation had paid a purchase price holdback of $0.9 million, net of a $0.1 million compensation for damages. The final measurement of the fair value of assets acquired and liabilities assumed led to the recognition of goodwill of $2.4 million. The recognized goodwill is not deductible for tax purposes.

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20

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

4 BUSINESS COMBINATIONS, ASSET ACQUISITION AND BUSINESS DISPOSALS (CONTINUED)

Business combinations (continued)

The following table presents the fair value of the acquired companies' assets acquired and liabilities assumed at the acquisition date for the above-mentioned transactions:

	2021 acquisition	2021 acquisition	2020	acquisition
	Provisional			Final
		allocation		allocation
Assets acquired
Cash acquired	$	0.2	$	—
Current assets		8.9		10.3
Property, plant and equipment		3.6		3.6
Right-of-use assets		14.4		5.5
Intangible assets		29.2		3.1
Goodwill		28.7		2.4
	$	85.0	$	24.9
Liabilities assumed
Current liabilities	$	8.6	$	6.2
Long-term debt (including current portion) and other debt items assumed(1)		—		4.1
Lease liabilities (including current portion)		14.4		5.5
Deferred taxes		8.1		0.7
		31.1		16.5
	$	53.9	$	8.4
Total consideration
Cash paid	$	43.9	$	7.4
Current consideration payable		2.0		—
Long-term considerationpayable		8.0		1.0
	$	53.9	$	8.4

(1) As at October 25, 2020, the Corporation had repaid in full the long-term debt and other debt items assumed of $4.1 million related to the acquisition of Artisan Complete.

Asset acquisition

Transaction for the year ended October 25, 2020

• Enviroplast

On June 15, 2020, the Corporation acquired the assets of Enviroplast Inc. ("Enviroplast"), a company specializing in recycling flexible plastics in Québec. This acquisition represents a first step toward vertically integrating the recycling of plastics in the Packaging Sector production chain and supports the goal of creating a circular economy for plastic. The acquisition price was set at $2.4 million, excluding a contingent consideration payable that is based on achieving an operational performance threshold based on the annual recycled plastic production.

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21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

4 BUSINESS COMBINATIONS, ASSET ACQUISITION AND BUSINESS DISPOSALS (CONTINUED)

Business disposals

Transaction for the year ended October 25, 2020

• Sale of paper and woven polypropylene packaging operations

On January 17, 2020, the Corporation completed the sale of its paper and woven polypropylene packaging operations to Hood Packaging Corporation pursuant to the final agreement announced on November 27, 2019. The sale transaction includes the assets related to paper packaging operations, including the buildings and equipment of four plants, as well as the assets related to the paper and woven polypropylene packaging operations of a plant located in South Carolina.

For this sale transaction, the Corporation received a final cash consideration of $235.3 million (US$180.1 million) including working capital adjustments, but before transaction costs incurred for the transaction, which amounted to $3.2 million.

Consideration received for the sale of the paper and woven polypropylene packaging operations
Cash	$	235.1
Transaction costs		(3.2)
Consideration received, net of transaction costs		231.9
Final workingcapital adjustments		0.2
Net consideration received		232.1
Assets and liabilities sold
Current assets		62.1
Property, plant and equipment(1)		74.4
Intangible assets		56.7
Goodwill		54.8
Current liabilities		(11.2)
Assets and liabilities sold, net amount		236.8
Loss on disposal, before taxes		(4.7)
Tax impact of the disposal		(11.7)
Loss on disposal, after taxes	$	(16.4)

(1) This amount also includes $0.3 million for short-term leases for equipment that was disposed of.

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22

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

5 OPERATING EXPENSES

Operating expenses by major headings are as follows for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Employee-related costs(1)	$	675.4	$	638.4
Supply chain and logistics(2)		1,401.9		1,321.5
Othergoods and services(3)		111.2		114.7
	$	2,188.5	$	2,074.6

(1) During the year ended October 31, 2021, the Corporation recognized under "Employee-related costs", against eligible salary expenses, subsidies claimed under the Canada Emergency Wage Subsidy program amounting to $29.5 million. For the year ended October 25, 2020, the amount recognized and claimed was $58.5 million. As at October 31, 2021, the Corporation had already received a portion of the subsidies claimed and continued to believe that there was reasonable assurance that the amount not yet received would be received from the Canadian federal government based on the fact that eligibility criteria were still met.

(2) "Supply chain and logistics" includes mainly production, other than employee-related costs, and distribution costs related to external suppliers.

(3) "Other goods and services" includes mainly promotion, advertising and telecommunications costs, office supplies, real estate expenses and professional fees.

The cost of goods sold recognized in operating expenses for the year ended October 31, 2021 was $1,734.6 million ($1,629.8 million for the year ended October 25, 2020). An amount of $2.9 million was recognized as inventory obsolescence expense for the year ended October 31, 2021 ($5.4 million for the year ended October 25, 2020).

6 RESTRUCTURING AND OTHER COSTS

Restructuring and other costs by major headings are as follows for the years ended:

		October 31,	October 31,	October 25,	October 25,
	Note		2021		2020(1)
Workforce reductions(2)		$	6.5	$	21.1
Costs related to plant closures and restructuring(2)			2.8		6.0
Net losses related to the sale of certain activities(3)			0.7		8.9
Onerous contracts			1.3		0.5
Business acquisition and integration costs(4)			1.5		3.4
Fair value remeasurement of contingent considerations related to business combinations	30		(3.4)		(7.4)
Other items(5)			3.3		8.9
		$	12.7	$	41.4

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

(2) For the years ended October 31, 2021 and October 25, 2020, amounts presented under this caption include termination payments to employees as part of plant closures or workforce reorganizations, mainly in the Printing Sector, as well as related costs associated with such restructuring.

• (3) For the year ended October 25, 2020, amounts presented under this caption mainly include the following items:

• A $1.3 million gain from a bargain purchase resulting from the final accounting of the acquisition of Trilex;

• A $4.7 million loss on the disposal of the paper and woven polypropylene packaging operations (Note 4); and

• A $3.8 million expense for receivables related to previous transactions.

(4) Business acquisition costs include transaction costs, primarily legal fees, success fees related to the acquisition and other professional fees, for potential or realized business combinations, as well as integration costs related to acquired companies.

• (5) For the year ended October 25, 2020, amounts presented under this caption mainly include the following items:

• A $4.6 million gain related to insurance proceeds receivable for the replacement of equipment destroyed by fire, net of the loss on the derecognition of such asset; and;

• A $7.0 million expense for atypical additional costs incurred in relation with the COVID-19 pandemic.

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23

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

7 IMPAIRMENT OF ASSETS

Goodwill and intangible assets with indefinite useful life

• Combination of groups of CGUs

During the year ended October 31, 2021, the Corporation revised the determination of its groups of CGUs in the Printing Sector as a result of the development of this operating segment, the impact of the COVID-19 pandemic on this industry and the growth in in-store marketing solutions operations. During the last few fiscal years, management undertook restructuring initiatives to manage this operational platform in a more integrated manner and thereby optimize profitability and business opportunities. Decisions related to allocating production among production units are made to maximize the return of the overall Printing Sector. The groups of CGUs affected by these changes are the Retail, Newspaper and Premedia Group and the Magazine, Book and Catalog Group of the Printing Sector, which were combined, including the goodwill allocated to them, into a single group of CGUs called Printing Group. Prior to this combination, both groups of CGUs were separately tested for impairment and the Corporation concluded that these groups of CGUs were not impaired.

• Annual goodwill impairment test

The Corporation performed its annual goodwill impairment test for all its groups of CGUs. In performing the annual goodwill impairment test, the carrying amount of groups of CGUs, including goodwill and intangible assets with an indefinite useful life, was compared to their recoverable amount. The Corporation concluded that the recoverable amount of groups of CGUs tested for impairment exceeded their carrying amount. As a result, no impairment charges were recognized for the year ended October 31, 2021 and the same conclusion had been reached for the impairment test performed during the year ended October 25, 2020.

The recoverable amount of groups of CGUs, established for the annual impairment test of goodwill, has been determined based on the greater of the fair value less costs of disposal and the value in use.

The fair value less costs of disposal was determined using capitalization multiples applied to the budgeted fiscal 2022 EBITDA for the group of CGUs concerned. The main assumptions used in this model include expected sales volumes, sales prices and estimated operating expenses ("cash flows") needed to establish EBITDA as well as capitalization multiples, which are derived from comparable companies whose activities are similar to the group of CGUs concerned.

The following table presents the main groups of CGUs subject to a goodwill impairment test, the basis used for the recoverable amount and key assumptions used as at the date of the impairment test for the year ended October 31, 2021:

			Basis
		Carrying	used for the
		amount of	recoverable	Capitalization
		goodwill	amount	multiple
Packaging Sector
Americas Group	$	669.8	Fair value	10.0 x
Coatings Group		66.4	Fair value	11.5 x
Printing Sector
Printing Group(1)		289.4	Fair value	4.5 x
Retail, Newspaper and Premedia Group(1) (2)		224.0	Fair value	4.5 x
Magazine, Book and Catalog Group(1) (2)		65.4	Fair value	5.0 x
MarketingProduct Group		34.5	Fair value	5.0 x

(1) Following the combination of groups of CGUs, the retail, newspaper and premedia operations and the magazine, book and catalog operations were combined to form the Printing Group.

(2) Represent the methods used to determine the recoverable amount and key assumptions used as at the date of the impairment test performed prior to the combination of groups of CGUs .

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24

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

7 IMPAIRMENT OF ASSETS (CONTINUED)

• Annual goodwill impairment test (continued)

The Corporation performed a sensitivity analysis on the most significant assumptions used to determine the recoverable amount for groups of CGUs subject to the impairment test.

The sensitivity analysis shows that a decrease in capitalization multiples of 1.0x or a decrease in EBITDA of 17.5% would not change the conclusions of the impairment test.

The Book Publishing Group and Business Solutions Group CGUs were validated as part of the impairment test as at October 31, 2021. The carrying amount of goodwill related to these CGUs is not significant compared to the total carrying amount of the Corporation's goodwill (Note 16).

Intangible assets with an indefinite useful life

The Corporation performed its annual impairment test for intangible assets with an indefinite useful life, which mainly comprise trade names acquired in book publishing business combinations. No impairment charges were recognized for the year ended October 31, 2021 and the same conclusion had been reached for the impairment test performed during the year ended October 25, 2020.

8 DEPRECIATION AND AMORTIZATION

Depreciation and amortization by major headings is as follows for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Property, plant and equipment	$	110.9	$	119.5
Right-of-use assets		23.0		20.2
Intangible assets		73.8		76.9
		207.7		216.6
Intangible assets and other assets,recognized in revenues and operatingexpenses		19.6		20.9
	$	227.3	$	237.5

9 NET FINANCIAL EXPENSES

Net financial expenses by major headings are as follows for the years ended:

		October 31,	October 31,	October 25,	October 25,
	Note		2021		2020
Financial expenses on long-term debt		$	35.5	$	43.8
Interest on lease liabilities			3.2		3.3
Net interest on defined benefit asset and liability	28		2.2		2.5
Other expenses (revenues)			1.0		(0.3)
Net foreign exchange losses(gains)			0.4		(2.9)
		$	42.3	$	46.4

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25

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10 INCOME TAXES

The following table presents a reconciliation of income taxes at the Canadian statutory tax rate and at the effective tax rate for the years ended:

		October 31,	October 31,	October 25,	October 25,
	Note		2021		2020
Earnings before income taxes		$	191.5	$	195.0
Canadian statutorytax rate(1)			26.50 %		26.52 %
Income taxes at the statutory tax rate			50.7		51.7
Effect of differences in tax rates and additional income taxes in other jurisdictions			(5.3)		1.9
Income taxes on non-deductible expenses and non-taxable revenues			(0.8)		(2.6)
Tax impact of an internal reorganization(2)and non-deductible expenses related to the disposal			10.7		12.8
Change in deferred tax assets on tax losses or temporary differences not previously recognized			(0.3)		(0.1)
Adjustment for previous years' balances			6.2		(0.5)
Other			(0.2)		—
Income taxes at effective tax rate		$	61.0	$	63.2
Income taxes before the following items (Income taxes on adjusted net earnings):		$	64.9	$	79.3
Income taxes on amortization of intangible assets arising from business combinations			(13.7)		(17.1)
Income taxes on impairment of assets			(0.2)		—
Income taxes on restructuring and other costs (gains), excluding the tax impact of the disposal			(3.7)		(10.7)
Tax impact of an internal reorganization(2)			10.7		—
Adjustment on additional income taxes in other jurisdictions(3)			3.0		—
Tax impact of the disposal	4		—		11.7
Income taxes at effective tax rate		$	61.0	$	63.2

(1) The Corporation's applicable tax rate corresponds to the combined Canadian tax rates applicable in the provinces where the Corporation operates.

(2) During the year ended October 31, 2021, the Corporation carried out an internal reorganization which generated a deferred tax expense of $10.7 million.

(3) Adjustment on additional income taxes in other jurisdictions related to a previous year.

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26

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10 INCOME TAXES (CONTINUED)

The following table presents components of income tax expense for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Current taxes
Current year	$	69.3	$	53.2
Adjustment forpreviousyears' balances		2.1		(9.6)
		71.4		43.6
Deferred taxes
Adjustment for previous years' balances		4.1		9.1
Origination and reversal of temporary differences		(14.3)		10.0
Change in deferred tax assets on tax losses or temporary differences not previously recognized		(0.3)		(0.1)
Impact of tax rate changes		0.1		0.6
		(10.4)		19.6
Income taxes	$	61.0	$	63.2

The following table presents components of the deferred tax asset and liability:

		As at October	As at October	31, 2021		As at October	As at October	25,2020
		Asset		Liability		Asset		Liability
Property, plant and equipment	$	—	$	79.9	$	—	$	91.6
Right-of-use assets, net of lease liabilities		5.6		—		6.8		—
Intangible assets and goodwill		—		127.0		—		134.6
Non-deductible provisions for the year		18.6		—		15.8		—
Deferred revenues		0.8		—		1.5		—
Long-term debt and derivative financial instruments		0.2		—		7.1		—
Defined benefit plans		10.4		—		15.9		—
Issuance of shares		0.7		—		1.3		—
Loss carryforwards		26.5		—		44.1		—
Interest expense		21.4		—		22.0		—
Other		4.0		—		2.0		—
		88.2		206.9		116.5		226.2
Offsettingof assets and liabilities		(69.6)		(69.6)		(92.3)		(92.3)
	$	18.6	$	137.3	$	24.2	$	133.9

Loss carryforwards included in deferred tax assets expire between 2023 and 2041.

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27

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

10 INCOME TAXES (CONTINUED)

Changes in deferred tax assets and liabilities for the year ended October 31, 2021 are as follows:

							Recognized in	Recognized in
	Balance as at					Exchange		other				Balance as at
	October 25,		Recognized in			rate	comprehensive				Business	October 31,
		2020	net	earnings		change		loss		combinations			2021
Property, plant and equipment	$	(91.6)	$	9.7	$	2.7	$	—		$	(0.7)	$	(79.9)
Right-of-use assets, net of lease liabilities		6.8		(1.1)		(0.1)		—			—		5.6
Intangible assets and goodwill		(134.6)		9.0		6.0		—			(7.4)		(127.0)
Non-deductible provisions for the year		15.8		3.1		(0.3)		—			—		18.6
Deferred revenues		1.5		(0.7)		—		—			—		0.8
Long-term debt and derivative financial instruments		7.1		4.7		(0.8)		(10.8)			—		0.2
Defined benefit plans		15.9		0.1		(0.3)		(5.3)			—		10.4
Issuance of shares		1.3		(0.6)		—		—			—		0.7
Loss carryforwards		44.1		(15.4)		(2.2)		—			—		26.5
Interest expense		22.0		0.5		(1.0)		—			—		21.5
Other		2.0		1.1		0.8		—			—		3.9
	$	(109.7)	$	10.4	$	4.8	$	(16.1)		$	(8.1)	$	(118.7)

Changes in deferred tax assets and liabilities for the year ended October 25, 2020 are as follows:

							Recognized in	Recognized in
	Balance as at					Exchange		other		Impact of			Balance as at
	October 27,		Recognized in			rate	comprehensive		the	transition		Business	October 25,
		2019	net	earnings		change	income	(loss)	to IFRS 16		combinations			2020
Property, plant and equipment	$	(85.5)	$	(5.1)	$	(0.2)	$	—	$	—	$	(0.8)	$	(91.6)
Right-of-use assets, net of lease liabilities		—		0.7		—		—		5.3		0.8		6.8
Intangible assets and goodwill		(159.4)		27.0		(1.4)		—		—		(0.8)		(134.6)
Non-deductible provisions for the year		18.7		(2.2)		0.2		—		(1.0)		0.1		15.8
Deferred revenues		3.5		(2.1)		0.1		—		—		—		1.5
Long-term debt and derivative financial
instruments		1.5		2.9		(0.1)		2.8		—		—		7.1
Defined benefit plans		19.4		(0.1)		—		(3.4)		—		—		15.9
Issuance of shares		2.5		(1.2)		—		—		—		—		1.3
Loss carryforwards		82.7		(39.8)		1.2		—		—		—		44.1
Interest expense		15.1		7.1		(0.2)		—		—		—		22.0
Other		8.5		(6.8)		0.2		—		—		0.1		2.0
	$	(93.0)	$	(19.6)	$	(0.2)	$	(0.6)	$	4.3	$	(0.6)	$	(109.7)

As at October 31, 2021, the Corporation had $3.8 million in capital losses that can be carried forward indefinitely and for which the potential benefits have not been recognized. In addition to losses for which the tax impact was recorded, the Corporation has deductible temporary differences as well as loss carryforwards in various jurisdictions for which, considering that it is unlikely that a sufficient future taxable income will be available to use a portion of those items, the Corporation has not recognized a deferred tax asset totaling $21.8 million. Loss carryforwards related to this unrecognized asset expire for the most part between 2022 and 2037.

As at October 31, 2021, no deferred tax liability was recognized for temporary differences arising from investments in subsidiaries because the Corporation controls the decisions affecting the realization of such liabilities and it is probable that the temporary differences will not reverse in the foreseeable future.

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28

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

11 ACCOUNTS RECEIVABLE

The components of accounts receivable are as follows:

		As at		As at
	October 31,		October 25,
		2021		2020
Trade receivables	$	440.6	$	403.7
Allowance account for credit losses		(3.1)		(7.4)
Other receivables		58.6		64.9
	$	496.1	$	461.2

12 INVENTORIES

The components of inventories are as follows:

		As at		As at
	October 31,		October 25,
		2021		2020
Raw materials	$	200.3	$	149.8
Work in progress and finished goods		172.7		153.1
Provision for obsolescence		(16.0)		(14.1)
	$	357.0	$	288.8

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29

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

13 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES

The following tables present changes in property, plant and equipment for the years ended:

													Assets under	Assets under
													construction
									Machinery				and deposits
							Leasehold		and			Other		on
October 31, 2021		Land		Buildings		improvements		equipment			equipment		equipment			Total
Cost
Balance, beginning of year	$	40.7	$	269.5		$	54.8	$	1,320.0		$	91.1	$	41.4	$	1,817.5
Acquisitions		1.6		11.0			3.7		30.4			3.7		64.1		114.5
Made available for use		—		3.9			1.3		43.5			1.6		(50.3)		—
Business combinations (Note 4)		—		—			0.1		3.3			0.2		—		3.6
Disposals and retirement		—		(4.6)			(1.2)		(32.2)			(3.0)		—		(41.0)
Exchange rate change and other		(1.3)		(2.2)			(1.1)		(22.5)			(1.3)		(3.8)		(32.2)
Balance as at October 31,2021	$	41.0	$	277.6		$	57.6	$	1,342.5		$	92.3	$	51.4	$	1,862.4
Accumulated depreciation
and impairment losses
Balance, beginning of year	$	—	$	(131.0)		$	(33.5)	$	(863.2)		$	(77.4)	$	—	$	(1,105.1)
Depreciation		—		(12.0)			(4.3)		(89.1)			(5.5)		—		(110.9)
Disposals and retirement		—		1.1			1.2		30.0			2.7		—		35.0
Impairment		—		—			—		(0.7)			—		—		(0.7)
Exchange rate change and other		—		0.3			—		7.8			0.9		—		9.0
Balance as at October 31,2021	$	—	$	(141.6)		$	(36.6)	$	(915.2)		$	(79.3)	$	—	$	(1,172.7)
Net carrying amount	$	41.0	$	136.0		$	21.0	$	427.3		$	13.0	$	51.4	$	689.7

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30

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

13 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES (CONTINUED)

											Assets under	Assets under
											construction
								Machinery			and deposits
						Leasehold		and		Other		on
October 25,2020		Land		Buildings	improvements			equipment		equipment		equipment		Total
Cost
Balance, beginning of year	$	40.7	$	280.7	$	49.0	$	1,446.7	$	94.0	$	43.8	$	1,954.9
Acquisitions		0.1		3.0		0.9		25.2		2.2		50.3		81.7
Made available for use		—		2.8		2.2		42.1		3.2		(50.3)		—
Business combinations (Note 4)		2.6		—		—		3.4		0.2		—		6.2
Business disposals (Note 4)		(2.7)		(16.5)		—		(73.4)		(0.8)		—		(93.4)
Disposals and retirement		—		(3.0)		(0.1)		(122.2)		(8.3)		—		(133.6)
Exchange rate change and other		—		2.5		2.8		(1.8)		0.6		(2.4)		1.7
Balance as at October 25,2020	$	40.7	$	269.5	$	54.8	$	1,320.0	$	91.1	$	41.4	$	1,817.5
Accumulated depreciation
and impairment losses
Balance, beginning of year	$	—	$	(122.6)	$	(28.2)	$	(904.1)	$	(79.9)	$	—	$	(1,134.8)
Depreciation		—		(12.7)		(5.2)		(95.8)		(5.8)		—		(119.5)
Business disposals (Note 4)		—		1.2		—		17.9		0.2		—		19.3
Disposals and retirement		—		2.5		—		118.7		8.3		—		129.5
Exchange rate change and other		—		0.6		(0.1)		0.1		(0.2)		—		0.4
Balance as at October 25,2020	$	—	$	(131.0)	$	(33.5)	$	(863.2)	$	(77.4)	$	—	$	(1,105.1)
Net carrying amount	$	40.7	$	138.5	$	21.3	$	456.8	$	13.7	$	41.4	$	712.4

Borrowing costs capitalized to property, plant and equipment

For the years ended October 31, 2021 and October 25, 2020, negligible amounts were capitalized to property, plant and equipment as borrowing costs.

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31

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

14 LEASES

The Corporation leases real estate properties (office or warehousing spaces and buildings for plants) and other assets (production equipment, office equipment and other). Leases for real estate properties usually have a fixed term of 1 to 10 years, while other types of leases usually have a fixed term of 1 to 5 years. Leases may include extension and/or termination options that are taken into account when it is reasonably certain that the option will be exercised. Lease provisions are negotiated on an individual basis and contain a wide variety of terms and conditions.

A number of leases entered into throughout the Corporation include extension and termination options. These options are intended to provide as much flexibility as possible in managing leases. Most extension and termination options may only be exercised by the Corporation and not by the lessor.

The Consolidated Statement of Financial Position presents the following amounts related to leases:

		As at		As at
	October 31,		October 25,
		2021		2020
Right-of-use assets
Real estate properties	$	137.3	$	129.9
Other		3.5		4.7
	$	140.8	$	134.6
Lease liabilities
Current portion of lease liabilities	$	23.1	$	22.8
Non-currentportion of lease liabilities		137.3		132.0
	$	160.4	$	154.8

For the years ended October 31, 2021 and October 25, 2020, additions to right-to-use assets totaled $31.7 million and $39.7 million, respectively.

The depreciation of right-of-use assets by class of underlying assets is detailed as follows for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Real estate properties	$	21.1	$	18.4
Other		1.9		1.8
	$	23.0	$	20.2

For the years ended October 31, 2021 and October 25, 2020, the expense relating to short-term leases, leases of low-value assets and variable lease payments not included in lease liabilities was $6.5 million and $8.8 million respectively.

The Corporation entered into subleasing transactions for some of its spaces under leases. For the years ended October 31, 2021 and October 25, 2020, subleasing revenues totaled $3.3 million and $3.6 million respectively.

As at October 31, 2021, the average remaining term of leases was 8.3 years (9.1 years as at October 25, 2020) and the weighted average rate applied to lease liabilities was 1.93% (2.28% as at October 25, 2020).

Cash outflows for leases for the years ended October 31, 2021 and October 25, 2020, totaled $27.0 million and $25.0 million, respectively. Future lease payments are presented in Note 30.

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32

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15 INTANGIBLE ASSETS

The following tables present changes in intangible assets for the years ended:

October 31, 2021	Indefinite Finite useful life useful life Book Customer prepublication Technology Trade names relationships costs project costs Others(1) and others Total
Cost Balance, beginning of year Additions (internally generated) Business combinations (Note 4) Retirement Exchange rate change and other	$ 747.3 $ 160.7 $ 54.3 $ 22.7 $ 8.5 $ 993.5 — 12.5 9.5 0.7 0.6 23.3 29.0 — 0.2 — — 29.2 — (33.9) (0.3) — — (34.2) (37.5) 0.1 0.5 0.3 — (36.6)
Balance as at October 31,2021	$ 738.8 $ 139.4 $ 64.2 $ 23.7 $ 9.1 $ 975.2
Accumulated amortization and impairment losses Balance, beginning of year Amortization Retirement Exchange rate change and other	$ (236.5) $ (133.6) $ (34.9) $ (20.0) $ — $ (425.0) (66.2) (9.9) (6.2) (1.4) — (83.7) — 33.9 0.3 — — 34.2 12.0 — 0.2 0.1 — 12.3
Balance as at October 31,2021	$ (290.7) $ (109.6) $ (40.6) $ (21.3) $ — $ (462.2)
Net carrying amount	$ 448.1 $ 29.8 $ 23.6 $ 2.4 $ 9.1 $ 513.0

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33

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15 INTANGIBLE ASSETS (CONTINUED)

15INTANGIBLE ASSETS (CONTINUED)
October 25,2020	Indefinite Finite useful life useful life Book Customer prepublication Technology relationships costs project costs Other(1) Trade names Total
Cost Balance, beginning of year Additions (internally generated) Business combinations (Note 4) Business disposals (Note 4) Retirement Exchange rate change and other	$ 807.0 $ 164.9 $ 46.7 $ 25.2 $ 8.4 $ 1,052.2 — 10.9 6.3 1.1 — 18.3 3.1 — — — — 3.1 (66.1) — — — — (66.1) — (15.1) (0.3) (3.1) — (18.5) 3.3 — 1.6 (0.5) 0.1 4.5
Balance as at October 25,2020	$ 747.3 $ 160.7 $ 54.3 $ 22.7 $ 8.5 $ 993.5
Accumulated amortization and impairment losses Balance, beginning of year Amortization Business disposals (Note 4) Retirement Exchange rate change and other	$ (177.1) $ (138.9) $ (27.9) $ (22.2) $ 0.1 $ (366.0) (69.8) (9.8) (6.3) (0.8) — (86.7) 9.4 — — — — 9.4 — 15.1 0.3 3.1 — 18.5 1.0 — (1.0) (0.1) (0.1) (0.2)
Balance as at October 25,2020	$ (236.5) $ (133.6) $ (34.9) $ (20.0) $ — $ (425.0)
Net carrying amount	$ 510.8 $ 27.1 $ 19.4 $ 2.7 $ 8.5 $ 568.5

(1) The "Other" category mainly comprises educational book titles, non-compete agreements, development costs and acquired printing contracts.

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34

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

16 GOODWILL

The following table presents changes in goodwill for the years ended:

	October 31,	October 31,	October 25,	October 25,
	Note	2021		2020
Balance, beginning of year	$	1,098.8	$	1,145.3
Business combinations	4	28.7		2.3
Impact of finalizing purchase price allocation calculations	4	0.1		(0.7)
Business disposals	4	—		(54.8)
Exchange rate change		(41.0)		6.7
Balance,end ofyear	$	1,086.6	$	1,098.8

The carrying amount of goodwill is allocated to the groups of CGUs as follows:

		As at		As at
	October 31,		October 25,
Operating segments		2021		2020(1)
Packaging Sector
Americas Group	$	669.8	$	703.8
Coatings Group		66.4		73.4
		736.2		777.2
Printing Sector
Printing Group(1)		289.4		—
Retail, Newspaper and Premedia Group(1)		—		224.0
Magazine, Book and Catalog Group(1)		—		65.4
MarketingProduct Group		34.5		5.7
		323.9		295.1
Other
Book Publishing Group		20.8		20.8
Business Solutions Group		5.7		5.7
		26.5		26.5
	$	1,086.6	$	1,098.8

(1) During the year ended October 31, 2021, the Corporation revised the determination of its groups of CGUs, as described in Note 7. As part of this combination, the goodwill of the Magazine, Book and Catalog Group and the Retail, Newspaper and Premedia Group were combined to form the Printing Group.

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35

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

17 OTHER ASSETS

The components of other assets are as follows:

			As at		As at
		October 31,		October 25,
	Note		2021		2020
Contract acquisition costs		$	7.7	$	12.1
Defined benefit asset	28		16.9		13.5
Income tax credit receivable			5.5		—
Other			8.6		9.6
		$	38.7	$	35.2

18 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The components of accounts payable and accrued liabilities are as follows:

			As at		As at
		October 31,		October 25,
	Notes		2021		2020
Accounts payable and other accruals		$	255.2	$	224.5
Salaries and other benefits payable			103.8		110.8
Stock-based compensation	24		22.3		8.0
Derivative financial instruments	30		4.2		0.8
Financial expenses payable			4.0		2.8
Other			49.7		52.8
		$	439.2	$	399.7

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36

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

19 LONG-TERM DEBT

Long-term debt is as follows:

	Effective interest			As at		As at
	rate as at		October 31,		October 25,
	October 31,2021	Maturity		2021		2020
U.S. dollar term loans (issued in 2018)	1.97 %	2022-2023	$	464.6$ $		918.8
U.S. dollar term loans (issued in 2021)	2.02	2028		148.7		—
Unsecured fixed-rate notes	2.41	2026		250.0		—
Unified Debenture	4.84	2028		100.0		100.0
Other loans		2026-2031		6.5		3.9
Finance leases				0.1		0.6
				969.9		1,023.3
Issuance costs on long-term debt at amortized cost				4.4		3.2
Total long-term debt				965.5		1,020.1
Currentportion of long-term debt				187.3		229.7
			$	778.2$ $		790.4

As at October 31, 2021, an amount of $187.3 million was presented in Current liabilities, consisting mainly of tranche D of $185.8 million (US$150.0 million) maturing on May 1, 2022.

New financings during the year ended October 31, 2021

The Corporation issued a U.S. dollar term loan amounting to US$120.0 million ($146.3 million) and maturing in June 2028. This term loan bears interest at the U.S. base rate or LIBOR plus a margin of 0.85% and 1.85%, respectively. An amount of $0.4 million (US$0.3 million) is repayable each quarter until maturity. Issuance costs of $0.8 million were recognized as a reduction of long-term debt, and they will be amortized using the effective interest method over the life of the term loan.

The Corporation also issued unsecured notes bearing interest at a fixed rate of 2.28%, amounting to $250.0 million and maturing in July 2026. Issuance costs of $1.6 million were recognized as a reduction of long-term debt, and they will be amortized using the effective interest method over the life of the unsecured notes. Concurrently with this issuance, the Corporation entered into cross-currency fixed interest rate swaps amounting to $250.0 million (US$200.4 million) to convert the fixed rate on the unsecured notes of 2.28% into a fixed rate of 2.055% paid in U.S. dollars.

Repayment of term loans

On October 30, 2020, the Corporation repaid the remaining portion of US$62.5 million ($83.2 million) of tranche A of the U.S. dollar term loans (issued in 2018) that was maturing.

On April 30, 2021, the Corporation repaid the balance of US$112.5 million ($138.1 million) of tranche B of the U.S. dollar term loans (issued in 2018) that was maturing.

On August 3, 2021, the Corporation early repaid the balance of US$150.0 million ($187.1 million) of tranche C of the U.S. dollar term loans (issued in 2018) that was maturing on November 1, 2021.

Credit facility extension

The Corporation has a credit facility amounting to $400.0 million or the U.S. dollar equivalent, which was maturing in February 2025, and for which the maturity was extended on August 31, 2021 to February 2026, and modified some of its characteristics to add a sustainable development-related loan structure providing for a rate adjustment based on meeting targets associated with environmental, social and governance (ESG) factors, including diversity and reduction in greenhouse gas emissions. The other terms and conditions remained unchanged. The applicable interest rate on the credit facility is based on the credit rating assigned to the Corporation. According to the current credit rating, the rate is either the banker’s acceptance rate or LIBOR, plus 1.675%, or the Canadian prime rate or U.S. base rate, plus 0.675%.

The Corporation has a credit facility with a maximum amount of US$25.0 million ($31.0 million), bearing interest at LIBOR plus 1.10%, which was expiring in March 2021 and for which maturity was extended for an additional year to March 2022 on the same terms.

As at October 31, 2021, no amount had been drawn on the credit facilities, and the unused amount under the credit facilities was $431.0 million.

The Corporation has revolving letters of credit facilities for an aggregate amount of $40.0 million. The fees applicable to the issued portion of these letters of credit facilities are 0.80% annually. As at October 31, 2021, letters of credit amounting to $23.3 million ($34.3 million as at October 25, 2020) were issued on these facilities, mainly to secure unpaid contributions with respect to the solvency deficiency of the Corporation's defined benefit plans (Note 28).

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37

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19 LONG-TERM DEBT

Principal payments to be made by the Corporation in forthcoming years are as follows:

		Principal
		payments
2022	$	187.3
2023		280.5
2024		1.6
2025		1.6
2026		252.0
After		246.9
	$	969.9

Hedging instruments

During the year ended October 31, 2021, concurrently with the issuance of the $250.0 million unsecured fixed-rate notes, the Corporation entered into cross-currency fixed interest rate swaps amounting to $250.0 million (US$200.4 million) and maturing in July 2026, to convert into US dollars the proceeds of issuance of the unsecured notes received in Canadian dollars and fix the exchange rate that will be applicable upon repaying the unsecured notes at maturity. The Corporation applies hedge accounting to hedges of its net investment in foreign operations. As a result, the notional amount of cross-currency fixed interest rate swaps of $200.4 million was designated as a hedging instrument of the Corporation's net investment in foreign operations. Only the spot element is included in the hedging relationship, and the change in fair value is recognized in other comprehensive income. The forward element and the foreign currency basis spread are excluded from the hedging relationship. They are recognized in other comprehensive income as a hedge-related transaction cost and are then amortized to net earnings based on the settlement of interest payments on the cross-currency fixed interest rate swaps. As a result, during the year ended October 31, 2021, a $2.4 million loss was recognized in other comprehensive income. During the year ended October 31, 2021, a negligible amount for the forward element and the foreign currency basis spread was recognized in net earnings.

As at October 31, 2021, an amount of US$331.0 million ($410.0 million) of the term loans and existing credit facilities denominated in U.S. dollars had been designated by the Corporation as hedging instruments of its net investment in foreign operations (US$649.6 million, or $852.7 million as at October 25, 2020). As a result, during the years ended October 31, 2021 and October 25, 2020, a foreign exchange gain of $41.7 million and a foreign exchange loss of $1.4 million, respectively, were reclassified to other comprehensive income.

In the last few fiscal years, the Corporation has entered into interest rate swaps for an amount of US$450.0 million as a hedge against risks related to future fluctuations in interest rates on certain of its loans until their respective maturities. A US$75.0 million swap related to tranche C of the U.S. dollar term loans was settled upon the repayment of this tranche on August 3, 2021. The Corporation applies cash flow hedge accounting by designating these swaps as hedging instruments. Consequently, during the years ended October 31, 2021 and October 25, 2020, the change in fair value of these hedging instruments, namely a $3.2 million gain and an $18.5 million loss, respectively, was recognized in other comprehensive income.

The Corporation must comply with certain restrictive covenants, including maintaining certain financial ratios. During the year ended October 31, 2021, the Corporation has not been in default under any covenants.

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38

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

20 PROVISIONS

The following table presents changes in provisions for the year ended October 31, 2021:

	Restructuring	Restructuring		Onerous
		costs		contracts		Other		Total
Balance, beginning of year	$	7.6	$	—	$	0.6	$	8.2
Provisions recorded		6.6		1.4		1.4		9.4
Amounts used		(12.9)		(1.1)		(1.4)		(15.4)
Provisions reversed		—		—		(0.2)		(0.2)
Business combinations		—		—		0.1		0.1
Balance as at October 31, 2021	$	1.3	$	0.3	$	0.5	$	2.1
Current portion	$	1.3	$	—	$	0.2	$	1.5
Non-currentportion		—		0.3		0.3		0.6
	$	1.3	$	0.3	$	0.5	$	2.1

Restructuring costs

The Corporation is implementing rationalization measures, including plant closures, in the Printing Sector to consolidate its printing platform.

21 OTHER LIABILITIES

The components of other liabilities are as follows:

			As at		As at
		October 31,		October 25,
	Notes		2021		2020
Deferred revenues		$	1.1	$	2.1
Accrued liabilities and other liabilities			14.2		7.5
Stock-based compensation	24		15.5		14.8
Defined benefit liability	28		62.2		76.0
Derivative financial instruments	30		9.9		25.3
		$	102.9	$	125.7

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39

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

22 SHARE CAPITAL

Class A Subordinate Voting Shares: Class B Shares:

subordinate participating voting shares carrying one vote per share, authorized in unlimited number, no par value. participating voting shares carrying 20 votes per share, convertible into Class A Subordinate Voting Shares, authorized in unlimited number, no par value.

The following table presents changes in the Corporation's share capital for the years ended:

	October	**31, **	2021	October	25,2020	25,2020
	Number of			Number of
	shares		Amount	shares		Amount
Class A Subordinate Voting Shares
Balance, beginning of year	73,049,344	$	621.0	73,360,754	$	622.9
Conversion of Class B Shares into Class A Subordinate Voting Shares	63,000		0.1	3,800		—
Income taxes on share issuance costs	—		—	—		—
Shares redeemed and cancelled	(200)		—	(450,450)		(3.8)
Exercise of stock options	—		—	135,240		1.9
Balance,end ofyear	73,112,144		621.1	73,049,344		621.0
Class B Shares
Balance, beginning of year	13,975,826		19.0	13,979,626		19.0
Conversion of Class B Shares into Class A Subordinate VotingShares	(63,000)		(0.1)	(3,800)		—
Balance,end ofyear	13,912,826		18.9	13,975,826		19.0
	87,024,970	$	640.0	87,025,170	$	640.0

Share redemptions

On September 29, 2021, the Corporation has been authorized to repurchase, for cancellation on the open market, or subject to the approval of any securities authority by private agreements, between October 1, 2021 and September 30, 2022, or at an earlier date if the Corporation concludes or cancels the offer, up to 1,000,000 of its Class A Subordinate Voting Shares and up to 190,300 of its Class B Shares. The repurchases are made in the normal course of business at market prices through the Toronto Stock Exchange.

On September 18, 2020, the Corporation had been authorized to repurchase, for cancellation on the open market, or subject to the approval of any securities authority by private agreements, between October 1, 2020 and September 30, 2021, or at an earlier date if the Corporation concludes or cancels the offer, up to 1,000,000 of its Class A Subordinate Voting Shares and up to 191,320 of its Class B Shares. The repurchases are made in the normal course of business at market prices through the Toronto Stock Exchange.

During the year ended October 31, 2021, the Corporation repurchased and cancelled 200 of its Class A Subordinate Voting Shares at a weighted average price of $18.39, for a negligible total cash consideration excess of the total consideration over the carrying amount of the shares was applied against retained earnings. The Corporation was under no obligation to repurchase its Class A Subordinate Voting Shares and Class B Shares as at October 31, 2021.

During the year ended October 25, 2020, the Corporation repurchased and cancelled 450,450 of its Class A Subordinate Voting Shares at a weighted average price of $15.70, for a total cash consideration of $7.1 million. The excess of the total consideration over the carrying amount of the shares, in the amount of $3.3 million, was applied against retained earnings. The Corporation was under no obligation to repurchase its Class A Subordinate Voting Shares and Class B Shares as at October 25, 2020.

Dividends

Dividends of $0.900 and $0.895 per share were declared and paid to the holders of shares for the years ended October 31, 2021 and October 25, 2020, respectively.

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Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23 NET EARNINGS PER SHARE

The following table presents a reconciliation of the components used in the calculation of basic and diluted net earnings per share for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Numerator
Net earnings	$	130.6	$	131.7
Denominator(in millions)
Weighted average number of shares - basic and diluted		87.0		87.1

For the years ended October 31, 2021 and October 25, 2020, there were no dilutive instruments.

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41

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

24 STOCK-BASED COMPENSATION

Share unit plan for certain officers and senior executives

The Corporation offers a share unit plan for certain officers and senior executives under which deferred share units ("DSUs") and restricted share units ("RSUs") are granted. Vested DSUs and RSUs will be paid, at the Corporation's discretion, in cash or with Class A Subordinate Voting Shares of the Corporation purchased on the open market.

The following table presents the changes in the plan's status for the years ended:

Number of units	October 31, October 25, October 31, October 25, 2021 2020 2021 2020
Balance, beginning of year Units granted Units cancelled Units paid Units converted Dividendspaid in units	DSUs RSUs 547,645 435,890 1,093,533 868,893 — 113,764 477,219 474,190 (5,655) (12,128) (85,554) (61,457) (6,979) (27,939) (100,068) (247,564) 8,303 6,805 — — 22,936 31,253 56,040 59,471
Balance,end ofyear	566,250 547,645 1,441,170 1,093,533

During the years ended October 31, 2021 and October 25, 2020, the Corporation gave an irreversible choice to the participants in the share unit plan for certain officers and senior executives to extend the vesting period of certain plan programs for a maximum of 12 months compared to the original vesting period. Changes in the vesting period resulted in a reversal of the liability to the corresponding expense of $0.6 million and $1.0 million for the years ended October 31, 2021 and October 25, 2020, respectively.

As at October 31, 2021, the liability related to the share unit plan for certain officers and senior executives was $31.5 million, of which $15.5 million is presented under "Other liabilities" ($16.5 million as at October 25, 2020, of which $14.8 million is presented under "Other liabilities"). Expenses recorded in the Consolidated Statements of Earnings for the years ended October 31, 2021 and October 25, 2020 were $17.4 million and $6.9 million, respectively. Amounts totaling $2.4 million and $3.8 million were paid under this plan for the years ended October 31, 2021 and October 25, 2020, respectively.

Share unit plan for directors

The Corporation offers a deferred share unit plan for its directors. Under this plan, directors may elect to receive as compensation either cash, deferred share units, or a combination of both.

The following table presents the changes in the plan's status for the years ended:

	October 31,	October 25,
Number of units	2021	2020
Balance, beginning of year	363,266	291,271
Directors' compensation	39,109	52,416
Units paid	(105,794)	—
Dividendspaid in units	11,431	19,579
Balance,end ofyear	308,012	363,266

As at October 31, 2021, the liability related to the share unit plan for directors was $6.3 million ($6.3 million as at October 25, 2020). Expenses recorded in the Consolidated Statements of Earnings for the years ended October 31, 2021 and October 25, 2020 were $2.2 million and $1.6 million, respectively. Under this plan, an amount totaling $2.2 million was paid for the year ended October 31, 2021, and no amounts were paid for the year ended October 25, 2020.

Total return swap

During the years ended October 31, 2021 and October 25, 2020, the Corporation has entered into total return swaps, which have a term of 12 months and are renewable annually, on 1,200,000 units purchased at a weighted-average price of $20.75 and 950,000 units at a weighted-average price of $16.37, respectively, to hedge a portion of the stock-based compensation expenses (gains) that vary based on the price of the Corporation's shares. During the years ended October 31, 2021 and October 25, 2020, gains recognized in the Consolidated Statements of Earnings under "Operating expenses", corresponding to the change in fair value of the total return swap for hedged units, before taking into account dividends received and interest paid, were $2.5 million and $0.2 million, respectively. Amounts totaling $5.0 million and $0.3 million were received under the total return swap during the years ended October 31, 2021 and October 25, 2020, respectively.

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42

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

25ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
								Actuarial
								gains and	Accumulated
				Net	Cumulative		losses related			other
		Cash flow	investment			translation		to defined	comprehensive
		hedges		hedges	differences		benefitplans			loss
Balance as at October 25, 2020(1)	$	(16.4)	$	(10.1)	$	40.3	$	(28.6)	$	(14.8)
Net change ingains(losses),net of income taxes		15.1		35.2		(93.2)		16.4		(26.5)
Balance as at October 31, 2021	$	(1.3)	$	25.1	$	(52.9)	$	(12.2)	$	(41.3)
Balance as at October 27, 2019	$	(9.8)	$	(9.1)	$	31.1	$	(38.1)	$	(25.9)
Net change ingains(losses),net of income taxes		(6.6)		(1.0)		9.2		9.5		11.1
Balance as at October 25, 2020(1)	$	(16.4)	$	(10.1)	$	40.3	$	(28.6)	$	(14.8)

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

As at October 31, 2021, the amounts expected to be reclassified to net earnings in future years are as follows:

		2022		2023		2024		Total
Net change in the fair value of derivatives designated as cash flow hedges	$	3.0	$	(5.1)	$	0.3	$	(1.8)
Income taxes		0.8		(1.4)		0.1		(0.5)
	$	2.2	$	(3.7)	$	0.2	$	(1.3)

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43

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

26 SUPPLEMENTAL INFORMATION ON THE CONSOLIDATED STATEMENTS OF CASH FLOWS

Changes in non-cash operating items are as follows for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020(1)
Accounts receivable	$	(47.9)	$	39.8
Inventories		(73.5)		(16.1)
Prepaid expenses and other current assets		(0.1)		0.6
Accounts payable and accrued liabilities		45.0		(19.6)
Provisions		(7.3)		(6.9)
Deferred revenues and deposits		1.2		(3.0)
Defined benefitplans		0.8		0.1
	$	(81.8)	$	(5.1)

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

The following table presents changes in financial liabilities for the year ended October 31, 2021 :

Cash flows related to Opening financing balance activities	Non-cash changes Business Fair value Foreign Amortization acquisitions adjustments exchange rate of deferred Accrued Closing and disposals additions(1) effect financingfees interest balance
U.S. dollar term loans Issued in 2018 $ 918.8 $ (408.4) $ — $ — $ (45.8) $ — $ 1.0 $ 465.6 U.S. dollar term loans Issued in 2021 — 146.3 — — 2.4 — 0.4 149.1 Unsecured fixed-rate notes — 250.0 — — — — 1.8 251.8 Unified Debenture 100.0 — — — — — 1.2 101.2 Other external debts 4.5 2.4 — (0.2) (0.1) — — 6.6 Issuance costs on long-term debt at amortized cost (3.2) (2.8) — — — 1.6 — (4.4) Lease liabilities 154.8 (27.0) 14.4 17.2 (2.3) — 3.3 160.4 Contingent considerations 3.5 — 10.0 (3.4) (0.1) — — 10.0
$ 1,178.4 $ (39.5) $ 24.4 $ 13.6 $ (45.9) $ 1.6 $ 7.7 $ 1,140.3

(1) Additions to lease liabilities include additions resulting from signing new contracts and modifying existing contracts, less early terminations amounting to $3.1 million.

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44

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

27 RELATED PARTY TRANSACTIONS

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Corporation, directly or indirectly, including any director (whether executive or otherwise) of the Corporation.

The following table presents key management personnel compensation for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Salaries and other short-term benefits	$	8.9	$	9.6
Post-employment benefits		0.8		0.7
Stock-based compensation		17.4		6.6
	$	27.1	$	16.9

28 EMPLOYEE BENEFITS

The Corporation offers its employees various contributory and non-contributory defined benefit pension plans and other post-employment defined benefit plans, defined contribution pension plans, group registered savings plans and multi-employer pension plans. Since June 1, 2010, most of the employees participate only in the defined contribution pension plans. For the defined benefit plans, the amount of benefits is generally calculated based on the employees’ years of service and salaries. Plan funding is calculated based on actuarial estimates and is subject to limitations under applicable income tax and other regulations. Actuarial estimates prepared during the year were based on assumptions related to projected employee compensation levels up to the time of retirement and the anticipated long-term rate of return on pension plan assets. For defined contribution pension plans, multi-employer pension plans and group registered savings plans, the sole obligation of the Corporation is to make the monthly employer’s contribution. Certain obligations of the Corporation under the defined benefit plans are secured by letters of credit, drawn on the Corporation's credit facilities, which are pledged as collateral for unpaid contributions with respect to the solvency deficiency of the plans. The contributions paid by the Corporation to defined contribution pension plans are expensed in the period in which they are earned by employees. The assets of the Corporation's defined benefit pension plans are held in a trust. The Corporation recognizes the annual amounts related to its defined benefit pension plans using calculations based on various actuarial assumptions, in particular regarding discount rates, mortality rates and annual rates of return on plan assets. These estimates may vary significantly from period to period based on the return on plan assets, actuarial valuations and market conditions. The Corporation reviews its actuarial assumptions each year and revises them based on prevailing rates and current trends. The Corporation believes that the assumptions used to account for its accrued benefit obligation are reasonable based on its experience, market conditions and data provided by its external actuary and investment advisor.

In the United States, the defined benefit pension plans in which the Corporation's employees participated were closed to new participants before January 1, 2014. Consequently, the calculation of final benefits under the U.S. plans represented the benefits earned under the U.S. plans as of the date these plans stopped accepting new participants. Since then, new employees of the Corporation join 401(k)-type defined contribution pension plans. The obligations of the Corporation for this type of plan are limited to making the monthly employer's contribution.

The Board of Directors of the Corporation, with assistance from the pension committee, is responsible for the oversight and governance of the pension plans. The pension committee assists the Board in fulfilling its general oversight responsibilities with respect to pension plans, especially with regards to investment decisions, contributions to defined benefit plans and the selection of investment opportunities for defined contribution plans. Pension plan assets are held in a trust, except insured annuities. The Corporation's pension plans are managed in accordance with laws applicable to pension plans, which have determined minimum and maximum funding requirements for defined benefit pension plans.

The Corporation's funding policy is to make contributions to its pension plans based on various actuarial valuation methods, as permitted by regulatory bodies for pension plans. The Corporation's contributions to its pension plans reflect the most recent actuarial valuations for investment returns, salary projections and benefits related to future services. The funding of pension plans is based on funding measurement bases that are different from the accounting basis and for which the methods and assumptions may differ from those used for accounting purposes.

Defined benefit pension plans and other post-employment plans expose the Corporation to certain risks, including investment returns, changes in the discount rate used to measure the obligation, the mortality rate for plan participants, inflation and health care costs.

The Corporation also offers other long-term employee benefit plans that provide for continued dental and health care benefits in case of long-term disability.

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45

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

28 EMPLOYEE BENEFITS (CONTINUED)

The most recent actuarial valuations of the Corporation's pension plans for funding purposes were done as at December 31, 2018 for plans registered in Quebec, as at December 31, 2019 for plans registered in Ontario and as at December 1, 2019 for plans registered in the United States.

The defined benefit obligation and the fair value of the plan assets are measured on the date of the annual consolidated financial statements. The following table presents the changes in the defined benefit obligation and in the fair value of plan assets for the years ended:

		Pension	benefits	benefits	Other	defined	benefitplans	benefitplans		Total	Total
	October 31,		October 25,		October 31,		October 25,		October 31,		October 25,
		2021		2020(1)		2021		2020(1)		2021		2020
Defined benefit obligation
Balance, beginning of year	$	805.0	$	825.2	$	13.4	$	15.6	$	818.4	$	840.8
Current service cost(2)		—		—		0.6		0.5		0.6		0.5
Past service cost		0.1		0.2		—		—		0.1		0.2
Interest cost on the defined benefit obligation		22.0		24.6		0.7		0.7		22.7		25.3
Actuarial gains or losses from:
Plan experience		(1.7)		1.9		0.2		(0.2)		(1.5)		1.7
Changes in demographic assumptions		0.3		(2.7)		—		—		0.3		(2.7)
Changes in financial assumptions		(42.6)		25.5		(0.7)		(2.1)		(43.3)		23.4
Defined benefit obligation extinguished on settlement		(2.7)		(9.2)		—		—		(2.7)		(9.2)
Benefits paid		(64.7)		(62.0)		(1.4)		(1.2)		(66.1)		(63.2)
Exchange rate change and other		(5.4)		1.5		3.7		0.1		(1.7)		1.6
Balance,end ofyear	$	710.3	$	805.0	$	16.5	$	13.4	$	726.8	$	818.4
Fair value of plan assets
Balance, beginning of year	$	758.1	$	766.6	$	—	$	—	$	758.1	$	766.6
Interest income on plan assets		20.6		22.8		—		—		20.6		22.8
Actuarial gains (losses) on plan assets		(22.8)		35.3		—		—		(22.8)		35.3
Administrative costs (other than asset management costs)		(2.6)		(1.9)		—		—		(2.6)		(1.9)
Benefits paid		(64.7)		(62.0)		(1.4)		(1.2)		(66.1)		(63.2)
Employer contributions		3.6		6.6		1.4		1.2		5.0		7.8
Asset distributed on settlement		(3.2)		(10.2)		—		—		(3.2)		(10.2)
Exchange rate change and other		(5.7)		0.9		—		—		(5.7)		0.9
Balance,end ofyear	$	683.3	$	758.1	$	—	$	—	$	683.3	$	758.1
Plan deficit	$	(27.0)	$	(46.9)	$	(16.5)	$	(13.4)	$	(43.5)	$	(60.3)
Effect of the asset ceiling		(1.8)		(2.2)		—		—		(1.8)		(2.2)
Defined benefit liability	$	(28.8)	$	(49.1)	$	(16.5)	$	(13.4)	$	(45.3)	$	(62.5)

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

(2) The current service cost for the other defined benefit plans includes the net change in the long-term disability plan, consisting of current service cost and actuarial gains or losses. The past service cost for this plan is presented on a separate line.

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46

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

28 EMPLOYEE BENEFITS (CONTINUED)

The defined benefit asset (liability) is included as follows in the Consolidated Statements of Financial Position:

			As at		As at
		October 31,		October 25,
	Notes		2021		2020
Other assets	17	$	16.9	$	13.5
Other liabilities	21		(62.2)		(76.0)
		$	(45.3)	$	(62.5)

The following table presents the composition of the fair value of the pension plan assets:

		As at		As at
	October 31,		October 25,
		2021		2020
Quoted in an active market
Equity securities
Canadian and foreign equities and investment funds	$	137.4	$	122.5
Debt securities
Government and corporate bonds and investment funds		355.7		426.5
Cash and cash equivalents and investment funds		2.7		1.7
		495.8		550.7
Not quoted in an active market
Real estate		—		1.3
Insured annuities		187.5		206.1
	$	683.3	$	758.1

For the years ended October 31, 2021 and October 25, 2020, the plan assets did not include any shares of the Corporation.

The matching strategy for the Corporation's assets and liabilities consists in minimizing risk through the purchase of insured annuities and debt securities. For the years ended October 31, 2021 and October 25, 2020, the plans invested in buy-in insured annuities. Their fair value is considered equal to the defined benefit obligation for participants targeted by the annuities purchases, calculated using assumptions applicable at the reporting date.

The following table presents the funded status of defined benefit plans:

		Pension	benefits	benefits	Other defined	Other defined	benefitplans	benefitplans		Total	Total
		As at		As at		As at		As at		As at		As at
	October 31,		October 25,		October 31,		October 25,		October 31,		October 25,
		2021		2020(1)		2021		2020(1)		2021		2020
Fair value of plan assets for funded or partially funded plans	$	683.3	$	758.1	$	—	$	—	$	683.3	$	758.1
Defined benefit obligation of funded or partially funded plans		683.8		776.1		—		—		683.8		776.1
Effect of the asset ceiling		(1.8)		(2.2)		—		—		(1.8)		(2.2)
Funded status of funded orpartially fundedplans - deficit	$	(2.3)	$	(20.2)	$	—	$	—	$	(2.3)	$	(20.2)
Defined benefit obligation of unfundedplans		(26.5)		(28.9)		(16.5)		(13.4)		(43.0)		(42.3)
Total funded status - deficit	$	(28.8)	$	(49.1)	$	(16.5)	$	(13.4)	$	(45.3)	$	(62.5)

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

The Corporation expects to contribute $2.9 million to its defined benefit plans during the year ending October 30, 2022, considering that it plans to use letters of credit from its credit facilities to secure unpaid contributions for the solvency deficiency of the defined benefit plans. The actual amount paid may differ from the estimate based on the results of the actuarial valuations, investment returns, volatility in discount rates, regulatory requirements and other factors.

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47

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

28 EMPLOYEE BENEFITS (CONTINUED)

The following table presents the significant assumptions used to calculate the Corporation's defined benefit obligation:

	As at	As at
	October 31,	October 25,
	2021	2020
Discount rate, end of year
Canada	3.39 %	2.89 %
United States	2.90	2.70
Weighted average rate of compensation increase
Canada	2.36	2.36

As at October 31, 2021, in Canada, the growth rate of health care costs for other post-employment defined benefit plans was estimated at 6.5%, gradually decreasing over 15 years to reach 4.5% and remain at this level afterwards.

The following table presents the impact of changes in the significant assumptions on the defined benefit obligation for the year ended October 31, 2021 and has some limitations. The sensitivities of each significant assumption have been calculated without taking into account any changes in the other assumptions. Actual results could therefore lead to changes in other assumptions simultaneously. Any change in one factor may result in changes in another factor, which could amplify or reduce the impact of changes in significant assumptions.

		Defined
		benefit
Increase(decrease)		obligation
Impact of 10 bps increase in discount rate	$	(8.3)
Impact of 10 bps decrease in discount rate		8.5
Impact of 100 bps increase in growth rate of health care costs		0.7
Impact of 100 bps decrease ingrowth rate of health care costs		(0.6)

The following table presents the composition of the defined benefit plan cost for the years ended:

		Pension	benefits		Other	defined	benefit	plans		Total	Total
	October 31,		October 25,		October 31,		October 25,		October 31,		October 25,
	Note	2021		2020		2021		2020		2021		2020
Current service cost	$	—	$	—	$	0.6	$	0.5	$	0.6	$	0.5
Past service cost		0.1		0.2		—		—		0.1		0.2
Administrative costs		2.6		1.9		—		—		2.6		1.9
Loss on settlement		0.5		1.0		—		—		0.5		1.0
Plan cost recognized in net earnings		3.2		3.1		0.6		0.5		3.8		3.6
Interest cost on the defined benefit obligation		22.0		24.6		0.7		0.7		22.7		25.3
Interest income on plan assets		(20.6)		(22.8)		—		—		(20.6)		(22.8)
Interest on ceilingeffect		0.1		—		—		—		0.1		—
Net interest on the defined benefit liability	9	1.5		1.8		0.7		0.7		2.2		2.5
Actuarialgains		—		—		—		0.2		—		0.2
Remeasurement of the net defined benefit liability
(asset)		—		—		—		0.2		—		0.2
Defined benefitplan cost	$	4.7	$	4.9	$	1.3	$	1.4	$	6.0	$	6.3

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48

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

28 EMPLOYEE BENEFITS (CONTINUED)

The following table presents the defined benefit plan costs recognized in the Consolidated Statements of Earnings for the years ended:

		October 31,	October 31,	October 25,	October 25,
	Note		2021		2020
Costs recognized under "Operating expenses"		$	3.2	$	2.4
Net costs recognized under "Restructuringand other costs"	6		0.6		1.2
		$	3.8	$	3.6

The following table presents the costs recognized under "Operating expenses" in the Consolidated Statement of Earnings for defined contribution pension plans and state plans for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Defined contribution pension plans	$	15.3	$	14.1
Stateplans		14.2		13.6
	$	29.5	$	27.7

29 COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES

Commitments

The Corporation leases real estate properties (office or warehousing spaces and buildings for plants) and other assets (production equipment, office equipment and other). Minimum payments related to most of the Corporation's lease commitments have been recognized as lease liabilities in the Statement of Financial Position. For more details, see Note 14.

As at October 31, 2021, the Corporation had commitments with suppliers for capital expenditures totaling $28.5 million.

Guarantees

In the normal course of business, the Corporation has provided the following significant guarantees to third parties:

a) Indemnification of third parties

Under the terms of debt agreements, the Corporation has agreed to indemnify the holders of such debt instruments against any increase in costs incurred or reduction in the amounts otherwise payable to them resulting from changes in laws and regulations. These indemnification commitments are in effect for the term of the agreements and have no limitations. Given the nature of these indemnification agreements, the Corporation is unable to estimate its maximum potential liability to third parties. Historically, the Corporation has not made any indemnification payments and, as at October 31, 2021, the Corporation had not recorded a liability associated with these indemnification agreements.

b) Business disposals

In connection with the disposal of operations or assets, the Corporation agreed to indemnify against any claims that may result from its previous activities or arise under inforce agreements at the transaction date. Given the nature of these indemnification agreements, the Corporation is unable to estimate its maximum potential liability to guaranteed parties. Historically, the Corporation has not made any significant indemnification payments and, as at October 31, 2021, the Corporation had not recorded any liability associated with these indemnification agreements.

Contingent liabilities

In the normal course of operations, the Corporation is involved in various claims and legal proceedings. Although the outcome of these pending cases as at October 31, 2021, cannot be determined with certainty, the Corporation considers that their outcome is unlikely to have a material adverse effect on its financial position and operating results, given the provisions or insurance coverage with regards to some of these claims and legal proceedings.

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49

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

30 FINANCIAL INSTRUMENTS

Credit risk

Credit risk is the risk that the Corporation will incur losses arising from the failure of third parties to meet their contractual obligations. The Corporation is exposed to credit risk with regard to its accounts receivable and loans receivable, as well as through its normal activities involving cash. The Corporation's maximum exposure to credit risk for these elements is represented by their carrying amount in the Consolidated Statements of Financial Position. The Corporation is also exposed to credit risk with regard to its derivative financial instrument assets. However, the Corporation estimates this risk as low because it deals only with recognized financial institutions with investment-grade credit ratings. As at October 31, 2021 and October 25, 2020, the Corporation's maximum exposure to credit risk related to derivative financial instrument assets was low.

The Corporation regularly analyzes and examines the financial position of customers and applies rigorous evaluation procedures to all new customers. The Corporation establishes a specific credit limit for each customer and periodically reviews the limits for customers that are significant or considered at risk. As well, the Corporation believes that it is protected against any concentration of risk through its products, customer base and geographic diversity. The Corporation also has a credit insurance policy covering certain customers for aggregated losses of up to $15.0 million per year in Canada and up to US$15.0 million in the United States. The policy contains the usual clauses and limits regarding the amounts that can be claimed by event and year of coverage.

As at October 31, 2021, no single customer represented 10.0% or more of the revenues of the Corporation, or 10.0% or more of the related accounts receivable.

The Corporation determines whether receivables are past due according to the types of customers, their payment history and the industry in which they conduct business. An allowance account for credit losses is set up based on factors such as the credit risk of specific customers, historical trends and other data. The allowance account for credit losses is reviewed at each reporting date by management. Loss allowances for credit losses are set up, if needed, to reflect credit losses risks.

a) Definition of default

The Corporation considers the following items as a default for internal credit risk management purposes, as past experience indicates that financial assets meeting any of these conditions are generally not recoverable:

• breaches of financial covenants by a debtor;

• information prepared internally or from external sources indicating that it is unlikely that the debtor will fully repay its creditors, including the Corporation (without considering any collateral held by the Corporation).

b) Write-down policy

The Corporation writes down the value of a financial asset when information indicates that the debtor has significant financial difficulties and there are no realistic prospects of recovery, for instance at the earliest of when the debtor is in liquidation or enters into bankruptcy proceedings or, in the case of accounts receivable, when amounts more than 12 months past due. Derecognized financial assets may continue to be subject to measures under the Corporation's recovery procedures, based on legal advice, if applicable. Amounts recovered are recognized in net earnings.

Receivables are detailed as follows:

		As at		As at
	October 31,		October 25,
Trade receivables		2021		2020(1)
Current balance	$	383.8	$	324.5
1 - 30 days past due		34.8		48.4
31 - 60 days past due		8.1		11.1
More than 60 dayspast due		13.9		19.7
		440.6		403.7
Allowance account for credit losses		(3.1)		(7.4)
	$	437.5	$	396.3

(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

The change in the allowance account for credit losses is as follows for the years ended:

		October 31,	October 31,	October 25,	October 25,
	Note		2021		2020
Balance, beginning of year		$	7.4	$	5.2
Business combinations	4		—		0.1
Loss allowance for credit losses			(2.0)		3.9
Receivables recovered or written off			(2.3)		(1.8)
Balance, end ofyear		$	3.1	$	7.4

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50

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

30 FINANCIAL INSTRUMENTS (CONTINUED)

To assess whether the credit risk on a financial instrument has increased significantly since initial recognition, the Corporation compares the risk of default as at the reporting date with the risk of default as at the initial recognition date of the financial instrument. In making this assessment, the Corporation considers reasonable and supportable quantitative and qualitative information, including past experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered include future prospects for the industries in which the Corporation's debtors operate from reports prepared by experts in economics, financial analysts, government agencies, relevant think tanks and other similar organizations, as well as various external sources of economic information and forecasts related to the Corporation's core operations.

Based on its analysis, the Corporation is of the opinion that the allowance account for credit losses is adequate to cover risks of non-payment.

Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they mature. The Corporation is exposed to liquidity risk with regard to its accounts payable, long-term debt, derivative financial instrument liabilities and contractual obligations.

The following table presents the contractual maturities of financial liabilities as at October 31, 2021:

		Carrying	Contractual	Contractual		Less than						Over
		amount		cash flows		1year		1-3years		3-5years		5years
Non-derivative financial liabilities
Accounts payable and accrued liabilities	$	435.0	$	435.0	$	435.0	$	—	$	—	$	—
Long-term debt		965.5		1,054.2		207.5		310.1		278.8		257.8
Lease liabilities		160.4		175.6		25.7		44.8		38.1		67.0
Other monetary liabilities, excluding contingent considerations		16.6		16.6		0.4		16.2		—		—
Contingent considerations		10.0		10.0		2.0		8.0		—		—
		1,587.5		1,691.4		670.6		379.1		316.9		324.8
Derivative financial instruments in liabilities
Interest rate swaps		9.5		9.5		2.2		7.3		—		—
Cross-currency fixed interest rate swaps		2.5		2.5		—		—		2.5		—
Total return swaps		1.4		1.4		1.4		—		—		—
Foreign exchange forward contracts		0.7		0.7		0.6		0.1		—		—
	$	1,601.6	$	1,705.5	$	674.8	$	386.5	$	319.4	$	324.8

The following table presents the contractual maturities of financial liabilities as at October 25, 2020:

		Carrying	Contractual	Contractual		Less than						Over
		amount		cash flows		1year		1-3years		3-5years		5years
Non-derivative financial liabilities
Accounts payable and accrued liabilities	$	398.8	$	398.8	$	398.8	$	—	$	—	$	—
Long-term debt		1,020.1		1,080.3		248.3		707.8		9.9		114.3
Lease liabilities		154.8		171.6		25.7		40.7		32.3		72.9
Other monetary liabilities, excluding contingent considerations		15.2		15.2		0.2		15.0		—		—
Contingent considerations		3.5		3.5		3.5		—		—		—
		1,592.4		1,669.4		676.5		763.5		42.2		187.2
Derivative financial instruments in liabilities
Interest rate swaps		25.3		25.3		0.2		25.1		—		—
Foreign exchange forward contracts		0.8		0.8		0.6		0.2		—		—
	$	1,618.5	$	1,695.5	$	677.3	$	788.8	$	42.2	$	187.2

The Corporation believes that future funds generated by operating activities and the access to additional funds on banking and financial markets will be adequate to meet its obligations. In addition, the Corporation has entered into long-term contracts with the majority of its major customers.

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51

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

30 FINANCIAL INSTRUMENTS (CONTINUED)

Market risk

The market risk is the risk that the Corporation will incur losses arising from adverse changes in underlying market factors, including interest and exchange rates.

a) Interest rate risk

The Corporation is exposed to market risk related to interest rate fluctuations because a portion of its long-term debt bears interest at floating rates. The Corporation manages this risk by maintaining a mix of fixed and floating rate borrowings in accordance with the Corporation's policies.

To manage interest rate risk, the Corporation entered into interest rate swaps on a portion of its floating-rate indebtedness. In the last few fiscal years, the Corporation has entered into interest rate swaps for an amount of US$450.0 million as a hedge against risks related to future fluctuations in interest rates on certain of its loans until their respective maturities. A US$75.0 million swap related to tranche C of the U.S. dollar term loans was settled upon the repayment of this tranche on August 3, 2021. The Corporation applies cash flow hedge accounting by designating these swaps as hedging instruments. Consequently, during the years ended October 31, 2021 and October 25, 2020, the change in fair value of these hedging instruments, namely a $3.2 million gain and an $18.5 million loss, respectively, was recognized in other comprehensive income.

For the year ended October 31, 2021, all other things being equal, if interest rates had increased or decreased by 50 basis points, the Corporation's net earnings would have decreased or increased by $0.7 million.

b) Foreign currency risk

The Corporation operates in and exports goods to the United States and several other countries, and purchases production equipment denominated in U.S. dollars. In addition, a portion of the Corporation's long-term debt is denominated in U.S. dollars. Consequently, it is exposed to risks arising from foreign currency rate fluctuations.

To manage foreign currency risk related to exports to the United States, the Corporation enters into foreign exchange forward contracts. As at October 31, 2021, the Corporation held foreign exchange forward contracts to sell (buy) US$(45.3) million (US$95.5 million as at October 25, 2020), of which US$(90.3) million, US$25.0 million and US$20.0 million will be (bought) sold during fiscal 2022, 2023 and 2024, respectively. The maturities of foreign exchange forward contracts range from 1 to 31 months and their rates range from 1.2277 to 1.4393. Foreign exchange forward contracts are designated as cash flow and net investment hedging instruments as at October 31, 2021 and hedging relationships were effective and in accordance with the risk management objective and strategy throughout the year. No ineffectiveness expense was recorded in the Consolidated Statements of Earnings during the years ended October 31, 2021 and October 25, 2020.

As indicated in Note 19, the Corporation designated a portion of its term loans and credit facilities denominated in U.S. dollars as hedging instruments for its net investment in foreign operations to mitigate its foreign currency risk. The designated amount varied between US$331.0 million and US$632.3 million during the year ended October 31, 2021. The effective portion of unrealized exchange losses on the translation of the U.S. dollar denominated debt designated as a hedging item was $41.7 million for the year ended October 31, 2021 and was recorded in other comprehensive income.

For the years ended October 31, 2021 and October 25, 2020, all other things being equal, a hypothetical 10.0% appreciation of the U.S. dollar against the Canadian dollar would have the following impact on net earnings and other comprehensive income:

			October 31,	October 31,				October 25,
				2021				2020
				Other				Other
			comprehensive				comprehensive
	Net	earnings		income	Net	earnings		income
Exposure to U.S dollars	$	2.9	$	22.8	$	0.7	$	(11.7)

A hypothetical 10.0% depreciation of the U.S. dollar against the Canadian dollar would have the opposite effect on net earnings and other comprehensive income.

Fair value

The fair value represents the amount that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date. The fair value estimates are calculated at a specific date taking into consideration assumptions regarding the amounts, the timing of estimated future cash flows and discount rates. Accordingly, due to its approximate and subjective nature, the fair value must not be interpreted as being realizable in an immediate settlement of the financial instruments.

The carrying amount of cash, accounts receivable, accounts payable and accrued liabilities approximates their fair value due to their short term maturities.

The fair value of long-term debt is determined using the discounted future cash flows method and management's estimates for market interest rates for identical or similar issuances.

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52

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

30 FINANCIAL INSTRUMENTS (CONTINUED)

The only financial instruments of the Corporation that are measured at fair value on a recurring basis subsequent to their initial recognition are derivative financial instruments, including foreign exchange forward contracts, interest rate swaps, cross-currency fixed interest rate swaps, total return swaps and contingent considerations payable related to business combinations. The fair value of derivative financial instruments is determined using an evaluation of the estimated market value, adjusted for the credit quality of the counterparty. The valuation model for contingent considerations considers the present value of expected payments, discounted using a risk-adjusted discount rate. The expected payment is determined by considering various scenarios of achievement of pre-established financial performance thresholds, the amount to be paid under each scenario and the probability of each scenario.

The Corporation presents a fair value hierarchy with three levels that reflects the significance of inputs used in determining the fair value assessments. The fair value of financial assets and liabilities classified in these three levels is evaluated as follows:

• Level 1 - Unadjusted prices on active markets for identical assets or liabilities

• Level 2 - Inputs other than the prices included within Level 1, that are observable for the asset or liability, directly (prices) or indirectly (derived from prices)

• Level 3 - Inputs for the asset or liability that are not based on observable market data

The following table presents the fair value and the carrying amount of other financial instruments and derivative financial instruments:

	As at October	As at October	**31, **	2021		As at October	As at October	25,2020
				Carrying				Carrying
		Fair value		amount		Fair value		amount
Foreign exchange forward contracts in assets	$	7.2	$	7.2	$	2.7	$	2.7
Total return swaps in assets		—		—		0.3		0.3
Contingent considerations		(10.0)		(10.0)		(3.5)		(3.5)
Long-term debt		(962.1)		(965.5)		(1,038.3)		(1,020.1)
Interest rate swaps in liabilities		(9.5)		(9.5)		(25.3)		(25.3)
Cross-currency fixed interest rate swaps		(2.5)		(2.5)		—		—
Total return swaps in liabilities		(1.4)		(1.4)
Foreign exchange forward contracts in liabilities		(0.7)		(0.7)		(0.8)		(0.8)

These financial instruments are classified in Level 2 of the fair value hierarchy, except for the contingent considerations payable related to business combinations, which are classified in Level 3. For the years ended October 31, 2021 and October 25, 2020, no financial instruments were transferred between Levels 1, 2 and 3.

Sensitivity analysis of Level 3 financial instruments

As at October 31, 2021, all other things being equal, a 10% increase in projected financial performance thresholds of acquired businesses would have had no impact on net earnings. A 10% decrease in projected financial performance thresholds would have resulted in an increase in net earnings of $10.0 million.

The changes in Level 3 financial instruments are as follows for the years ended:

		October 31,	October 31,	October 25,	October 25,
	Note		2021		2020
Balance, beginning of year		$	3.5	$	10.6
Business combinations	4		10.0		—
Change included in net earnings(1)			(3.4)		(7.4)
Exchange rate change			(0.1)		0.3
Balance, end ofyear		$	10.0	$	3.5

(1) Includes a revaluation gain of $3.4 million and $7.4 million for the years ended October 31, 2021 and October 25, 2020, respectively, recorded under "Restructuring and other costs (gains)" (Note 6).

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53

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2021 and October 25, 2020 (in millions of Canadian dollars, unless otherwise indicated and per share data)

31 CAPITAL MANAGEMENT

The Corporation's main capital management objectives are as follows:

• Optimize the financial structure by targeting a ratio of net debt to operating earnings before depreciation and amortization excluding the accelerated recognition of deferred revenues, restructuring and other costs (gains) and impairment of assets ("adjusted operating earnings before depreciation and amortization") in order to maintain a high credit rating;

• Preserve its financial flexibility in order to seize strategic investment opportunities.

The Corporation relies on the ratio of net indebtedness to adjusted operating earnings before depreciation and amortization as the main indicator of financial leverage. The net indebtedness ratio is as follows for the years ended:

	October 31,	October 31,	October 25,	October 25,
		2021		2020
Long-term debt	$	778.2	$	790.4
Lease liabilities		137.3		132.0
Current portion of long-term debt		187.3		229.7
Current portion of lease liabilities		23.1		22.8
Cash		(231.1)		(241.0)
Net indebtedness	$	894.8	$	933.9
Adjusted operatingearnings before depreciation and amortization	$	454.9	$	499.4
Net indebtedness ratio		1.97 x		1.87 x

32 SUBSEQUENT EVENTS

REIMBURSEMENT OF DEBT

On November 1, 2021, the Corporation repaid in advance the balance of $185.8 million (US$150.0 million) of tranche D of the U.S. dollar term loans.

BUSINESS COMBINATION

On November 1, 2021, the Corporation acquired all the shares of H.S. Crocker Co., Inc. ("H.S. Crocker"), a manufacturer of die cut lids for the food industry and labels for the pharmaceutical industry located in Huntley, Illinois, and Exton, Pennsylvania. The Corporation will measure the fair value of H.S. Crocker's assets acquired and liabilities assumed in the coming quarters. This acquisition enables the Corporation to broaden its packaging solutions portfolio in the food sector as well as expand its the pharmaceutical and medical expertise in the specialized coating products offering.

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