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Other material factors that impact the comparability of the quarters are noted below(27):
---------------------------------------------------------------------------After-tax impact, net of non- controlling interests(millions of dollars, except for per share Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 amounts) 2013 2012 2012 2012 2012 2011 2011 2011---------------------------------------------------------------------------Shareholder net income (loss), as reported $ 61.9 $ 21.3 $ 20.5 $ 2.6 $(18.0) $(44.1) $(21.6) $ 2.1Foreign exchange (gain) loss on long-term debt and investments, net $ 2.3 $ 1.2 $ (4.0) $ 2.4 $ (2.7) $ (3.3) $ 11.0 $(1.4)(Gain) loss on derivative financial instruments $(2.2) $ 6.5 $ (4.4) $ 4.2 $ (5.1) $ (6.7) $ 7.0 $(0.7)Canfor's 50% interest in Canfor-LP OSB's income, net of tax $ 8.3 $ - $ - $ - $ - $ - $ - $ -Net gain on post retirement and pension plan amendments $ - $ (8.7) $ - $ - $ - $ - $ - $ -Restructuring costs related to changes in management group $ - $ - $ 1.5 $ - $ - $ - $ - $ 2.6Decrease (increase) in fair value of asset-backed commercial paper $ - $ - $ - $ - $ (1.1) $ (0.5) $ 1.8 $(0.5)Costs recorded in relation to Tembec acquisition $ - $ - $ - $ - $ 2.8 $ - $ - $ -Mill closure provisions $ - $ - $ - $ - $ - $ 17.0 $ - $ -Asset impairment charges $ - $ - $ - $ - $ - $ 5.5 $ - $ ----------------------------------------------------------------------------Net impact of above items $ 8.4 $ (1.0) $ (6.9) $ 6.6 $ (6.1) $ 12.0 $ 19.8 $ ----------------------------------------------------------------------------Adjusted shareholder net income (loss) $ 70.3 $ 20.3 $ 13.6 $ 9.2 $(24.1) $(32.1) $ (1.8) $ 2.1------------------------------------------------------------------------------------------------------------------------------------------------------Shareholder net income (loss) per share (EPS), as reported $ 0.43 $ 0.15 $ 0.14 $ 0.02 $(0.13) $(0.31) $(0.15) $ 0.01Net impact of above items per share $ 0.06 $(0.01) $(0.05) $ 0.05 $(0.05) $ 0.09 $ 0.14 $ 0.00---------------------------------------------------------------------------Adjusted net income (loss) per share $ 0.49 $ 0.14 $ 0.09 $ 0.07 $(0.18) $(0.22) $(0.01) $ 0.01------------------------------------------------------------------------------------------------------------------------------------------------------(27) Certain 2012 amounts have been restated due to the adoption of amendedIAS 19, Employee Benefits and IFRS 11, Joint Arrangements. 2011 amounts havenot been restated. Further details can be found in the Company's unauditedinterim consolidated financial statements.Canfor CorporationCondensed Consolidated Balance Sheets As at As at March 31, December 31, (millions of Canadian dollars, unaudited) 2013 2012-------------------------------------------------------------------------- (Note 14)ASSETSCurrent assetsCash and cash equivalents $ 6.2 $ -Accounts receivable - Trade 150.1 102.7 - Other 55.8 57.5Inventories (Note 2) 531.2 431.3Prepaid expenses and other assets 30.7 23.4Investment in joint venture held for sale (Note 3) 68.1 75.1--------------------------------------------------------------------------Total current assets 842.1 690.0--------------------------------------------------------------------------Property, plant and equipment 1,083.2 1,081.7Timber licenses 550.5 554.6Goodwill and other intangible assets 83.6 80.4Long-term investments and other (Note 4) 39.6 44.6Deferred income taxes, net 15.6 39.3--------------------------------------------------------------------------Total assets $ 2,614.6 $ 2,490.6----------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIESCurrent liabilitiesCheques issued in excess of cash on hand $ - $ 17.1Operating loans (Note 5(a)) 40.0 27.0Accounts payable and accrued liabilities 309.8 258.4Current portion of long-term debt (Note 5(b)) 187.9 184.1Current portion of deferred reforestation obligations 37.3 37.3--------------------------------------------------------------------------Total current liabilities 575.0 523.9--------------------------------------------------------------------------Long-term debt (Note 5(b)) 100.0 100.0Retirement benefit obligations 297.0 311.7Deferred reforestation obligations 92.8 78.4Other long-term liabilities 14.5 13.6Deferred income taxes, net 149.0 151.1--------------------------------------------------------------------------Total liabilities $ 1,228.3 $ 1,178.7--------------------------------------------------------------------------EQUITYShare capital $ 1,126.2 $ 1,126.2Contributed surplus 31.9 31.9Retained earnings (deficit) 32.5 (35.1)Accumulated foreign exchange translation differences (7.0) (10.5)--------------------------------------------------------------------------Total equity attributable to equity holders of the Company 1,183.6 1,112.5Non-controlling interests 202.7 199.4--------------------------------------------------------------------------Total equity $ 1,386.3 $ 1,311.9--------------------------------------------------------------------------Total liabilities and equity $ 2,614.6 $ 2,490.6----------------------------------------------------------------------------------------------------------------------------------------------------The accompanying notes are an integral part of these condensed consolidatedfinancial statements.APPROVED BY THE BOARD"R.S. Smith" "R.L. Cliff"Director, R.S. Smith Director, R.L. CliffCanfor CorporationCondensed Consolidated Statements of Income (Loss) 3 months ended March 31,(millions of Canadian dollars, unaudited) 2013 2012-------------------------------------------------------------------------- (Note 14)Sales $ 786.3 $ 593.8Costs and expenses Manufacturing and product costs 492.2 418.0 Freight and other distribution costs 129.4 119.6 Export taxes - 11.2 Amortization 46.9 42.6 Selling and administration costs 16.3 16.0 Restructuring, mill closure and severance costs 1.5 4.8-------------------------------------------------------------------------- 686.3 612.2--------------------------------------------------------------------------Operating income (loss) 100.0 (18.4)Finance expense, net (8.8) (8.6)Foreign exchange gain (loss) on long-term debt and investments, net (3.8) 4.0Gain on derivative financial instruments (Note 7) 3.3 7.4Equity income (loss) from joint venture (Note 3) - (3.5)Other income, net 1.7 ---------------------------------------------------------------------------Net income (loss) before income taxes 92.4 (19.1)Income tax recovery (expense) (Note 8) (24.9) 6.2--------------------------------------------------------------------------Net income (loss) $ 67.5 $ (12.9)--------------------------------------------------------------------------Net income (loss) attributable to:Equity shareholders of the Company $ 61.9 $ (18.0)Non-controlling interests 5.6 5.1--------------------------------------------------------------------------Net income (loss) $ 67.5 $ (12.9)--------------------------------------------------------------------------Net income (loss) per common share: (in dollars)Attributable to equity shareholders of the Company - Basic and diluted (Note 9) $ 0.43 $ (0.13)----------------------------------------------------------------------------------------------------------------------------------------------------The accompanying notes are an integral part of these condensed consolidatedfinancial statements.Canfor CorporationCondensed Consolidated Statements of Other Comprehensive Income (Loss) 3 months ended March 31,(millions of Canadian dollars, unaudited) 2013 2012-------------------------------------------------------------------------- (Note 14)Net income (loss) $ 67.5 $ (12.9)Other comprehensive income (loss)Items that will not be recycled through net income (loss): Defined benefit plan actuarial gains (losses) (Note 6) 7.7 (4.3) Income tax recovery (expense) on defined benefit plan actuarial gains (losses) (Note 8) (1.9) 1.0-------------------------------------------------------------------------- 5.8 (3.3)Items that may be recycled through net income (loss): Foreign exchange translation differences for foreign operations 3.5 (3.6)--------------------------------------------------------------------------Other comprehensive income (loss), net of tax 9.3 (6.9)--------------------------------------------------------------------------Total comprehensive income (loss) $ 76.8 $ (19.8)----------------------------------------------------------------------------------------------------------------------------------------------------Total comprehensive income (loss) attributable to:Equity shareholders of the Company $ 71.1 $ (23.9)Non-controlling interests 5.7 4.1--------------------------------------------------------------------------Total comprehensive income (loss) $ 76.8 $ (19.8)----------------------------------------------------------------------------------------------------------------------------------------------------Condensed Consolidated Statements of Changes in Equity 3 months ended March 31,(millions of Canadian dollars, unaudited) 2013 2012-------------------------------------------------------------------------- (Note 14)Share capitalBalance at beginning of period $ 1,126.2 $ 1,125.9Common shares issued on exercise of stock options - 0.3--------------------------------------------------------------------------Balance at end of period $ 1,126.2 $ 1,126.2--------------------------------------------------------------------------Contributed surplus--------------------------------------------------------------------------Balance at beginning and end of period $ 31.9 $ 31.9--------------------------------------------------------------------------Retained earnings (deficit)Balance at beginning of period $ (35.1) $ (24.7)Net income (loss) attributable to equity shareholders of the Company 61.9 (18.0)Defined benefit plan actuarial gains (losses), net of tax 5.7 (2.3)--------------------------------------------------------------------------Balance at end of period $ 32.5 $ (45.0)--------------------------------------------------------------------------Accumulated foreign exchange translation differencesBalance at beginning of period $ (10.5) $ (5.9)Foreign exchange translation differences for foreign operations 3.5 (3.6)--------------------------------------------------------------------------Balance at end of period $ (7.0) $ (9.5)--------------------------------------------------------------------------Total equity attributable to equity holders of the Company $ 1,183.6 $ 1,103.6----------------------------------------------------------------------------------------------------------------------------------------------------Non-controlling interestsBalance at beginning of period $ 199.4 $ 232.8Net income attributable to non-controlling interests 5.6 5.1Defined benefit plan actuarial gains (losses) attributable to non-controlling interests, net of tax 0.1 (1.0)Distributions to non-controlling interests (2.4) (0.4)Share exchange (Note 13) - (25.0)--------------------------------------------------------------------------Balance at end of period $ 202.7 $ 211.5--------------------------------------------------------------------------Total equity $ 1,386.3 $ 1,315.1----------------------------------------------------------------------------------------------------------------------------------------------------The accompanying notes are an integral part of these condensed consolidatedfinancial statements.Canfor CorporationCondensed Consolidated Statements of Cash Flows 3 months ended March 31,(millions of Canadian dollars, unaudited) 2013 2012-------------------------------------------------------------------------- (Note 14)Cash generated from (used in):Operating activities Net income (loss) $ 67.5 $ (12.9) Items not affecting cash: Amortization 46.9 42.6 Income tax (recovery) expense 24.9 (6.2) Long-term portion of deferred reforestation obligations 14.1 13.4 Foreign exchange (gain) loss on long- term debt and investments, net 3.8 (4.0) Changes in mark-to-market value of derivative financial instruments (5.3) (6.0) Employee future benefits 3.5 3.3 Net finance expense 8.8 8.6 Equity (income) loss from joint venture (Note 3) - 3.5 Change in fair value of long-term investment - (1.3) Other, net (0.7) (0.7) Defined benefit pension plan contributions (13.5) (14.0) Income taxes recovered (paid), net 0.5 (1.3) Net change in non-cash working capital (Note 10) (94.5) (76.8)-------------------------------------------------------------------------- 56.0 (51.8)--------------------------------------------------------------------------Financing activities Change in operating bank loans (Note 5(a)) 13.0 94.0 Proceeds from long-term debt - 100.0 Repayment of long-term debt - (49.9) Finance expenses paid (2.5) (3.1) Cash distributions paid to non-controlling interests (2.4) (4.3) Other, net - 0.3-------------------------------------------------------------------------- 8.1 137.0--------------------------------------------------------------------------Investing activities Additions to property, plant and equipment and intangible assets (46.4) (53.6) Reimbursements from Federal Government under Green Transformation Program - 7.9 Distributions (advances) from (to) joint venture (Note 3) 7.0 (3.0) Acquisition of Tembec assets (Note 12) - (64.9) Share exchange (Note 13) - 6.8 Other, net (1.4) 1.8-------------------------------------------------------------------------- (40.8) (105.0)--------------------------------------------------------------------------Increase (decrease) in cash and cash equivalents(i) 23.3 (19.8)Cash and cash equivalents at beginning of period(i) (17.1) 26.6--------------------------------------------------------------------------Cash and cash equivalents at end of period(i) $ 6.2 $ 6.8----------------------------------------------------------------------------------------------------------------------------------------------------(i) Cash and cash equivalents include cash on hand less unpresented cheques.The accompanying notes are an integral part of these condensed consolidatedfinancial statements.
