West Fraser ("WFT") Announces Fourth Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 13, 2014) - West Fraser Timber Co. Ltd. (TSX:WFT) today reported earnings of $118 million or $1.37 per share on sales of $833 million in the fourth quarter of 2013 and earnings of $349 million or $4.07 per share, on sales of $3,474 million for 2013. Earnings per share figures for the current and prior periods have been adjusted to reflect a stock dividend paid January 13, 2014. The stock dividend had the same effect as a two-for-one share split.

Fourth quarter earnings include the recognition of a $101 million benefit related to our remaining tax loss carryforwards not previously recognized. Adjusted earnings and adjusted basic EPS as described in the table below remove the effect of this benefit and reflect other adjustments described in the tables referred to in footnote 2 below.

These results compare with previous periods as follows:

($ millions except earnings per	2013			2012
share ("EPS"))	Q4	Q3	YTD	YTD	Q4
Sales	833	878	3,474	3,000	773
EBITDA1	97	113	529	275	75
Operating earnings	30	73	345	123	36
Earnings	118	55	349	77	20
Basic EPS ($)	1.37	0.64	4.07	0.90	0.23
Adjusted Earnings2	50	68	328	128	51
Adjusted basic EPS ($)2	0.58	0.79	3.82	1.50	0.60

1. In this News Release, reference is made to EBITDA (defined as operating earnings plus amortization and restructuring charges). Our management believes that, in addition to earnings, EBITDA is a useful performance indicator and is a useful measure of cash available prior to debt service, capital expenditures and income taxes. Reference is also made to Adjusted earnings (calculated as set out in the tables described in footnote 2 and Adjusted EPS (collectively, with EBITDA, "these measures")). None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ("IFRS") and none has a standardized meaning prescribed by IFRS. Investors are cautioned that none of these measures should be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities.

2. Refer to the tables titled "Annual Earnings Adjustments for Certain Non-Operational Items" and "Quarterly Earnings Adjustments for Certain Non-Operational Items" in Management's Discussion and Analysis of our 2013 results for details of adjustments.

Operational Results

In the quarter our lumber operations generated operating earnings of $32 million (Q3 - $57 million) and EBITDA of $83 million (Q3 - $83 million). Restructuring charges of $24 million are included in our operating earnings in the quarter, representing costs associated with the planned closure of our Houston, B.C. sawmill. The benefit provided by higher lumber prices and a weaker Canadian dollar was offset by the effect of reduced shipments. Lumber markets weakened late in the quarter as severe weather reduced demand and also affected transportation. Despite prices strengthening for certain lumber grades and dimensions, prices for wide-width SYP lumber declined during the quarter which adversely affected our U.S. lumber results.

The panel segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $2 million (Q3 - $6 million) and EBITDA of $6 million (Q3 - $9 million), mostly reflecting reduced plywood shipments due to a seasonal slowdown in the Canadian building industry and weather-related reduced railcar deliveries.

Pulp and paper operations generated operating earnings in the quarter of $13 million (Q3 - $29 million) and EBITDA of $24 million (Q3 - $40 million). Improved NBSK pricing and a weaker Canadian dollar were offset by operational difficulties at our NBSK mills.

Outlook

"We consider that 2013 represents a year of remarkable recovery," said Ted Seraphim, President and CEO. "We achieved our highest earnings since 2006 reflecting a continuing improvement in the U.S. housing market after a prolonged downturn. We are early in the recovery and as such, we expect some volatility, but the overall trend remains positive. We are also experiencing some of the benefits from our ongoing major capital investment program."

Annual Financial Statements and Management's Discussion & Analysis ("MD&A")

The Company's consolidated financial statements for the year ended December 31, 2013 and related MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.

Dividend Declared

The Board of Directors of the Company has declared a dividend of $0.07 per share on the Common shares and the Class B Common shares in the capital of the Company, payable on April 4, 2014 to shareholders of record on March 21, 2014.

Advance Notice Policy

Our Board has also adopted an Advance Notice Policy (the "Policy"), which includes a provision that requires advance notice to the Company in circumstances where nominations of persons for election to the board of directors are made by shareholders of the Company other than pursuant to: (i) a proposal made in accordance with the Business Corporations Act (British Columbia) (the "Act"); or (ii) a requisition of the shareholders made in accordance with the Act. This type of policy has become quite common for U.S. companies, is becoming more common for Canadian companies and is consistent with the Company's goals of: (i) facilitating orderly and efficient shareholder meetings; (ii) ensuring that all shareholders receive adequate notice of director nominations and sufficient information with respect to all nominees; and (iii) allowing shareholders to register an informed vote.

Among other things, the Policy fixes a deadline by which shareholders of the Company must submit director nominations to our corporate secretary prior to any annual or special meeting of shareholders and sets forth the specific information that a shareholder must include in such notice for an effective nomination to occur. No person will be eligible for election as a director of the Company unless nominated in accordance with the provisions of the Policy.

In the case of an annual meeting of shareholders, notice to the Company must be made not less than 30 nor more than 65 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made by the Company, notice may be made not later than the close of business on the 10^th day following such public announcement. In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Company must be made not later than the close of business on the 15^th day following the day on which the first public announcement of the date of the special meeting was made. The Policy is effective and in full force and effect as of the date it was approved.

At our annual and special meeting of shareholders scheduled for April 29, 2014 our shareholders will be asked to approve an amendment to our Articles which will effectively adopt the Policy. If the amendment is not approved at the meeting, the Policy will terminate and be of no further force and effect.

A copy of the Policy will be available under the Company's profile on SEDAR at www.sedar.com.

The Company

West Fraser is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States.

Forward-Looking Statements

This news release contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook", are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2013 annual Management's Discussion & Analysis under "Risks and Uncertainties", and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.

Conference Call

Investors are invited to listen to the quarterly conference call on Friday, February 14, 2014 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-800-766-6630 (toll- free North America). The call may also be accessed through West Fraser's website at www.westfraser.com.

West Fraser Timber Co. Ltd.
Condensed Consolidated Balance Sheets
(in millions of Canadian dollars, except where indicated - unaudited)
	December 31 2013		December 31 2012
Assets
Current assets
Cash and short-term investments	$	162	$	102
Receivables		279		251
Inventories		519		459
Prepaid expenses		11		11
		971		823
Property, plant and equipment		1,144		959
Timber licences		489		496
Goodwill and other intangibles		321		330
Other assets		83		24
Deferred income tax assets		96		-
	$	3,104	$	2,632
Liabilities
Current liabilities
Payables and accrued liabilities	$	385	$	322
Income taxes payable		30		20
Reforestation and decommissioning obligations		39		43
Current portion of long-term debt		319		-
		773		385
Long-term debt		9		300
Other liabilities		197		327
Deferred income tax liabilities		178		128
		1,157		1,140
Shareholders' Equity
Share capital (note 4)		602		602
Accumulated other comprehensive earnings		10		(9	)
Retained earnings		1,335		899
		1,947		1,492
	$	3,104	$	2,632
Number of Common shares and Class B Common shares outstanding at February 13, 2014 was 85,672,068.

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(in millions of Canadian dollars, except where indicated - unaudited)
	October 1 to December 31						January 1 to December 31
	2013			2012			2013			2012
Share capital
Balance - beginning of period	$	602		$	602		$	602		$	601
Issuance of Common shares		-			-			1			1
Common share repurchases		-			-			(1	)		-
Balance - end of period	$	602		$	602		$	602		$	602
Accumulated other comprehensive earnings
Balance - beginning of period	$	-		$	(12	)	$	(9	)	$	(6	)
Translation gain (loss) on foreign operations		10			3			19			(3	)
Balance - end of period	$	10		$	(9	)	$	10		$	(9	)
Retained earnings
Balance - beginning of period	$	1,166		$	836		$	899		$	888
Actuarial gain (loss) on post-retirement benefits		57			49			113			(42	)
Common share repurchases		-			-			(2	)		-
Earnings for the period		118			20			349			77
Dividends		(6	)		(6	)		(24	)		(24	)
Balance - end of period	$	1,335		$	899		$	1,335		$	899
Shareholders' Equity	$	1,947		$	1,492		$	1,947		$	1,492

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
(in millions of Canadian dollars, except where indicated - unaudited)
	October 1 to December 31						January 1 to December 31
	2013			2012			2013			2012
Sales	$	833		$	773		$	3,474		$	3,000
Costs and expenses
Cost of products sold		560			506			2,260			2,024
Freight and other distribution costs		122			118			491			477
Export taxes		3			11			9			48
Amortization		43			39			160			152
Selling, general and administration		36			33			131			115
Equity-based compensation		15			30			54			61
Restructuring charges (note 5)		24			-			24			-
		803			737			3,129			2,877
Operating earnings		30			36			345			123
Finance expense		(8	)		(7	)		(29	)		(28	)
Exchange gain (loss) on long-term debt		(10	)		(3	)		(21	)		7
Other income		18			2			22			-
Earnings before tax		30			28			317			102
Tax recovery (provision) (note 6)		88			(8	)		32			(25	)
Earnings	$	118		$	20		$	349		$	77
Earnings per share (dollars) (note 7)
Basic and diluted	$	1.37		$	0.23		$	4.07		$	0.90
Comprehensive earnings
Earnings	$	118		$	20		$	349		$	77
Other comprehensive earnings
Translation gain (loss) on foreign operations		10			3			19			(3	)
Actuarial gain (loss) on post-retirement benefits		57			49			113			(42	)
Comprehensive earnings	$	185		$	72		$	481		$	32

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Cash Flows
(in millions of Canadian dollars, except where indicated - unaudited)
		October 1 to December 31						January 1 to December 31
		2013			2012			2013			2012
Operating activities
Earnings		$	118		$	20		$	349		$	77
Adjustments
	Amortization		43			39			160			152
	Finance expense		8			7			29			28
	Exchange loss (gain) on long-term debt		10			3			21			(7	)
	Tax provision (recovery)		(88	)		8			(32	)		25
	Income taxes received (paid)		(10	)		(1	)		(36	)		2
	Post-retirement expense		11			13			54			51
	Contributions to post-retirement benefit plans		(38	)		(41	)		(106	)		(72	)
	Other		7			(4	)		(7	)		(11	)
Changes in non-cash working capital
	Receivables		14			2			(15	)		(22	)
	Inventories		(49	)		(36	)		(55	)		(58	)
	Prepaid expenses		5			2			-			(2	)
	Payables and accrued liabilities		2			8			57			41
Cash flows from operating activities			33			20			419			204
Financing activities
Proceeds from long-term debt			-			-			8			-
Finance expense paid			(8	)		(8	)		(18	)		(18	)
Dividends			(6	)		(6	)		(24	)		(24	)
Common share repurchases			-			-			(3	)		-
Other			(1	)		(1	)		(2	)		-
Cash flows from financing activities			(15	)		(15	)		(39	)		(42	)
Investing activities
Acquisition			-			(30	)		-			(30	)
Additions to capital assets			(119	)		(43	)		(338	)		(159	)
Government assistance			10			6			11			51
Proceeds from disposal of capital assets			-			-			2			9
Other			(2	)		-			(1	)		1
Cash flows from investing activities			(111	)		(67	)		(326	)		(128	)
Change in cash			(93	)		(62	)		54			34
Foreign exchange effect on cash			3			-			6			-
Cash - beginning of period			252			164			102			68
Cash - end of period		$	162		$	102		$	162		$	102

West Fraser Timber Co. Ltd.

Notes to Condensed Consolidated Interim Financial Statements

(figures are in millions of dollars, except where indicated - unaudited)

1. Nature of operations

West Fraser Timber Co. Ltd. ("West Fraser", "we", "us" or "our") is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint with facilities in western Canada and the southern United States. Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the Business Corporations Act (British Columbia) and is registered in British Columbia, Canada. Our Common shares are listed for trading on the Toronto Stock Exchange under the symbol WFT.

2. Basis of presentation and statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and using the same accounting policies and methods of their application as the December 31, 2013 annual financial statements. These condensed consolidated interim financial statements should be read in conjunction with our 2013 annual financial statements.

3. Changes in accounting policies

We have adopted the new and revised IASB standards that were effective January 1, 2013. For a description of the new and revised standards refer to note 4 of our 2013 annual financial statements. The application of the amendment to IAS 19 resulted in a revision of our financial statements.

IAS 19 - Amendment, Employee Benefits

The effect of adopting the amended standard on January 1, 2013 is as follows:

	Previous standard			Change			Amended standard
October 1 to December 31, 2013
Post-retirement and other long-term employee benefits expense	$	9		$	1		$	10
Finance expense		-			2			2
Tax recovery		(3	)		-			(3	)
	$	6		$	3		$	9
Actuarial gain on post-retirement benefits - net of tax	$	(54	)	$	(3	)	$	(57	)
Basic and diluted earnings per share1	$	1.40		$	(0.03	)	$	1.37
1. Per share amounts have been retroactively adjusted to take into account the Stock Dividend described in note 4.
		Previous standard			Change			Amended standard
October 1 to December 31, 2012
Post-retirement and other long-term employee benefits expense	$	10		$	1		$	11
Finance expense		-			2			2
Tax recovery		(3	)		(1	)		(4	)
	$	7		$	2		$	9
Actuarial gain on post-retirement benefits - net of tax	$	(47	)	$	(2	)	$	(49	)
Basic and diluted earnings per share1	$	0.25		$	(0.02	)	$	0.23
January 1 to December 31, 2013
Post-retirement and other long-term employee benefits expense	$	35		$	9		$	44
Finance expense		-			10			10
Tax recovery		(9	)		(4	)		(13	)
	$	26		$	15		$	41
Actuarial gain on post-retirement benefits - net of tax	$	(98	)	$	(15	)	$	(113	)
Basic and diluted earnings per share1	$	4.24		$	(0.17	)	$	4.07
January 1 to December 31, 2012
Post-retirement and other long-term employee benefits expense	$	39		$	4		$	43
Finance expense		-			9			9
Tax recovery		(10	)		(3	)		(13	)
	$	29		$	10		$	39
Actuarial loss on post-retirement benefits - net of tax	$	52		$	(10	)	$	42
Basic and diluted earnings per share1	$	1.01		$	(0.11	)	$	0.90
1. Per share amounts have been retroactively adjusted to take into account the Stock Dividend described in note 4.

There is no impact on balance sheet amounts resulting from the amended standard.

4. Share capital

Authorized

200,000,000 Common shares, without par value

20,000,000 Class B Common shares, without par value

10,000,000 Preferred shares, issuable in series, without par value

Issued

	2013			2012
	Number	Amount		Number	Amount
Common	40,554,274	$	602	40,281,242	$	602
Class B Common	2,281,478		-	2,581,478		-
Total Common	42,835,752	$	602	42,862,720	$	602

During 2013 300,000 (2012 - 200,000) Class B Common shares were exchanged for Common shares.

On September 12, 2013 our Board of Directors authorized the initiation of a normal course issuer bid to repurchase for cancellation up to 1,000,000 Common shares or approximately 2.5% of our issued and outstanding Common shares. The normal course issuer bid expires September 16, 2014.

In September 2013 we repurchased 32,277 Common shares at a cost of approximately $3 million.

Stock dividend

On December 10, 2013 the Board of Directors declared a stock dividend (the "Stock Dividend") of one Common share for each issued and outstanding Common share and Class B Common share in the capital of the Company, which has the same effect as a two-for-one stock split. The Stock Dividend was paid on January 13, 2014 to shareholders of record on December 31, 2013. For comparative purposes the Stock Dividend has been applied retroactively to earlier periods so that the number of shares used to calculate earnings per share is doubled resulting in earnings per share for 2013 and prior years being half of the amount that would otherwise have been reported.

On January 13, 2014 we issued 42,835,752 Common shares pursuant to the Stock Dividend. Also on January 13, 2014 the number of options and units outstanding under our share option, phantom share, and directors' deferred share unit plans were doubled and the exercise price of outstanding share options was halved to reflect the Stock Dividend.

5. Restructuring charges

On October 24, 2013 we announced our intention to permanently close our Houston, B.C. sawmill. The closure is expected to be complete in the second quarter of 2014 and the resulting restructuring charges are as follows:

	2013
Asset impairment	$	13
Severance		10
Decommissioning obligations		1
	$	24

6. Tax provision

The tax recovery (provision) differs from the amount that would have resulted from applying the Canadian statutory income tax rates to earnings before tax as follows:

	October 1 to December 31						January 1 to December 31
	2013			2012			2013			2012
Income tax expense at statutory rate of 25.75% (2012 - 25%)	$	(8	)	$	(7	)	$	(82	)	$	(26	)
Non-taxable amounts		(4	)		(5	)		(12	)		(9	)
Rate differentials between jurisdictions and on specified activities		-			-			(10	)		(1	)
Recognized tax assets		101			3			140			11
Increase in statutory tax rate		-			-			(2	)		-
Other		(1	)		1			(2	)		-
Tax recovery (provision)	$	88		$	(8	)	$	32		$	(25	)

7. Earnings per share

Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding after adjusting for the Stock Dividend (note 4).

Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense charged to earnings and after deducting a notional charge for share option expense assuming the use of the equity settled method, as set out below. The diluted weighted average number of shares is calculated using the treasury stock method. When earnings available to Common shareholders for diluted earnings per share are greater than earnings available to Common shareholders for basic earnings per share, the calculation is anti-dilutive and diluted earnings per share are deemed to be the same as basic earnings per share.

	October 1 to December 31						January 1 to December 31
	2013			2012			2013			2012
Earnings
Basic	$	118		$	20		$	349		$	77
Share option expense		13			23			44			45
Equity settled share option adjustment		(1	)		(1	)		(3	)		(3	)
Diluted	$	130		$	42		$	390		$	119
Weighted average number of shares (thousands)
Basic		85,670			85,723			85,712			85,714
Share options		1,382			1,351			1,628			1,111
Diluted		87,052			87,074			87,340			86,825
Earnings per share (dollars)
Basic and diluted	$	1.37		$	0.23		$	4.07		$	0.90

8. Segmented information

		Lumber			Panels			Pulp & paper			Corporate & other			Consolidated
October 1, 2013 to December 31, 2013
Sales at market prices
	To external customers	$	522		$	108		$	203		$	-		$	833
	To other segments		19			2			-			-
		$	541		$	110		$	203		$	-
EBITDA1		$	83		$	6		$	24		$	(16	)	$	97
Amortization			(27	)		(4	)		(11	)		(1	)		(43	)
Restructuring charges			(24	)		-			-			-			(24	)
Operating earnings			32			2			13			(17	)		30
Finance expense			(4	)		(2	)		(2	)		-			(8	)
Exchange loss on long-term debt			-			-			-			(10	)		(10	)
Other income			12			1			4			1			18
Earnings before tax		$	40		$	1		$	15		$	(26	)	$	30

1. Non-IFRS measure:

EBITDA is defined as operating earnings plus amortization and restructuring charges.

		Lumber			Panels			Pulp & paper			Corporate & other			Consolidated
October 1, 2012 to December 31, 2012
Sales at market prices
	To external customers	$	478		$	109		$	186		$	-		$	773
	To other segments		18			1			-			-
		$	496		$	110		$	186		$	-
EBITDA1		$	74		$	11		$	24		$	(34	)	$	75
Amortization			(23	)		(5	)		(11	)		-			(39	)
Operating earnings			51			6			13			(34	)		36
Finance expense			(3	)		(1	)		(2	)		(1	)		(7	)
Exchange loss on long-term debt			-			-			-			(3	)		(3	)
Other income (expense)			(1	)		-			4			(1	)		2
Earnings before tax		$	47		$	5		$	15		$	(39	)	$	28
1. Non-IFRS measure:
EBITDA is defined as operating earnings plus amortization and restructuring charges.

		Lumber			Panels			Pulp & paper			Corporate & other			Consolidated
January 1, 2013 to December 31, 2013
Sales at market prices
	To external customers	$	2,234		$	460		$	780		$	-		$	3,474
	To other segments		81			7			-			-
		$	2,315		$	467		$	780		$	-
EBITDA1		$	437		$	43		$	103		$	(54	)	$	529
Amortization			(99	)		(15	)		(45	)		(1	)		(160	)
Restructuring charges			(24	)		-			-			-			(24	)
Operating earnings			314			28			58			(55	)		345
Finance expense			(15	)		(5	)		(9	)		-			(29	)
Exchange loss on long-term debt			-			-			-			(21	)		(21	)
Other income (expense)			16			1			8			(3	)		22
Earnings before tax		$	315		$	24		$	57		$	(79	)	$	317

1. Non-IFRS measure:

EBITDA is defined as operating earnings plus amortization and restructuring charges.

			Lumber			Panels			Pulp & paper			Corporate & other			Consolidated
January 1, 2012 to December 31, 2012
Sales at market prices
	To external customers	$	1,783		$	442		$	775		$	-		$	3,000
	To other segments		72			6			-			-
		$	1,855		$	448		$	775		$	-
EBITDA1		$	176		$	54		$	109		$	(64	)	$	275
Amortization			(86	)		(16	)		(47	)		(3	)		(152	)
Operating earnings			90			38			62			(67	)		123
Finance expense			(13	)		(4	)		(9	)		(2	)		(28	)
Exchange gain on long-term debt			-			-			-			7			7
Other income (expense)			(4	)		-			1			3			-
Earnings before tax		$	73		$	34		$	54		$	(59	)	$	102
1. Non-IFRS measure:
EBITDA is defined as operating earnings plus amortization and restructuring charges.

The geographic distribution of external sales is as follows ¹:

	October 1 to December 31				January 1 to December 31
	2013		2012		2013		2012
United States	$	436	$	368	$	1,761	$	1,435
Canada		184		194		821		747
China		131		139		537		513
Other Asia		59		47		263		201
Other		23		25		92		104
	$	833	$	773	$	3,474	$	3,000

1. Sales distribution is based on the location of product delivery.

West Fraser Timber Co. Ltd.
[phone]
[phone] (FAX)
www.westfraser.com