Enhanced Investments - Financial Portal

Published: 2021-05-06

West Fraser Timber Co. Ltd.Condensed Consolidated Balance Sheets(in millions of United States dollars, except where indicated - unaudited)
	Currency		Currency
		remeasurement		remeasurement
					March 31	December 31		January 1
					2021	2020	2020
AssetsCurrent assetsCash and short-term investments
					1,400	$	461	$	12				$
Receivables					679		277		199
Income taxes receivable		-				8		104
Inventories (note 5)					1,137		578		561
Prepaid expenses						29			12		7
					3,245		1,336		883
Property, plant and equipment					3,688		1,657		1,648
Timber licences					378		372		380
Goodwill and other intangibles					2,445		591		594
Export duty deposits (note 14)					171		178		61
Other assets						43			35		20
Deferred income tax assets		3				9		8
					9,973	$	4,178	$	3,594	$
LiabilitiesCurrent liabilitiesCheques issued in excess of funds on deposit
		-			$	-	$	12				$
Operating loans (note 6)		-				-		288
Payables and accrued liabilities					802		389		305
Current portion of long-term debt (note 6)					376		7		7
Current portion of reforestation and decommissioning obligations						36			34		32
Income taxes payable					236			98		-
					1,450		528		644
Long-term debt (note 6)					839		500		500
Other liabilities (note 7)					348		408		350
Deferred income tax liabilities					722		264		195
					3,359		1,700		1,689
Shareholders' EquityShare capital (note 9)
					3,917		481		480
Contributed surplus						15		-		-
Accumulated other comprehensive earnings					(239)		(240)		(272)
Retained earnings					2,921		2,237		1,697
					6,614		2,478		1,905
					9,973	$	4,178	$	3,594	$
Number of Common shares and Class B Common shares outstanding at May 5, 2021 was 121,586,183.

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	West Fraser Timber Co. Ltd.Condensed Consolidated Statements of Changes in Shareholders' Equity(in millions of United States dollars, except where indicated - unaudited)
		Currency
			remeasurement
				January 1 to March 31
				2021	2020
	Share capital Balance - beginning of period
				481	$		480	$
	Issuance of Common shares (note 9)			3,487						-
	Repurchase of Common shares for cancellation (note 9)		(51)						-
	Balance - end of period			3,917	$		480	$
	Contributed surplusBalance - beginning of period
			-	$					-	$
	Equity settled share option plan acquired (note 3)		14						-
	Share based compensation for equity settled plan		1						-
	Balance - end of period		15	$					-	$
	Accumulated other comprehensive earnings Balance - beginning of period
				(240)	$		(272)	$
	Translation gain on foreign operations		1						-
	Translation effect on change in reporting currency		-			(119)
	Balance - end of period			(239)	$		(391)	$
	Retained earningsBalance - beginning of period
				2,237	$		1,697	$
	Actuarial gain on post-retirement benefits, net of tax		89						67
	Repurchase of Common shares for cancellation (note 9)		(51)						-
	Earnings for the period			665						9
	Dividends declared		(19)						(9)
	Balance - end of period			2,921	$		1,764	$
	Shareholders' Equity			6,614	$		1,853	$

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	West Fraser Timber Co. Ltd.Condensed Consolidated Statements of Earnings and Comprehensive Earnings(in millions of United States dollars, except where indicated - unaudited)
		Currency
			remeasurement
				January 1 to March 31
				2021	2020
	Sales			2,343	$		890	$
	Costs and expensesCost of products sold
				1,039			630
	Freight and other distribution costs			181			125
	Export duties (note 14)			37					26
	Amortization			122					52
	Selling, general and administration			78					41
	Equity-based compensation			7					7
				1,464			881
	Operating earnings			879					9
	Finance expense			(13)					(12)
	Other (note 10)			4					9
	Earnings before tax			870					6
	Tax (provision) recovery (note 11)			(205)					3
	Earnings			665	$				9	$
	Earnings per share (dollars) (note 12)Basic
				6.96	$		0.13	$
	Diluted			6.96	$		(0.09)	$
	Comprehensive earningsEarnings
				665	$				9	$
	Other comprehensive earningsTranslation gain on foreign operations
				1					-
	Translation effect on change in reporting currency		-			(119)
	Actuarial gain on post-retirement benefits, net of tax			89					67
	Comprehensive earnings			755	$				(43)	$

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	West Fraser Timber Co. Ltd.Condensed Consolidated Statements of Cash Flows(in millions of United States dollars, except where indicated - unaudited)
		Currency
			remeasurement
				January 1 to March 31
	Cash provided by (used in)			2021	2020
	Operating activitiesEarnings
				665	$				9	$
	Adjustments
	Amortization			122					52
	Finance expense			13					12
	Foreign exchange loss (gain)		6					(10)
	Export duty deposits		8					(6)
	Post-retirement expense			25					19
	Contributions to post-retirement benefit plans			(13)					(10)
	Tax provision (recovery)			205					(3)
	Income taxes paid			(246)					(1)
	Reforestation and decommissioning obligations			13					18
	Other			(13)					4
	Changes in non-cash working capital
	Receivables			(172)					(49)
	Inventories			(221)			(145)
	Prepaid expenses			(4)					(3)
	Payables and accrued liabilities			74					22
				462					(91)
	Financing activitiesRepayment of long-term debt
				(2)					-
	Proceeds from operating loans		-			219
	Financing fees paid			(3)					-
	Finance expense paid			(3)					(7)
	Repurchase of Common shares for cancellation			(93)					-
	Issuance of Common shares		5					-
	Dividends paid			(11)					(10)
	Other			(2)					-
				(109)			202
	Investing activitiesAcquired cash and short-term investments (note 3)
				642					-
	Additions to capital assets			(62)					(45)
	Government assistance		3					-
	Other			(1)					4
				582					(41)
	Change in cash			935					70
	Foreign exchange effect on cash		4					(4)
	Cash - beginning of period			461					-
	Cash - end of period			1,400	$				66	$

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	West Fraser Timber Co. Ltd. Notes to Condensed Consolidated Interim Financial Statements (figures are in millions of United States 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 with more than 60 facilities in Canada, the United States (“U.S.”), the United Kingdom (“U.K.”), and Europe. From responsibly sourced and sustainably managed forest resources, the Company produces lumber, engineered wood products (OSB, LVL, MDF, plywood, and particleboard), pulp, newsprint, wood chips, other residuals and renewable energy. West Fraser’s products are used in home construction, repair and remodelling, industrial applications, papers, tissue, and box materials. 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 (“TSX”) and on the New York Stock Exchange (“NYSE”) under the symbol WFG.
	2. Basis of presentation and statement of compliance
	These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting as issued by the International Accounting Standards Board and use the same accounting policies and methods of their application as the December 31, 2020, audited annual consolidated financial statements, except for the change in functional and reporting currency and the business combination as discussed below. These condensed consolidated interim financial statements should be read in conjunction with our 2020 audited annual consolidated financial statements, which are presented in Canadian dollars.
	Change in functional and reporting currency
	Determination of functional currency may involve certain judgments to determine the primary economic environment, and we reconsider the functional currency of our entities if there is a change in events and conditions which determine the primary economic environment. We have determined that as a result of the acquisition of Norbord Inc. (the “Acquisition”), the functional currency of our Canadian operations has changed from Canadian dollars (“CAD”) to United States dollars (“USD”). We considered a variety of factors when making this decision. The most significant being an increase in the level of sales made in U.S. dollars, a significant portion of operating expenses are incurred in U.S. dollars, and increased levels of U.S. dollar financing from the Acquisition.
	Concurrent with the change in functional currency, we also changed our reporting currency from Canadian dollars to U.S. dollars. This change in reporting currency is to better reflect our business activities, following the increased presence in the U.S. as a result of the Acquisition and in connection with the listing of West Fraser’s common shares on the NYSE on February 1, 2021.
	A change in functional currency is applied prospectively and must be based on a change in economic facts, events and conditions. In contrast, a change in reporting currency requires retroactive restatement. Both changes have specific transition rules under IAS 21, The Effects of Changes in Foreign Exchange Rates.
	As at and for the year ended December 31, 2020 and all prior periods, the functional and reporting currency of the Company was the Canadian dollar as described in our audited annual consolidated financial statements. The currency remeasurement of our results applied the IAS 21 transitional rules.
	To prepare our December 31, 2020 and January 1, 2020 consolidated balance sheets, all assets and liabilities were translated into U.S. dollars at the closing exchange rate on December 31, 2020 and December 31, 2019, as listed below. Equity items were retroactively restated at historical exchange rates to give effect to the change in reporting currency. The accounting policy used to translate the equity items prior to 2020, was to use the annual

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	average exchange rate for each equity transaction that occurred in the year. For 2020, equity items were translated quarterly using the average exchange rate for each quarter.
	To prepare our 2020 consolidated statement of earnings, all revenues and expenses were translated into U.S. dollars at the average exchange rate for each quarter, with no adjustments to the measurement of or accounting for previously reported results. To prepare our 2020 consolidated statement of cash flow, all items were translated into U.S. dollars at the average exchange rate for each quarter, with no adjustments to the measurement of or accounting for previously reported results.
	The exchange rates used to reflect the change in reporting currency were as follows:
	Canadian - USD exchange rate	Q1-20	Q2-20	Q3-20	Q4-20	Q4-19
	Closing rate	0.7049	n/a	n/a	0.7854	0.7699
	Average rate	0.7443	0.7221	0.7508	0.7676	n/a
	Foreign currency translation effective from February 1, 2021
	Assets and liabilities of foreign operations having a functional currency other than the US dollar are translated at the rate of exchange prevailing at the reporting date, and revenues and expenses at average rates during the period. Gains or losses on translation are included as a component of shareholders’ equity in other comprehensive earnings.
	Foreign currency-denominated (non-U.S. currencies) monetary assets and liabilities are translated using the rate of exchange prevailing at the reporting date. Gains or losses on translation of these items are included in earnings and reported other income or expense.
	Foreign currency fluctuation effective from February 1, 2021
	Our Canadian operations incur a portion of their operating expenses in Canadian dollars. Therefore, an increase in the value of the Canadian dollar relative to the U.S. dollar increases the value of expenses in U.S. dollar terms incurred by our Canadian operations, which reduces operating margin and the cash flow available to fund operations.
	The impact on USD equivalent of net CAD revenues and expenses for a $0.01 change results in a pre-tax earnings adjustment of $18 million.
	3. Norbord acquisition
	Business combinations are accounted for using the acquisition method. We measure goodwill at the acquisition date as the fair value of the consideration transferred less the fair value of the identifiable assets acquired and liabilities assumed. Customer lists acquired in a business combination that qualify for separate recognition are recognized as intangible assets at their fair value and amortized straight-line over 10-years. Transaction costs in connection with business combinations are expensed as incurred. The determination of the fair value of the assets acquired and liabilities assumed requires management to use estimates that contain uncertainty and critical judgments including the remaining estimated useful life of non-monetary assets. We have engaged a valuations expert to prepare the fair value for Norbord’s working capital, property, plant and equipment, and intangible assets. This work is expected to be complete by the end of the year.
	On February 1, 2021, we acquired all of the outstanding shares of Norbord Inc. (“Norbord”). According to the terms of the Acquisition, Norbord shareholders received 0.675 of a West Fraser shares for each Norbord share held. The result was the issuance of 54,484,188 Common shares of West Fraser at a price of US$63.90 per share (CAD$81.94 per share) for $3,482 million. The price per share is based on the West Fraser Common shares’ closing price as listed on the TSX on January 29, 2021, and a CAD/USD exchange rate of 0.7798.

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	Included in the Acquisition are five OSB mills in Canada, seven OSB mills in the U.S., one OSB mill, one MDF plant and two particleboard plants in the U.K., one OSB mill in Belgium, and their related corporate offices.
	We have incorporated the North American operations of Norbord into our Panels segment and renamed that segment North America (“NA”) Engineered Wood Products (“EWP”). This segment includes the results from North American operations for OSB, plywood, MDF, and LVL. In addition, we have identified a Europe EWP segment, which includes the results from the U.K. and Belgium operations for OSB, MDF and particleboard. The EWP segments have been separated due to differences in the operating region, customer base, profit margins and sales volumes.
	The Acquisition has been accounted for as an acquisition of a business in accordance with IFRS 3, Business Combinations. We have allocated the purchase price based on our preliminary estimated fair value of the assets acquired and the liabilities assumed as follows:
		Preliminary
	West Fraser purchase consideration:	March 31, 2021
	Fair value of 54 million West Fraser shares issued		$	3,482
	Fair value of equity-based compensation instruments			24
			$	3,506
	Fair value of net assets acquired:
	Cash and short-term investments		$	642
	Accounts receivable			232
	Inventories			339
	Prepaid expenses			12
	Property, plant and equipment			2,084
	Timber			10
	Other non-current assets			6
	Other intangibles			17
	Customer list intangible			470
	Goodwill			1,374
	Deferred income tax assets			3
	Payables and accrued liabilities			(300)
	Income tax payable			(144)
	Current portion of reforestation and decommissioning obligations			(2)
	Long-term debt			(720)
	Other non-current liabilities			(37)
	Deferred income tax liabilities			(480)
			$	3,506
	Factors contributing to goodwill include the Norbord workforce, assets that are geographically complementary to our existing facilities and offer close access to large markets and timber baskets. The Acquisition also provides increased scale and geographic diversification of manufacturing and markets. The goodwill of $1,374 million is not deductible for tax purposes.
	The following tables represent Norbord’s actual results included in our statement of earnings and the proforma results of operations for the three months ended March 31, 2021 assuming the Acquisition occurred on January 1, 2021 and including purchase price accounting for the Acquisition.

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	Norbord Results ($ millions except as otherwise indicated)
		Norbord results for February 1
			to March 31, 20211
	Sales			707
	Operating earnings			2182
	Earnings			1602
	1.	Represents the results of the Norbord operations since the acquisition date that are included in our Q1-21 results.
	2.	Includes purchase price accounting impact of $93 million expense for the one-time inventory adjustment in cost of products sold and $41 million expense for amortization. Earnings was further impacted by a $3 million recovery for finance expense and the related tax impact on these items.
	Proforma Q1-21 Results ($ millions except as otherwise indicated)
					West Fraser	Norbord	West Fraser
					Actual	Proforma	Proforma
					Results	Results1			Results1
					Q1-21	Jan-21			Q1-21
	Sales				2,343	277		2,620
	Operating earnings				8792	1153		9944
	Earnings				6652	863		7514
	1.	These unaudited proforma results have been provided as required per IFRS 3 - Business Combinations. West Fraser proforma Q1-21 presents West Fraser’s results as if the Acquisition was completed on January 1, 2021.
	2.	Operating earnings includes purchase price accounting impact of $93 million expense for the one-time inventory adjustment in cost of products sold; $41 million expense for amortization. Earnings was further impacted by a $3 million recovery for finance expense and the related tax impact on these items.
	3.	Operating earnings includes purchase price accounting impact of $18 million expense for amortization. Earnings was further impacted by a $1 million recovery for finance expense and the related tax impact on these items.
	4.	Includes purchase price accounting per footnote 2 and 3.
	Balances that required significant fair value adjustments for purchase price accounting included inventory, property, plant and equipment, timber, and customer list intangibles. Goodwill and deferred income tax liabilities were also significant.
	Acquisition costs of $16 million have been expensed in selling, general and administration.
	4. Seasonality of operations
	Our operating results are subject to seasonal fluctuations that may impact quarter-to-quarter comparisons. Consequently, interim operating results may not proportionately reflect operating results for a full year.
	Market demand varies seasonally, as homebuilding activity and repair-and-remodelling work are generally stronger in the spring and summer months. Extreme weather conditions, including wildfires in Western Canada and hurricanes in the U.S. South may periodically affect operations, including logging, manufacturing and transportation. Log inventory is typically built up in the Northern regions of North America and Europe during the winter to sustain our lumber and EWP production during the second quarter when logging is curtailed due to wet and inaccessible land conditions. This inventory is generally consumed in the spring and summer months.

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	5. Inventories
	At March 31, 2021, no inventory valuation reserve was recognized (December 31, 2020 - $2 million; March 31, 2020 - $16 million; January 1, 2020 - $30 million) to reflect net realizable value being lower than cost.
					Currency			Currency
						remeasurement			remeasurement
			March 31, 2021	December 31, 2020					January 1, 2020
	Manufactured products	$								426	$	270	$	262
	Logs and other raw materials									502		189		174
	Processing materials and supplies									209		119		125
		$	1,137	$	578		$	561
	6. Operating loans and long-term debt
	Operating loans
	Our revolving lines of credit consist of a $676 million (CAD$850 million) committed revolving credit facility which matures August 2024, a $450 million committed revolving credit facility which matures April 2024, a $25 million demand line of credit dedicated to our U.S. operations and a $6 million (CAD$8 million) demand line of credit dedicated to our jointly -owned newsprint operation.
	At March 31, 2021, our revolving credit facilities were undrawn and the associated deferred financing costs of $5 million were recorded in other assets.
	Interest on the facilities is payable at floating rates based on Prime, Base Rate Advances, Bankers’ Acceptances or LIBOR Advances at our option.
	In addition, we have credit facilities totalling $111 million dedicated to letters of credit, of which $96 million (CAD$120 million) is committed to our Canadian operations. On March 31, 2021, our letter of credit facilities supported $56 million of open letters of credit.
	All debt is unsecured except the $6 million (CAD$8 million) joint operation demand line of credit, which is secured by that joint operation’s current assets.

	Long-term debt
									Currency			Currency
					remeasurement				remeasurement
March 31,					December 31,			January 1,
2021					2020			2020
	$350 million senior notes due July 2027; interest
	at 5.75%	$				376		$	-	$			-
	$315 million senior notes due April 2023; interest
	at 6.25%					340			-				-
	Senior notes due October 2024; interest at 4.35%					300							300		300
	Term loan due August 2024; floating interest rate					200							200		200
	Note payable due March 2021; interest at 2%					-			7		7
	Notes payable					1			2		3
						1,217							509		510
	Less: deferred financing costs					(2)			(2)		(3)
	Less: current portion					(376)			(7)		(7)
		$				839		$					500	$	500

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	As part of the Acquisition, we assumed Norbord’s $315 million senior notes due April 2023 (the “2023 Notes”), bearing interest at 6.25% and $350 million senior notes due July 2027 (the “2027 Notes”), bearing interest at 5.75%. The purchase price fair value adjustment resulted in an increase of $28 million for the 2023 Notes and $26 million for the 2027 Notes. These adjustments are amortized into income over the remaining life of the debt, of which $3 million went through earnings by March 31, 2021.
	On March 2, 2021, we made a mandatory change of control offer for 2023 Notes and 2027 Notes, which expired on April 1, 2021. As a result of the change of control offer, $1 million of the 2023 Notes and $1 million of the 2027 Notes were redeemed and were repaid in the second quarter of 2021. On April 6, 2021, we elected to redeem the remaining 2027 Notes, which redemption occurred on May 6, 2021. On May 6, 2021, we elected to redeem all of Norbord’s outstanding 2023 Notes on June 7, 2021. After the completion of the redemption of the 2023 Notes and the 2027 notes, the principal value of long-term debt will be reduced by $665 million from the date of the Acquisition.
	The fair value of the long-term debt at March 31, 2021, was $1,230 million (December 31, 2020 - $524 million) based on rates available to us at the balance sheet date for long-term debt with similar terms and remaining maturities.
	Interest rate swap contracts
	At March 31, 2021, the Company had interest rate swap contracts to pay fixed interest rates (weighted average interest rate of 1.14%) and receive variable interest rates equal to 3-month LIBOR on $200 million notional principal amount of indebtedness. These agreements terminate in August 2024.
	The agreements are accounted for as a derivative, and the gain or loss related to changes in the fair value is included in other income. For the three months ended March 31, 2021, a $3 million gain was recorded.
	7. Other liabilities
						Currency			Currency
				remeasurement			remeasurement
		March 31, 2021		December 31, 2020	January 1, 2020
	Post-retirement (note 8)	$	207		$	295		$	242
	Long-term portion of reforestation		75			58			57
	Long-term portion of decommissioning		23			25			24
	Other		43			30			27
		$	348		$	408		$	350
	8. Post-retirement benefits
	We maintain defined benefit and defined contribution pension plans covering a majority of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life, based either on length of service or on earnings and length of service, and in most cases do not increase after the commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.
	The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:

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								Currency			Currency
						remeasurement	remeasurement
			March 31, 2021			December 31, 2020			January 1, 2020
	Projected benefit obligations	$	(1,520)				$	(1,471)		$	(1,305)
	Fair value of plan assets			1,322					1,181			1,067
		$	(198)				$	(290)		$	(238)
	Represented by
	Post-retirement assets	$	9				$	5		$	4
	Post-retirement liabilities			(207)					(295)			(242)
		$	(198)				$	(290)		$	(238)
	The significant actuarial assumptions used to determine our balance sheet date post-retirement assets and liabilities are as follows:
						March 31, 2021			December 31, 2020
	Discount rate							3.24%				2.69%
	Future compensation rate increase							3.62%				3.65%
	For the three months ended March 31, 2021, we recognized in other comprehensive earnings a before tax gain of $118 million to reflect the changes in the valuation of the post-retirement benefit plans. The gain reflects the increase in the discount rate used to calculate plan liabilities from the beginning of the year, partially offset by a negative return on plan assets.
	The actuarial gain on post-retirement benefits, included in other comprehensive earnings, is as follows:
						January 1 to March 31
													Currency remeasurement
				2021					2020
	Actuarial gain	$				118						$	91
	Tax provision					(29)							(24)
		$				89						$	67
	9. Share Capital
	Authorized
	400,000,000 Common shares, without par value 20,000,000 Class B Common shares, without par value 10,000,000 Preferred shares, issuable in series, without par value
	Issued
			March 31, 2021		December 31, 2020
					Amount									Currency
							remeasurement
		Number				Number	Amount
	Common	119,400,329 $	3,917						66,397,144 $	481
	Class B Common	2,281,478		-		2,281,478	-
	Total Common	121,681,807 $	3,917						68,678,622 $	481
	As part of the Acquisition, we issued 54,484,188 of West Fraser Common shares at a price of US$63.90 per share (CAD$81.94 per share) for $3,482 million. The price per share is based on the West Fraser Common shares’ closing price as listed on the TSX on January 29, 2021, and a CAD/USD exchange rate of 0.7798.

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	During the quarter, we issued 77,600 Common shares of the Company under our share option plans and 2,316 under our employee share purchase plan. On April 20, 2021, our board of directors approved a change to the assumed Norbord option plan to allow holders the right to elect to receive a cash payment in lieu of exercising an option to purchase Common shares. No other changes were made to the plan.
	On February 17, 2021, we renewed our normal course issuer bid (“NCIB”) allowing us to acquire an additional 6,044,000 Common shares for cancellation until the expiry of the bid on February 16, 2022. This represents approximately 5% of the Company’s issued and outstanding Common shares. During the quarter, we have repurchased 1,560,919 at an average price of US$65.28 (CAD$82.86) per share under this NCIB.
	10. Other
		January 1 to March 31
				2021		Currency remeasurement
				2020
	Foreign exchange (loss) gain	$	(6)		$	14
	Gain (loss) on interest rate swap contracts		3			(4)
	Other		7			(1)
		$	4		$	9
	11. Tax provision
	The tax provision differs from the amount that would have resulted from applying the British Columbia statutory income tax rate to earnings before tax as follows:
		January 1 to March 31
						Currency remeasurement
		2021		2020
	Income tax expense at statutory rate of 27%	$	(235)		$	(2)
	Rate differential between jurisdictions		28			-
	Non-taxable amounts		(2)			5
	Other		4			-
	Tax (provision) recovery	$	(205)		$		3
	12. 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 cash-settled share option expense (recovery) charged to earnings and after deducting a notional charge for cash-settled share options assuming the use of the equity-settled method, as set out below. No earnings adjustment is required for our equity-settled share option plan. 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.

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		January 1 to March 31
							Currency remeasurement
			2021		2020
	Earnings
	Basic	$			665	$	9
	Share option expense (recovery)			9			(13)
	Equity-settled share option adjustment			(3)			(2)
	Diluted	$			671	$	(6)

	Weighted average number of shares (thousands)
	Basic				95,670		68,665
	Share options			536			132
	Diluted				96,206		68,797
	Earnings per share (dollars)

	Basic	$		6.96		$	0.13
	Diluted	$		6.96		$	(0.09)

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	13. Segmented information
				Corporate &
						Lumber	NA EWP		Pulp & Paper Europe EWP	Other	Total
	January 1, 2021 to March 31, 2021Sales
	To external customers					$ 1,275 $ 779 $ 177 $ 112 $ - $ 2,343
	To other segments					25 2 - - (27) - $ 1,300 $ 781 $ 177 $ 112 $ (27) $ 2,343
	Cost of products sold					(490) (364) (125) (87) 27 (1,039)
	Freight and other distribution costs					(91) (48) (33) (9) - (181)
	Export duties, net					(37) - - - - (37)
	Amortization					(39) (54) (9) (17) (3) (122)
	Selling, general and administration					(36) (16) (8) (5) (13) (78)
	Equity-based compensation					- - - - (7) (7)
	Operating earnings					$ 607 $ 299 $ 2 $ (6) $ (23) $ 879
	Finance expense, net					(5) (1) (2) - (5) (13)
	Other					7 - 1 - (4) 4
	Earnings before tax					$ 609 $ 298 $ 1 $ (6) $ (32) $ 870
	Currency remeasurementJanuary 1, 2020 to March 31, 2020Sales
	To external customers					$ 622 $ 103 $ 165 $ - $ - $ 890
	To other segments					21 1 - - (22) - $ 643 $ 104 $ 165 $ - $ (22) $ 890
	Cost of products sold					(453) (82) (117) - 22 (630)
	Freight and other distribution costs					(82) (11) (32) - - (125)
	Export duties, net					(26) - - - - (26)
	Amortization					(39) (3) (8) - (2) (52)
	Selling, general and administration					(29) (5) (8) - 1 (41)
	Equity-based compensation					- - - - (7) (7)
	Operating earnings					$ 14 $ 3 $ - $ - $ (8) $ 9
	Finance expense, net					(9) (1) (2) - - (12)
	Other					12 - 3 - (6) 9
			Earnings before tax					$ 17 $ 2 $ 1 $ - $ (14) $ 6
	The geographic distribution of external sales is as follows1:
			January 1 to March 31
					2021		Currency remeasurement
					2020
	Canada	$		407		$	176
	U.S.				1,636		559
	China			118			104
	Other Asia			64			44
	Other			118			7
		$			2,343	$	890
	1.	Sales distribution is based on the location of product delivery.

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	14. Countervailing and antidumping duty dispute
	Additional details can be found in Note 25 - Countervailing (	"CVD") and antidumping ("ADD") duty dispute of our
	2020 annual audited consolidated financial statements.
	Developments in CVD and ADD rates
	On April 24, 2017, the United States Department of Commerce (“USDOC”) issued its preliminary determination in the CVD investigation, and on June 26, 2017, the USDOC issued its preliminary determination in the ADD investigation. On December 4, 2017, the duty rates were revised. On November 24, 2020, the USDOC finalized these rates based on its first Administrative Review (“AR”) of the first Period of Investigation (“POI”) as listed below.
	Effective November 30, 2020 for ADD and December 1, 2020 for CVD, shipments from Canada to the U.S. were subject to the new cash deposit rate of 7.57% for CVD and 1.40% for ADD.
	The respective Cash Deposit Rates, the AR1 Final Rate, and the West Fraser Estimated ADD Rate for each period are as follows:
		Cash Deposit	AR1 Final Rate3
	Effective dates for CVD	Rate	(24-Nov-20)
	AR1 POI
	April 28, 2017 - August 24, 20171	24.12%	6.76%
	August 25, 2017 - December 27, 20171			-	-
	December 28, 2017 - December 31, 20172	17.99%	6.76%
	January 1, 2018 - December 31, 2018	17.99%	7.57%
	AR2 POI
	January 1, 2019 - December 31, 2019	17.99%			n/a5
	AR3 POI
	January 1, 2020 - November 30, 2020	17.99%			n/a6
	December 1, 2020 - December 31, 20204	7.57%			n/a6
	AR4 POI
	January 1, 2021 – March 31, 2021	7.57%			n/a7
	1.	On April 24, 2017, the USDOC issued its preliminary rate in the CVD investigation. The requirement that we make cash deposits for CVD was suspended on August 24, 2017, until the USDOC published the revised rate.
	2.	On December 4, 2017, the USDOC revised our CVD Cash Deposit Rate effective December 28, 2017.
	3.	On February 3, 2020, the USDOC issued a preliminary CVD rate and, on November 24, 2020, a final CVD rate for the AR1 POI. This table only reflects the final rate.
	4.	Effective December 1, 2020, shipments from Canada to the U.S. were subject to the new Cash Deposit rate of 7.57% for CVD.
	5.	The CVD rate for the AR2 POI will be adjusted when AR2 is complete and the USDOC finalizes the rate, which is not expected until 2021.
	6.	The CVD rate for the AR3 POI will be adjusted when AR3 is complete and the USDOC finalizes the rate, which is not expected until 2022.
	7.	The CVD rate for the AR4 POI will be adjusted when AR4 is complete and the USDOC finalizes the rate, which is not expected until 2023.

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		AR1 Final	West Fraser
Cash Deposit		Rate3	Estimated
	Effective dates for ADD	Rate		(24-Nov-20)	Rate
	AR1 POI
	June 30, 2017 - December 3, 20171	6.76%		1.40%	1.46%
	December 4, 2017 - December 31, 20172	5.57%		1.40%	1.46%
	January 1, 2018 - December 31, 2018	5.57%		1.40%	1.46%
	AR2 POI
	January 1, 2019 - December 31, 2019	5.57%		n/a5	4.65%
	AR3 POI
	January 1, 2020 - November 29, 2020	5.57%		n/a6	3.40%
	November 30, 2020 – December 31, 20204	1.40%		n/a6	3.40%
	AR4 POI
	January 1, 2021 – March 31, 2021	1.40%		n/a7	3.77%
	1. On June 26, 2017, the USDOC issued its preliminary rate in the ADD investigation effective June 30, 2017. 2. On December 4, 2017, the USDOC revised our ADD Cash Deposit Rate effective December 4, 2017. 3. On February 3, 2020, the USDOC issued a preliminary ADD Rate and, on November 24, 2020, a final CVD rate for the AR1 POI. This table
	only reflects the final rate.
	4. Effective November 30, 2020, shipments from Canada to the U.S. were subject to the new Cash Deposit Rate of 1.40% for ADD. 5. The ADD rate for the AR2 POI will be adjusted when AR2 is complete and the USDOC finalizes the rate, which is not expected until 2021. 6. The ADD rate for the AR3 POI will be adjusted when AR3 is complete and the USDOC finalizes the rate, which is not expected until 2022. 7. The ADD rate for the AR4 POI will be adjusted when AR4 is complete and the USDOC finalizes the rate, which is not expected until 2023.
	Impact on earnings
	The following table reconciles our cash deposits paid during the period to the amount recorded in our earnings statement.
							January 1 to March 31
								Currency
		2021		remeasurement
						2020
	Cash deposits1						$	(29)	$	(32)
	Adjust to West Fraser Estimated ADD rate2							(8)		6
	Duty recovery (expense)3						$	(37)	$	(26)
	Interest income on duty deposits attributable to
	West Fraser Estimated rate adjustments						$	-	$	-
	Interest income on the AR1 duty deposits
	receivable4	1				-
	Interest income on duty deposits						$	1	$	-
	1.	Represents combined CVD and ADD cash deposit rate of 8.97% for Q1-21 and 23.56% for Q1-20.
	2.	Represents adjustment to West Fraser Estimated ADD rate of 3.77% for Q1-21 and 0.77% for Q1-20.
	3.	The total represents the combined CVD cash deposit rate and West Fraser Estimated ADD rate of 11.34% for Q1-21 and 18.76% for Q1-20.
	4.	Represents interest income accrued on the $95 million AR1 true-up duty deposit receivable.

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	Impact on the balance sheet
	Export duty deposits receivable is represented by:
	Export duty deposits receivable				Currency remeasurement
January 1 to March 31			January 1 to December 31
		2021		2020
	Beginning balance				$	178	$	61
	Export duties recognized as long-term duty
	deposits receivable in consolidated balance sheets
		(8)		104
	Interest recognized on the long-term duty
	deposits receivable	1		13
	Ending balance				$	171	$	178
	As at March 31, 2021, export duties paid and payable on deposit with the USDOC are $562 million.
	AR2, AR3 and AR4
	The preliminary rates for AR2 (POI January 1 to December 31, 2019) are expected in the second quarter of 2021 and rates finalized by the fourth quarter. AR3 (POI January 1 to December 31, 2020) commenced in April 2021, and the rates are expected to be finalized sometime in 2022. AR4 (POI January 1 to December 31, 2021) is expected to commence in 2022 with the results finalized in 2023. We have been selected as a mandatory respondent for AR3, which will result in West Fraser continuing to be subject to a company-specific rate.
	Appeals
	Our 2020 annual MD&A included in our 2020 Annual Report includes details on Softwood Lumber Dispute appeals.
	Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administrative review process is complete and related appeal processes are concluded.