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Accounting Standards Issued and Not Applied
In May 2011, the International Accounting Standards Board ("IASB") issued IFRS 9, Financial Instruments, which is effective for annual periods beginning on or after January 1, 2015, with early adoption permitted. IFRS 9 is not expected to have a material impact on amounts recorded in the financial statements of Canfor.
Further details of the new accounting Standard and the potential impact on Canfor can be found in the Company's Annual Report for the year ended December 31, 2012.
2. Inventories
As at As at December March 31, 31,(millions of Canadian dollars) 2013 2012--------------------------------------------------------------------------Logs $ 197.9 $ 119.4Finished products 228.6 205.8Residual fibre 9.0 11.5Processing materials and supplies 95.7 94.6-------------------------------------------------------------------------- $ 531.2 $ 431.3----------------------------------------------------------------------------------------------------------------------------------------------------
3. Investment in Joint Venture Held for Sale
On November 28, 2012, the Company entered into a Letter of Intent with Louisiana-Pacific to sell its 50% share in Canfor-LP OSB, which owns the Peace Valley OSB mill, for a price of $70.0 million plus working capital. As part of the sale, Canfor may receive additional annual consideration over a 3 year period based on Peace Valley OSB's annual adjusted earnings before interest, tax, depreciation and amortization. On completion of the sale, Louisiana-Pacific will become the sole owner of the Peace Valley OSB mill. At December 31, 2012, the $75.1 million equity investment in Canfor-LP OSB was reclassified as held for sale and was measured at the lower of the carrying amount and the fair value less cost to sell.
In accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, upon classification of the investment as held for sale at December 31, 2012, the Company ceased the equity method of accounting. As such, Canfor's $11.0 million share of Canfor-LP OSB's operating income was not recognized in the first quarter of 2013. The carrying value of Canfor's investment in Canfor-LP OSB was reduced by distributions received of $7.0 million during the first quarter of 2013. The transaction is currently scheduled to close in the second quarter of 2013.
4. Long-term Investments and Other
As at As at December March 31, 31,(millions of Canadian dollars) 2013 2012--------------------------------------------------------------------------Other investments $ 23.8 $ 23.7Investment tax credits 1.6 8.6Defined benefit plan assets 1.4 1.4Other deposits, loans and advances 12.8 10.9-------------------------------------------------------------------------- $ 39.6 $ 44.6----------------------------------------------------------------------------------------------------------------------------------------------------
