We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Silver Pursuit Resources Ltd | TSXV:SPF | TSX Venture | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
Hot Features
Premium
Canfor Corporation (TSX:CFP) today reported net income attributable to
shareholders ("shareholder net income") of $28.0 million, or $0.20 per share,
for the fourth quarter of 2013, compared to $28.4 million, or $0.20 per share,
for the third quarter of 2013 and $21.3 million, or $0.15 per share, for the
fourth quarter of 2012. For the year ended December 31, 2013, the Company's
shareholder net income was $228.6 million, or $1.61 per share, compared to $26.4
million, or $0.18 per share, reported for 2012.
The following table summarizes selected financial information for the Company
for the comparative periods(1):
(millions of Canadian
dollars, except for per
share amounts) Q4 Q3 YTD Q4 YTD
2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Sales $ 809.5 $ 755.9 $ 3,194.9 $ 700.3 $ 2,642.8
Operating income, as
reported $ 53.8 $ 49.3 $ 331.3 $ 49.0 $ 71.3
Operating income,
adjusted for one-time
items $ 74.9 $ 49.3 $ 352.4 $ 34.8 $ 59.9
Net income attributable
to equity shareholders
of Company $ 28.0 $ 28.4 $ 228.6 $ 21.3 $ 26.4
Net income per share
attributable to equity
shareholders of Company,
basic and diluted $ 0.20 $ 0.20 $ 1.61 $ 0.15 $ 0.18
Adjusted shareholder net
income $ 48.8 $ 26.2 $ 233.0 $ 20.3 $ 19.0
Adjusted shareholder net
income per share, basic
and diluted $ 0.35 $ 0.18 $ 1.64 $ 0.14 $ 0.13
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Certain prior period amounts have been restated due to the adoption of
amended IAS 19, Employee Benefits and IFRS 11, Joint Arrangements. Further
details can be found in the Company's unaudited interim consolidated
financial statements.
After adjusting for various items affecting comparability with the prior
periods, the Company's adjusted shareholder net income for the fourth quarter of
2013 was $48.8 million, or $0.35 per share, compared to an adjusted shareholder
net income of $26.2 million, or $0.18 per share, for the third quarter of 2013.
Canfor's adjusted shareholder net income for the fourth quarter of 2012 was
$20.3 million, or $0.14 per share. For 2013, the Company's adjusted shareholder
net income was $233.0 million, or $1.64 per share, compared to $19.0 million, or
$0.13 per share, for 2012.
The Company reported operating income of $53.8 million for the fourth quarter of
2013, compared to operating income of $49.3 million for the third quarter. The
modest improvement in operating income was largely attributable to strong gains
in lumber markets as well as higher pulp production and shipments, partially
offset by lower lumber production and shipments and increased log costs as well
as restructuring costs of $20.0 million related to the announced closure of the
Company's Quesnel Sawmill and one-time costs of $1.1 million associated with new
five year collective labour agreements for the lumber business ratified in the
current quarter. Adjusted for these one-time items, operating income in the
fourth quarter was $74.9 million, an increase of $25.6 million compared to the
third quarter.
The North American lumber market saw strong gains in prices during the fourth
quarter of 2013 supported by momentum in the U.S. housing market recovery and
continued solid offshore lumber demand. U.S housing starts reached their highest
level in five years, averaging 1,002,000 units SAAR (seasonally adjusted annual
rate), up 14% from the previous quarter. Single-family starts, which consume a
larger proportion of lumber compared to multi-family starts, increased 11% in
the quarter, a further indication of the strengthening U.S. housing market.
Canadian housing starts were up 4% from the third quarter of 2013 to 200,000
units SAAR, primarily reflecting steady construction activity. Canfor's offshore
lumber shipments remained at strong levels in the fourth quarter of 2013, driven
in part by increased shipments to China.
The average North American benchmark Western Spruce/Pine/Fir ("SPF") 2x4 #2&Btr
lumber price was up 13% in the fourth quarter of 2013 to US$370 per Mfbm, and
solid increases were seen across most other dimensions during the quarter. North
American sales realizations benefited from this upward trend in pricing, as well
as lower export taxes and a favourable impact from the weakening of the Canadian
dollar over the period (for the Company's Western SPF operations). Offshore
sales realizations saw more modest gains in the current quarter, lagging North
American gains mostly due to the nature of pricing, much of which is negotiated
monthly or quarterly in advance. Sales realizations for Southern Yellow Pine
("SYP") products were relatively flat quarter-over-quarter with an increase of
US$22/Mfbm, or 6%, in the benchmark SYP 2x4 #2 price to US$415 per Mfbm, offset
somewhat by declines in most wider dimension products.
Lumber shipments and production were down 63 million board feet (5%) and 56
million board feet (5%), respectively, from the prior quarter, primarily
reflecting downtime related to capital installations and ramp-ups, less
operating hours in the current quarter (mostly due to additional statutory
holidays), and, to a lesser extent, weather related factors. Unit manufacturing
costs showed a modest increase compared to the previous quarter resulting from
the lower production, a continued industry-wide focus on dust control safety,
and increased log costs stemming from log profile challenges related in part to
severe flooding in the southeast area of British Columbia earlier in the year.
Global softwood pulp markets saw a modest improvement in the fourth quarter,
with an increase in demand and a corresponding increase in list prices. Global
softwood pulp producer inventory levels were balanced during the quarter, at 27
days' supply in December 2013, in line with September 2013. Average Northern
Bleached Softwood Kraft ("NBSK") pulp list prices increased in all regions
during the fourth quarter, with the North American pulp list price up US$36 per
tonne from the previous quarter to US$983 and Europe up US$35 per tonne from the
previous quarter to US$902 reflecting a 4% gain in both regions. Pulp list
prices to China were up US$52 per tonne to US$737, an increase of 8% in the
quarter. List prices to all regions ended the 2013 year at their highest levels
for two years, but price gains for the 2013 year as a whole were partly eroded
by increased upward pressure on discounts, particularly in North America. Fourth
quarter sales realizations also benefited slightly from the weaker Canadian
dollar against the US dollar.
Higher pulp shipment levels for the fourth quarter of 2013, up over 62,000
tonnes from the prior quarter, were attributable to higher pulp production and a
drawdown of inventories resulting from increased purchasing, principally from
China, in part due to inventory build ahead of the Chinese Lunar New Year. The
increased production levels mainly reflected a reduction in scheduled outages
during the period. Pulp unit manufacturing costs in the fourth quarter of 2013
were broadly in line with the previous quarter, with the favourable impact of
the higher production levels offset by higher energy costs.
The Company continued to preserve its strong financial position, ending the year
with cash and cash equivalents of $90 million, and a consolidated net debt to
capitalization of 8.0%. For Canfor, excluding Canfor Pulp Products Inc.
("CPPI"), net debt to capitalization at the end of the fourth quarter was 6.2%.
During the fourth quarter of 2013, CPPI completed a $50 million floating
interest rate term debt financing, repayable on November 5, 2018 with no penalty
for early repayment, and also extended the maturity on its $110 million
operating loan facility to January 31, 2018. CPPI ended the year with a net debt
to capitalization of 9.7%.
During the fourth quarter of 2013, the Company entered into an agreement with
West Fraser Mills Ltd. ("West Fraser") for an exchange in forest tenure rights
in the Quesnel, Lakes and Morice Timber Supply Areas of the BC interior, as well
as a non-replaceable license and undercut volumes. In December 2013, the Company
negotiated new five year collective labour agreements with the United
Steelworkers ("USW") union for most of its lumber operations in BC. This
agreement provides Canfor with a stable labour environment for the next five
years.
Commenting on the fourth quarter performance, Canfor's President and Chief
Executive Officer, Don Kayne, said that lumber markets continued to demonstrate
improvement in demand in the U.S. and solid offshore markets, and that early
indications for 2014 were encouraging. Kayne added, "With our significant
investment in capital upgrades over the last couple of years, most recently at
our Mackenzie and Elko Sawmills, we are well placed to take full advantage of
the improving market conditions". Regarding the pulp and paper segment's fourth
quarter results, Kayne said, "Overall shipments were strong in the fourth
quarter, supported by better-than-anticipated market conditions." He added that
he was encouraged by the Company's improving operating performance as it entered
2014 and by the continued growth of its green energy business, with CPPI's
turbine upgrades at its Northwood Pulp Mill projected to be commissioned by the
end of the first quarter of 2014.
Looking ahead, North American lumber consumption is forecast to improve as the
U.S. housing market continues to recover and more existing homeowners are
forecast to undertake home improvement projects this year. Offshore markets are
projected to remain solid supported by continued demand from China, Japan and
other emerging markets. With significant new hardwood pulp capacity projected to
come online in the coming months, there continues to be a risk that pulp prices
may come under pressure in 2014.
Additional Information and Conference Call
A conference call to discuss the fourth quarter's financial and operating
results will be held on Thursday, February 6, 2014 at 8:00 AM Pacific time. To
participate in the call, please dial 416-340-8010 or Toll-Free 866-540-8136. For
instant replay access until February 22, 2014, please dial 800-408-3053 and
enter participant pass code 5201618#. The conference call will be webcast live
and will be available at www.canfor.com. This news release, the attached
financial statements and a presentation used during the conference call can be
accessed via the Company's website at
http://www.canfor.com/investor-relations/webcasts.
Forward Looking Statements
Certain statements in this press release constitute "forward-looking statements"
which involve known and unknown risks, uncertainties and other factors that may
cause actual results to be materially different from any future results,
performance or achievements expressed or implied by such statements. Words such
as "expects", "anticipates", "projects", "intends", "plans", "will", "believes",
"seeks", "estimates", "should", "may", "could", and variations of such words and
similar expressions are intended to identify such forward-looking statements.
These statements are based on management's current expectations and beliefs and
actual events or results may differ materially. There are many factors that
could cause such actual events or results expressed or implied by such
forward-looking statements to differ materially from any future results
expressed or implied by such statements. Forward-looking statements are based on
current expectations and the Company assumes no obligation to update such
information to reflect later events or developments, except as required by law.
Canfor is a leading integrated forest products company based in Vancouver,
British Columbia (BC) with interests in BC, Alberta, Quebec, North and South
Carolina and Alabama. The Company produces primarily softwood lumber and also
produces specialized wood products and bleached chemi-thermo mechanical pulp
(BCTMP). Canfor also owns a 50.4% interest in Canfor Pulp Products Inc., which
is one of the largest producers of northern softwood kraft pulp in Canada and a
leading producer of high performance kraft paper. Canfor shares are traded on
the Toronto Stock Exchange under the symbol CFP.
Canfor Corporation
Fourth Quarter 2013
Management's Discussion and Analysis
This interim Management's Discussion and Analysis ("MD&A") provides a review of
Canfor Corporation's ("Canfor" or "the Company") financial performance for the
quarter ended December 31, 2013 relative to the quarters ended September 30,
2013 and December 31, 2012, and the financial position of the Company at
December 31, 2013. It should be read in conjunction with Canfor's unaudited
interim consolidated financial statements and accompanying notes for the
quarters ended December 31, 2013 and 2012, as well as the 2012 annual MD&A and
the 2012 audited consolidated financial statements and notes thereto, which are
included in Canfor's Annual Report for the year ended December 31, 2012
(available at www.canfor.com). The financial information in this interim MD&A
has been prepared in accordance with International Financial Reporting Standards
("IFRS"), which is the required reporting framework for Canadian publicly
accountable enterprises.
Throughout this discussion, reference is made to Operating Income before
Amortization which Canfor considers to be a relevant indicator for measuring
trends in the performance of each of its operating segments and the Company's
ability to generate funds to meet its debt repayment and capital expenditure
requirements. Reference is also made to Adjusted Shareholder Net Income (Loss)
(calculated as Shareholder Net Income (Loss) less specific items affecting
comparability with prior periods - for the full calculation, see reconciliation
included in the section "Analysis of Specific Material Items Affecting
Comparability of Shareholder Net Income (Loss)") and Adjusted Shareholder Net
Income (Loss) per Share (calculated as Adjusted Shareholder Net Income (Loss)
divided by the weighted average number of shares outstanding during the period).
Operating Income before Amortization and Adjusted Shareholder Net Income (Loss)
and Adjusted Shareholder Net Income (Loss) per Share are not generally accepted
earnings measures and should not be considered as an alternative to net income
or cash flows as determined in accordance with IFRS. As there is no standardized
method of calculating these measures, Canfor's Operating Income before
Amortization, Adjusted Shareholder Net Income (Loss) and Adjusted Shareholder
Net Income (Loss) per Share may not be directly comparable with similarly titled
measures used by other companies. Reconciliations of Operating Income before
Amortization to operating income (loss) and Adjusted Shareholder Net Income
(Loss) to Net Income (Loss) reported in accordance with IFRS are included in
this MD&A.
Factors that could impact future operations are also discussed. These factors
may be influenced by both known and unknown risks and uncertainties that could
cause the actual results to be materially different from those stated in this
discussion. Factors that could have a material impact on any future oriented
statements made herein include, but are not limited to: general economic, market
and business conditions; product selling prices; raw material and operating
costs; currency exchange rates; interest rates; changes in law and public
policy; the outcome of labour and trade disputes; and opportunities available to
or pursued by Canfor.
All financial references are in millions of Canadian dollars unless otherwise
noted. The information in this report is as at February 5, 2014.
Forward Looking Statements
Certain statements in this MD&A constitute "forward-looking statements" which
involve known and unknown risks, uncertainties and other factors that may cause
actual results to be materially different from any future results, performance
or achievements expressed or implied by such statements. Words such as
"expects", "anticipates", "projects", "intends", "plans", "will", "believes",
"seeks", "estimates", "should", "may", "could", and variations of such words and
similar expressions are intended to identify such forward-looking statements.
These statements are based on management's current expectations and beliefs and
actual events or results may differ materially. There are many factors that
could cause such actual events or results expressed or implied by such
forward-looking statements to differ materially from any future results
expressed or implied by such statements. Forward-looking statements are based on
current expectations and the Company assumes no obligation to update such
information to reflect later events or developments, except as required by law.
FOURTH QUARTER 2013 OVERVIEW
Selected Financial Information and Statistics(1)
(millions of Canadian
dollars, except per share
amounts) Q4 Q3 YTD Q4 YTD
2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Operating income (loss) by
segment:
Lumber $ 37.4 $ 43.8 $ 285.1 $ 42.5 $ 75.6
Pulp and Paper $ 23.2 $ 11.5 $ 72.2 $ 12.0 $ 27.6
Unallocated and Other $ (6.8) $ (6.0) $ (26.0) $ (5.5) $ (31.9)
----------------------------------------------------------------------------
Total operating income $ 53.8 $ 49.3 $ 331.3 $ 49.0 $ 71.3
Add: Amortization $ 44.9 $ 44.8 $ 186.2 $ 47.8 $ 177.1
----------------------------------------------------------------------------
Total operating income
before amortization $ 98.7 $ 94.1 $ 517.5 $ 96.8 $ 248.4
Add (deduct):
Working capital movements $ (14.5) $ 4.6 $ (7.5) $ (49.4) $ (71.3)
Defined benefit pension
plan contributions $ (14.0) $ (12.9) $ (53.0) $ (13.4) $ (54.9)
Other operating cash
flows, net(2) $ 28.6 $ (10.5) $ 33.3 $ (6.4) $ (4.8)
----------------------------------------------------------------------------
Cash from operating
activities $ 98.8 $ 75.3 $ 490.3 $ 27.6 $ 117.4
Add (deduct):
Finance expenses paid $ (5.9) $ (1.5) $ (17.4) $ (7.6) $ (19.5)
Distributions paid to
non-controlling
interests $ (2.4) $ (2.4) $ (9.3) $ (0.4) $ (15.9)
Capital additions, net(3) $ (67.5) $ (74.6) $(237.3) $ (48.8) $(247.5)
Investment in Scotch &
Gulf Lumber, LLC $ (0.5) $ (29.0) $ (29.5) $ - $ -
Loan to Scotch & Gulf
Lumber, LLC $ 2.1 $ (34.0) $ (31.9) $ - $ -
Proceeds from sale of
Canfor-LP OSB(6) $ - $ 1.3 $ 77.9 $ - $ -
Drawdown (repayment) of
long-term debt $ (66.6) $ - $(139.8) $ - $ 50.1
Other, net $ (33.0) $ (16.9) $ (44.0) $ 12.0 $ 44.7
----------------------------------------------------------------------------
Change in cash / operating
loans $ (75.0) $ (81.8) $ 59.0 $ (17.2) $ (70.7)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ROIC - Consolidated(4) 2.0% 2.2% 17.8% 2.4% 3.7%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average exchange rate (US$
per C$1.00)(5) $ 0.953 $ 0.963 $ 0.971 $ 1.009 $ 1.001
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Certain prior period amounts have been restated due to the adoption of
amended IAS 19, Employee Benefits and IFRS 11, Joint Arrangements. Further
details can be found in the Company's unaudited interim consolidated
financial statements.
(2) Other operating cash flows in the fourth quarter of 2013 include a $20.0
million accounting provision for the closure of the Company's Quesnel
Sawmill. Further information on operating cash flows can be found in the
Company's unaudited interim consolidated financial statements.
(3) Additions to property, plant and equipment include the acquisition of
assets from Tembec Industries Ltd. ("Tembec") in the first quarter of 2012,
and are shown net of amounts received under Government funding initiatives
in the pulp and paper segment.
(4) Consolidated Return on Invested Capital ("ROIC") is equal to operating
income/loss, plus realized gains/losses on derivatives, equity income/loss
from joint venture and other income/expense, all net of minority interest,
divided by the average invested capital during the year. Invested capital
is equal to capital assets, plus long-term investments and net non-cash
working capital, all excluding minority interest components.
(5) Source - Bank of Canada (average noon rate for the period).
Analysis of Specific Material Items Affecting Comparability of Shareholder
Net Income (Loss)(1)
After-tax impact, net of
non-controlling interests
(millions of Canadian
dollars, except per share Q4 Q3 YTD Q4 YTD
amounts) 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Shareholder Net Income, as
reported $ 28.0 $ 28.4 $ 228.6 $ 21.3 $ 26.4
Foreign exchange (gain) loss
on long-term debt and
investments, net $ 1.5 $ (1.0) $ 4.6 $ 1.2 $ (3.1)
(Gain) loss on derivative
financial instruments $ 0.1 $ (2.2) $ (3.3) $ 6.5 $ 1.2
Mill closure provisions $ 14.8 $ - $ 14.8 $ - $ -
One-time costs associated
with collective agreements
for the lumber business $ 0.8 $ - $ 0.8 $ - $ -
Canfor's 50% interest in
Canfor-LP OSB's income, net
of tax $ - $ - $ 12.1 $ - $ -
(Gain) loss on sale of
Canfor-LP OSB(6) $ 3.6 $ 1.0 $ (28.8) $ - $ -
Change in substantively
enacted tax rate $ - $ - $ 4.2 $ - $ -
Net gain on post retirement
and pension plan amendments $ - $ - $ - $ (8.7) $ (8.7)
Restructuring charges for
management changes $ - $ - $ - $ - $ 1.5
Increase in fair value of
ABCP $ - $ - $ - $ - $ (1.1)
Costs related to Tembec
acquisition $ - $ - $ - $ - $ 2.8
----------------------------------------------------------------------------
Net impact of above items $ 20.8 $ (2.2) $ 4.4 $ (1.0) $ (7.4)
----------------------------------------------------------------------------
Adjusted Shareholder Net
Income $ 48.8 $ 26.2 $ 233.0 $ 20.3 $ 19.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shareholder Net Income per
share (EPS), as reported $ 0.20 $ 0.20 $ 1.61 $ 0.15 $ 0.18
Net impact of above items
per share $ 0.15 $ (0.02) $ 0.03 $ (0.01) $ (0.05)
----------------------------------------------------------------------------
Adjusted Shareholder Net
Income per share $ 0.35 $ 0.18 $ 1.64 $ 0.14 $ 0.13
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(6) The Company completed the sale of its 50% share of the Canfor-LP OSB
Limited Partnership ("Canfor-LP OSB") in the second quarter of 2013 and
recorded a gain of $33.4 million (after tax). As part of the sale, Canfor
may receive additional annual consideration over a 3 year period, starting
June 1, 2013, based on Peace Valley OSB's annual adjusted earnings before
interest, tax, depreciation and amortization. An asset was recorded based
on the fair value of this additional consideration and will be adjusted to
current estimated fair value each reporting period. Based on the estimated
fair value at December 31, 2013, a loss of $3.6 million (after tax) was
recorded in the fourth quarter of 2013.
The Company reported operating income of $53.8 million for the fourth quarter of
2013, compared to operating income of $49.3 million for the third quarter. The
modest improvement in operating income was largely attributable to strong gains
in lumber markets as well as higher pulp production and shipments, partially
offset by lower lumber production and shipments and increased log costs as well
as restructuring costs of $20.0 million related to the announced closure of the
Company's Quesnel Sawmill and one-time costs of $1.1 million associated with new
five year collective labour agreements for the lumber business ratified in the
current quarter. Adjusted for these one-time items, operating income in the
fourth quarter was $74.9 million, an increase of $25.6 million compared to the
third quarter.
The North American lumber market saw strong gains in prices during the fourth
quarter of 2013 supported by momentum in the U.S. housing market recovery and
continued solid offshore lumber demand. U.S housing starts reached their highest
level in five years, averaging 1,002,000 units SAAR (seasonally adjusted annual
rate), up 14% from the previous quarter. Single-family starts, which consume a
larger proportion of lumber compared to multi-family starts, increased 11% in
the quarter, a further indication of the strengthening U.S. housing market.
Canadian housing starts were up 4% from the third quarter of 2013 to 200,000
units SAAR, primarily reflecting steady construction activity. Canfor's offshore
lumber shipments remained at strong levels in the fourth quarter of 2013, driven
in part by increased shipments to China.
The average North American benchmark Western Spruce/Pine/Fir ("SPF") 2x4 #2&Btr
lumber price was up 13% in the fourth quarter of 2013 to US$370 per Mfbm, and
solid increases were seen across most other dimensions during the quarter. North
American sales realizations benefited from this upward trend in pricing, as well
as lower export taxes and a favourable impact from the weakening of the Canadian
dollar over the period (for the Company's Western SPF operations). Offshore
sales realizations saw more modest gains in the current quarter, lagging North
American gains mostly due to the nature of pricing, much of which is negotiated
monthly or quarterly in advance. Sales realizations for Southern Yellow Pine
("SYP") products were relatively flat quarter-over-quarter with an increase of
US$22/Mfbm, or 6%, in the benchmark SYP 2x4 #2 price to US$415 per Mfbm, offset
somewhat by declines in most wider dimension products.
Lumber shipments and production were down 63 million board feet (5%) and 56
million board feet (5%), respectively, from the prior quarter, primarily
reflecting downtime related to capital installations and ramp-ups, less
operating hours in the current quarter (mostly due to additional statutory
holidays), and, to a lesser extent, weather related factors. Unit manufacturing
costs showed a modest increase compared to the previous quarter resulting from
the lower production, a continued industry-wide focus on dust control safety,
and increased log costs stemming from log profile challenges related in part to
severe flooding in the southeast area of British Columbia earlier in the year.
Global softwood pulp markets saw a modest improvement in the fourth quarter,
with an increase in demand and a corresponding increase in list prices. Global
softwood pulp producer inventory levels were balanced during the quarter, at 27
days' supply in December 2013, in line with September 2013. Average Northern
Bleached Softwood Kraft ("NBSK") pulp list prices increased in all regions
during the fourth quarter, with the North American pulp list price up US$36 per
tonne from the previous quarter to US$983 and Europe up US$35 per tonne from the
previous quarter to US$902 reflecting a 4% gain in both regions. Pulp list
prices to China were up US$52 per tonne to US$737, an increase of 8% in the
quarter. List prices to all regions ended the 2013 year at their highest levels
for two years, but price gains for the 2013 year as a whole were partly eroded
by increased upward pressure on discounts, particularly in North America. Fourth
quarter sales realizations also benefited slightly from the weaker Canadian
dollar against the US dollar.
Higher pulp shipment levels for the fourth quarter of 2013, up over 62,000
tonnes from the prior quarter, were attributable to higher pulp production and a
drawdown of inventories resulting from increased purchasing, principally from
China, in part due to inventory build ahead of the Chinese Lunar New Year. The
increased production levels mainly reflected a reduction in scheduled outages
during the period. Pulp unit manufacturing costs in the fourth quarter of 2013
were broadly in line with the previous quarter, with the favourable impact of
the higher production levels offset by higher energy costs.
After adjusting for the Quesnel closure provision and one-time costs associated
with the new collective labour agreements for the lumber business, operating
income was up $40.1 million compared to the $34.8 million in the fourth quarter
of 2012 (adjusted for the accounting gain related to amendments to the Company's
post retirement benefit plans). The increase was largely the result of
improvements in sales realizations in both the lumber and pulp markets.
Partially offsetting the favourable gains in the markets were higher lumber unit
manufacturing costs driven by increased market-driven stumpage costs and to a
lesser extent elevated dust control efforts, as well as the impact of lower pulp
production volume and higher fibre costs in the pulp and paper segment.
OPERATING RESULTS BY BUSINESS SEGMENT
Lumber
Selected Financial Information and Statistics - Lumber(7)
(millions of Canadian
dollars unless otherwise Q4 Q3 YTD Q4 YTD
noted) 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales $ 533.7 $ 529.4 $2,192.2 $ 469.9 $1,711.8
Operating income before
amortization $ 66.1 $ 71.4 $ 398.6 $ 69.1 $ 177.4
Operating income $ 37.4 $ 43.8 $ 285.1 $ 42.5 $ 75.6
----------------------------------------------------------------------------
Positive impact of
inventory valuation
adjustments(8) $ - $ - $ - $ (0.4) $ (13.5)
Mill closure provisions $ 20.0 $ - $ 20.0 $ - $ -
One-time costs associated
with collective
agreements $ 1.1 $ - $ 1.1 $ - $ -
Costs related to Tembec
acquisition $ - $ - $ - $ - $ 2.5
----------------------------------------------------------------------------
Operating income
excluding impact of
inventory valuation
adjustments and unusual
items $ 58.5 $ 43.8 $ 306.2 $ 42.1 $ 64.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average SPF 2x4 #2&Btr
lumber price in US$(9) $ 370 $ 328 $ 356 $ 335 $ 299
Average SPF price in Cdn$ $ 388 $ 340 $ 367 $ 332 $ 299
Average SYP 2x4 #2 lumber
price in US$(10) $ 415 $ 393 $ 413 $ 386 $ 333
Average SYP price in Cdn$ $ 436 $ 408 $ 425 $ 383 $ 333
----------------------------------------------------------------------------
U.S. housing starts
(thousand units
SAAR)(11) 1,002 882 923 896 783
----------------------------------------------------------------------------
Production - SPF lumber
(MMfbm) 979.7 1,043.5 4,207.4 985.5 3,857.5
Production - SYP lumber
(MMfbm) 138.7 131.3 539.9 121.8 479.1
Shipments - SPF lumber
(MMfbm)(12) 999.1 1,066.4 4,187.9 1,007.9 3,867.5
Shipments - SYP lumber
(MMfbm)(12) 143.2 139.5 548.6 133.5 511.8
Shipments - wholesale
lumber (MMfbm) 5.7 5.2 24.8 8.0 54.7
----------------------------------------------------------------------------
(7) Certain prior period amounts have been restated due to the adoption of
amended IAS 19, Employee Benefits and IFRS 11, Joint Arrangements. Further
details can be found in the Company's unaudited interim consolidated
financial statements.
(8) In accordance with IFRS, Canfor records its log and finished product
inventories at the lower of cost and net realizable value ("NRV"). Changes
in inventory volumes, market prices, foreign exchange rates and costs over
the respective reporting periods can all affect inventory valuation
adjustments, if any, required at each period end.
(9) Western Spruce/Pine/Fir, per thousand board feet (Source - Random
Lengths Publications, Inc.).
(10) Southern Yellow Pine, Eastside, per thousand board feet (Source -
Random Lengths Publications, Inc.).
(11) Source - U.S. Census Bureau, seasonally adjusted annual rate ("SAAR").
(12) Canfor-produced lumber, including lumber purchased for remanufacture.
Overview
Operating income for the lumber segment was $37.4 million for the fourth quarter
of 2013, a decrease of $6.4 million compared to operating income of $43.8
million in the previous quarter, and down $5.1 million from operating income of
$42.5 million reported for the fourth quarter of 2012. Adjusting for one-time
items, operating income was $306.2 million in 2013, up $241.6 million from 2012.
Results in the lumber segment for the fourth quarter of 2013 were impacted by
various unusual items including an expense of $20.0 million related to the
announced closure of the Quesnel Sawmill and, to a lesser extent, one-time costs
of $1.1 million associated with new five year collective agreements ratified in
the quarter. Excluding the impact of these unusual items, operating income for
the fourth quarter of 2013 was $58.5 million, compared to similarly adjusted
$43.8 million in the third quarter and $42.1 million in the fourth quarter of
2012. Results in the fourth quarter of 2012 also included an accounting gain of
$6.8 million related to certain amendments to the Company's salaried post
retirement benefit plans.
The improvement in adjusted operating income in the current quarter, compared to
the third quarter of 2013 resulted from improved sales realizations driven by an
upward trend in pricing, offset in part by lower shipments as well as higher
unit log costs. Unit manufacturing costs were up driven largely by log profile
challenges partially resulting from the flooding experienced earlier in the year
in the southeast area of British Columbia and the unfavourable impact of lower
production levels on unit costs. The lower production levels reflected various
factors including downtime related to capital installations and ramp-ups
including the recent capital project at the Houston Sawmill, reduced operating
hours compared to the previous quarter, and to a lesser extent, weather related
factors and the start-up of additional shifts at the Company's southern pine
operations.
The improved adjusted operating income compared to the fourth quarter of 2012
resulted principally from higher sales realizations, due to stronger market
prices, lower export taxes and a weaker Canadian dollar. These gains more than
offset higher unit manufacturing costs, which were largely log cost driven.
Total shipments and production were in line with the fourth quarter of 2012,
with an increase in productivity following various capital projects undertaken
in 2013 offset by reduced overtime shifts in the current quarter. Higher unit
manufacturing costs were driven by significant market-price related increases in
stumpage and to a lesser extent, continued dust control efforts and additional
shifts at the Company's southern pine operations.
Markets
The North American lumber market saw strong gains in prices during the fourth
quarter of 2013, driven mostly by solid demand from the U.S. residential
construction market. The U.S. housing market recovery continued to gain momentum
with total housing starts averaging 1,002,000 units(13) SAAR, reaching the
highest level since the first quarter of 2008, and up 14% from the third quarter
of 2013 and 11% higher compared to the same period in 2012. Single-family
starts, which consume a larger proportion of lumber compared to multi-family
starts, were up 11% compared to the third quarter to 661,000 units(13) SAAR.
In Canada, lumber consumption was higher than the previous quarter, as Canadian
housing starts averaged 200,000 units(14) SAAR for the quarter, up 8,000 units,
or 4%, compared to the third quarter of 2013, primarily reflecting steady
construction activity. Compared to the same quarter in 2012, Canadian housing
starts declined 2% attributable to a more moderate pace of construction activity
in most parts of the country.
Canfor's offshore lumber shipments remained solid in the fourth quarter of 2013,
buoyed by strong shipments to China where the total BC softwood lumber industry
set a new record high volume in the month of October(15).
Sales
Sales for the lumber segment for the fourth quarter of 2013 were $533.7 million,
compared to $529.4 million in the previous quarter and $469.9 million in the
fourth quarter of 2012. The increase from both comparable periods reflected
overall higher sales realizations in the current quarter offset in part by lower
shipments. Current quarter sales also included lower residual fibre revenue
resulting mostly from lower shipments and seasonal adjustments. Compared to the
fourth quarter of 2012, log sales were up, largely as a result of higher log
costs.
Total shipments in the fourth quarter of 2013, at just over 1.1 billion board
feet, were down 5% from the previous quarter, reflecting lower production levels
and in line with the fourth quarter of 2012.
Overall North American sales realizations benefited from an upward trend in
pricing, as well as from lower export taxes and a favourable impact from the
weakening of the Canadian dollar over the period (for the Company's Canadian
operations). For sales to North America, the average Random Lengths Western SPF
2x4 #2&Btr lumber price was up 13% to US$370 per Mfbm, and solid increases were
seen across most other dimensions during the quarter. Offshore sales
realizations saw more modest gains in the current quarter, lagging North
American gains mostly due to the nature of pricing, much of which is negotiated
monthly or quarterly in advance. Sales realizations for SYP products were
relatively flat quarter-over-quarter with a US$22/Mfbm, or 6%, increase in the
benchmark SYP 2x4 #2 price to US$415 per Mfbm, offset by declines in most wider
dimension products. The average value of the Canadian dollar compared to the US
dollar in the fourth quarter was down 1 cent, or 1%, from the previous quarter,
positively impacting current quarter sales realizations.
Compared to the fourth quarter of 2012, sales realizations showed a modest
improvement reflecting stronger overall prices, lower export taxes and a
favourable foreign exchange impact. The benchmark North American Random Lengths
Western SPF 2x4 #2&Btr price was up US$35 per Mfbm, or 10%, compared to the
fourth quarter of 2012, while most other grades and dimensions also saw
increases, but to a lesser degree. Offshore pricing also showed solid increases
compared to the fourth quarter of 2012. SYP products experienced similar gains,
with the benchmark SYP 2X4 #2 price up US$29 per Mfbm, or 8%. Sales realizations
for Canadian operations benefited from a 6 cent, or 6%, weaker Canadian dollar.
Likewise, export taxes on Canadian shipments to the U.S. were lower, averaging
2% in the current period (5% in October) compared to the fourth quarter of 2012,
when the export tax averaged 8% (5% in October and 10% in November and
December).
(13) U.S. Census Bureau
(14) CMHC - Canada Mortgage and Housing Corporation
(15) Council of Forestry Industries
Total residual fibre revenue was down in the current quarter compared to the
third quarter of 2013, mostly resulting from lower shipments of sawmill residual
chips along with seasonal factors. Compared to the fourth quarter of 2012, total
residual fibre revenue was also down, with lower shipments of sawmill residual
chips more than offsetting a market-driven increase in sawmill residual chip
prices.
Operations
Lumber production, at just over 1.1 billion board feet, was down 5% from the
previous quarter, caused by a combination of factors including downtime related
to capital installations and ramp-ups, including work on the recent capital
project at the Houston Sawmill, less operating hours in the current quarter
(mostly due to additional statutory holidays), and to a lesser extent, weather
related issues. Productivity in the fourth quarter of 2013 was also impacted by
the start-up of additional shifts at the Company's southern pine operations.
Compared to the fourth quarter of 2012, lumber production was broadly in line,
with continued productivity improvements from various capital projects
undertaken in 2013 and a full quarter of production from the Company's Radium
Sawmill, which was restarted in the comparative period of 2012, offset by a
reduction in overtime shifts in the fourth quarter of 2013.
Overall, the Company's lumber unit manufacturing costs saw a modest increase
compared to the previous quarter, resulting from an increase in unit log costs
coupled with moderate increases in unit cash conversion costs. The increase in
unit manufacturing costs reflected the lower production as well as a continued
industry-wide focus on dust control safety efforts. Higher unit manufacturing
costs also reflected log profile challenges resulting from the severe flooding
in 2013 in the southeast area of British Columbia and increased hauling and
logging costs. These factors were partly offset by market-driven decreases in
stumpage.
Compared to the fourth quarter of 2012, higher unit manufacturing costs were
largely attributable to market-related stumpage increases and higher logging and
hauling costs and to a lesser degree, the aforementioned continuing dust control
efforts and additional shifts at the Company's southern pine operations.
Pulp and Paper
Selected Financial Information and Statistics - Pulp and Paper(16, 17)
(millions of Canadian
dollars unless otherwise Q4 Q3 YTD Q4 YTD
noted) 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Sales $ 275.8 $ 224.6 $ 999.4 $ 228.4 $ 923.5
Operating income before
amortization $ 39.2 $ 28.5 $ 144.0 $ 32.5 $ 96.6
Operating income $ 23.2 $ 11.5 $ 72.2 $ 12.0 $ 27.6
----------------------------------------------------------------------------
Average pulp price
delivered to U.S. -
US$(18) $ 983 $ 947 $ 941 $ 863 $ 872
Average price in Cdn$ $ 1,032 $ 983 $ 969 $ 855 $ 871
----------------------------------------------------------------------------
Production - pulp (000 mt) 299.5 274.8 1,192.9 314.1 1,169.9
Production - paper (000
mt) 30.8 33.8 134.7 35.4 130.2
Shipments - pulp (000 mt) 329.5 267.5 1,213.0 297.8 1,176.6
Shipments - paper (000 mt) 31.1 35.5 138.8 32.1 129.1
----------------------------------------------------------------------------
(16) Certain prior period amounts have been restated due to the adoption of
amended IAS 19, Employee Benefits. Further details can be found in the
Company's unaudited interim consolidated financial statements.
(17) Includes the Taylor Pulp Mill and 100% of Canfor Pulp Products Inc.,
which is consolidated in Canfor's results. Pulp production and shipment
volumes presented are for both NBSK and bleached chemi-thermo mechanical
pulp ("BCTMP").
(18) Per tonne, NBSK pulp list price delivered to U.S. (Resource Information
Systems, Inc.).
Overview
Operating income for the pulp and paper segment was $23.2 million for the fourth
quarter of 2013, up $11.7 million from the previous quarter, and up $11.2
million from the fourth quarter of 2012. For the 2013 year, operating income was
$72.2 million, up $44.6 million from $27.6 million in 2012.
Compared to the previous quarter of 2013, results for the pulp segment reflected
significantly higher shipment volumes coupled with moderate increases in sales
realizations resulting from increased NBSK prices and a further weakening of the
Canadian dollar. The increased production primarily resulted from a reduction in
scheduled outages. The unit impact of higher production and slightly lower fibre
costs were offset by higher energy costs, resulting in unit manufacturing costs
being broadly in line with the third quarter.
Improved results for the pulp segment compared to the fourth quarter of 2012
principally reflected higher sales realizations, resulting from a 14% increase
in pulp list prices, a 6% weaker Canadian dollar and higher shipments in the
current quarter, the latter driven by higher shipments to China, partially
offset by reduced volume into the U.S. This shift in the regional sales mix as
well as upward pressure on discounts in North American markets partially offset
the improved NBSK list prices and favourable exchange rates. Unit manufacturing
costs increased moderately quarter-over-quarter, as a result of higher sawmill
residual chip fibre costs (linked to NBSK market pulp sales realizations), and
lower production levels, offset in part by reduced chemical and maintenance
spend. The fourth quarter of 2012 results included an accounting gain of $4.5
million related to post retirement plan adjustments.
Markets
Global softwood pulp markets strengthened in the fourth quarter of 2013, with
increased demand and solid increases in list prices through the quarter. Global
softwood pulp producer inventory levels were balanced during the quarter, at 27
days' supply in December 2013, in line with September 2013(19). Market
conditions are generally considered balanced when inventories are in the 27-30
days of supply range.
Global shipments of bleached softwood kraft pulp increased 2% in 2013 compared
to 2012(20). The increase in softwood pulp shipments in the year was primarily
due to increased shipments to North America and Europe, while shipments to China
were relatively flat. Global shipments to China were up 2% in the fourth quarter
of 2013 compared to the third quarter of 2013 and up 11% compared to the same
period in 2012(20).
Sales
The Company's pulp shipments in the fourth quarter of 2013 were 330,000 tonnes,
an increase of 62,000 tonnes, or 23%, from the previous quarter, reflecting both
higher production volumes and increased demand, principally from China, driven
in part by a build in inventories ahead of the Chinese Lunar New Year. Compared
to the fourth quarter of 2012, shipments were higher by 32,000 tonnes, or 11%,
due largely to increased shipments to China, partially offset by reduced volumes
to the U.S.
The North American pulp list price increased US$36 per tonne to US$983 and the
list price to Europe increased US$35 to US$902 reflecting a 4% gain in both
regions. The NBSK pulp list price to China increased US$52 per tonne, averaging
US$737 in the quarter. List prices to all regions ended the year at their
highest levels over the last two years. The favourable impact of higher NBSK
prices during the quarter was slightly offset by increased volume to China, with
lower average sales realizations. Current quarter sales realizations also
benefited slightly from the 1% weakening of the Canadian dollar against the US
dollar. Bleached chemi-thermo mechanical pulp ("BCTMP") average sales
realizations showed a moderate increase compared to the previous quarter
reflecting an upward trend in prices through the current quarter.
Compared to the fourth quarter of 2012, higher pulp sales realizations resulted
from significant improvements in average pulp prices in all regions and the 6%
weakening of the Canadian dollar. The North American NBSK list pulp price
increased US$120 per tonne, or 14%. List prices to Europe and China experienced
similar increases, up 12% and 11%, respectively, compared to the fourth quarter
of 2012. The improved NBSK list prices more than offset the impact of increased
volume to lower-margin regions, principally China, and the impact of increased
discounts in North American markets in 2013. BCTMP sales realizations
experienced moderate increases compared to the fourth quarter of 2012,
reflecting higher market pricing and the weaker Canadian dollar.
Operations
Pulp production in the current quarter was 300,000 tonnes, an increase of 25,000
tonnes, or 9%, from the previous quarter, and a decrease of 15,000 tonnes, or
5%, compared to the fourth quarter of 2012.
Increased production in the current quarter was primarily the result of a
reduction in scheduled outages compared to the previous quarter. The current
quarter included a scheduled maintenance outage at the Prince George Pulp Mill
which resulted in reduced market pulp production of 4,000 tonnes. In comparison,
the third quarter of 2013 included a scheduled major maintenance outage at the
Northwood Pulp Mill, which impacted production by 32,000 tonnes. Both the
current and previous quarters' production levels reflected similar impacts from
operational challenges but productivity improved towards the end of the current
quarter. Compared to the fourth quarter of 2012, production levels reflected
lower overall operating rates.
(19) World 20 data is based on twenty producing countries representing 80%
of world chemical market pulp capacity and is based on information compiled
and prepared by the Pulp and Paper Products Council ("PPPC").
(20) As reported by PPPC statistics.
Pulp unit manufacturing costs were broadly in line with the previous quarter,
largely due to the favourable impact of higher production and slightly lower
fibre costs, offset by higher energy costs. Fibre costs were down slightly
compared to the previous quarter, attributable to lower-cost whole log chips and
seasonal pricing adjustments. The increase in energy costs in the current
quarter was primarily related to reduced power production as upgrades were
completed to the Northwood turbine generators and planned maintenance was
completed on the Prince George Pulp Mill's turbine generator.
Compared to the fourth quarter of 2012, unit manufacturing costs increased
moderately, primarily driven by higher fibre costs, lower production levels and
higher energy costs, offset in part by reduced chemical costs and reduced
maintenance spending. The higher fibre costs in the current quarter resulted
from market-related increases in prices for sawmill residual chips coupled with
increased prices for higher-cost whole log chips, in part related to pressure on
stumpage rates.
Unallocated and Other Items
Selected Financial Information(21)
(millions of Canadian Q4 Q3 YTD Q4 YTD
dollars) 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Operating income (loss) of
Panels operations(22) $ (0.5) $ 0.1 $ (1.7) $ (0.7) $ (5.0)
Corporate costs $ (6.3) $ (6.1) $ (24.3) $ (4.8) $ (26.9)
Finance expense, net $ (6.4) $ (6.4) $ (27.9) $ (8.7) $ (33.8)
Foreign exchange gain
(loss) on long-term debt
and investments, net $ (3.4) $ 2.3 $ (8.9) $ (2.0) $ 4.7
Gain (loss) on derivative
financial instruments $ (0.2) $ 4.0 $ 4.4 $ (8.7) $ (0.8)
Gain on sale of Canfor-LP
OSB joint venture $ - $ - $ 38.3 $ - $ -
Other income (expense), net $ (3.1) $ (3.9) $ 1.5 $ 3.2 $ 6.6
----------------------------------------------------------------------------
(21) Certain prior period amounts have been restated due to the adoption of
amended IAS 19, Employee Benefits and IFRS 11, Joint Arrangements. Further
details can be found in the Company's unaudited interim consolidated
financial statements.
(22) The Panels operations include the Company's PolarBoard OSB plant,
which is currently indefinitely idled and its Tackama plywood plant, which
was closed in January 2012.
Corporate costs were $6.3 million for the fourth quarter of 2013, in line with
the previous quarter and were up $1.5 million compared to the fourth quarter of
2012. The fourth quarter of 2012 corporate costs included a portion of the
aforementioned gain due to amendments to the Company's salaried post retirement
benefit plans.
Net finance expense for the fourth quarter of 2013 was $6.4 million, in line
with the previous quarter. Compared to the fourth quarter of 2012, finance
expense was down $2.3 million, principally resulting from lower debt and higher
cash balances through the current quarter. Net finance expense for the 2012
periods has been restated for adoption of amended IAS 19, Employee Benefits, as
further discussed in the "Changes in Accounting Policies" section later in this
document.
The Company recorded a foreign exchange translation loss on its US dollar
denominated debt of $3.4 million for the fourth quarter of 2013, as a result of
a weakening of the Canadian dollar against the US dollar through the fourth
quarter. In the third quarter of 2013, a strengthening of the Canadian dollar at
the quarter end close dates resulted in a translation gain of $2.3 million,
while the fourth quarter of 2012 showed a loss of $2.0 million due to a
weakening of the Canadian dollar against the US dollar at the respective quarter
ends.
The Company uses a variety of derivative financial instruments as partial
economic hedges against unfavourable changes in foreign exchange rates, energy
costs, lumber prices, pulp prices and interest rates. In the fourth quarter of
2013, the Company recorded a net loss $0.2 million related to its derivative
instruments due to realized and unrealized losses on its interest rate swaps as
a result of lower interest rates, largely offset by realized and unrealized
gains on US dollar forward contracts and collars.
The following table summarizes the gains (losses) on derivative financial
instruments for the comparable periods:
(millions of Canadian Q4 Q3 YTD Q4 YTD
dollars) 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Foreign exchange collars
and forward contracts $ 0.3 $ 3.9 $ 0.2 $ (1.0) $ 3.2
Energy derivatives $ 0.1 $ 0.3 $ 0.2 $ (0.3) $ 0.6
Lumber futures $ 0.2 $ 0.4 $ 4.2 $ (7.5) $ (3.6)
Pulp futures $ (0.1) $ - $ (0.1) $ - $ -
Interest rate swaps $ (0.7) $ (0.6) $ (0.1) $ 0.1 $ (1.0)
----------------------------------------------------------------------------
$ (0.2) $ 4.0 $ 4.4 $ (8.7) $ (0.8)
----------------------------------------------------------------------------
Other expense, net for the fourth quarter of 2013 included a $4.8 million
negative fair value adjustment to the Canfor-LP OSB contingent consideration
asset, largely reflecting weaker forecast OSB prices over the contingent
consideration period. On completion of the Canfor-LP OSB sale in the second
quarter of 2013, the initial fair value estimate for the contingent
consideration arrangement was included in the gain on sale of the Canfor-LP OSB
joint venture (see further discussion in the "Sale of Peace Valley OSB Joint
Venture" section later in this document). The Company also recognized a net
accounting loss of $4.2 million related to the timber exchange with West Fraser
(see further discussion in the "Timber Exchange" section later in this
document). Partially offsetting these factors in the fourth quarter of 2013 were
foreign exchange gains on US dollar denominated working capital of $4.0 million
resulting from the weakening of the Canadian dollar relative to the US dollar
over the course of the quarter. In the third quarter of 2013 and fourth quarter
of 2012, the Company recorded a $2.7 million loss and a $0.7 million gain on US
dollar denominated working capital, respectively.
Other Comprehensive Income (Loss)
The following table summarizes Canfor's Other Comprehensive Income (Loss) for
the comparable periods(23):
(millions of Canadian Q4 Q3 YTD Q4 YTD
dollars) 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Foreign exchange translation
differences for foreign
operations $ 8.0 $ (5.6) $ 15.0 $ 1.9 $ (4.6)
Defined benefit actuarial
gains (losses), net of tax $ 40.4 $ 17.1 $ 91.7 $ (3.6) $ (42.4)
----------------------------------------------------------------------------
Other comprehensive income
(loss), net of tax $ 48.4 $ 11.5 $ 106.7 $ (1.7) $ (47.0)
----------------------------------------------------------------------------
(23) Certain prior period amounts have been restated due to the adoption of
amended IAS 19, Employee Benefits. Further details can be found in the
Company's unaudited interim consolidated financial statements.
In the fourth quarter of 2013, the Company recorded an after-tax credit to the
statements of other comprehensive income (loss) of $40.4 million in relation to
changes in the valuation of its defined benefit post-employment compensation
plans and other non-pension post-employment benefit plans. The gain associated
with the defined benefit post-employment compensation plans is principally due
to a higher return on plan assets coupled with a higher discount rate used to
value the net defined benefit obligation, offset in part by adjustments to
mortality rate assumptions. The gain related to the other non-pension
post-employment benefits principally reflected a higher discount rate used to
value the post-employment obligation and favourable experience adjustments,
offset in part by adjustments to mortality rate assumptions. In the previous
quarter, the Company recorded a credit of $17.1 million (after-tax), while an
after-tax charge of $3.6 million was recorded in the fourth quarter of 2012.
In addition, the Company recorded $8.0 million of other comprehensive gain in
the quarter for foreign exchange differences for foreign operations, reflecting
favourable foreign exchange movements during the quarter. This compared to other
comprehensive loss of $5.6 million in the previous quarter and a gain of $1.9
million in the fourth quarter of 2012.
SUMMARY OF FINANCIAL POSITION
The following table summarizes Canfor's cash flow and selected ratios for and as
at the end of the following periods(24):
(millions of Canadian
dollars, except for Q4 Q3 YTD Q4 YTD
ratios) 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents $ (0.4) $ (81.8) $ 106.6 $ (7.2) $ (43.7)
Operating activities $ 98.8 $ 75.3 $ 490.3 $ 27.6 $ 117.4
Financing activities $ (33.8) $ (21.6) $(181.4) $ 2.0 $ 42.0
Investing activities $ (65.4) $(135.5) $(202.3) $ (36.8) $(203.1)
Ratio of current assets to
current liabilities 1.7:1 1.3:1
Net debt to capitalization 8.0% 20.0%
ROIC - Consolidated 2.0% 2.2% 17.8% 2.4% 3.7%
ROCE - Canfor solid wood
business(25) 2.4% 2.5% 17.0% 1.8% 2.9%
----------------------------------------------------------------------------
(24) Certain prior period amounts have been restated due to the adoption of
IFRS 11, Joint Arrangements. Further details can be found in the Company's
unaudited interim consolidated financial statements.
(25) Return on Capital Employed ("ROCE") for the Canfor solid wood business
represents consolidated ROCE adjusted to remove the Company's interest in
Canfor-LP OSB and pulp and paper operations, including CPPI and the Taylor
Pulp Mill. Consolidated ROCE is equal to shareholder net income for the
period plus finance expense, after tax, divided by the average capital
employed during the period (which consists of current and long-term debt
and operating loans, and shareholders' equity, less cash and temporary
investments).
Changes in Financial Position
Cash generated from operating activities was $98.8 million in the fourth quarter
of 2013, compared to cash generated of $75.3 million in the previous quarter and
$27.6 million in the same quarter of 2012. The increase in cash generated from
operating activities compared to the previous quarter was attributable to higher
cash earnings, partly offset by an increase in non-cash working capital. The
latter principally resulted from a seasonal increase in log inventory and a
decrease in accounts payable and accrued liabilities largely related to the
timing of contractor and stumpage payments, partially offset by seasonally lower
trade accounts receivable balances. Compared to the fourth quarter of 2012, the
increase in cash generated from operating activities resulted largely from
higher cash earnings coupled with a drawdown in finished goods inventories in
the current period.
Cash used in financing activities was $33.8 million in the current quarter,
compared to cash used of $21.6 million in the previous quarter and cash
generated of $2.0 million in the same quarter of 2012. The current quarter cash
flows included repayment of CPPI's US$110 million 6.41% interest rate debt. In
the fourth quarter of 2013, CPPI completed a $50.0 million floating rate term
debt financing (see further discussion of the debt issued in the fourth quarter
in the following "Liquidity and Financial Requirements" section). The Company
had $74.6 million drawn on its operating loan facility at the end of the
quarter. During the current quarter, the Company paid $6.0 million in finance
costs principally reflecting the final interest payment on CPPI's US$110 million
term debt. Cash distributions to non-controlling interests were $2.4 million, in
line with the third quarter of 2013 and up $2.0 million from same quarter in the
previous year. In the current quarter, Canfor purchased 1,474,600 common shares
under the Normal Course Issuer Bid for $33.4 million compared to $17.7 million
in the prior quarter (see further discussion of the shares purchased under the
Normal Course Issuer Bid in the following "Liquidity and Financial Requirements"
section).
Cash used for investing activities was $65.4 million in the current quarter,
compared to $135.5 million in the prior quarter and $36.8 million in same
quarter of 2012. Cash used for capital additions was $67.5 million, down $7.1
million from third quarter and up $18.0 million from the fourth quarter of 2012.
Cash paid for capital in the current quarter included the Company's Mackenzie
Sawmill rebuild and capital projects at its Houston Sawmill. In the pulp and
paper segment, current quarter capital expenditures of $20.1 million primarily
related to the Northwood Pulp Mill and Intercontinental turbine upgrades, work
performed on a power boiler precipitator upgrade at the Prince George Pulp Mill
and scheduled capitalized major maintenance of business. Construction of the
Northwood Pulp Mill turbines was substantially completed by the end of the year
and the project is targeted for commissioning by the end of the first quarter of
2014.
Liquidity and Financial Requirements
At December 31, 2013, the Company on a consolidated basis had cash of $89.5
million, $74.6 million drawn on its operating loans, and an additional $27.0
million reserved for several standby letters of credit. Total available undrawn
operating loans were $378.4 million.
In the fourth quarter of 2013, CPPI extended the maturity on its $110.0 million
principal operating loan facility from November 13, 2016 to January 31, 2018.
All other terms on the operating loan facility remain unchanged.
In the fourth quarter of 2013, CPPI also completed a 5-year $50.0 million in
floating interest rate term debt financing, repayable in November 2018 with no
penalty for early repayment, and also repaid its US$110 million 6.41% term debt.
Canfor's $100.0 million term debt is scheduled for repayment on February 13,
2017.
The Company and CPPI remained in compliance with the covenants relating to their
operating loans and long-term debt during the quarter, and expect to remain so
for the foreseeable future.
The Company's consolidated net debt to total capitalization at the end of the
fourth quarter of 2013 was 8.0%. For Canfor, excluding CPPI, net debt to
capitalization at the end of the fourth quarter was 6.2%.
On March 5, 2013, the Company commenced a normal course issuer bid whereby it
can purchase for cancellation up to 7,137,621 common shares or approximately 5%
of its issued and outstanding common shares. The normal course issuer bid is set
to expire on March 4, 2014. In the fourth quarter of 2013, Canfor purchased
1,474,600 common shares for $33.4 million. For the year ended December 31, 2013,
Canfor purchased 2,847,838 common shares for $60.0 million.
Phased Purchase of Scotch & Gulf Lumber, LLC
On August 9, 2013, the Company completed the first phase of the previously
announced purchase of Scotch & Gulf Lumber, LLC ("Scotch Gulf") for $29.5
million, representing an initial 25% interest in Scotch Gulf, plus transaction
closing costs and a proportionate share of working capital. Canfor's initial 25%
interest will increase over a 3 year period to 33% after twelve months, 50%
after eighteen months and 100% at the end of the term. Scotch Gulf has an option
under the purchase agreement to accelerate the final closing of the phased
purchase to a date earlier than August 2016 under certain conditions. The
aggregate purchase price for Scotch Gulf is US$80 million, plus working capital.
As part of the transaction, Scotch Gulf borrowed $34.0 million from Canfor in
the form of a term loan that will be repaid from the distribution of cash
earnings over the course of the phased purchase agreement with any net
outstanding amount at August 2016 applied against the final phase purchase price
payment. The term loan has an interest rate equal to the floating rate on
Canfor's principal operating loans plus 1.0% and is secured by Scotch Gulf's
operating assets. At December 31, 2013, $33.0 million was outstanding on the
term loan receivable and is included in Long-term Investments and Other on the
balance sheet.
Sale of Canfor-LP OSB Joint Venture
On May 31, 2013, the Company completed the sale of its 50% share in Canfor-LP
OSB, which owns the Peace Valley OSB Mill, to Louisiana-Pacific Corporation for
cash proceeds of $77.9 million including working capital. A pre-tax gain on sale
of $38.3 million was recorded in the second quarter of 2013 which included
recognition of Canfor's share of the operating income for the first half of
2013.
As part of the sale, Canfor may receive additional annual consideration over a 3
year period, starting June 1, 2013, contingent on Peace Valley OSB's annual
adjusted earnings before interest, tax, depreciation and amortization. The fair
value of the contingent consideration as at the close of the current quarter was
$12.8 million, with the current portion presented in Other Accounts Receivable
and the long-term portion presented in Long-Term Investments and Other. During
the fourth quarter of 2013, Canfor recognized a $4.8 million negative fair value
adjustment on the contingent consideration.
Timber Exchange
In the fourth quarter of 2013, Canfor entered into an agreement with West Fraser
Mills Ltd. ("West Fraser") to exchange forest tenure rights. Canfor exchanged
382,194 cubic metres of replaceable forest license allowable annual cut in the
Quesnel Timber Supply Area and 53,627 cubic metres of replaceable forest license
allowable annual cut in the Lakes Timber Supply Area with West Fraser for
324,500 cubic metres of replaceable forest license allowable annual cut in the
Morice Timber Supply Area as well as a non-replaceable license and undercut
volumes. The timber exchange was treated as a non-monetary transaction in the
Company's fourth quarter of 2013's financial statements and resulted in a
pre-tax loss of $4.2 million in the current period. The estimated fair value of
the timber tenures exchanged between Canfor and West Fraser was $20.0 million.
Canfor's Collective Agreement with the United Steelworkers (USW)
The Company ratified new five year collective agreements with the USW during the
fourth quarter of 2013, with terms expiring on June 30, 2018.
OUTLOOK
Lumber
For 2014, North American lumber consumption is forecast to improve as the U.S.
housing market continues to recover and more existing homeowners are forecast to
undertake home improvement projects this year. Offshore markets are projected to
remain solid supported by continued demand from China, Japan and other emerging
markets.
Pulp and Paper
For the month of January 2014, CPPI announced an increase in the NBSK pulp list
price of US$20 per tonne in North America with list prices to China and Europe
remaining unchanged. There are no maintenance outages planned for the first
quarter of 2014. NBSK pulp markets are projected to remain stable through the
first quarter of 2014 and producer inventories are balanced with steady demand
from North America and Europe. Demand from China is projected to soften before
the end of the first quarter of 2014 following strong buying in the fourth
quarter of 2013 and the traditional Chinese Lunar New Year's holiday in January
2014.
With significant new hardwood pulp capacity projected to come online in the
coming months, there continues to be a risk that pulp prices may come under
pressure in 2014.
Canfor Corporation
Condensed Consolidated Balance Sheets
As at
As at December
December 31,
(millions of Canadian dollars, unaudited) 31, 2013 2012
----------------------------------------------------------------------------
(Note 14)
ASSETS
Current assets
Cash and cash equivalents $ 89.5 $ -
Accounts receivable - Trade 112.6 102.7
- Other 39.3 57.5
Inventories (Note 2) 471.9 431.3
Prepaid expenses and other assets 39.1 23.4
Investment in joint venture held for sale (Note
13) - 75.1
----------------------------------------------------------------------------
Total current assets 752.4 690.0
----------------------------------------------------------------------------
Property, plant and equipment 1,151.9 1,081.7
Timber licenses 534.6 554.6
Goodwill and other intangible assets 93.5 80.4
Retirement benefit surplus (Note 5) 42.2 1.4
Long-term investments and other (Note 3) 112.5 43.2
Deferred income taxes, net 6.2 39.3
----------------------------------------------------------------------------
Total assets $ 2,693.3 $ 2,490.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES
Current liabilities
Cheques issued in excess of cash on hand $ - $ 17.1
Operating loans (Note 4(a)) 74.6 27.0
Accounts payable and accrued liabilities 321.8 258.4
Current portion of long-term debt (Note 4(b)) - 184.1
Current portion of deferred reforestation
obligations 44.1 37.3
----------------------------------------------------------------------------
Total current liabilities 440.5 523.9
----------------------------------------------------------------------------
Long-term debt (Note 4(b)) 153.1 100.0
Retirement benefit obligations (Note 5) 200.5 311.7
Deferred reforestation obligations 69.8 78.4
Other long-term liabilities 14.9 13.6
Deferred income taxes, net 217.1 151.1
----------------------------------------------------------------------------
Total liabilities $ 1,095.9 $ 1,178.7
----------------------------------------------------------------------------
EQUITY
Share capital $ 1,103.7 $ 1,126.2
Contributed surplus 31.9 31.9
Retained earnings (deficit) 234.2 (35.1)
Accumulated foreign exchange translation
differences 4.5 (10.5)
----------------------------------------------------------------------------
Total equity attributable to equity holders of
the Company 1,374.3 1,112.5
Non-controlling interests 223.1 199.4
----------------------------------------------------------------------------
Total equity $ 1,597.4 $ 1,311.9
----------------------------------------------------------------------------
Total liabilities and equity $ 2,693.3 $ 2,490.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
APPROVED BY THE BOARD
Director, R.S. Smith
Director, R.L. Cliff
Canfor Corporation
Condensed Consolidated Statements of Income
3 months ended 12 months ended
December 31, December 31,
(millions of Canadian dollars,
except per share data,
unaudited) 2013 2012 2013 2012
----------------------------------------------------------------------------
(Note 14) (Note 14)
Sales $ 809.5 $ 700.3 $ 3,194.9 $ 2,642.8
Costs and expenses
Manufacturing and product
costs 528.8 452.0 2,036.8 1,777.6
Freight and other
distribution costs 137.3 122.0 540.4 491.8
Export taxes 2.7 9.8 9.2 45.5
Amortization 44.9 47.8 186.2 177.1
Selling and administration
costs 21.8 14.9 67.9 61.0
Restructuring, mill closure
and severance costs 20.2 4.8 23.1 18.5
----------------------------------------------------------------------------
755.7 651.3 2,863.6 2,571.5
----------------------------------------------------------------------------
Operating income 53.8 49.0 331.3 71.3
Finance expense, net (6.4) (8.7) (27.9) (33.8)
Foreign exchange gain (loss)
on long-term debt and
investments, net (3.4) (2.0) (8.9) 4.7
Gain (loss) on derivative
financial instruments (Note
6) (0.2) (8.7) 4.4 (0.8)
Gain on sale of Canfor-LP OSB
joint venture (Note 13) - - 38.3 -
Other income (expense), net (3.1) 3.2 1.5 6.6
----------------------------------------------------------------------------
Net income before income taxes 40.7 32.8 338.7 48.0
Income tax expense (Note 7) (5.6) (8.1) (88.2) (12.4)
----------------------------------------------------------------------------
Net income $ 35.1 $ 24.7 $ 250.5 $ 35.6
----------------------------------------------------------------------------
Net income attributable to:
Equity shareholders of the
Company $ 28.0 $ 21.3 $ 228.6 $ 26.4
Non-controlling interests 7.1 3.4 21.9 9.2
----------------------------------------------------------------------------
Net income $ 35.1 $ 24.7 $ 250.5 $ 35.6
----------------------------------------------------------------------------
Net income per common share:
(in dollars)
Attributable to equity
shareholders of the Company
- Basic and diluted (Note 8) $ 0.20 $ 0.15 $ 1.61 $ 0.18
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Canfor Corporation
Condensed Consolidated Statements of Other Comprehensive Income (Loss)
3 months ended 12 months ended
December 31, December 31,
(millions of Canadian
dollars, unaudited) 2013 2012 2013 2012
----------------------------------------------------------------------------
(Note 14) (Note 14)
Net income $ 35.1 $ 24.7 $ 250.5 $ 35.6
Other comprehensive income
(loss)
Items that will not be
recycled through net income:
Defined benefit plan
actuarial gains (losses)
(Note 5) 54.6 (4.8) 123.9 (56.8)
Income tax recovery
(expense) on defined
benefit actuarial gains
(losses) (Note 7) (14.2) 1.2 (32.2) 14.4
----------------------------------------------------------------------------
40.4 (3.6) 91.7 (42.4)
Items that may be recycled
through net income:
Foreign exchange
translation differences
for foreign operations 8.0 1.9 15.0 (4.6)
----------------------------------------------------------------------------
Other comprehensive income
(loss), net of tax 48.4 (1.7) 106.7 (47.0)
----------------------------------------------------------------------------
Total comprehensive income
(loss) $ 83.5 $ 23.0 $ 357.2 $ (11.4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total comprehensive income
(loss) attributable to:
Equity shareholders of the
Company $ 68.4 $ 20.4 $ 322.3 $ (15.0)
Non-controlling interests 15.1 2.6 34.9 3.6
----------------------------------------------------------------------------
Total comprehensive income
(loss) $ 83.5 $ 23.0 $ 357.2 $ (11.4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Canfor Corporation
Condensed Consolidated Statements of Changes in Equity
3 months ended 12 months ended
December 31, December 31,
(millions of Canadian
dollars, unaudited) 2013 2012 2013 2012
----------------------------------------------------------------------------
(Note 14) (Note 14)
Share capital
Balance at beginning of
period $ 1,115.4 $ 1,126.2 $ 1,126.2 $ 1,125.9
Common shares issued on
exercise of stock options - - - 0.3
Share purchases (Note 8) (11.7) - (22.5) -
----------------------------------------------------------------------------
Balance at end of period $ 1,103.7 $ 1,126.2 $ 1,103.7 $ 1,126.2
----------------------------------------------------------------------------
Contributed surplus
----------------------------------------------------------------------------
Balance at beginning and end
of period $ 31.9 $ 31.9 $ 31.9 $ 31.9
----------------------------------------------------------------------------
Retained earnings (deficit)
Balance at beginning of
period $ 195.5 $ (53.6) $ (35.1) $ (24.7)
Net income attributable to
equity shareholders of the
Company 28.0 21.3 228.6 26.4
Defined benefit plan
actuarial gains (losses),
net of tax 32.4 (2.8) 78.7 (36.8)
Share purchases (Note 8) (21.7) - (37.5) -
Acquisition of non-
controlling interests (Note
8) - - (0.5) -
----------------------------------------------------------------------------
Balance at end of period $ 234.2 $ (35.1) $ 234.2 $ (35.1)
----------------------------------------------------------------------------
Accumulated foreign exchange
translation differences
Balance at beginning of
period $ (3.5) $ (12.4) $ (10.5) $ (5.9)
Foreign exchange translation
differences for foreign
operations 8.0 1.9 15.0 (4.6)
----------------------------------------------------------------------------
Balance at end of period $ 4.5 $ (10.5) $ 4.5 $ (10.5)
----------------------------------------------------------------------------
Total equity attributable to
equity holders of the
Company $ 1,374.3 $ 1,112.5 $ 1,374.3 $ 1,112.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Non-controlling interests
Balance at beginning of
period $ 210.4 $ 197.2 $ 199.4 $ 232.8
Net income attributable to
non-controlling interests 7.1 3.4 21.9 9.2
Defined benefit plan
actuarial gains (losses)
attributable to non-
controlling interests, net
of taxes 8.0 (0.8) 13.0 (5.6)
Distributions to non-
controlling interests (2.4) (0.4) (9.3) (12.0)
Acquisition of non-
controlling interests (Note
8) - - (1.9) -
Share exchange - - - (25.0)
----------------------------------------------------------------------------
Balance at end of period $ 223.1 $ 199.4 $ 223.1 $ 199.4
----------------------------------------------------------------------------
Total equity $ 1,597.4 $ 1,311.9 $ 1,597.4 $ 1,311.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Canfor Corporation
Condensed Consolidated Statements of Cash Flows
3 months ended 12 months ended
December 31, December 31,
(millions of Canadian
dollars, unaudited) 2013 2012 2013 2012
----------------------------------------------------------------------------
(Note 14) (Note 14)
Cash generated from (used
in):
Operating activities
Net income $ 35.1 $ 24.7 $ 250.5 $ 35.6
Items not affecting cash:
Amortization 44.9 47.8 186.2 177.1
Income tax expense 5.6 8.1 88.2 12.4
Long-term portion of
deferred reforestation
obligations (0.3) 8.9 (9.6) 2.5
Foreign exchange (gain)
loss on long-term debt
and investments, net 3.4 2.0 8.9 (4.7)
Changes in mark-to-market
value of derivative
financial instruments 0.2 5.8 (4.4) 3.9
Employee future benefits 2.7 (11.2) 13.0 (0.7)
Net finance expense 6.4 8.7 27.9 33.8
Mill closure provisions 20.0 - 20.0 -
Gain on sale of joint
venture (Note 13) - - (38.3) -
Other, net 9.6 (1.7) 8.7 (8.2)
Defined benefit pension
plan contributions (14.0) (13.4) (53.0) (54.9)
Income taxes paid, net (0.3) (2.7) (0.3) (8.1)
----------------------------------------------------------------------------
113.3 77.0 497.8 188.7
Net change in non-cash
working capital (Note 9) (14.5) (49.4) (7.5) (71.3)
----------------------------------------------------------------------------
98.8 27.6 490.3 117.4
----------------------------------------------------------------------------
Financing activities
Change in operating bank
loans 74.6 10.0 47.6 27.0
Proceeds from long-term
debt 50.0 - 53.1 100.0
Repayment of long-term debt (116.6) - (192.9) (49.9)
Finance expenses paid (5.9) (7.6) (17.4) (19.5)
Share purchases (Note 8) (33.4) - (60.0) -
Acquisition of non-
controlling interests
(Note 8) - - (2.4) -
Cash distributions paid to
non-controlling interests (2.4) (0.4) (9.3) (15.9)
Other, net (0.1) - (0.1) 0.3
----------------------------------------------------------------------------
(33.8) 2.0 (181.4) 42.0
----------------------------------------------------------------------------
Investing activities
Additions to property,
plant and equipment and
intangible assets (67.5) (49.5) (237.3) (201.6)
Investment in Scotch & Gulf
Lumber, LLC (Note 12) (0.5) - (29.5) -
(Loan to) repayment from
Scotch & Gulf Lumber, LLC
(Note 12) 2.1 - (31.9) -
Proceeds on sale of Canfor-
LP OSB joint venture (Note
13) - - 77.9 -
Distributions from
(advances to) joint
venture (Note 13) - 6.0 16.5 13.5
Acquisition of Tembec
assets - - - (65.6)
Reimbursements from
Government under Green
Transformation Program - 0.7 - 19.7
Proceeds from redemption of
asset-backed commercial
paper - - - 12.9
Share exchange - - - 6.8
Other, net 0.5 6.0 2.0 11.2
----------------------------------------------------------------------------
(65.4) (36.8) (202.3) (203.1)
----------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents(i) (0.4) (7.2) 106.6 (43.7)
Cash and cash equivalents at
beginning of period(i) 89.9 (9.9) (17.1) 26.6
----------------------------------------------------------------------------
Cash and cash equivalents at
end of period(i) $ 89.5 $ (17.1) $ 89.5 $ (17.1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Cash and cash equivalents include cash on hand less unpresented cheques.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Canfor Corporation
Notes to the Condensed Consolidated Financial Statements
(unaudited, millions of Canadian dollars unless otherwise noted)
1. Basis of Preparation
These condensed consolidated interim financial statements (the "financial
statements") have been prepared in accordance with International Accounting
Standard ("IAS") 34 Interim Financial Reporting, and include the accounts of
Canfor Corporation and its subsidiary entities, hereinafter referred to as
"Canfor" or "the Company".
These financial statements do not include all of the disclosures required by
International Financial Reporting Standards ("IFRS") for annual financial
statements. Additional disclosures relevant to the understanding of these
financial statements, including the accounting policies applied, can be found in
Canfor's Annual Report for the year ended December 31, 2012, available at
www.canfor.com or www.sedar.com.
Canfor's financial results are impacted by seasonal factors such as weather and
building activity. Adverse weather conditions can cause logging curtailments,
which can affect the supply of raw materials to sawmills and pulp mills. Market
demand also varies seasonally to some degree. For example, building activity and
repair and renovation work, which affects demand for solid wood products, are
generally stronger in the spring and summer months. Shipment volumes are
affected by these factors as well as by global supply and demand conditions.
The currency of presentation for these financial statements is the Canadian dollar.
Changes in Accounting Policy
The Company has adopted the following new and revised Standards, along with any
consequential amendments, effective January 1, 2013. These changes were made in
accordance with the applicable transitional provisions.
-- The Company adopted IFRS 11, Joint Arrangements, which redefines joint
operations and joint ventures with a focus on the rights and obligations
of an arrangement, rather than its legal form. Under the new Standard,
joint ventures are accounted for using the equity method accounting as
set out in IAS 28, Investments in Associates and Joint Ventures, whereas
for a joint operation the venturer will recognize its share of the
assets, liabilities, revenue and expenses of the joint operations.
Canfor's 50% interest in the Canfor-LP OSB Limited Partnership ("Canfor-
LP OSB") was classified as a joint venture and accounted for using the
equity method. The Company has restated its comparative period results
for adoption of IFRS 11 (Note 14). Canfor sold its 50% interest in the
Canfor-LP OSB joint venture to the Louisiana Pacific Corporation ("LP")
on May 31, 2013 (Note 13).
-- The Company adopted the amended IAS 19, Employee Benefits, which changes
the recognition and measurement of defined benefit pension expense and
termination benefits and enhances the disclosure of all employee
benefits. Pension benefit cost is split between (i) the cost of benefits
accrued in the current period (service cost) and benefit changes (past-
service costs (including plan amendments, settlements and
curtailments)); and (ii) finance expense or income. Interest cost and
expected return on plan assets, which previously reflected different
rates, has been replaced with a net interest amount that is calculated
by applying one discount rate to the net defined benefit liability
(asset). The Company has restated its comparative period results for
adoption of amended IAS 19 (Note 14).
-- The Company also adopted IFRS 10, Consolidated Financial Statements,
IFRS 13, Fair Value Measurement, and IAS 1, Presentation of Financial
Statements, effective January 1, 2013. These Standards did not result in
material impacts on the amounts recorded in the financial statements of
Canfor.
Accounting Standards Issued and Not Applied
In May 2011, the International Accounting Standards Board ("IASB") issued IFRS
9, Financial Instruments. The required adoption date for IFRS 9 has been
deferred and is not expected until January 1, 2017, with early adoption
permitted. IFRS 9 is not expected to have a material impact on amounts recorded
in the financial statements of Canfor.
2. Inventories
As at As at
December 31, December 31,
(millions of Canadian dollars) 2013 2012
----------------------------------------------------------------------------
Logs $ 134.5 $ 119.4
Finished products 222.3 205.8
Residual fibre 14.9 11.5
Processing materials and supplies 100.2 94.6
----------------------------------------------------------------------------
$ 471.9 $ 431.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
3. Long-Term Investments and Other
As at As at
December 31, December 31,
(millions of Canadian dollars) 2013 2012
----------------------------------------------------------------------------
Investments $ 53.8 $ 23.7
Term loan to Scotch & Gulf Lumber, LLC
(Note 12) 33.0 -
Contingent consideration (Note 13) 11.4 -
Other deposits, loans and advances 14.3 19.5
----------------------------------------------------------------------------
$ 112.5 $ 43.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
On August 9, 2013, Canfor completed the first phase of the purchase of Scotch &
Gulf Lumber, LLC ("Scotch Gulf"). Included in Long-term Investments and Other is
Canfor's initial 25% interest in Scotch Gulf and a term loan receivable from
Scotch Gulf (Note 12). Investments also includes the Company's 33.3% investment
in Lakeland Mills Ltd. and Winton Global Lumber Ltd. The Company does not
exercise significant influence over Lakeland Mills Ltd. or Winton Global Lumber
Ltd.
4. Operating Loans and Long-Term Debt
(a) Available Operating Loans
As at As at
December December
31, 31,
(millions of Canadian dollars) 2013 2012
----------------------------------------------------------------------------
Canfor (excluding CPPI)
Available Operating Loans:
Total operating loans - Canfor (excluding
CPPI) $ 350.0 $ 350.0
Drawn (64.0) (27.0)
Letters of credit (principally unregistered
pension plans) (14.8) (18.0)
----------------------------------------------------------------------------
Total available operating loans - Canfor
(excluding CPPI) $ 271.2 $ 305.0
----------------------------------------------------------------------------
CPPI
Available Operating Loans:
Operating loan facility $ 110.0 $ 110.0
Facility for letters of credit related to
energy agreements 20.0 7.5
----------------------------------------------------------------------------
Total operating loans - CPPI 130.0 117.5
Drawn (10.6) -
Energy letters of credit (12.2) (9.2)
----------------------------------------------------------------------------
Total available operating loans - CPPI $ 107.2 $ 108.3
----------------------------------------------------------------------------
Consolidated:
Total operating loans $ 480.0 $ 467.5
Total available operating loans $ 378.4 $ 413.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Canfor's principal operating loans, excluding Canfor Pulp Products Inc.
("CPPI"), mature on February 28, 2018. Interest is payable at floating rates
based on the lenders' Canadian prime rate, bankers acceptances, US dollar base
rate or US dollar LIBOR rate, plus a margin that varies with the Company's net
debt to total capitalization ratio.
The terms of CPPI's operating loan facility include interest payable at floating
rates that vary depending on the ratio of net debt to total capitalization and
is based on lenders' Canadian prime rate, bankers acceptances, US dollar base
rate or US dollar LIBOR rate, plus a margin. The facility has certain financial
covenants that stipulate maximum net debt to total capitalization ratios and
minimum net worth amounts based on shareholders' equity. In the fourth quarter
of 2013, CPPI extended the maturity date of the operating loan facility from
November 13, 2016 to January 31, 2018.
Also, in the fourth quarter of 2013, CPPI replaced its facility for
energy-related letters of credit with a new $20.0 million facility maturing on
June 30, 2015. At December 31, 2013, $9.8 million of energy-related letters of
credit were covered under the new facility.
As at December 31, 2013, the Company and CPPI were in compliance with all
covenants relating to their operating loans. Substantially all borrowings of
CPPI (operating loans and long-term debt) are non-recourse to other entities
within the Company.
(b) Long-Term Debt
On November 5, 2013, CPPI completed a $50.0 million unsecured non-revolving term
debt financing, which is repayable on November 5, 2018 with no penalty for early
repayment. The interest rate on the new term debt is based on the lender's
Canadian prime rate, or bankers acceptance rate in the year of payment. On
November 29, 2013, CPPI repaid its $116.6 million (US$110.0 million) 6.41% term
debt.
At December 31, 2013, the fair value of the Company's long-term debt
approximates its amortized cost of $153.1 million (2012 - $288.8 million).
5. Employee Future Benefits
For the three months ended December 31, 2013, an amount of $54.6 million (before
tax) was credited to other comprehensive income. The gain reflects the return on
plan assets coupled with a higher discount rate used to value the net defined
benefit obligation offset in part by adjustments to mortality rate assumptions.
For the twelve months ended December 31, 2013, the gain was $123.9 million
(before tax). For the three months ended December 31, 2012, an amount of $4.8
million (before tax) was charged to other comprehensive income and for the
twelve months ended December 31, 2012, the charge was $56.8 million (before
tax).
At December 31, 2013, certain post-employment defined benefit pension plans are
in a surplus position of $42.2 million (2012 - $1.4 million) reflecting the
credit to other comprehensive income and employer contributions to the pension
plans during 2013.
For the Company's defined benefit plans, a one percentage point increase in the
discount rate used in calculating the actuarial estimate of future liabilities
would decrease the accrued benefit obligation by an estimated $78.1 million.
The assumptions used to estimate the changes in net accrued benefit liabilities
were as follows:
----------------------------------------------------------------------------
Pension Benefit Plans
Discount rate
December 31, 2013 4.80%
September 30, 2013 4.70%
December 31, 2012 4.20%
September 30, 2012 4.30%
December 31, 2011 5.00%
Rate of return on plan assets
12 months ended December 31, 2013 13.70%
9 months ended September 30, 2013 6.60%
12 months ended December 31, 2012 9.40%
9 months ended September 30, 2012 6.60%
----------------------------------------------------------------------------
Other Benefit Plans
Discount rate
December 31, 2013 4.90%
September 30, 2013 4.80%
December 31, 2012 4.40%
September 30, 2012 4.50%
December 31, 2011 5.30%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
6. Financial Instruments
Canfor's cash and cash equivalents, accounts receivable, other deposits, loans
and advances, operating loans, accounts payable and accrued liabilities, and
long-term debt are measured at amortized cost subsequent to initial measurement.
The fair value of long-term debt is disclosed in Note 4(b).
Derivative instruments are measured at fair value. IFRS 13, Fair Value
Measurement, requires classification of financial instruments within a hierarchy
that prioritizes the inputs to fair value measurement.
The three levels of the fair value hierarchy are:
Level 1 - Unadjusted quoted prices in active markets for identical
assets or liabilities;
Level 2 - Inputs other than quoted prices that are observable for the
asset or liability, either directly or indirectly;
Level 3 - Inputs that are not based on observable market data.
The following table summarizes Canfor's financial instruments measured at fair
value at December 31, 2013 and December 31, 2012, and shows the level within the
fair value hierarchy in which they have been classified:
As at As at
Fair Value December December
Hierarchy 31, 31,
(millions of Canadian dollars) Level 2013 2012
----------------------------------------------------------------------------
Financial assets measured at fair value
Derivative financial instruments -
held for trading Level 2 $ 0.6 $ 0.7
Royalty receivable - available for
sale Level 3 5.3 6.5
Contingent consideration - available
for sale (Note 13) Level 3 12.8 -
----------------------------------------------------------------------------
$ 18.7 $ 7.2
----------------------------------------------------------------------------
Financial liabilities measured at fair
value
Derivative financial instruments -
held for trading Level 2 $ 0.3 $ 4.8
----------------------------------------------------------------------------
$ 0.3 $ 4.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The royalty receivable and contingent consideration are measured at fair value
at each reporting period and are presented in Other Accounts Receivable and
Long-term Investments and Other on the consolidated balance sheet. The fair
value of the royalty receivable is determined by discounting future expected
cash flows based on energy price assumptions and future sales volume assumptions
until the termination of the royalty agreement in September 2015. The fair value
of the contingent consideration is determined by discounting future expected
cash flows based on forecast OSB prices, sales volumes and margins for the Peace
Valley OSB operation (Note 13).
The Company uses a variety of derivative financial instruments to reduce its
exposure to risks associated with fluctuations in foreign exchange rates, lumber
prices, energy costs, electricity sales and floating interest rates on long-term
debt. At December 31, 2013, the fair value of derivative financial instruments
was a net asset of $0.3 million (December 31, 2012 - net liability of $4.1
million). The fair value of these financial instruments was determined based on
prevailing market rates for instruments with similar characteristics.
The following table summarizes the gain (loss) on derivative financial
instruments for the three and twelve month periods ended December 31, 2013 and
2012:
3 months ended 12 months ended
December 31, December 31,
(millions of Canadian
dollars) 2013 2012 2013 2012
----------------------------------------------------------------------------
Foreign exchange collars and
forward contracts $ 0.3 $ (1.0) $ 0.2 $ 3.2
Energy derivatives 0.1 (0.3) 0.2 0.6
Lumber futures 0.2 (7.5) 4.2 (3.6)
Pulp futures (0.1) - (0.1) -
Interest rate swaps (0.7) 0.1 (0.1) (1.0)
----------------------------------------------------------------------------
$ (0.2) $ (8.7) $ 4.4 $ (0.8)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The following table summarizes the fair value of the derivative financial
instruments included in the balance sheet at December 31, 2013 and December 31,
2012:
As at As at
December 31, December 31,
(millions of Canadian dollars) 2013 2012
----------------------------------------------------------------------------
Foreign exchange collars and forward contracts $ 0.3 $ 0.3
Energy derivatives 0.1 0.3
Lumber futures 0.2 (4.1)
Pulp futures (0.1) -
Interest rate swaps (0.2) (0.6)
----------------------------------------------------------------------------
Total asset (liability), net 0.3 (4.1)
Less: current portion asset (liability), net 0.4 (3.5)
----------------------------------------------------------------------------
Long-term portion asset (liability), net $ (0.1) $ (0.6)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
7. Income Taxes
3 months ended December 12 months ended December
31, 31,
(millions of Canadian
dollars) 2013 2012 2013 2012
----------------------------------------------------------------------------
Current $ (10.0) $ (2.2) $ (21.6) $ (2.9)
Deferred 4.4 (5.9) (66.6) (9.5)
----------------------------------------------------------------------------
Income tax expense $ (5.6) $ (8.1) $ (88.2) $ (12.4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The reconciliation of income taxes calculated at the statutory rate to the
actual income tax provision is as follows:
3 months ended 12 months ended
December 31, December 31,
(millions of Canadian dollars) 2013 2012 2013 2012
----------------------------------------------------------------------------
Income tax expense at statutory
rate 2013 - 25.75% (2012 -
25.0%)(1) $ (10.5) $ (8.2) $ (87.2) $ (12.0)
Add (deduct):
Non-taxable income related to
non-controlling interests in
limited partnerships - 0.2 0.3 1.7
Entities with different income
tax rates and other tax
adjustments 5.4 0.3 0.5 (2.3)
Permanent difference from
capital gains and losses and
other non-deductible items (0.5) (0.4) 3.6 0.2
Change in substantively
enacted tax rate(1) - - (5.4) -
----------------------------------------------------------------------------
Income tax expense $ (5.6) $ (8.1) $ (88.2) $ (12.4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Effective April 1, 2013, the British Columbia Provincial Government
increased the corporate tax rate from 10% to 11%.
In addition to the amounts recorded to net income, a tax expense of $14.2
million was recorded to other comprehensive income for the three month period
ended December 31, 2013 (three months ended December 31, 2012 - tax recovery of
$1.2 million) in relation to the actuarial gains/losses on defined benefit
employee compensation plans. For the twelve months ended December 31, 2013, the
tax expense was $32.2 million (twelve months ended December 31, 2012 - recovery
of $14.4 million).
8. Earnings Per Share and Normal Course Issuer Bid
Basic net income per share is calculated by dividing the net income available to
common shareholders by the weighted average number of common shares outstanding
during the period. As at December 31, 2013 and 2012, there were no outstanding
stock options.
3 months ended December 31, 12 months ended December 31,
2013 2012 2013 2012
----------------------------------------------------------------------------
Weighted average
number of
common shares 140,691,040 142,752,431 141,959,473 142,749,096
----------------------------------------------------------------------------
----------------------------------------------------------------------------
On March 5, 2013, the Company commenced a normal course issuer bid whereby it
can purchase for cancellation up to 7,137,621 common shares or approximately 5%
of its issued and outstanding common shares. The normal course issuer bid is set
to expire on March 4, 2014. During the fourth quarter of 2013, Canfor purchased
1,474,600 common shares for $33.4 million. For the twelve months ended December
31, 2013, Canfor purchased 2,847,838 common shares for $60.0 million. Under a
separate normal course issuer bid, CPPI purchased shares from non-controlling
shareholders increasing Canfor's ownership of CPPI from 50.2% at December 31,
2012 to 50.4% at December 31, 2013. There were no shares purchased by CPPI
during the fourth quarter of 2013.
9. Net Change in Non-Cash Working Capital
3 months ended 12 months ended
December 31, December 31,
(millions of Canadian dollars) 2013 2012 2013 2012
----------------------------------------------------------------------------
Accounts receivable $ 21.0 $ 12.7 $ 10.6 $ 2.4
Inventories (22.9) (40.0) (39.0) (57.5)
Prepaid expenses and other assets 6.4 9.5 (8.1) (1.9)
Accounts payable, accrued
liabilities and current portion
of deferred reforestation
obligations (19.0) (31.6) 29.0 (14.3)
----------------------------------------------------------------------------
Net increase in non-cash working
capital $ (14.5) $ (49.4) $ (7.5) $ (71.3)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
10. Segment Information
Canfor has two reportable segments (lumber segment and pulp and paper segment)
which offer different products and are managed separately because they require
different production processes and marketing strategies.
Sales between segments are accounted for at prices that approximate fair value.
These include sales of residual fibre from the lumber segment to the pulp and
paper segment for use in the pulp production process.
The Company's panels business does not meet the criteria to be reported fully as
a separate segment and is included in Unallocated & Other below. On May 31,
2013, Canfor sold its 50% share of Canfor-LP OSB (Note 13). Prior to completion
of the sale, the Company's share of Canfor-LP OSB's 2013 sales and operating
income was $43.5 million and $16.1 million, respectively. As a result of the
classification of Canfor's investment in Canfor-LP OSB as held for sale, these
amounts were not included in the segment results of the Company.
(millions of Pulp & Unallocated Elimination
Canadian dollars) Lumber Paper & Other Adjustment Consolidated
----------------------------------------------------------------------------
3 months ended
December 31, 2013
Sales to external
customers $ 533.7 275.8 - - $ 809.5
Sales to other
segments $ 32.6 - - (32.6) $ -
Operating income
(loss) $ 37.4 23.2 (6.8) - $ 53.8
Amortization $ 28.7 16.0 0.2 - $ 44.9
Capital
expenditures(1) $ 43.5 20.1 3.9 - $ 67.5
----------------------------------------------------------------------------
3 months ended
December 31, 2012
Sales to external
customers $ 469.9 228.4 2.0 - $ 700.3
Sales to other
segments $ 26.1 - - (26.1) $ -
Operating income
(loss) $ 42.5 12.0 (5.5) - $ 49.0
Amortization $ 26.6 20.5 0.7 - $ 47.8
Capital
expenditures(1) $ 34.7 12.8 2.0 - $ 49.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
12 months ended
December 31, 2013
Sales to external
customers $2,192.2 999.4 3.3 - $ 3,194.9
Sales to other
segments $ 131.9 - - (131.9) $ -
Operating income
(loss) $ 285.1 72.2 (26.0) - $ 331.3
Amortization $ 113.5 71.8 0.9 - $ 186.2
Capital
expenditures(1) $ 164.7 62.6 10.0 - $ 237.3
Identifiable assets $1,715.8 770.3 207.2 - $ 2,693.3
----------------------------------------------------------------------------
12 months ended
December 31, 2012
Sales to external
customers $1,711.8 923.5 7.5 - $ 2,642.8
Sales to other
segments $ 111.9 - - (111.9) $ -
Operating income
(loss) $ 75.6 27.6 (31.9) - $ 71.3
Amortization $ 101.8 69.0 6.3 - $ 177.1
Capital
expenditures(1) $ 110.9 88.7 2.0 - $ 201.6
Identifiable assets $1,553.3 774.6 162.7 - $ 2,490.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Capital expenditures represent cash paid for capital assets, excluding
acquisition of Tembec assets in 2012. Pulp & Paper includes capital
expenditures by CPPI that were financed by the federal government-funded
Green Transformation Program and other government grants.
11. Timber Exchange
On October 24, 2013, Canfor entered into an agreement with West Fraser Mills
Ltd. ("West Fraser") to exchange forest tenure rights. Canfor exchanged 382,194
cubic metres of replaceable forest license allowable annual cut in the Quesnel
Timber Supply Area and 53,627 cubic metres of replaceable forest license
allowable annual cut in the Lakes Timber Supply Area with West Fraser for
324,500 cubic metres of replaceable forest license allowable annual cut in the
Morice Timber Supply Area as well as a non-replaceable license and undercut
volumes. The timber exchange was treated as a non-monetary transaction in the
Company's fourth quarter of 2013's financial statements and resulted in a
pre-tax loss of $4.2 million in the current period. The estimated fair value of
the timber tenures exchanged between Canfor and West Fraser was $20.0 million.
12. Phased Purchase of Scotch & Gulf Lumber, LLC
On August 9, 2013, the Company completed the first phase of the purchase of
Scotch Gulf for $29.5 million, representing an initial 25% interest in Scotch
Gulf, plus transaction closing costs and a proportionate share of working
capital. Canfor's initial 25% interest will increase over a 3 year period to 33%
after twelve months, 50% after eighteen months and 100% at the end of the term.
Scotch Gulf has an option under the purchase agreement to accelerate the final
closing of the phased purchase to a date earlier than August 2016 under certain
conditions. The aggregate purchase price for Scotch Gulf is US$80.0 million,
plus working capital. Canfor's commitment to purchase Scotch Gulf at a fixed
price represents an equity financial instrument.
As part of the transaction, Scotch Gulf borrowed $34.0 million from Canfor in
the form of a term loan that will be repaid from the distribution of cash
earnings over the course of the phased purchase agreement with any net
outstanding amount at August 2016 applied against the final phase purchase price
payment. The term loan has an interest rate equal to the floating rate on
Canfor's principal operating loans plus 1.0% and is secured by Scotch Gulf's
operating assets. At December 31, 2013, $33.0 million was outstanding on the
term loan receivable which is included in Long-term Investments and Other on the
balance sheet (Note 3).
13. Sale of Canfor-LP OSB Joint Venture
On May 31, 2013, the Company completed the sale of its 50% share in Canfor-LP
OSB, which owns the Peace Valley OSB mill, to LP for cash proceeds of $77.9
million including working capital. A pre-tax gain on sale of $38.3 million was
recorded in the second quarter of 2013 which included recognition of Canfor's
share of the operating income for the first half of 2013.
As part of the sale, Canfor may receive additional annual consideration over a 3
year period, starting June 1, 2013, contingent on Peace Valley OSB's annual
adjusted earnings before interest, tax, depreciation and amortization. At
December 31, 2013, the fair value of the contingent consideration is $12.8
million, with the current portion presented in Other Accounts Receivable and the
long-term portion presented in Long-Term Investments and Other (Note 3). During
the fourth quarter of 2013, Canfor recognized a $4.8 million negative fair value
adjustment on the contingent consideration in other expense.
14. Transition to New Accounting Standards
Effective January 1, 2013, the Company adopted IFRS 11, Joint Arrangements, and
as a result reclassified its 50% interest in Canfor-LP OSB from a jointly
controlled entity to a joint venture. The Company's interest in Canfor-LP OSB
was previously accounted for using the proportionate consolidation method of
accounting and upon adoption of the new Standard was accounted for using the
equity method of accounting. The comparative period financial statements have
been restated for adoption of IFRS 11 with impacts to the financial statements
discussed below.
The adoption of IFRS 11 resulted in a decrease in sales of $71.3 million and a
decrease in operating income of $7.0 million for the twelve months ended
December 31, 2012 (for the three months ended December 31, 2012, a decrease of
$21.5 million and a decrease of $3.4 million, respectively). IFRS 11 had no
impact on net income or other comprehensive income in the comparative periods.
Further, adoption of IFRS 11 resulted in a decrease in cash flow from operating
activities of $13.8 million and an increase in cash flow from investing
activities of $13.7 million for the twelve months ended December 31, 2012 (for
the three months ended December 31, 2012, a decrease in cash flows from
operating activities of $5.8 million and an increase in cash flow from investing
activities of $6.2 million).
Also effective January 1, 2013, the Company adopted amended IAS 19, Employee
Benefits, which amends certain requirements for defined benefit plans and
termination benefits. The comparative period financial statements have been
restated for adoption of revised IAS 19 with impacts to the financial statements
discussed below.
The adoption of amended IAS 19 resulted in an increase in operating income of
$1.4 million, an increase of finance expense of $9.1 million and a decrease in
income tax expense of $1.9 million for the twelve months ended December 31, 2012
(for the three months ended December 31, 2012, an increase of $2.3 million, and
an increase of $2.2 million, respectively). Amended IAS 19 decreased net income
by $5.8 million and increased other comprehensive income by $8.0 million
(after-tax) for the twelve months ended December 31, 2012 (for the three months
ended December 31, 2012, $0.1 million increase to net income and an increase to
other comprehensive income of $2.1 million (after-tax), respectively). The
impact on earnings per share for the twelve months ended December 31, 2012 was a
decrease of $0.04 per share (three months ended December 31, 2012 - no change in
earnings per share).
The impacts to the current period condensed consolidated statement of income
(loss) and the current period condensed consolidated statement of other
comprehensive income (loss) as a result of amended IAS 19 are comparable to the
impacts in 2012 (disclosed above). Refer to the Company's first quarter 2013
interim financial statements for impacts to the condensed consolidated opening
balance sheet at January 1, 2012 and the comparative balance sheet at December
31, 2012.
FOR FURTHER INFORMATION PLEASE CONTACT:
Canfor Corporation - Media Contact:
Christine Kennedy
Vice President, Public Affairs & Corporate Communications
(604) 661-5225
Christine.Kennedy@canfor.com
Canfor Corporation - Investor Contact:
Pat Elliott
Vice President & Treasurer
(604) 661-5441
Patrick.Elliott@canfor.com
www.canfor.com
1 Year Silver Pursuit Resources Ltd. Chart |
1 Month Silver Pursuit Resources Ltd. Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
