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Compared to the first quarter of 2012, unit manufacturing costs were largely unchanged as lower fibre costs and the favourable impact of higher production volumes were offset by higher (timing-based) maintenance spending and higher energy costs.
Unallocated and Other Items(20)
Q1 Q4 Q1(millions of Canadian dollars) 2013 2012 2012--------------------------------------------------------------------------Operating income (loss) of Panels operations(21) $ (0.7) $ (0.7) $ (1.5)Corporate costs $ (6.6) $ (4.8) $ (7.9)Finance expense, net $ (8.8) $ (8.7) $ (8.6)Foreign exchange gain (loss) on long-term debt and investments, net $ (3.8) $ (2.0) $ 4.0Gain (loss) on derivative financial instruments $ 3.3 $ (8.7) $ 7.4Equity income (loss) from joint venture(22) $ - $ 3.5 $ (3.5)Other income (expense), net $ 1.7 $ (0.3) $ ---------------------------------------------------------------------------(20) Certain prior period amounts have been restated due to the adoption ofamended IAS 19, Employee Benefits and IFRS 11, Joint Arrangements. Furtherdetails can be found in the Company's unaudited interim consolidatedfinancial statements.(21) The Panels operations include the Company's Tackama plywood plant,which was closed in January 2012, and its PolarBoard OSB plant, which iscurrently indefinitely idled.(22) In accordance with IFRS 5, Non-current Assets Held for Sale andDiscontinued Operations, upon classification of the Company's 50% investmentin the Canfor-LP OSB Limited Partnership as held for sale at December 31,2012, the Company ceased to equity account for the investment. Furtherdetails can be found in the Company's unaudited interim consolidatedfinancial statements.
Effective January 1, 2013, the Company adopted IFRS 11, Joint Arrangements, which impacted the accounting for the Company's 50% interest in Canfor-LP OSB Limited Partnership ("Canfor-LP OSB"). Canfor-LP OSB was previously accounted for using the proportionate consolidation method and is now accounted for using the equity method. The comparative periods have been restated to reflect the change. For the 2012 periods, Canfor-LP OSB's results are included below operating income as equity income (loss) from joint venture. Moreover, with the pending sale of Canfor's interest in Canfor-LP OSB, equity income (comprising operating income) from the joint venture of $11.0 million for the first quarter of 2013, has not been recognized in the Company's current quarter results due to IFRS held for sale accounting requirements. The sale is further discussed in the "Investment in Joint Venture Held for Sale" section later in this document.
Corporate costs were $6.6 million for the first quarter of 2013, up $1.8 million from the previous quarter, principally the result of the gain due to amendments to the Company's salaried post retirement benefit plans recorded in the fourth quarter of 2012. Corporate costs were lower by $1.3 million compared to the first quarter of 2012 due to costs related to the acquisition of the Kootenay sawmills and tenure.
Net finance expense for the first quarter of 2013 was $8.8 million, in line with both comparable periods. 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. Current quarter finance expenses included refinancing costs incurred to extend the maturity of the Company's principal operating loan facility (see further details on the maturity extension in the "Liquidity and Financial Requirements" section below), while the previous quarter included costs associated with a new four-year revolving operating loan facility entered into by Canfor Pulp. Compared to the first quarter of 2012, the slight increase in finance expense reflected higher average long-term debt levels partially offset by lower interest rates.
