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West Fraser Announces Fourth Quarter Results


VANCOUVER, BC--(Marketwired - February 11, 2016) - West Fraser (TSX: WFT) reported a loss $15 million or $(0.18) basic earnings per share on sales of $1,013 million in the fourth quarter of 2015 and earnings of $104 million or $1.25 basic earnings per share on sales of $4,100 million for 2015. These results compare with previous periods as shown in the table below.

Adjusted EBITDA, Adjusted earnings and Adjusted basic EPS as described in this News Release reflect the adjustments described in the tables referred to in the section titled "Non-IFRS Measures" on page 22 of our 2015 Management's Discussion & Analysis.

                                                                            
----------------------------------------------------------------------------
($millions except earnings per                   2015              2014     
share ("EPS"))                              Q4      Q3    YTD     Q4    YTD 
----------------------------------------------------------------------------
Sales                                     1,013   1,044  4,100    964  3,856
Adjusted EBITDA(1)                           90      82    417    157    621
Operating earnings                           18      88    249     83    406
Earnings                                    (15)     56    104     43    259
Basic EPS ($)                             (0.18)   0.67   1.25   0.51   3.06
Adjusted earnings(1)                         30      36    176     84    327
Adjusted basic EPS ($)(1)                  0.38    0.42   2.12   1.00   3.86
----------------------------------------------------------------------------
1. In this News Release, reference is made to Adjusted EBITDA, Adjusted     
earnings and Adjusted basic EPS (collectively "these measures"). We believe 
that, in addition to earnings, these measures are useful performance        
indicators. None of these measures is a generally accepted earnings measure 
under International Financial Reporting Standards ("IFRS") and none has a   
standardized meaning prescribed by IFRS. Investors are cautioned that none  
of these measures should be considered as an alternative to earnings, EPS or
cash flow, as determined in accordance with IFRS. As there is no            
standardized method of calculating any of these measures, our method of     
calculating each of them may differ from the methods used by other entities 
and, accordingly, our use of any of these measures may not be directly      
comparable to similarly titled measures used by other entities. Refer to the
tables in the section titled "Non-IFRS Measures" on page 22 of our 2015     
Management's Discussion & Analysis for details of these adjustments.        

Operational Results

In the quarter our lumber operations generated operating earnings of $17 million (Q3-15 -- operating loss of $9 million) and Adjusted EBITDA of $55 million (Q3-15 -- $26 million). An increase in U.S. SYP and low-grade SPF lumber prices and a slightly weaker Canadian dollar were major factors in the improvement on a quarter to quarter basis. The benefit of increased shipments from our Canadian mills was offset by a decrease in production and shipments from our U.S. sawmills.

Our panels segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $16 million (Q3-15 -- $26 million) and Adjusted EBITDA of $19 million (Q3-15 -- $29 million). Plywood and MDF markets experienced a seasonal decline and prices decreased accordingly.

Our pulp & paper segment generated operating earnings of $8 million (Q3-15 -- $14 million) and Adjusted EBITDA of $17 million (Q3-15 -- $25 million). Production and shipments from our pulp mills were similar to the previous quarter but key prices declined. Newsprint shipments improved but prices continued their secular decline.

Outlook

"We weathered a sharp deterioration in lumber prices in 2015 which was the result of a number of external factors such as a delayed building season due to poor weather in the first quarter of 2015 and a significant slowdown in demand from China during the third quarter. We expect U.S. housing to continue to improve in 2016 and currently are experiencing strong demand for lumber from our customers in China. We are continuing to focus on those factors that are within our control: all the elements of operational excellence. On that front, I am encouraged that we are improving many aspects of our performance and that throughout our Company our people are focused on taking advantage of all the opportunities that are presented to us," said Ted Seraphim, our President and CEO.

We are also announcing that on April 19, 2016 Hank Ketcham will relinquish the title of Executive Chairman and will become our non-executive Chairman of the Board. This step completes the transition of our senior executive position to Ted Seraphim, our President and Chief Executive Officer. Hank Ketcham has been the senior member of our executive team since his appointment as President and Chief Executive Officer in 1985. Ted Seraphim commented: "I know that Hank will continue to play a key role at West Fraser and I look forward to receiving his counsel and advice in the future."

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

The Company's consolidated financial statements for the year ended December 31, 2015 and related MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.

/EINPresswire.com/ -- Dividend Declared

The Board of Directors of the Company has declared a dividend of $0.07 per share on the Common shares and the Class B Common shares in the capital of the Company, payable on April 4, 2016 to shareholders of record on March 21, 2016.

Dividends are designated to be eligible dividends pursuant to subsection 89(14) of the Income Tax Act (Canada) and any applicable provincial legislation pertaining to eligible dividends.

The Company

West Fraser is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States.

Forward-Looking Statements

This Report contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook", are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2015 annual Management's Discussion & Analysis under "Risks and Uncertainties", and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.

Conference Call

Investors are invited to listen to the quarterly conference call on Friday, February 12, 2016 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-866-225-0198 (toll- free North America). The call may also be accessed through West Fraser's website at www.westfraser.com.

                                                                            
West Fraser Timber Co. Ltd.                                                 
Condensed Consolidated Balance Sheets                                       
(in millions of Canadian dollars, except where indicated -- unaudited)      
                                                                            
                                                   December 31   December 31
                                                          2015          2014
----------------------------------------------------------------------------
Assets                                                                      
Current assets                                                              
Cash and short-term investments                  $         13  $          21
Receivables                                               298            288
Income taxes receivable                                    11              -
Inventories (note 3)                                      631            586
Prepaid expenses                                           18             12
----------------------------------------------------------------------------
                                                          971            907
Property, plant and equipment                           1,609          1,469
Timber licences                                           570            530
Goodwill and other intangibles                            369            350
Other assets                                               36             79
Deferred income tax assets                                 80             62
----------------------------------------------------------------------------
                                                 $      3,635  $       3,397
----------------------------------------------------------------------------
                                                                            
Liabilities                                                                 
Current liabilities                                                         
Cheques issued in excess of funds on deposit     $         29  $          36
Operating loans                                           178            103
Payables and accrued liabilities                          351            411
Income taxes payable                                        -             26
Reforestation and decommissioning obligations              48             40
----------------------------------------------------------------------------
                                                          606            616
Long-term debt                                            423            354
Other liabilities                                         269            244
Deferred income tax liabilities                           190            154
----------------------------------------------------------------------------
                                                        1,488          1,368
----------------------------------------------------------------------------
                                                                            
Shareholders' Equity                                                        
Share capital                                             579            587
Accumulated other comprehensive earnings                  164             55
Retained earnings                                       1,404          1,387
----------------------------------------------------------------------------
                                                        2,147          2,029
----------------------------------------------------------------------------
                                                 $      3,635  $       3,397
----------------------------------------------------------------------------
Number of Common shares and Class B Common shares outstanding at February   
11, 2016 was 82,457,433.                                                    
                                                                            
                                                                            
West Fraser Timber Co. Ltd.                                                 
Condensed Consolidated Statements of Changes in Shareholders' Equity        
(in millions of Canadian dollars, except where indicated -- unaudited)      
                                                                            
                                            October 1 to        January 1 to
                                             December 31         December 31
                                         2015       2014     2015       2014
----------------------------------------------------------------------------
                                                                            
Share capital                                                               
Balance -- beginning of period       $    579  $    589  $    587  $    602 
Common share repurchases                    -        (2)       (8)      (15)
----------------------------------------------------------------------------
Balance -- end of period             $    579  $    587  $    579  $    587 
----------------------------------------------------------------------------
                                                                            
Accumulated other comprehensive                                             
 earnings                                                                   
Balance -- beginning of period       $    139  $     36  $     55  $     10 
Translation gain on foreign                                                 
 operations                                25        19       109        45 
----------------------------------------------------------------------------
Balance -- end of period             $    164  $     55  $    164  $     55 
----------------------------------------------------------------------------
                                                                            
Retained earnings                                                           
Balance -- beginning of period       $  1,406  $  1,404  $  1,387  $  1,335 
Actuarial gain (loss) on post-                                              
 retirement benefits                       19       (38)      (12)      (87)
Common share repurchases                    -       (16)      (52)      (96)
Earnings for the period                   (15)       43       104       259 
Dividends                                  (6)       (6)      (23)      (24)
----------------------------------------------------------------------------
Balance -- end of period             $  1,404  $  1,387  $  1,404  $  1,387 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Shareholders' Equity                 $  2,147  $  2,029  $  2,147  $  2,029 
----------------------------------------------------------------------------
                                                                             
West Fraser Timber Co. Ltd.                                                 
Condensed Consolidated Statements of Earnings and Comprehensive Earnings    
(in millions of Canadian dollars, except where indicated - unaudited)       
                                                                            
                                         October 1 to          January 1 to 
                                          December 31           December 31 
                                     2015        2014      2015        2014 
----------------------------------------------------------------------------
                                                                            
Sales                            $  1,013   $     964  $  4,100   $   3,856 
----------------------------------------------------------------------------
                                                                            
Costs and expenses                                                          
Cost of products sold                 712         631     2,874       2,538 
Freight and other distribution                                              
 costs                                160         137       627         548 
Export taxes                            3           -        29           - 
Amortization                           50          43       191         170 
Selling, general and                                                        
 administration                        48          39       153         149 
Equity-based compensation              22          31       (23)         45 
----------------------------------------------------------------------------
                                      995         881     3,851       3,450 
----------------------------------------------------------------------------
Operating earnings                     18          83       249         406 
Finance expense                        (6)         (6)      (29)        (26)
Other (note 4)                        (16)         (7)      (64)         (5)
----------------------------------------------------------------------------
Earnings before tax                    (4)         70       156         375 
Tax provision (note 5)                (11)        (27)      (52)       (116)
----------------------------------------------------------------------------
Earnings                         $    (15)  $      43  $    104   $     259 
----------------------------------------------------------------------------
                                                                            
Earnings per share (dollars)                                                
 (note 6)                                                                   
Basic                            $  (0.18)  $    0.51  $   1.25   $    3.06 
Diluted                          $  (0.18)  $    0.51  $   0.89   $    3.06 
----------------------------------------------------------------------------
                                                                            
Comprehensive earnings                                                      
Earnings                         $    (15)  $      43  $    104   $     259 
Other comprehensive earnings                                                
Translation gain on foreign                                                 
 operations                            25          19       109          45 
Actuarial gain (loss) on post-                                              
 retirement benefits (1)               19         (38)      (12)        (87)
----------------------------------------------------------------------------
Comprehensive earnings           $     29   $      24  $    201   $     217 
----------------------------------------------------------------------------
1. Net of tax provision of $7 million for the three months ended December   
31, 2015 (three months ended December 31, 2014 -- $14 million recovery) and 
$5 million tax recovery for the year ended December 31, 2015 (year ended    
December 31, 2014 -- $31 million recovery).                                 
                                                                            
West Fraser Timber Co. Ltd.                                                 
Condensed Consolidated Statements of Cash Flows                             
(in millions of Canadian dollars, except where indicated -- unaudited)      
                                                                            
                                 October 1 to December January 1 to December
                                                   31                    31 
                                     2015        2014      2015        2014 
----------------------------------------------------------------------------
Operating activities                                                        
Earnings                         $    (15)  $      43  $    104   $     259 
Adjustments                                                                 
  Amortization                         50          43       191         170 
  Finance expense                       6           6        29          26 
  Exchange loss on long-term                                                
   debt                                15          12        67          29 
  Fair value adjustment to power                                            
   agreements                           3           2        32           2 
  Tax provision                        11          27        52         116 
  Income taxes paid                    (5)        (14)      (67)        (68)
  Post-retirement expense              20          13        71          54 
  Contributions to post-                                                    
   retirement benefit plans           (34)        (27)      (78)        (69)
  Other                                (7)         (4)      (21)        (29)
Changes in non-cash working                                                 
 capital                                                                    
  Receivables                          20          25         1           3 
  Inventories                         (68)        (60)      (16)        (28)
  Prepaid expenses                      2           7        (4)          - 
  Payables and accrued                                                      
   liabilities                        (26)        (32)      (60)         10 
----------------------------------------------------------------------------
Cash flows from operating                                                   
 activities                           (28)         41       301         475 
----------------------------------------------------------------------------
                                                                            
Financing activities                                                        
Repayment of long-term debt             -        (339)        -        (339)
Proceeds from long-term debt            -         339         -         339 
Proceeds from operating loans         137          61        68         106 
Finance expense paid                  (10)        (10)      (22)        (22)
Dividends                              (6)         (6)      (23)        (24)
Common share repurchases                -         (18)      (60)       (111)
Other                                   -          (3)       (1)         (4)
----------------------------------------------------------------------------
Cash flows from financing                                                   
 activities                           121          24       (38)        (55)
----------------------------------------------------------------------------
                                                                            
Investing activities                                                        
Acquisitions                          (76)         (5)      (76)       (208)
Additions to capital assets           (51)        (89)     (220)       (410)
Government assistance                   4           4         4          17 
Other                                  (1)          -         4          (9)
----------------------------------------------------------------------------
Cash flows from investing                                                   
 activities                          (124)        (90)     (288)       (610)
----------------------------------------------------------------------------
                                                                            
Change in cash                        (31)        (25)      (25)       (190)
Foreign exchange effect on cash        12           3        24          13 
Cash - beginning of period              3           7       (15)        162 
----------------------------------------------------------------------------
Cash - end of period             $    (16)  $     (15) $    (16)  $     (15)
----------------------------------------------------------------------------
                                                                            
Cash consists of                                                            
Cash and short-term investments                        $     13   $      21 
Cheques issued in excess of                                                 
 funds on deposit                                           (29)        (36)
----------------------------------------------------------------------------
                                                       $    (16)  $     (15)
----------------------------------------------------------------------------
                                                                            

West Fraser Timber Co. Ltd.
Notes to Condensed Consolidated Interim Financial Statements
(figures are in millions of dollars, except where indicated -- unaudited)

1. Nature of operations 

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

2. Basis of presentation 

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 -- Interim Financial Reporting and using the same accounting policies and methods of their application as the December 31, 2015 annual audited consolidated financial statements and their accompanying notes ("Financial Statements"). These condensed consolidated interim financial statements should be read in conjunction with our 2015 Financial Statements.

3. Inventories

Inventories at December 31, 2015 were written down by $21 million (September 30, 2015 -- $37 million; December 31, 2014 -- $5 million) to reflect net realizable value being lower than cost.

4. Other                   

----------------------------------------------------------------------------
                                         October 1 to          January 1 to 
                                          December 31           December 31 
                                     2015        2014      2015        2014 
----------------------------------------------------------------------------
Foreign exchange gain on working                                            
 capital                         $      9   $       5  $     28   $      13 
Foreign exchange gain on                                                    
 intercompany financing                 1           2         9           5 
Foreign exchange loss on long-                                              
 term debt                            (15)        (12)      (67)        (29)
Writedown of investment                (7)          -        (7)          - 
Fair value adjustment to power                                               
 agreements                            (3)         (2)      (32)         (2)
Gain on asset sales                     1           1         2           3 
Other                                  (2)         (1)        3           5 
----------------------------------------------------------------------------
                                 $    (16)  $      (7) $    (64)  $      (5)
----------------------------------------------------------------------------

5. Tax provision 

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

----------------------------------------------------------------------------
                                         October 1 to          January 1 to 
                                          December 31           December 31 
                                     2015        2014      2015        2014 
----------------------------------------------------------------------------
Income tax expense at statutory                                             
 rate of 26%                     $      2   $     (19) $    (40)  $     (98)
Non-taxable amounts                    (8)         (7)       (1)        (11)
Rate differentials between                                                  
 jurisdictions and on specified                                             
 activities                             1          (2)        5          (8)
Unrecognized capital losses            (6)          -        (9)          - 
Increase in Alberta statutory                                               
 tax rate                               -           -        (7)          - 
Other                                   -           1         -           1 
----------------------------------------------------------------------------
Tax provision                    $    (11)  $     (27) $    (52)  $    (116)
----------------------------------------------------------------------------

6. Earnings per share                 

Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.

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

----------------------------------------------------------------------------
                                            October 1 to        January 1 to
                                            December 31         December 31 
                                        2015       2014     2015       2014 
----------------------------------------------------------------------------
Earnings                                                                    
Basic                                $   (15)  $     43  $   104   $    259 
Share option (recovery) expense           20         27      (26)        36 
Equity settled share option                                                 
adjustment                                 -         (1)      (3)        (3)
----------------------------------------------------------------------------
Diluted                              $     5   $     69  $    75   $    292 
----------------------------------------------------------------------------
                                                                            
Weighted average number of                                                  
shares (thousands)                                                          
Basic                                 82,455     83,687   83,104     84,742 
Share options                          1,074      1,406    1,295      1,430 
----------------------------------------------------------------------------
Diluted                               83,529     85,093   84,399     86,172 
----------------------------------------------------------------------------
                                                                            
Earnings per share (dollars)                                                
Basic                                $ (0.18)  $   0.51  $  1.25   $   3.06 
Diluted                              $ (0.18)  $   0.51  $  0.89   $   3.06 
----------------------------------------------------------------------------
                                                                            

7. Segmented information

                                                                            
                                              Pulp &   Corporate            
                        Lumber     Panels      paper    & other      Total  
----------------------------------------------------------------------------
October 1, 2015 to                                                          
 December 31, 2015                                                          
                                                                            
Sales                                                                       
  To external                                                               
   customers          $    656   $    137   $    220   $      -   $   1,013  
                                                                  ----------
  To other segments         28          2          -          -             
------------------------------------------------------------------          
                      $    684   $    139   $    220   $      -             
------------------------------------------------------------------          
                                                                            
Operating earnings                                                          
 before amortization  $     55   $     19   $     17   $    (23)  $     68  
Amortization               (38)        (3)        (9)         -        (50)
----------------------------------------------------------------------------
Operating earnings          17         16          8        (23)        18  
Finance expense             (4)         -         (2)         -         (6)
Other                       (4)        (1)         2        (13)       (16)
----------------------------------------------------------------------------
Earnings before tax   $      9   $     15   $      8   $    (36)  $     (4)
----------------------------------------------------------------------------
                                                                            
October 1, 2014 to                                                          
 December 31, 2014                                                          
                                                                            
Sales                                                                       
  To external                                                               
   customers          $     640  $     132  $     192  $       -  $     964 
                                                                  ----------
  To other segments          23          2          -          -            
-------------------------------------------------------------------         
                      $     663  $     134  $     192  $       -            
------------------------------------------------------------------          
                                                                            
Operating earnings                                                          
 before amortization  $     121  $      25  $      12  $     (32) $     126 
Amortization                (31)        (3)        (9)         -        (43)
----------------------------------------------------------------------------
Operating earnings           90         22          3        (32)        83 
Finance expense              (4)        (1)        (1)         -         (6)
Other                         4          -          1        (12)        (7)
----------------------------------------------------------------------------
Earnings before tax   $      90  $      21  $       3  $     (44) $      70 
----------------------------------------------------------------------------
                                              Pulp &   Corporate            
                        Lumber     Panels      paper    & other      Total  
----------------------------------------------------------------------------
January 1, 2015 to                                                          
 December 31, 2015                                                          
                                                                            
Sales                                                                       
  To external                                                               
   customers          $  2,654   $    546   $    900   $      -   $  4,100  
                                                                  --------- 
  To other segments        110          8          -          -             
------------------------------------------------------------------          
                      $  2,764   $    554   $    900   $      -             
------------------------------------------------------------------          
                                                                            
Operating earnings                                                          
 before amortization  $    243   $     95   $     80   $     22   $    440  
Amortization              (138)       (13)       (39)        (1)      (191)
----------------------------------------------------------------------------
Operating earnings         105         82         41         21        249  
Finance expense            (18)        (3)        (8)         -        (29)
Other                        9         (3)        (5)       (65)       (64)
----------------------------------------------------------------------------
Earnings before tax   $     96   $     76   $     28   $    (44)  $    156  
----------------------------------------------------------------------------
                                                                            
January 1, 2014 to                                                          
 December 31, 2014                                                          
                                                                            
Sales                                                                       
  To external                                                               
   customers          $   2,526  $     518  $     812  $       -  $   3,856 
                                                                  ----------
  To other segments          96          8          -          -            
------------------------------------------------------------------          
                      $   2,622  $     526  $     812  $       -            
------------------------------------------------------------------          
                                                                            
Operating earnings                                                          
 before amortization  $     465  $      78  $      83  $     (50) $     576 
Amortization               (114)       (14)       (41)        (1)      (170)
----------------------------------------------------------------------------
Operating earnings          351         64         42        (51)       406 
Finance expense             (16)        (3)        (7)         -        (26)
Other                        15          1          8        (29)        (5)
----------------------------------------------------------------------------
Earnings before tax   $     350  $      62  $      43  $     (80) $     375 
----------------------------------------------------------------------------
                                                                            
                                                                            
The geographic distribution of external sales is as follows(1):             
----------------------------------------------------------------------------
                                            October 1 to        January 1 to
                                             December 31         December 31
                                         2015       2014     2015       2014
----------------------------------------------------------------------------
Canada                               $    229  $     210 $    898  $     894
United States                             577        521    2,249      1,997
China                                     110        147      580        598
Other Asia                                 75         66      299        274
Other                                      22         20       74         93
----------------------------------------------------------------------------
                                     $  1,013  $     964 $  4,100  $   3,856
----------------------------------------------------------------------------
1. Sales distribution is based on the location of product delivery.         

West Fraser shares trade on the Toronto Stock Exchange under the symbol: "WFT".

For more information:
Larry Hughes
Vice President, Finance and Chief Financial Officer

Rodger Hutchinson
Vice President, Corporate Controller and Investor Relations
(604) 895-2700
www.westfraser.com


Distribution channels: Consumer Goods


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