WEST Fraser... · FLORIDA MEMPHIS 21 23 27. Seaboard 26. Armour 25. Newberry 24. Augusta NORT H CAROLINA 0 0 0 0 0 LUMBER PULP & PAPER PLYWOOD MDF VENEER & LVL 38 10 30 LUMBER Canada

WEST FRASERANNUAL REPORT 2013

INCLUDING

ANNUAL INFORMATION FORMDATED APRIL 1, 2014

WEST FRASERANNUAL REPORT 2013INCLUDING ANNUAL INFORMATION FORM DATED APRIL 1, 2014

TABLE OF CONTENTS 1. Map of Operations 2. Financial & Operating Highlights 4. Report to Shareholders 7. Corporate Structure 8. Annual Information Form 8. Business Overview

8. Corporate Strategy

9. Corporate Structure

9. History and Development of Business

9. Fibre Supply

12. Capital Expenditures and Acquisitions

12. Human Resources

12. Markets

13. Research and Development

13. Lumber

14. Panels

15. Pulp & Paper

15. External Factors Affecting West Fraser’s Business in 2013

16. Risk Factors

16. Capital Structure

18. Experts

18. Directors and Officers

20. Governance

20. Audit Committee

20. Material Contracts

21. Additional Information

21. Schedule 1 — Audit Committee Charter

23. Management’s Discussion & Analysis 24. Annual Results

25. Annual Earnings Adjustments for Certain Non-Operational Items

25. Discussion & Analysis of Annual Non-operational Items

26. Discussion & Analysis by Product Segment – Annual

29. 4th Quarter Results

29. Quarterly Earnings Adjustments for Certain Non-operational Items

30. Discussion & Analysis of Quarterly Non-operational Items – 4th Quarter

30. Discussion & Analysis by Product Segment

32. Capital Expenditures

33. Business Outlook

34. Earnings Sensitivity to Key Variables

34. Capital Structure and Liquidity

36. Significant Management Judgments Affecting Financial Results

37. Accounting Standards Issued But Not Yet Applied

37. New Accounting Pronouncements Adopted

37. Risks and Uncertainties

40. Disclosure Controls and Internal Controls Over Financial Reporting

41. Responsibility of Management 42. Independent Auditor’s Report 43. Financial Statements 70. Five-year Financial Review 71. Corporate Information IBC. Glossary of Industry Terms

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OPERATIONS West Fraser is a North American

wood products company. Its main product is lumber (spruce/pine/fir (“SPF”)

and southern yellow pine (“SYP”)), and it also produces panels (plywood, MDF

and LVL), pulp (NBSK and BCTMP), newsprint and wood chips. The operations

located in western Canada manufacture all of the products described above

except SYP lumber. The sawmills located in the southern United States

produce SYP lumber and wood chips.

0 LUMBER

Canada1. Quesnel2. Williams Lake3. Smithers4. Chetwynd5. Fraser Lake6. Chasm7. Houston8. 100 Mile House9. Blue Ridge

10. Slave Lake11. Hinton12. Edson13. Sundre

PULP & PAPER28. Hinton29. Quesnel (2)30. Slave Lake31. Whitecourt

PLYWOOD32. Edmonton33. Quesnel34. Williams Lake

MDF35. Blue Ridge36. Quesnel

VENEER & LVL

37. Rocky Mountain House

38. Slave Lake

0

0

0

0

12

3

4

57

86

119 12

13

2928

31

33

34

35

36 37

B R I T I S HC O L U M B I A A L B E R T A

V A N C O U V E R

Q U E S N E LE D M O N T O N

32

U.S.14. Joyce15. Huttig16. Henderson17. New Boston18. Leola19. Maplesville20. Opelika

23. Folkston22. Whitehouse21. McDavid

16

1718

15

1422

19 2024

2526

27

TEXAS

ARKANSAS

LOUIS IANA

TENNESSEE

SOUTHCAROLINA

GEORGIA

ALABAMA

FLORIDA

M E M P H I S

2123

27. Seaboard26. Armour25. Newberry24. Augusta

NORTH CAROLINA

0

0

0

0

0

LUMBER

PULP & PAPER

PLYWOOD

MDF

VENEER & LVL

3810 30

LUMBER Canada 1. Quesnel 2. Williams Lake 3. Smithers 4. Chetwynd 5. Fraser Lake 6. Chasm 7. Houston 8. 100 Mile House 9. Blue Ridge 10. Slave Lake 11. Hinton 12. Edson 13. Sundre U.S. 14. Joyce 15. Huttig 16. Henderson 17. New Boston 18. Leola 19. Maplesville 20. Opelika 21. McDavid 22. Whitehouse 23. Folkston 24. Augusta 25. Newberry 26. Armour 27. Seaboard

PULP & PAPER 28. Hinton 29. Quesnel (2) 30. Slave Lake 31. Whitecourt

PLYWOOD 32. Edmonton 33. Quesnel 34. Williams Lake

MDF 35. Blue Ridge 36. Quesnel

VENEER & LVL 37. Rocky Mountain House 38. Slave Lake

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Earnings ($ millions) 2013 2012

Sales 3,474 3,000

EBITDA1 529 275

Operating earnings 345 123

Earnings 349 77

Cash flow from operating activities 419 204

Common Share Data2 (in dollars per share, except shares outstanding)

Shares outstanding (thousands)

– Weighted average (basic) 85,712 85,714

– Year-end 85,672 85,726

Earnings per share

– Basic and diluted 4.07 0.90

Cash dividends per share 0.28 0.28

Common shareholders’ equity 22.73 17.40

Price range

– High (2013 – Dec 20; 2012 – Dec 21) 52.67 37.62

– Low (2013 – Jan 2; 2012 – Apr 25) 36.25 20.08

– Close 51.80 35.03

Financial Position ($ millions)

Working capital 198 438

Total assets 3,104 2,632

Long-term debt (includes current portion) 328 300

Shareholders’ equity 1,947 1,492

Analytical Data

Current ratio 1.3 2.1

Capital expenditures ($ millions) 358 159

Net debt to capitalization (%) 8 12

Return on common shareholders’ equity (%) 20.8 5.3

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FINANCIAL & OPERATING HIGHLIGHTS

Earnings ($ millions) 2013 2012

Lumber

Sales ($ millions)3 2,315 1,855

Operating earnings ($ millions) 314 90

SPF (MMfbm) Production 3,571 3,466

Shipments 3,588 3,453

SYP (MMfbm) Production 1,582 1,488


Panels

Sales ($ millions)3 467 448


Plywood (3/8” MMsf) Production 781 793

Shipments 774 798

MDF (3/4” MMsf) Production 204 195

Shipments 199 193

LVL (Mcf) Production 1,848 1,964


Pulp & Paper

Sales ($ millions) 780 775


NBSK (Mtonnes) Production 496 529

Shipments 510 531

BCTMP (Mtonnes) Production 603 620

Shipments 600 626

Newsprint (Mtonnes) Production 119 128

Shipments 119 127

1. EBITDA is defined as operating earnings plus amortization and restructuring charges.2. Per share amounts have been retroactively adjusted to take into account the Stock Dividend described in Note 17 of our annual consolidated financial statements.3. Includes intercompany fibre sales.

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REPORT TO SHAREHOLDERS

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MESSAGE FROM OUR CHAIRMAN2013 marked a year of significant achievement for our Company. Our significant growth in the U.S. South is paying real dividends ever

since the lumber market began its secular rebound in 2012. In addition, the benefits of capital upgrades to several of our Canadian mills

began to show results in 2013. We will see even further benefits in the coming years. Over the past decade West Fraser has become the

largest and one of the most geographically diversified lumber companies in the industry. We will continue to look for opportunities to build

on this strong base.

Our efforts this past year have been focused on upgrading existing facilities and investing in energy projects to reduce energy

costs and reduce our environmental footprint. In addition, we have worked hard to develop a strong succession and people development

program throughout the Company to prepare for the wave of retirements that will occur in our Company and throughout the industry

in the coming years.

At the end of 2013, the Company had one of the strongest balance sheets in the industry and continues to be one of the few forest

products companies in Canada to pay a dividend. This reflects our low-cost structure and our historic ability to operate profitably even

through the low cycles in our business.

Going forward, our strong management team, our low-cost culture and our large and diverse operating platform should enable us to

continue to build a larger, stronger and more profitable business in the future.

Henry H. Ketcham

Executive Chairman

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MESSAGE FROM OUR PRESIDENT AND CHIEF EXECUTIVE OFFICERThe longest downturn of the U.S. housing market in modern history appears to be behind us. It was a very challenging period for the

industry and for us but in spite of this, we are a much stronger company today than seven years ago. We’re one of the largest lumber

producers in our three key operating regions of British Columbia, Alberta and the southeast United States and cumulatively we’re the

largest lumber producer in North America. Our panels business continues to be a strong contributor and supports our operating philosophy

of extracting the maximum value from each log. Our pulp and paper business is much better positioned from a cost standpoint. Our

developing energy business, starting as part of our pulp and paper business, has now expanded to include power generation projects at two

of our sawmills. We have a strong balance sheet and are in the midst of an extensive capital program that will ensure that we can generate

industry-leading margins in the future. The importance of our low-cost culture was evident during the downturn, making us stronger and

even more committed to the values of frugality, teamwork and competitiveness.

Our list of capital projects is part of the most comprehensive capital program in our history. What had previously set us apart from our

competition was a combination of our low-cost culture and the continued re-investment in our mills to ensure that we had the best

technology in the industry. However, we deferred several capital projects during the prolonged housing downturn but we are now focused

on getting back to being well-positioned across all our business segments by the end of 2015. In 2013 we invested $358 million in our

mills and expect to continue at a similar pace in 2014 and 2015. Our focus is to lower costs and add value by extracting more from every

log we process and by further developing our energy business across all our business segments.

In October 2013 we announced our Mountain Pine Beetle Plan to address some of the significant effects of the mountain pine beetle

infestation in the interior of British Columbia. Part of this plan included the very difficult decision to close our Houston, B.C. sawmill in the

second quarter of 2014. The extensive infestation has resulted in the decline of timber supply and has altered the competitive position for

some of our B.C sawmills. In spite of this, we intend to maintain a strong sawmill presence in B.C. and part of the announced plan includes

rebuilding our sawmills at Smithers and 100 Mile House. However, we recognize the effect on our employees in Houston and continue to

work to provide opportunities to as many employees as possible to transition to opportunities within and outside West Fraser.

Although still far off the underlying demand of 1.5 million starts, U.S housing is coming back, with 930,000 starts in 2013. We’ve also

benefited tremendously from a developing overseas market with China. To put this into perspective, in 2005, Canada exported 100 million

board feet (the equivalent of 10,000 U.S. housing starts) to China but in 2013, Canadian shipments to China were in excess of 3.5 billion

feet (300,000 housing starts). Although we still expect some volatility until the U.S. housing market reaches higher sustained levels, steady

sales expectations for the U.S. and China give us good reason to be optimistic about the markets for our building products.

We are less encouraged about pulp and newsprint markets in 2014, given significant increases in global pulp capacity and continued

decline in newsprint consumption. However, our recent investments in energy production and energy efficiency as well as other capital

projects have positioned our pulp and paper business to compete in difficult markets.

The ongoing safety of our employees remains a major focus. We’ve made great progress over the past few years and we have a much

lower tolerance for risk throughout our mills. Our key safety statistics improved between 15% and 20% from 2012 as a result of our

employees’ changed behavior in response to increased hazard awareness. We have invested in excess of $20 million in reducing wood

dust in our mills and through the efforts of our employees, we are seen as a leader in driving the industry forward on this important issue.

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Our employees have set us apart and they have embraced the challenge to build a safer company with tremendous drive and commitment. Their

efforts have been recognized and we’re proud to note that West Fraser was recently voted as one of the ten best companies to work for in Canada.

It’s a recognition of the culture, values and spirit that our employees bring to work every day.

After leading West Fraser as CEO and President for 28 years, Hank Ketcham took on the role of Executive Chairman in 2013. We have accomplished

tremendous results under his leadership. Sales expanded eight-fold, our employee group grew from 1,800 to over 7,300 and our shareholder

return increased by 1,300%. Hank’s personal attention to the culture of West Fraser has created a unique environment in which we all enjoy

working. I’ve been fortunate to work closely with Hank for a number of years and I am grateful he continues to provide support, advice and

leadership to all of us as we continue to build a great company.

I’d like to also thank our board of directors, our customers, our communities and our employees for their support and commitment to West Fraser.

Ted Seraphim

President and Chief Executive Officer

REPORT TO SHAREHOLDERS

MESSAGE FROM OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER (CONTINUED)

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CORPORATE STRUCTURE

WEST FRASER TIMBER CO. LTD.

WEST FRASER MILLS LTD.

LUMBER PANELS PULP & PAPER CANADA U.S.3 PLYWOOD PULP

QUESNEL JOYCE EDMONTON HINTONWILLIAMS LAKE HUTTIG QUESNEL QUESNELSMITHERS HENDERSON WILLIAMS LAKE QUESNEL (50%)4

CHETWYND NEW BOSTON SLAVE LAKEFRASER LAKE LEOLA MDF CHASM MAPLESVILLE BLUE RIDGE NEWSPRINT HOUSTON OPELIKA QUESNEL WHITECOURT (50%)5

100 MILE HOUSE MCDAVID BLUE RIDGE1 SEABOARD VENEER & LVL SLAVE LAKE ARMOUR ROCKY MOUNTAIN HINTON NEWBERRY HOUSE2 SUNDRE2 AUGUSTA SLAVE LAKE EDSON FOLKSTON WHITEHOUSE

1. Owned through Blue Ridge Lumber Inc., a wholly-owned subsidiary.2. Owned through Sundre Forest Products Inc., a wholly-owned subsidiary.3. Owned through West Fraser, Inc., a wholly-owned subsidiary.4. Joint operation interest in Cariboo Pulp & Paper Company.5. Joint operation interest in Alberta Newsprint Company owned through West Fraser Newsprint Ltd., a wholly-owned subsidiary.

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ANNUAL INFORMATION FORM

DateThis Annual Information Form of West Fraser Timber Co. Ltd. (“West Fraser” or the “Company”) is dated as of April 1, 2014. Except as otherwise

indicated, the information contained in it is as of December 31, 2013.

Forward-looking Statements and Stock DividendThis Annual Information Form, and the Annual Report of which it forms a part, contain historical information, descriptions of current circumstances

and statements about potential future developments. The latter, which are forward-looking statements, 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. Forward-looking

statements are included under the headings “Fibre Supply – Mountain Pine Beetle and First Nations Issues” and “Capital Structure – Dividends” and

in parts of the Management’s Discussion & Analysis incorporated herein. 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 the matters described in these sections and under “Risk Factors”, and may

differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements which

reflect management’s estimates, projections and views only as of the date hereof. The Company undertakes no obligation to publicly revise these

statements to reflect subsequent events or changes in circumstances except as required by applicable securities laws.

All references within this Annual Information Form to the number of West Fraser shares, share prices and cash dividends reflect the payment

and adjustments resulting from a stock dividend, declared on December 10, 2013 and paid on January 13, 2014, applied retroactively to all

comparative periods. See Note 17 to the annual consolidated financial statements contained in our 2013 Annual Report for additional information

on the stock dividend.

Business OverviewWest Fraser is a North American integrated wood products company which produces lumber (spruce/pine/fir (“SPF”) and southern yellow pine (“SYP”)),

panels (plywood, MDF and LVL), pulp (NBSK and BCTMP), newsprint and wood chips. The operations located in western Canada manufacture all of

the products described above except SYP lumber. The sawmills located in the southern U.S. produce SYP lumber and wood chips.

The annual production capacities of our wholly-owned facilities and our share of the capacities of our joint operation facilities are as follows:

Lumber (MMfbm)

SPF 3,800

SYP 2,000

Total 5,800

Panels

Plywood (MMsf 3/8”) 830

MDF (MMsf 3/4”) 300

LVL (Mcf) 3,200

Pulp (Mtonnes)

BCTMP 650

NBSK 590

Newsprint (Mtonnes) 135

Corporate StrategyOur goal at West Fraser is to generate strong financial results through the business cycle, relying on our committed work force, the quality of our

assets, and our well-established corporate culture. This culture emphasizes cost control in all aspects of the business and on competitiveness,

both internally and externally. In our approach to employee relations, we emphasize employee involvement and favour internal promotions

whenever possible.

West Fraser is an integrated and diversified producer of wood products with access to extensive timber resources. Acquisitions and expansions are

considered with a view to extending our existing business lines, particularly in lumber operations, and to product and geographic diversification. Our

earnings over the business cycle have enabled us to make significant and ongoing capital investments in our facilities with the goal of achieving,

maintaining or improving an overall low-cost position.

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We are committed to operating in a financially conservative and prudent manner. The North American wood products industry is cyclical and over

the last several years has faced very difficult market conditions and serious challenges. During such cyclical downturns, we focus on financial

discipline, including reduction or deferral of non-essential capital expenditures. As market conditions improve we will typically undertake an

expanded capital investment program in order to catch up on expenditures reduced or deferred during the downturn. We believe that maintaining

a strong balance sheet provides the ability to react to growth opportunities.

Corporate StructureThe chart on page 7 shows the relationship of West Fraser to the principal direct and indirect subsidiaries and the joint operations in which we

participate and, where less than 100%, the percentage of our direct or indirect ownership.

West Fraser assumed its present form in 1966 by the amalgamation of a group of companies under the laws of B.C. The principal operating

subsidiary, West Fraser Mills Ltd., assumed its present form on January 1, 2005 by amalgamation under those laws. West Fraser, Inc. is a Delaware

corporation, while Blue Ridge Lumber Inc. and Sundre Forest Products Inc. are Alberta corporations. West Fraser Newsprint Ltd. subsists under

the laws of Canada. Alberta Newsprint Company (“ANC”) and Cariboo Pulp & Paper Company are unincorporated joint operations governed,

respectively, by the laws of Alberta and B.C.

Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, B.C., Canada, V6B 1C1 and our registered office is located at 1500 –

1055 West Georgia Street, Vancouver, B.C., Canada, V6E 4N7.

History and Development of BusinessWest Fraser originated in 1955 when three brothers, Pete, Bill and Sam Ketcham, acquired a lumber planing mill located in Quesnel, B.C.

(“Quesnel”). From 1955 through 2012 the business expanded in western Canada through the acquisition of a number of sawmills and related

timber harvesting rights and the acquisition or development of lumber, panel and pulp & paper businesses. Expansion into the southern U.S. began

in 2000, with the acquisition of two sawmills. An additional 13 sawmills located in the southern U.S. were acquired in 2007, one of which was

decommissioned and sold in 2012 after a lengthy curtailment.

Major developments for West Fraser during the last five years include the following:

2010 Closure of linerboard and kraft paper mill at Kitimat, B.C. in January 2010.

2011 Sale of Kitimat industrial site, deep-sea wharf and Terrace sawmill.

2012 Purchase of sawmill at Edson, Alberta.

2013 Mountain Pine Beetle Plan announced, including timber tenure exchange and planned second quarter 2014 closure of Houston, B.C. sawmill.

Sales Revenue1 ($ millions)

Year ended December 31 2013 2012 2011 2010 2009

Lumber 2,234 1,783 1,579 1,622 1,285

Panels 460 442 370 401 391

Pulp & Paper 780 775 813 863 677

Total 3,474 3,000 2,762 2,886 2,353

1. From continuing operations and excludes intercompany fibre sales.

Fibre SupplyOur operations are dependent on the consistent supply of substantial quantities of wood fibre in various forms. The primary manufacturing facilities,

which produce lumber, plywood and LVL, consume whole logs while the pulp & paper and MDF facilities mostly consume wood by-products in the

form of wood chips, shavings and sawdust resulting from the production of lumber, plywood or LVL. Many facilities also consume hog fuel and

wood waste in energy systems.

Log Supply

Our U.S. operations, which produce SYP lumber, consume approximately 8 million tons of logs per year operating at capacities described in this

Annual Information Form. These operations obtain approximately 25% of their log requirements under certain long-term supply contracts, with the

balance being purchased on the open market.

In B.C. and Alberta substantially all timberlands are publicly owned and the right to harvest timber is acquired through provincially-granted licences.

Licences grant the holder the right to harvest up to a specified quantity of timber annually and either have a term of 15 to 25 years and are

replaceable or renewable or have a shorter term but are not replaceable or renewable. The following table summarizes the timber tenures, as at

December 31, 2013, which supply the Canadian mills that we own or in which we have an interest, as well as our Annual Allowable Cut (“AAC”)

for such tenures.

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ANNUAL INFORMATION FORM (CONTINUED)

Timber Tenures (thousand m3)

Location Tenure 1 Expiry AAC

B.C. Coniferous Long-term 2021 – 2035 5,605

Coniferous Short-term 2014 – 2017 687

Alberta Coniferous Long-term 2016 – 2033 5,985

Deciduous Long-term 2019 – 2033 1,189

1. Long-term tenures include TFLs, FMAs, timber quotas and forest licences, which are renewable timber tenures. Short-term tenures include non-replaceable forest licences.

Annual log requirements for our Canadian sawmills, plywood facilities and LVL plant, all operating at the capacities described in this Annual

Information Form, total approximately 14 million m3. Approximately 78% of these requirements can be obtained from the tenures described in

the above table and the balance is typically acquired from third parties holding short or long-term timber harvesting rights, including independent

logging contractors, First Nations, communities and woodlot owners. We do not necessarily consume the maximum permitted volume of logs that

may be harvested from our tenures annually but will adjust between tenure and purchase logs depending on circumstances including the availability

of purchase logs.

Timber tenures in B.C. and Alberta require the payment of a fee, commonly known as stumpage, for timber harvested under it. Currently, stumpage

in Alberta is product-price specific and varies with the sales price of the product into which the logs will be converted. Stumpage in B.C. is

substantially based on the results of certain publicly-auctioned timber harvesting rights.

Timber tenures in B.C. and Alberta require the holder to carry out reforestation to ensure re-establishment of the forest after harvesting.

Reforestation requirements depend on climate, terrain, species and other factors affecting regeneration. Reforestation projects are planned and

supervised by our woodlands staff and are subject to approval by relevant government authorities. Our timber harvesting operations are carried out

by independent contractors under the supervision of our woodlands staff.

Mountain Pine Beetle

The current mountain pine beetle infestation in the B.C. interior reached a peak a number of years ago in terms of the annual timber mortality rate

according to information published by B.C.’s Ministry of Forests, Lands and Natural Resource Operations. To date, the Ministry estimates that 723

million m3 of pine has been attacked and killed and that approximately 56% of the mature pine within the province’s timber harvesting land base

(“THLB”) will be killed by 2017. Approximately 40% of B.C.’s standing timber inventory is within the THLB and approximately 29% of this is pine.

When only considering the THLB of B.C.’s Interior, approximately 37% is pine. Although the ultimate effect of the infestation is less severe than

originally forecasted, the damage to the mature pine forests within our operating areas is significant.

We continue to focus on the salvage and processing of dead pine in order to utilize as much of the resource as possible and to ensure that affected

sites are promptly reforested. The Province of B.C. has also limited the harvest of non-pine species until the salvage of dead pine stands comes to

a conclusion. The AAC will be reduced to reflect lower mature inventories as dead pine stands are harvested or when they are no longer economic

to harvest. The Province has reduced the AAC in the central Interior by approximately 8% in the past three years and we expect this process to

continue over the next several years. To date, B.C.’s Chief Forester has announced reductions of the AAC in three of our operating areas in the

Interior with four more announced reductions expected in 2014. As the timing of future reductions and the effect on our AACs will depend on a

variety of factors, including the amount of non-pine species available for harvest, the full effect on our operations cannot reasonably be determined

at this time.

In Alberta, the Ministry of Environment and Sustainable Resource Development and the forest industry continue to implement aggressive programs

of early detection, single tree control and focussed harvesting activity. Beetles have declined significantly in the southern part of the province but

a significant population remains in the northwest and west-central areas, including some pockets within our tenures. There is still risk of further

in-flight of insects from northwestern B.C. We continue to work aggressively to reduce the number of susceptible pine stands and conduct spread

control activities across the region in concert with other forest industry participants and the Province of Alberta.

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Certification

Our Canadian woodlands operations, in addition to being subject to various environmental protection laws, are third-party certified to internationally-

recognized, sustainable forest management standards. For more information concerning our sustainable and environmentally sound forest

practices see our Sustainability Report and our Environmental Report at www.westfraser.com.

First Nations Issues

Issues relating to Canada’s aboriginal people (“First Nations”) have the potential to have a significant effect on resource industries in Canada,

including wood products. The main First Nations issues that are relevant to our operations relate to aboriginal rights and title, and consultation.

The potential existence of aboriginal title and rights over substantial portions of B.C., including areas where our timber tenures are located, has

created uncertainty with respect to property rights and natural resource development in the province. The Supreme Court of Canada (the “SCC”)

determined in 1997 that First Nations may possess rights in respect of land used or occupied by their ancestors where treaties have not been

concluded to deal with those rights. Very few areas of B.C. are the subject of such treaties, although all of Alberta is covered by treaties. This

uncertainty in B.C. may be alleviated by the negotiation of treaties with First Nations and further judgments of the courts.

In 2004, the SCC confirmed that the Crown must consult with First Nations before authorizing activity that might infringe on their interests in

certain circumstances and, when appropriate to do so, seek to accommodate those interests by minimizing interference with them. In 2005 the

SCC determined that this Crown duty of consultation applies to treaty lands as well as non-treaty lands, so the duty of consultation applies to all of

the lands in B.C. and Alberta where our timber tenures are located. Authorizations requiring consultation may include approval of cutting permits

and required ministerial action relating to the transfer or renewal of Crown timber tenures. The process of consultation and, when appropriate,

accommodation is currently not clearly defined, creating some uncertainty with respect to Crown timber harvesting rights held by wood products

companies, including West Fraser.

We participate as requested by the Crown in the consultation process, but rely on provincial governments to adequately discharge obligations to

First Nations in order to preserve the validity of actions dealing with public rights, including the granting of Crown timber harvesting rights. We also

seek to develop good relationships with the First Nations that may be affected by our business activities.

However, as the jurisprudence and government policies respecting aboriginal title and rights and the consultation process continue to evolve,

we cannot at this time predict whether First Nations claims will have a material adverse effect on our timber harvesting rights or on our ability to

exercise or renew them, or secure other timber harvesting rights.

Residual Fibre Supply

In Canada substantially all our requirements for wood chips, shavings and sawdust and hog fuel are supplied from our own operations, either

directly or indirectly through trades. This reduces our exposure to risks associated with price fluctuations and supply shortages of these products.

Our B.C. sawmills and plywood plants fulfill substantially all of the fibre requirements of our B.C. pulp operations and MDF plant. The Alberta MDF

plant obtains its fibre from the adjacent Blue Ridge sawmill and other sawmills in the area. The Hinton pulp mill obtains its fibre from the adjacent

Hinton sawmill and other sawmills in the area owned by us. At times we produce whole log chips at the Hinton facility to supplement the supply

of residual chips from our various sawmills. Almost all of the fibre requirements of ANC are obtained from local sawmills, including the Slave Lake

sawmill and veneer operation, through log-for-chip trades using logs harvested from ANC’s tenures. The balance is obtained from direct fibre

purchases. The Slave Lake deciduous FMA provides most of the fibre requirements of the Slave Lake pulp mill, with the balance being obtained

from logs purchased from local suppliers.

The majority of the wood chips produced by our U.S. operations are sold to pulp mills at market prices pursuant to long-term contracts.

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Capital Expenditures and AcquisitionsWe regularly invest in upgrading and expanding our facilities and operations. However, during periods when earnings are weak, we will reduce

capital and other expenditures in order to preserve liquidity. The following table shows the capital expenditures and acquisitions during the past

five years.

Capital Expenditures and Acquisitions ($ millions)

Year ended December 31 2013 2012 2011 2010 2009 1

Lumber 281 114 108 47 10

Panels 5 5 5 2 1

Pulp & Paper 71 38 99 39 7

Corporate & Other 1 2 1 1 1

358 159 213 89 19

Acquisition — 30 — — —

Total 358 189 213 89 19

1. Amounts for years prior to 2010 have not been restated under IFRS and are prepared under previous Canadian generally accepted accounting principles.

Human Resources At December 31, 2013, we employed approximately 7,300 individuals, including our share of those in our joint operations. Of these, approximately

5,000 are employed in our lumber segment, 1,300 in our panels segment, 800 in our pulp & paper segment and 200 in our corporate segment.

Approximately 39% of our employees are covered by collective agreements. In 2014, collective agreements covering approximately 75 employees

will expire. Also in 2014, approximately 225 employees will be affected by the planned closure of our Houston, B.C. sawmill.

MarketsOur products are sold in markets open to a number of companies with similar products. Purchasing decisions by customers are generally based on

price, quality and service. Prices and sales volumes are influenced by general economic conditions. The following table shows selected average

benchmark prices for the past five years for products of the type we produced, although these prices do not necessarily reflect the prices we obtained.

Average Benchmark Prices (In US$ except plywood)

2013 2012 2011 2010 2009

SPF #2 & Better 2x4 (per Mfbm)1 356 299 255 256 182

SYP #2 West 2x4 (per Mfbm)2 414 348 279 304 242

Plywood (per Msf 3/8” basis)3 Cdn$ 392 382 308 334 329

MDF (per Msf 3/4” basis)4 605 566 546 536 489

NBSK (per tonne)5 941 872 977 960 718

Newsprint (per tonne)6 608 640 640 607 560

Sources:1. Random Lengths – 2x4, #2 & Better – Net FOB mill.2. Random Lengths – 2x4 – Net FOB mill Westside.3. Crow’s Market Report – Delivered Toronto.4. Resource Information Systems, Inc. – MDF Western U.S. – Net FOB mill.5. Resource Information Systems, Inc. – U.S. list price, delivered U.S.6. Resource Information Systems, Inc. – U.S. delivered 48.8 gram newsprint.

ANNUAL INFORMATION FORM (CONTINUED)A

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Research and DevelopmentWe support industry research and development organizations, and conduct research and development at several plants to improve processes,

maximize resource utilization and develop new products and environmental applications.

LUMBER

Capacity and Production (both MMfbm)

2013 2012 2011 2010 2009

Capacity – year-end 5,800 5,800 5,700 5,500 5,500

Production:

B.C. Sawmills (SPF)

Quesnel 609 590 582 529 485

Williams Lake 247 244 248 262 225

Smithers 271 269 277 276 263

Chetwynd 223 242 252 272 240

Fraser Lake 386 373 400 376 364

Chasm 238 250 244 230 155

Houston4 264 249 261 257 173

100 Mile House 239 244 233 195 129

2,477 2,461 2,497 2,397 2,034

Alberta Sawmills (SPF)

Blue Ridge 401 392 360 378 357

Slave Lake 18 18 16 12 20

Hinton 309 306 272 257 204

Sundre 272 277 263 274 268

Edson1 94 12 — — —

1,094 1,005 911 921 849

U.S. Sawmills (SYP)

Joyce, LA 189 177 201 194 190

Huttig, AR 139 132 137 125 116

Henderson, TX 113 118 134 116 115

New Boston, TX 197 153 165 139 129

Leola, AR 140 138 121 115 85

Maplesville, AL 76 100 88 71 63

Opelika, AL 94 87 71 57 56

McDavid, FL2 7 — — — —

Seaboard, NC 132 128 112 104 112

Armour, NC 185 158 174 177 170

Newberry, SC 124 126 123 105 95

Augusta, GA 120 116 108 106 100

Folkston, GA3 — — — — —

Whitehouse, FL 66 55 69 56 38

1,582 1,488 1,503 1,365 1,269

Total Production 5,153 4,954 4,911 4,683 4,152

1. Purchased October 31, 2012.2. Restarted October 2013.3. Indefinitely curtailed.4. Scheduled for closure in the second quarter of 2014.

Lumber capacity by region and species is approximately 64% SPF (64% B.C. and 36% Alberta) and 36% SYP (all U.S.) and is generally based on

our sawmills running on a five-day, two-shift basis with certain exceptions where logs may be available to run a third shift.

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Operations

We own 27 sawmills of which one is currently indefinitely curtailed and one is scheduled for closure in the second quarter of 2014. We also have

a wood-treating facility at the Sundre sawmill.

Sales

Lumber produced at our Canadian sawmills and sold to North American customers is marketed and sold from our sales office in Quesnel, while

sales to offshore markets are made from our export sales office in Vancouver, B.C. Offshore sales activities are complemented by customer service

offices in Japan and China. Lumber produced at our U.S. sawmills is marketed by the sales group in Memphis, Tennessee. From time to time, we

purchase lumber for resale in order to meet requirements of customers.

In 2013 sales of lumber from Canadian and U.S. operations were made to customers in the U.S. and Canada and to customers offshore,

predominantly in China and Japan. Most lumber shipments to North American customers by the Canadian operations were made by rail and the

rest by truck. Most lumber shipments to North American customers by the U.S. operations were delivered by truck and the rest by rail. Offshore

shipments from both Canada and the U.S. were through various public terminals in container vessels.

PANELS

Capacity and Production 2013 2012 2011 2010 2009

Plywood (MMsf 3/8” basis)

Capacity – year-end 830 830 830 830 830

Production:

Alberta Plywood 298 296 293 301 290

Williams Lake 242 250 250 250 237

Quesnel 241 247 237 240 218

Total Production 781 793 780 791 745

MDF (MMsf 3/4” basis)


Production:

Ranger Board 121 112 110 120 110

WestPine 83 83 76 72 85


LVL (Mcf)

Capacity – year-end 3,200 3,200 3,200 3,200 3,200

Production 1,848 1,964 1,634 1,918 1,643

Operations

Our panel operations include three plywood mills that primarily produce standard softwood sheathing plywood, two MDF mills, each with the

flexibility to manufacture varying thicknesses and sizes, an LVL mill, and a veneer mill that produces veneer for use in the Edmonton plywood mill.

Sales

Plywood, LVL and MDF are marketed from our sales office in Quesnel to retail outlets, wholesale distributors, remanufacturers and treating

businesses. MDF is marketed under the names “Ranger”™, “WestPine”™, “Eco Gold”™ and “Ecopremium”™ both from our sales office and

through distributors under the direction of our sales personnel.

In 2013 the majority of our sales of plywood were made to customers in Canada, sales of MDF were to customers in the U.S., Canada and other

areas and sales of LVL were to customers in the U.S. and Canada. Shipments to North America were by rail or truck and offshore shipments were

by bulk and container vessels.


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PULP & PAPER

Pulp

Capacity and Production (Mtonnes)

2013 2012 2011 2010 2009

BCTMP


Production:

Quesnel River Pulp 386 398 392 367 298

Slave Lake Pulp 217 222 231 249 203


NBSK


Production:

Hinton 353 370 337 354 361

Cariboo1 143 159 172 171 162


1. Reflects West Fraser’s 50% share of ownership.

Operations

BCTMP is produced, primarily from hardwood aspen, at our Slave Lake pulp mill and also produced, primarily from softwood, at our QRP mill. These

pulps are used by paper manufacturers to produce paperboard products, printing and writing papers and a variety of other paper grades. NBSK is

produced at our Hinton and Cariboo pulp mills and is used by paper manufacturers to produce a variety of paper products, including tissues and

printing and writing papers.

Sales

Pulp is marketed out of our pulp sales office in Vancouver. In 2013, sales of both NBSK and BCTMP were to customers in North America, Asia,

predominantly China, and to other offshore customers. Shipments within North America were primarily by rail and those to offshore customers

were by rail to Vancouver and then by bulk or container vessels.

Newsprint

Capacity and Production1 (Mtonnes)

2013 2012 2011 2010 2009


Production 119 128 122 131 111

1. Reflects West Fraser’s 50% share of ownership.

Operations

The ANC mill at Whitecourt, Alberta produces standard newsprint in three basis weights: 43, 45 and 48.8 grams per square metre.

Sales

Newsprint is sold to various publishers and printers in North America through a partnership owned indirectly by the ANC owners. In 2013, sales

were to customers in the U.S. and Canada. Shipments were by rail and truck.

External Factors Affecting West Fraser’s Business in 2013

Economic Conditions

Our earnings are sensitive to changes in world economic conditions, primarily those in North America, Europe and Asia and particularly to the U.S.

housing market. Most of our revenues are from sales of commodities for which prices are sensitive to variations in supply and demand. Since

most of these sales are in foreign currencies, mainly U.S. dollars, currency exchange fluctuations against the Canadian dollar are a major source

of earnings volatility for us.

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Softwood Lumber Agreement

Effective October 12, 2006, a Softwood Lumber Agreement between Canada and the U.S. (the “SLA 2006”) came into force. The SLA 2006

originally had a term of seven years, but in January 2012 was extended and now expires in October 2015.

Under the SLA 2006 we may be required to pay a tax to Canada on softwood lumber we export into the U.S. The basic tax may range up to 15% of

the value of the lumber for producers in B.C. and Alberta, and will vary depending on a reference lumber price. Subject to U.S. lumber consumption

and the volume of lumber shipments to the U.S. from either province, an additional 50% surcharge on the applicable basic tax may be levied. In

certain circumstances, exporters may be entitled to a refund of up to one third of taxes paid.

Energy

Our pulp, paper and MDF operations consume substantial amounts of energy. The Hinton and Cariboo pulp mills have generating facilities which

produce electricity to satisfy much of their energy requirements.

In B.C., electricity is purchased from the provincial utility at regulated prices based largely on generation costs. In Alberta, electricity is purchased

at market prices through the Alberta power pool.

In Alberta, we are hedged against electricity market price fluctuations for a substantial volume of our electricity consumption through a long-term

power purchase agreement that provides electricity at prices based largely on generation costs and inflation. Our exposure to energy costs includes

the cost to purchase electricity, natural gas, gasoline, diesel fuels and fuel surcharges on purchased transportation.

Environment

Our manufacturing operations are subject to environmental protection laws and regulations. We have developed and apply internal programs to

help ensure that our operations are in compliance with applicable laws and standards and to address any instances of non-compliance. We are

committed to responsible stewardship of the environment and to the continual improvement of our forest practices and manufacturing procedures

so we can optimize the use of resources and minimize the impact of our operations on the environment. We have adopted an Environmental Policy,

a copy of which is available on our website at www.westfraser.com.

Risk FactorsA detailed discussion of risk factors is included in “Management’s Discussion & Analysis – Risks and Uncertainties”, which is incorporated herein

by reference. Our Management’s Discussion & Analysis is available on SEDAR at www.sedar.com.

Capital Structure

Share Capital

Our authorized share capital consists of 230,000,000 shares divided into:

(a) 200,000,000 Common shares,

(b) 20,000,000 Class B Common shares, and

(c) 10,000,000 Preferred shares, issuable in series.

Each Class B Common share may at any time be exchanged for one Common share. The rights attached to the Common shares and Class B

Common shares are equal in all other respects, including the right to dividends and the right to vote. The Common shares are listed and traded on

the Toronto Stock Exchange under the symbol WFT while our Class B Common shares are not. Certain circumstances or corporate transactions

may require the approval of the holders of our Common shares and Class B Common shares on a separate class-by-class basis.

In December 2013 we announced that a one Common share dividend would be paid in respect of each Common share and Class B Common

share outstanding as at December 31, 2013, payable on January 13, 2014. This had the effect of a two-for-one share subdivision effective on

January 13, 2014.

After taking this stock dividend into consideration, as at December 31, 2013, the issued share capital consisted of 83,390,026 Common shares

and 2,281,478 Class B Common shares for a total of 85,671,504 shares (adjusted as at December 31, 2012 – 85,725,440 shares).


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Credit Ratings

As shown in the table below, West Fraser is rated by three rating agencies. West Fraser pays annual fees to maintain its debt and corporate ratings.

All three agencies upgraded our ratings to investment-grade during 2013 and all three have applied a Stable Outlook. The ratings are assigned

both on a corporate level and specifically to the US$300 million 144A debentures maturing October 2014. At below investment-grade levels,

Moody’s assigns a corporate as well as debt-specific rating but at investment-grade levels, ratings apply to specific debt issues. The ratings are

not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by each rating agency.

RatingsAgency Rating OutlookDominion Bond Rating Service1 BBB(low) Stable

Moody’s2 Baa3 Stable

Standard & Poor’s3 BBB- Stable

1. DBRS credit ratings for long-term obligations range from AAA to D. A rating of BBB is described by DBRS as “adequate credit quality. The capacity for the payment of financial obligations is considered acceptable. May be vulnerable to future events”. Additional information on the rating is available on DBRS’s website.2. Moody’s credit ratings for long-term obligations range from Aaa to C. Moody’s describes obligations rated Baa as “subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics”. Additional information on the rating is available on Moody’s website.3. S&P credit ratings for long-term obligations range from AAA to D. A rating of BBB- is described by S&P as “considered lowest investment grade by market participants”. Additional information on the rating is available on S&P’s website.

Market Prices

The following table sets forth adjusted market prices and trading volumes of our Common shares on the Toronto Stock Exchange for each month

of 2013 and 2012.

2013 2012

High Low Close Volume Close Volume

($ ) ($ ) ($ ) (000’s ) ($ ) (000’s )

January 41.61 36.25 40.04 5,537 24.16 2,155

February 42.50 39.42 42.50 3,800 23.96 2,911

March 47.05 42.07 45.00 3,667 23.06 2,426

April 47.27 39.28 43.98 5,413 21.72 2,150

May 44.51 37.53 38.51 6,962 23.45 2,272

June 43.62 38.50 39.75 5,938 25.68 2,388

July 46.86 38.76 46.81 5,286 26.55 1,998

August 47.59 40.26 41.70 4,308 27.80 2,770

September 46.78 41.20 46.35 5,041 27.97 4,455

October 48.11 43.00 47.79 5,199 30.25 3,236

November 50.00 44.29 46.90 5,602 34.84 4,778

December 52.67 46.36 51.80 3,971 35.03 6,263

Total 60,724 37,802

Source: http://tradingdata.tsx.com

Cash dividends

The declaration and payment of cash dividends is within the discretion of our Board of Directors. Historically, cash dividends have been declared

on a quarterly basis payable after the end of each quarter. On an annual basis, dividends of $0.28 per share were paid in 2013, 2012 and 2011.

There can be no assurance that cash dividends will continue to be declared and paid by us in the future, as the discretion of the Board of Directors

will be exercised from time to time taking into account our then current circumstances.

Transfer Agent

Our transfer agent and registrar is Canadian Stock Transfer, with registers of transfers in Vancouver and Toronto.

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ExpertsOur auditors are PricewaterhouseCoopers LLP (“PwC”), who prepared the Auditor’s Report included with our Consolidated Financial Statements for

the year ended December 31, 2013. PwC has confirmed that it is independent with respect to us, within the meaning of the Rules of Professional

Conduct of the Institute of Chartered Accountants of B.C., as of February 13, 2014.

Directors and Officers

Directors

The names and municipalities of residence of the directors of the Company, their principal occupations during the past five years and the periods

during which they have been directors of the Company are as follows:

Name and Municipalityof Residence Principal Occupation Director Since

Henry H. Ketcham Executive Chairman September 16, 1985Vancouver, B.C.

Clark S. Binkley1, 3 & 4 Chief Investment Officer, GreenWood Resources, Inc. February 13, 1992Portland, Oregon (a timberland investment management organization)

J. Duncan Gibson1, 3 & 4 Investor April 29, 1997Toronto, Ontario

Samuel W. Ketcham3 & 4 Managing Partner, Ketcham Capital, Inc. April 27, 2010Seattle, Washington

Harald H. Ludwig2 & 4 President, Macluan Capital Corporation May 2, 1995West Vancouver, B.C. (diversified private equity investment company)

Gerald J. Miller3 Corporate Director April 19, 2012Lake Country, B.C.

Robert L. Phillips2, 4 & 5 Corporate Director April 28, 2005West Vancouver, B.C.

Janice G. Rennie1, 2 & 4 Corporate Director April 28, 2004Edmonton, Alberta

Ted Seraphim President and Chief Executive Officer April 30, 2013North Vancouver, B.C.

1. Member of the Audit Committee.2. Member of the Compensation Committee.3. Member of the Safety & Environment Committee.4. Member of the Governance & Nominating Committee.5. Lead Director.

Each director has held the same or a similar principal occupation with the organization indicated or a predecessor thereof for the last five years

except for Henry H. Ketcham who before March 1, 2013 was our Chairman and Chief Executive Officer and before April 19, 2012 was also our

President; Gerald J. Miller who before July 31, 2011, was our Executive Vice-President, Finance and Chief Financial Officer; Ted Seraphim who

before March 1, 2013 was President and Chief Operating Officer, before April 19, 2012 was Executive Vice-President and Chief Operating Officer

and before July 1, 2010 was Vice-President, Pulp & Paper; and Clark Binkley who before July 31, 2012 was Managing Director of International

Forestry Investment Advisors LLC. The term of office of each director will expire at the conclusion of the Company’s next annual general meeting.

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Officers

Name and Municipality of Residence Office Held

Henry H. Ketcham Executive Chairman

Vancouver, B.C.

Ted Seraphim President and Chief Executive Officer

North Vancouver, B.C.

Raymond W. Ferris Vice-President, Wood Products

Quesnel, B.C.

Larry S. Hughes Vice-President, Finance and Chief Financial Officer

Vancouver, B.C. Secretary

Rodger M. Hutchinson Vice-President, Corporate Controller and Investor Relations

West Vancouver, B.C.

Maureen F. Kuper Treasurer

Burnaby, B.C.

David P. Lehane Vice-President, Canadian Woodlands

Quesnel, B.C.

Christopher D. McIver Vice-President, Lumber Sales and Corporate Development

Quesnel, B.C.

Sean P. McLaren Vice-President, U.S. Lumber Operations

Collierville, Tennessee

Peter A. Rippon Vice-President, Pulp and Energy

Quesnel, B.C.

Tom V. Theodorakis Assistant Secretary

Vancouver, B.C. Partner, McMillan LLP (lawyers)

Russell L. Wiggins Vice-President, Operations Controller

Quesnel, B.C.

Each officer has held the same or a similar office with the organization indicated or a predecessor thereof for the last five years except for Henry

H. Ketcham (see disclosure under “Directors”); Ted Seraphim (see disclosure under “Directors”); Larry S. Hughes, who before August 1, 2011 was

our Senior Vice-President and Secretary; Rodger M. Hutchinson, who before February 13, 2014 was our Vice-President, Corporate Controller;

Christopher D. McIver, who before October 1, 2010 was our Vice-President, Lumber Sales; Sean P. McLaren, who before October 1, 2010 was our

General Manager, Wood Products for the U.S. operations and before August 11, 2010 was our Manufacturing Manager for the U.S. operations;

Peter A. Rippon, who before October 1, 2010 was our Operations Manager, Mechanical Pulp and Energy; and Russell L. Wiggins, who before

February 19, 2014 was our Operations Controller and before October 15, 2010 was our Solid Wood Controller.

Shareholdings of Directors and Officers

The directors and executive officers of the Company as a group, beneficially owned or controlled or directed, directly or indirectly, the following

shares of the Company: December 31, December 31, 2013 2012

Common shares 1,910,572 2,043,652

% of total Common shares 2% 2%

Class B Common shares 78,728 78,728

% of total Class B Common shares 3% 3%

% of all shares outstanding 2% 2%

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GovernanceCorporate governance is guided by our Corporate Governance Policy, a copy of which may be viewed on our website: www.westfraser.com. The

Board of Directors has established a Governance & Nominating Committee comprised of all non-management directors. The Committee provides

support for the stewardship and governance role of the Board in reviewing and making recommendations on the composition of the Board, the

functioning of the Board and its committees, succession planning and all other corporate governance matters and practices. On the occasion of

each regularly-scheduled meeting of the Board in 2013, the Committee met without management representatives present and reviewed these and

other issues.

Audit CommitteeThe Audit Committee of our Board of Directors assists the Board in fulfilling its responsibility to oversee our financial reporting and audit process.

The full text of the Audit Committee’s Charter is attached as Schedule 1.

Members

The following identifies each current member of the Audit Committee, and the education and experience of each member that is relevant to the

performance of the member’s responsibilities as an Audit Committee member. All members of the Audit Committee are considered “independent”

and “financially literate” within the meaning of NI 52-110.

J. Duncan Gibson

Mr. Gibson holds a Bachelor of Commerce and a Masters of Business Administration. His career spanned 27 years with the Toronto-Dominion

Bank, including nine years in the Corporate Banking, U.S. Division, and as Vice Chairman with responsibility for the Commercial Banking Division.

Clark S. Binkley

Dr. Binkley holds a Bachelor of Arts in Applied Mathematics and a PhD in Forestry and Environmental Studies. He is the Chief Investment Officer of

a private equity timberland investment firm. He has served as a director of public and private forest products companies.

Janice G. Rennie

Mrs. Rennie, who holds a Bachelor of Commerce, is a Chartered Accountant. She was elected as Fellow of the Chartered Accountants in 1998.

Mrs. Rennie has chaired or been a member of several audit committees of public companies, including Teck Resources Limited, Nova Chemicals

Inc., Weldwood of Canada Limited, Canadian Hotel Income Properties REIT, Capital Power Corporation, Methanex Corporation, Major Drilling Group

International Inc. and Matrikon Inc.

Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy that sets out the pre-approval requirements related to services to be performed by our independent

auditors. The policy provides that the Committee will annually review proposed audit, audit-related, tax and other services (to be submitted by the

Chief Financial Officer and the independent auditor), and will provide general approval of described services, usually including specific maximum

fee amounts.

Unless a service has received general pre-approval, it will require specific pre-approval by the Committee. The Committee is permitted to delegate

pre-approval authority to any of its members. The Committee reports on the pre-approval process to the full Board of Directors from time to time.

Fees Paid to Auditors ($ thousands)

2013 2012

Audit Fees1 926 920

Audit-Related Fees2 203 209

Tax Fees 393 529

1. Represents actual and estimated fees related to fiscal year-ends.2. For assurance and related services that are reasonably related to the performance of the audit but are not reported as “Audit Fees”.

Material ContractsOn March 30, 2007, we entered into a committed revolving $600 million operating facility with an original maturity date of 2012. The facility has been

amended from time to time to extend the maturity date, to reflect certain covenant adjustments and for the granting of security. On December 13,

2010 we reduced the facility from $600 million to $500 million and as at December 20, 2013, we extended the maturity date to September 2018.


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Additional InformationAdditional information, including directors’ and officers’ remuneration and indebtedness, principal holders of our securities and securities authorized

for issuance under equity compensation plans, is contained in the Information Circular for the annual general meeting of the Company to be held

on April 29, 2014. Additional financial information is provided in our annual consolidated financial statements and Management’s Discussion &

Analysis for the year ended December 31, 2013.

Copies of our Annual Report, which includes this Annual Information Form and the documents incorporated by reference herein, our annual consolidated

financial statements (including the auditor’s report) for the year ended December 31, 2013, as well as the unaudited interim condensed consolidated

financial statements prepared for a period after December 31, 2013, and our Information Circular may be obtained at any time upon request from us,

but we may require the payment of a reasonable charge if the request is made by a person who is not a security holder of the Company.

This Annual Information Form, our Annual Report and additional information concerning the Company may also be obtained on the website

www.westfraser.com and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

Schedule 1The Audit Committee Charter, which is set out below, was approved by the Board on December 8, 2010.

General Mandate

To assist the Board in fulfilling its responsibility to oversee the Company’s financial reporting and audit processes, its system of internal controls and

its process for monitoring compliance with applicable financial reporting and disclosure laws and its own policies.

Responsibilities

The Committee will carry out the following responsibilities:

Financial Statements

• Review significant accounting and financial reporting issues, including complex or unusual transactions, significant contingencies and

highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the Company’s

financial statements

• Review interim financial reports (including financial statements, management’s discussion and analysis and related news releases) with

management and the auditors, consider whether they are complete and consistent with the information known to Committee members

and provide a recommendation to the Board with respect to the approval of the interim financial reports

• Understand how management develops interim financial information, and the nature and extent of auditor involvement

• Review with management and the auditors the results of the audit, including any difficulties encountered

• Review the annual financial statements, the annual management discussion and analysis and related news releases, and consider

whether they are complete, consistent with information known to Committee members, and reflect appropriate accounting principles,

and provide a recommendation to the Board with respect to the approval of the statements, the management discussion and analysis

and the news release

• Review with management and the auditors all matters required to be communicated to the Committee under generally accepted

auditing standards

• Approve, if so delegated by the Board, the interim financial reports and annual financial statements and the filing of the same together

with all required documents and information with regulators

Internal Control

• Require management of the Company to implement and maintain appropriate internal control procedures over annual and interim

financial reporting

• Review with management and auditors the adequacy and effectiveness of the Company’s internal control over annual and interim

financial reporting, including information technology security and control and controls related to the prevention and detection of

fraud and improper or illegal transactions or payments, the status of the remediation of any identified control deficiencies, and elicit

recommendations for improvements

• Understand the scope of the auditor’s review of internal control over financial reporting, and obtain and review reports on significant

findings and recommendations, including respecting the Company’s accounting principles or changes to such principles or their

application and the treatment of financial information discussed with management, together with management’s responses

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Audit

• Review the auditor’s proposed audit scope and approach

• Review the performance of the auditors, and provide a recommendation to the Board with respect to the nomination of the auditors for

appointment and remuneration

• Review and confirm the independence of the auditors by obtaining statements from the auditors on relationships between the auditors

and the Company, including non-audit services, and discussing the relationships with the auditors

• Periodically evaluate the need for the establishment of an internal audit function and make appropriate recommendations to the Board

Compliance

• Review the effectiveness of the system for monitoring compliance with financial reporting and disclosure laws and the results of

management’s investigation and follow-up (including disciplinary action) of any instances of non-compliance

• Review the findings of any examinations by regulatory agencies, and any auditor observations

• Obtain regular updates from management and Company legal counsel regarding compliance matters

Reporting Requirements

• Regularly report to the Board about Committee activities, issues and related recommendations

• Provide an open avenue of communication between the auditors and the Board

• Review any reports the Company issues that relate to Committee responsibilities

Other Responsibilities

• Institute and oversee special investigations as needed

• Develop and implement a policy for the approval of the provision of non-audit services by the auditors and assessing the independence

of the auditors in the context of these engagements

• Establish procedures for: (a) the receipt, retention and treatment of complaints received regarding non-compliance with the Company’s

Code of Conduct, violations of laws or regulations, or concerns regarding accounting, internal accounting controls or auditing matters;

and (b) the confidential, anonymous submission by officers or employees of the Company or by other persons of concerns regarding

questionable accounting, auditing or financial reporting and disclosure matters or non-compliance with the Company’s Code of Conduct

or other matters that are of a sensitive or “whistleblower” nature

• Perform other activities related to this charter as requested by the Board

• Review and assess the adequacy of this charter annually, requesting Board approval for proposed changes

• Review terms of any Code of Conduct established by the Board and respond to any related compliance issues

• Confirm annually to the Board that all responsibilities outlined in this charter have been carried out

Qualifications and Procedures

• The composition of the Committee will comply with applicable laws including requirements for independence, unrelated to management,

financial literacy and audit experience

• The Committee will meet at least four times annually, and more frequently as circumstances dictate, and the CFO and a representative

of the auditors should be available on request to attend all meetings

• The Committee should meet privately in executive session with representatives of each of management and of the auditors to discuss

any matters of concern to the Committee or such members, including any post-audit management letter

• Minutes of each meeting should be prepared, approved by the Committee and circulated to the full Board


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2013 MANAGEMENT’S DISCUSSION & ANALYSIS

This discussion and analysis by West Fraser’s management (“MD&A”) of West Fraser’s financial performance during 2013 and the fourth quarter of

2013 should be read in conjunction with the 2013 annual audited consolidated financial statements and accompanying notes. Dollar amounts are

expressed in Canadian currency, unless otherwise indicated.

The financial information contained in this MD&A has been prepared in accordance with International Financial Reporting Standards (“IFRS”).

All references within this MD&A to the number of West Fraser shares, share prices, earnings per share, options, and other equity-based incentives

reflect the payment and adjustments resulting from a stock dividend, declared on December 10, 2013 and paid on January 13, 2014, applied

retroactively to all comparative periods. See the “Capital Structure and Liquidity” section of this MD&A and Note 17 to the accompanying annual

consolidated financial statements for additional information on the stock dividend.

This MD&A contains historical information, descriptions of current circumstances and statements about potential future developments and

anticipated financial results. The latter, which are forward-looking statements, 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. Forward-looking statements are included under

the headings “Discussion & Analysis of Annual Non-operational Items” (concerning the scheduled closing of our Houston, B.C. mill), “Discussion

and Analysis by Product Segment – Lumber Segment” (concerning the expected startup of our Edson mill), “Capital Expenditures” (concerning the

startup of our Edson mill and the completion of certain energy projects) and “Business Outlook”. Actual outcomes and results of these statements

will depend on a number of factors including those matters described 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 we undertake no obligation

to publicly revise them to reflect subsequent events or circumstances except as required by applicable securities laws.

Throughout this MD&A reference is made to EBITDA (defined as operating earnings plus amortization and restructuring charges). We believe that, in

addition to earnings, EBITDA is a useful performance indicator and is a useful measure of cash available prior to debt service, capital expenditures

and income taxes. Reference is also made to Adjusted earnings and Adjusted basic earnings per share calculated as set out in the table titled

“Earnings Adjustments for Certain Non-operational Items” (collectively, with EBITDA, “these measures”). None of these measures is a generally

accepted earnings measure under 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, earnings per share (“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.

This MD&A includes references to benchmark prices over selected periods for products of the type produced by West Fraser. These benchmark

prices do not necessarily reflect the prices obtained by West Fraser for those products during such period. The information in this MD&A is as at

February 13, 2014 unless otherwise indicated.

For definitions of various abbreviations and technical terms used in this MD&A please see the Glossary of Industry Terms found in our most recent

Annual Report.

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ANNUAL RESULTS

Financial Comparisons ($ millions, except as otherwise indicated)

Year ended December 31 2013 2012 3 2011 3

Sales by segment Lumber1 2,234 1,783 1,579

Panels1 460 442 370

Pulp & Paper 780 775 813

Total 3,474 3,000 2,762

EBITDA 529 275 226

Amortization (160 ) (152 ) (168 )

Restructuring charges (24 ) — —

Operating earnings 345 123 58

Operating earnings by segment Lumber 314 90 (20 )

Panels 28 38 (7 )

Pulp & Paper 58 62 83

Corporate & Other (55 ) (67 ) 2

Total 345 123 58

Earnings from continuing operations 349 77 27

Earnings after discontinued operations 349 77 73

Diluted earnings per share ($) – continuing operations 4.07 0.90 0.21

Diluted earnings per share ($) – after discontinued operations 4.07 0.90 0.74

Cash dividends per share ($) 0.28 0.28 0.28

Total assets 3,104 2,632 2,537

Long-term debt2 328 300 306

Cdn$1.00 converted to US$ – average 0.971 1.000 1.011

1. Excludes intercompany fibre sales.2. Includes current portion of long-term debt.3. 2012 was restated for amendments to International Accounting Standard 19 – Employee Benefits, while 2011 was not.

MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)

Selected Quarterly Information($ millions, except earnings per share (“EPS”) amounts which are in $)

Q4-13 Q3-13 Q2-13 Q1-13 Q4-12 Q3-12 Q2-12 Q1-12

Sales 833 878 900 863 773 772 774 681

Earnings (loss) 118 55 109 67 20 52 24 (19 )

Basic EPS 1.37 0.64 1.27 0.79 0.23 0.61 0.29 (0.22 )

Diluted EPS 1.37 0.64 1.12 0.79 0.23 0.61 0.29 (0.22 )

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Annual Earnings Adjustments for Certain Non-operational Items($ millions, except EPS amounts which are in $) 2013 2012

Earnings 349 77

Adjustments to earnings

Equity-based compensation 54 61

Loss (gain) on translation of U.S. dollar-denominated long-term debt 21 (7 )

Restructuring charges 24 —

Gain on sale of tenure (10 ) —

Net tax effect on the above adjustments (9 ) (3 )

Recognition of deferred income tax asset related to loss carryforwards (101 ) —

Net effect of above items (21 ) 51

Adjusted earnings 328 128

Adjusted basic EPS 3.82 1.50

Discussion & Analysis of Annual Non-operational ItemsEarnings in 2013 improved significantly compared to results for 2012. For a description of operational results see “Discussion & Analysis by

Product Segment” which follows this section. Our results include several significant non-operational items that are identified as adjustments in

the table immediately above this section. After taking into account these adjustments, we generated adjusted earnings of $328 million compared

to $128 million in 2012.

In 2013 an expense of $54 million was recorded related to equity-based compensation compared to an expense of $61 million in 2012. An

expense is recorded on the issuance of share options or phantom or directors’ deferred share units and an additional expense or recovery is

recorded each quarter based primarily on valuation models that consider various factors relating to outstanding options and units. The most

significant of these factors is the change in the market value of our shares from the beginning to the end of the particular period. The market value

of the Company’s shares increased over 48% from $35.03 per share at the end of 2012 to $51.80 per share at the end of 2013. The expense or

recovery does not necessarily represent the actual amount that will ultimately be paid by the Company in respect of options and units.

Any change in the value of the Canadian dollar relative to the value of the U.S. dollar results in the revaluation of certain U.S. dollar-denominated

liabilities and assets. A loss of $21 million on U.S. dollar-denominated long-term debt for 2013 reflects a weakening of the Canadian dollar at the

close of 2013 compared to the close of 2012. The $7 million gain in 2012 reflected a slight strengthening of the Canadian dollar by the end of that

year. Included in other income is a translation gain on current monetary items of $10 million, compared to a loss of $5 million in 2012.

Restructuring charges of $24 million relating to the closure and resulting impairment of our Houston, B.C. sawmill were expensed. The mill is

scheduled to be closed in the second quarter of 2014.

The gain on tenure sale of $10 million relates to an exchange of certain timber harvesting rights announced in the fourth quarter of 2013.

Note 22 to the accompanying annual consolidated financial statements provides a reconciliation of income taxes calculated at the statutory rate

to the income tax recovery (provision). In the fourth quarter of 2013 we recognized a benefit of $101 million for remaining tax loss carryforwards

not previously recognized.

The funded position of our defined benefit pension plans and other post-retirement plans, whether surplus or deficit, is estimated at the end of each

quarter. The funded position, as shown in Note 16 to the accompanying annual consolidated financial statements, is determined by subtracting

plan assets from plan obligations. A combination of an increase in the discount rate used to calculate plan liabilities from the beginning of the year

and the rate of return on assets held that was higher than the discount rate resulted in a net actuarial gain of $113 million after-tax which was

included in other comprehensive earnings.

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DISCUSSION & ANALYSIS BY PRODUCT SEGMENT

Lumber Segment 2013 2012

Production (MMfbm)

SPF 3,571 3,466

SYP 1,582 1,488

Shipments (MMfbm)

SPF 3,588 3,453

SYP 1,567 1,485

Wood chip production

SPF (M ODTs) 1,786 1,710

SYP (M green tons) 1,961 1,927

Sales ($millions) 2,315 1,855

EBITDA ($millions) 437 176

Amortization ($millions) (99 ) (86 )

Restructuring charges ($millions) (24 ) —

Operating earnings ($millions) 314 90

EBITDA margin (%) 19 9

Capital expenditures ($millions) 281 114

Acquisition ($millions) — 30

Benchmark prices (per Mfbm)

SPF #2 & Better 2x41 – US$ 356 299

SPF #3 Utility1 – US$ 295 250

SYP #2 West 2x42 – US$ 414 348

SPF #2 & Better 2x4 – Cdn$3 367 299

SPF #3 Utility – Cdn$3 304 250

SYP #2 West 2x4 – Cdn$3 426 348

1. Source: Random Lengths – 2x4, #2 & Better – Net FOB mill.2. Source: Random Lengths – 2x4 – Net FOB mill Westside.3. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. dollar benchmark price.

The significant increase in our lumber segment’s operating earnings resulted from higher prices, a weaker Canadian dollar and an increase

in shipments. Higher prices reflected an improvement in U.S. housing-related construction as well as continued steady Asian demand while the

increase in shipments reflected higher production resulting from more operating hours and the acquisition of a sawmill at Edson, Alberta

late in 2012.

Composite lumber benchmark prices strengthened sufficiently to trigger a zero duty under the Softwood Lumber Agreement (“SLA”) for nine months

of 2013. Under the SLA, the duties are eliminated when the composite lumber price reaches levels above US$355 per mfbm. The duties paid

in 2013, when averaged over the year, were under 2% compared to an average of approximately 11% for 2012, translating into a $39 million

reduction in duties paid. The SLA is scheduled to expire in 2015.


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The benefit of improved lumber prices and lower export duties was partially offset by increased log costs for our Canadian mills as purchased

log costs, stumpage rates and timber harvesting contracting costs all increased. In B.C. increased purchased log costs reflect both increased

competition for logs as well as increased purchases of higher-value logs which we source to achieve improved returns. Stumpage rates in B.C.

are tied to purchased log costs and lumber prices, both of which increased during the year. Increased timber harvesting contracting costs reflect

increased industry and regional competition for contractors.

The higher revenues were also offset by higher freight costs in the current year, reflecting increased fuel surcharges on Canadian freight, and a

weaker Canadian dollar which affects all of our non-Canadian freight which is priced in U.S. dollars. Canadian electricity prices increased in 2013

as did costs relating to several of our major capital project startups. We also increased our spending on dust control.

Our Canadian sawmills continued to run at or near capacity with some production affected by capital projects. Our Edson sawmill, which we

acquired late in 2012, operated until the third quarter of 2013 at which time we began a full rebuild of the mill. It is expected that the Edson mill

will restart by the end of the first quarter of 2014.

Our U.S. sawmills operated at approximately 80% of capacity, including one sawmill that continues to be indefinitely curtailed, with some production

affected by ongoing capital projects. We restarted operations at our McDavid, Florida sawmill on a one-shift basis in the third quarter of 2013 after

a lengthy market-related curtailment. We expect to increase production at this mill as lumber markets continue to recover.

In October 2013 we announced a Mountain Pine Beetle Plan to address some effects of the pine beetle infestation in the interior of British Columbia.

The plan included the closure of our Houston, B.C. sawmill by the end of the second quarter of 2014 and an exchange of certain timber harvesting

rights. Restructuring charges of $24 million relating to the planned closure are reflected in operating earnings and a $10 million gain on the timber

harvesting rights exchange is reflected in other income.

Panels Segment 2013 2012

Plywood (MMsf 3/8” basis)

Production 781 793

Shipments 774 798

MDF (MMsf 3/4” basis)

Production 204 195

Shipments 199 193

LVL (Mcf)

Production 1,848 1,964


Sales ($millions) 467 448






Benchmark prices

Plywood (per Msf 3/8” basis)1 Cdn$ 392 382

MDF (per Msf 3/4” basis)2 US$ 605 566

MDF (per Msf 3/4” basis) Cdn$3 623 566

1. Source: Crow’s Market Report – Delivered Toronto.2. Source: Resource Information Systems, Inc. – MDF Western U.S. – Net FOB mill.3. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. dollar benchmark price.

$150

$200

$250

$300

$350

$400

$450

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13US

$/M

fbm

2012 2013 Source: Random Lengths

SPF-2&Btr

SYP W-#2 W

SPF-#3 Util

$500

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The panels segment is comprised of our three plywood operations, two MDF operations and one LVL operation. All are located in western Canada.

Most of the plywood we produce is sold to customers in Canada. This market remained relatively consistent through 2012 and 2013 with each

year reflecting increased building activity in the first and second quarters and a slowdown in the fourth quarter. Benchmark prices increased slightly

in 2013 but the resulting benefit was more than offset by a small decrease in shipments and an increase in raw material costs. Consequently,

operating earnings from our plywood operations declined in 2013 from 2012.

Operating earnings from our MDF operations improved with prices rising in the first half of the year. MDF demand is significantly affected by new

home construction which has been gradually strengthening in the U.S. Our LVL operation continues to operate on a partially-curtailed basis. LVL is

used predominantly in single-family home construction which has not improved as much as construction of multi-family housing units.

Pulp & Paper Segment 2013 2012

BCTMP (Mtonnes)

Production 603 620

Shipments 600 626

NBSK (Mtonnes)

Production 496 529

Shipments 510 531

Newsprint (Mtonnes)

Production 119 128

Shipments 119 127

Sales ($millions) 780 775






Benchmark prices (per tonne)

NBSK – US$1 941 872

Newsprint – US$2 608 640

NBSK – Cdn$3 969 872

Newsprint – Cdn$3 626 640

1. Source: Resource Information Systems, Inc. – U.S. list price, delivered U.S.2. Source: Resource Information Systems, Inc. – delivered U.S. 48.8 gram.3. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. dollar benchmark price.

The pulp & paper segment is comprised of our NBSK, BCTMP and newsprint businesses.

Benchmark prices for NBSK increased in the year as the market improved, mainly as a result of continued Chinese buying and a delay of planned

startup of new global pulp production capacity. BCTMP markets remained stable during the year.

The benefits arising from higher prices and a weaker Canadian dollar were offset by a series of significant operational difficulties experienced by

both of our NBSK mills in the year. The majority of reduced production of 33,000 tonnes and reduced shipments of 21,000 tonnes from the previous

year was due to these difficulties. Approximately 14,000 tonnes of the lower production was due to planned shutdowns at both mills in the first half

of 2013 compared to an approximate 4,000 tonne reduction during a planned shutdown at the Cariboo mill in 2012.

The operating disruptions also resulted in higher maintenance costs and a higher usage of natural gas, thereby increasing production costs.


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Operating earnings from our BCTMP mills in 2013 were very similar to those from the previous year. A slight increase in BCTMP prices was offset

by a decrease in production and shipments resulting from a combination of increased power price-related curtailments at our Slave Lake mill and

reduced production at our QRP mill due to operational disruptions related to capital projects at the mill.

Newsprint operating earnings were lower in 2013 than in 2012, reflecting decreased prices in the current year and reduced production and

shipments. The production decrease resulted from increased curtailments related to high electricity prices and an increase in shutdown days

related both to ongoing maintenance and the interconnection of the power plant that is under construction. Increased power costs resulting from

higher electricity prices were partially offset by revenue from selling power during the times the mill was curtailed.

During periods of high electricity prices in Alberta we may curtail production at both our Slave Lake pulp mill and our newsprint mill and avoid power

consumption at extreme price peaks. The revenue we receive from selling electricity to the power grid under our power purchase agreement helps

mitigate our ongoing energy costs.

4TH QUARTER RESULTS

Sales and Earnings Comparison($ millions, except as otherwise indicated) Q4–13 Q3–13 Q4–12

Sales by Segment Lumber1 522 559 478

Panels1 108 118 109

Pulp & Paper 203 201 186

Total 833 878 773

1. Excludes intercompany fibre sales.

Operating Earnings by Segment

Lumber 32 57 51

Panels 2 6 6

Pulp & Paper 13 29 13

Corporate & Other (17 ) (19 ) (34 )

Operating earnings 30 73 36

Finance expense (8 ) (7 ) (7 )

Exchange gain (loss) on long-term debt (10 ) 6 (3 )

Other income (expense) 18 (3 ) 2

Tax recovery (provision) 88 (14 ) (8 )

Earnings 118 55 20

Cdn$1.00 converted to US$ – average 0.953 0.963 1.009

Quarterly Earnings Adjustments for Certain Non-operational Items($ millions except EPS amounts which are in $) Q4-13 Q3–13 Q4–12

Earnings 118 55 20

Adjustments to earnings

Equity-based compensation 15 19 30

Loss (gain) on translation of U.S. dollar-denominated long-term debt 10 (6 ) 3

Restructuring charges 24 — —

Gain on sale of tenure (10 ) — —

Net tax effect on the above adjustments (6 ) — (2 )

Recognition of deferred income tax asset related to loss carryforwards (101 ) — —

Net effect of above items (68 ) 13 31

Adjusted earnings 50 68 51

Adjusted basic EPS 0.58 0.79 0.60

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Discussion & Analysis of Quarterly Non-operational ItemsFor a description of our operational results see “Discussion & Analysis by Product Segment” which follows this section. Our results include several

significant non-operational items that are identified as adjustments in the table immediately above this section. After taking into account the

adjustments, we generated adjusted earnings of $50 million in the current quarter compared to adjusted earnings of $68 million in the previous

quarter and adjusted earnings of $51 million in the fourth quarter of 2012. For a description of the key adjustments, see the corresponding section

under “Annual Results” in this MD&A.

DISCUSSION & ANALYSIS BY PRODUCT SEGMENT

Lumber Segment Q4-13 Q3-13 Q4-12

Production (MMfbm)

SPF 847 878 857

SYP 375 397 366

Shipments (MMfbm)

SPF 833 975 891

SYP 368 425 355

Sales ($millions) 541 581 496

EBITDA ($millions) 83 83 74

Amortization ($millions) (27 ) (26 ) (23 )

Restructuring charges ($millions) (24 ) — —

Operating earnings ($millions) 32 57 51

EBITDA margin (%) 15 14 15

Benchmark prices (per Mfbm)

SPF #2 & Better 2x41 – US$ 370 328 335

SPF #3 Utility1 – US$ 303 261 281

SYP #2 West 2x42 – US$ 423 369 398

SPF #2 & Better 2x4 – Cdn$3 388 341 332

SPF #3 Utility – Cdn$3 318 271 279

SYP #2 West 2x4 – Cdn$3 444 383 395

1. Source: Random Lengths – Net FOB mill.2. Source: Random Lengths – Net FOB mill Westside.3. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. dollar benchmark price.

If we adjust to exclude the effect of the restructuring charge, our fourth quarter operating earnings for our lumber segment were similar to our third

quarter operating earnings and reflected a modest improvement over our operating earnings for the fourth quarter of 2012.

Fourth quarter results were adversely affected by reduced production as we closed our Edson sawmill for a rebuild, had fewer operating hours

due to statutory holidays and experienced capital-related interruptions at some of our U.S. operations. Reduced production, combined with two

ongoing planer upgrades in Canada which reduced finished inventory, contributed to reduced shipments compared to the previous quarter when

shipments were very strong. Our results benefitted from improving prices for 2x4 dimension lumber, although prices for wide-width SYP lumber,

which represents a material part of our U.S. production, did not follow this improving trend during the quarter.

Compared to the same quarter of 2012, our operating earnings reflected improving prices, lower export duties and a weaker Canadian dollar

partially offset by the effects of reduced SPF shipments and higher log costs. Current results were also affected by higher costs associated with

ongoing capital projects and increased amortization as several major projects reached completion.


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Panels Segment Q4-13 Q3-13 Q4-12Plywood (MMsf 3/8” basis) Production 190 199 184Shipments 180 206 189MDF (MMsf 3/4” basis) Production 52 47 51Shipments 48 47 48LVL (Mcf) Production 490 451 498Shipments 441 470 446


EBITDA ($millions) 6 9 11Amortization ($millions) (4 ) (3 ) (5 )Operating earnings ($millions) 2 6 6EBITDA margin (%) 5 8 10Benchmark prices Plywood (per Msf 3/8” basis)1 Cdn$ 386 386 390 MDF (per Msf 3/4” basis)2 US$ 609 616 579 MDF (per Msf 3/4” basis) Cdn$3 639 640 574

1. Source: Crow’s Market Report – Delivered Toronto.2. Source: Resource Information Systems, Inc. – MDF Western U.S. – Net FOB mill.3. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. dollar benchmark price.

The decline in operating earnings for the panels segment compared to the previous quarter resulted from reduced plywood production and shipments

and a slight increase in costs. Reduced production reflected fewer production hours in the quarter. Reduced shipments reflected both the winter

slowdown of the Canadian building industry and interruptions of railcar deliveries that followed severe winter weather in the current quarter. Average

prices remained the same as in the previous quarter but costs increased in the current quarter due to higher weather-related energy costs.

Operating earnings for MDF improved in the current quarter compared to the previous quarter. Although Canadian dollar equivalent prices and

shipments were very similar in both quarters, maintenance and additive costs were lower.

Our LVL operation continues to run on a curtailed basis because of weak markets.

The main contributor to the decline in operating earnings for the current quarter compared to the same quarter of 2012 was lower plywood

shipments resulting from the interruptions in railcar deliveries after severe winter weather in the current quarter. We also experienced increased

log costs for our plywood and LVL operations and increased raw material costs for our MDF operations.

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Pulp & Paper Segment

Q4-13 Q3-13 Q4-12

BCTMP (Mtonnes) Production 150 153 150Shipments 150 143 154NBSK (Mtonnes) Production 119 137 132Shipments 129 137 132Newsprint (Mtonnes) Production 29 31 31Shipments 29 31 30


EBITDA ($millions) 24 40 24Amortization ($millions) (11 ) (11 ) (11 )Operating earnings ($millions) 13 29 13EBITDA margin (%) 12 20 13Benchmark prices (per tonne) NBSK – US$1 983 947 863 Newsprint – US$2 605 605 640 NBSK – Cdn$3 1,032 983 856

Newsprint – Cdn$3 635 628 634

1. Source: Resource Information Systems, Inc. – U.S. list price delivered U.S.2. Source: Resource Information Systems, Inc. – delivered 48.8 gram newsprint.3. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. benchmark price.

Operating earnings from our pulp & paper operations were lower compared to the previous quarter. The benefits provided by price increases for

both NBSK and BCTMP and the weakening of the Canadian dollar were offset by continuing operational difficulties at both our NBSK mills resulting

in decreased production and shipments. As a result of the operational disruptions, maintenance costs and natural gas usage increased.

Our BCTMP mills ran well in the quarter, with slightly lower production reflecting fewer operating days. Fewer power-related curtailments were

taken at our Slave Lake mill compared to the previous quarter, reflecting lower electricity prices. Markets remained steady and we were able to ship

our production. Operating earnings for our newsprint mill were lower compared to the previous quarter, partially reflecting lower production and

shipments. The decrease in production resulted from scheduled maintenance downtime to permit connection of the power project being constructed

on site. No scheduled downtime was taken in the previous quarter. Earnings in the quarter were also adversely affected by substantially lower

revenues under our power purchase agreement.

Chip prices, which are tied to NBSK prices, increased at all our pulp mills in the quarter.

Operating earnings for the segment as a whole were substantially the same as in the fourth quarter of 2012 as the benefit of higher prices and a

weaker Canadian dollar in the current quarter were offset by production interruptions at the Hinton and Cariboo pulp mills and increased chip prices.

CAPITAL EXPENDITURESDuring the year our capital expenditures totaled $358 million as set out in the following table.

($ millions of dollars) PROFIT TIMBER MAINTENANCESEGMENT IMPROVEMENT ENERGY TENURE OF BUSINESS TOTAL

Lumber 178 50 20 33 281

Panels 1 — — 4 5

Pulp & Paper 5 53 — 13 71

Corporate — — — 1 1

Total 184 103 20 51 358

MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTIAAANUED)

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Profit improvement projects in our Canadian lumber operations include a major rebuild of our Chetwynd sawmill, new planers at Edson and Williams

Lake and the rebuild of the sawmill at Edson, which is ongoing. The Edson mill is scheduled for startup in the first quarter of 2014. In our U.S.

operations we have installed and are installing continuous kilns at many of our facilities. We have also updated several U.S. planer mills and

continue to modernize our sawmills to take advantage of current technology.

Our expenditures on energy relate primarily to the biomass projects at Chetwynd and Fraser Lake, a biomethanation plant at our Slave Lake pulp

mill and a natural gas peaking power plant at our joint operation newsprint mill. The two biomass projects and the natural gas project are expected

to be completed in the first half of 2014 while the biomethanation plant is expected to be completed in the fourth quarter of 2014.

The timber harvesting rights exchange in the fourth quarter of 2013 resulted in a capital addition of $20 million related to timber rights.

Maintenance of business expenditures are primarily for roads, bridges and mobile equipment. In addition, major maintenance expenditures for our

pulp segment are capitalized.

BUSINESS OUTLOOKIn 2013 we continued to focus on maintaining a strong balance sheet and reinvesting in our operations to optimize efficiencies. We expect to do

the same in 2014. Economic recovery in the U.S., particularly in new home construction, is progressing slowly but there are uncertainties relating

to the health of the broader global economy. Our products are sold mainly within North America and Asia, particularly China and Japan, and the

success of our businesses in 2014 will depend on the economic well-being of those regions.

We continue to believe that the housing sector of the North American economy is on a positive trajectory. The supply chain for building products,

from logging and transportation through the distribution system, has begun to respond to increased demand and we expect it will continue to

improve. However, the pace of the improvement in U.S. housing-related construction is expected to continue to be uneven as it has been in the

past two years and as a result we expect there to be volatility in the prices of lumber and other building products including plywood, MDF and LVL.

650

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850

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Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-132012 2013 Source: U.S. Census Bureau

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As the U.S. housing market continues to improve we expect that less U.S. plywood will be sold into Canada. The weakness of the Canadian dollar

against the U.S. dollar also affects U.S. plywood imports into Canada as Canadian plywood is priced in Canadian dollars.

If U.S. housing continues to recover and Canadian and Asian demand for lumber and panels remains steady we expect there will be competitive

pressures on key costs, particularly log costs, which will adversely affect our lumber, plywood and LVL earnings. Specifically, the results of our

B.C. lumber operations are likely to be affected by decreasing log availability resulting from the continuing deterioration of the pine forest as the

mountain pine beetle infestation moves to its late stages.

We expect that pulp markets will be adversely affected in the second quarter of 2014 when new global hardwood pulp supply is expected to enter

the market. This will likely put downward pressure on prices for all grades of market pulp for the remainder of 2014.

We expect to continue an aggressive capital expenditure program in 2014. This will include investments in previously-announced energy projects

expected to be completed and to commence operation during 2014. In addition, we will continue to modernize our U.S. sawmills and begin major

upgrades of our Smithers and 100 Mile House sawmills in B.C.

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ESTIMATED EARNINGS SENSITIVITY TO KEY VARIABLES1

(based on 2013 production – $ millions) CHANGE IN FACTOR VARIATION PRE-TAX EARNINGS

Lumber price US$10 (per Mfbm) 55

Plywood price Cdn$10 (per Msf) 8

NBSK price US$10 (per tonne) 5

BCTMP price US$10 (per tonne) 6

U.S. – Canadian $ exchange rate2 US$0.01 (per Cdn $) 21

1. Each sensitivity has been calculated on the basis that all other variables remain constant and assumes year-end foreign exchange rates.2. Excludes exchange impact of translation of U.S. dollar-denominated debt and other monetary items. Reflects the amount of the initial US$0.01 change; additional changes are substantially, but not exactly, linear.

CAPITAL STRUCTURE AND LIQUIDITYThe capital structure of the Company consists of Common share equity and long-term debt. In addition, the Company maintains a committed

revolving credit facility that is available to meet additional funding requirements.

In September 2013 we announced approval for a normal course issuer bid to acquire up to 2,000,000 Common shares for cancellation until expiry

of the bid in September 2014. In 2013 we repurchased 64,554 Common shares at a total cost of approximately $3 million. Common share

amounts have been adjusted to take into account the stock dividend described below.

In December 2013 we announced that a one Common share dividend would be paid in respect of each Common share and Class B Common

share outstanding as at December 31, 2013, payable on January 13, 2014. This had the effect of a two-for-one share subdivision effective on

January 13, 2014.

After taking this stock dividend into consideration, the outstanding Common share equity consists of 83,390,590 Common shares and 2,281,478

Class B Common shares for a total of 85,672,068 shares issued and outstanding as at February 13, 2014.

Class B Common shares are equal in all respects to Common shares and are exchangeable on a one-for-one basis for Common shares. Common

shares are listed for trading on the Toronto Stock Exchange while Class B Common shares are not. Certain circumstances or corporate transactions

may require the approval of the holders of our Common shares and Class B Common shares on a separate class by class basis.

In addition, as of February 13, 2014 there were 2,506,772 share purchase options outstanding with exercise prices ranging from $12.36 to $40.82

per Common share.

In December 2013, we amended our $500 million committed revolving credit facility to, among other things, extend its maturity date to September

2018. The facility allows for additional borrowings of up to $150 million, subject to sourcing new lenders for this additional amount. To date

we have not sought to access this additional facility. In May 2011, we entered into an uncommitted $25 million line of credit for the purpose of

establishing letters of credit. Copies of the committed facility and the December 2013 amendment are available at www.sedar.com.

On December 31, 2013 there was no balance owing under the credit facilities (2012 – nil). Letters of credit in the amount of $46 million were

supported by our facilities, leaving approximately $484 million of credit available for further use.

Our cash requirements, other than for operating purposes, are primarily for interest payments, repayment of debt, additions to property, plant,

equipment and timber, acquisitions and payment of dividends. In normal business cycles and in years without a major acquisition or debt

repayment, cash on hand and cash provided by operations have been sufficient to meet these requirements.


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Summary of Financial Position ($ millions, except as otherwise indicated)

As at December 31 2013 2012

Cash1 162 102

Current assets 971 823

Current liabilities2 773 385

Ratio of current assets to current liabilities 1.3 2.1

Net debt3 162 194

Shareholders’ equity 1,947 1,492

Net debt to capitalization4 8% 12%

1. Cash consists of cash and short-term investments less cheques issued in excess of funds on deposit.2. 2013 includes US$300 million of long-term debt due in October 2014.3. Total debt less deferred financing costs less cash.4. Net debt divided by net debt plus shareholders’ equity.

As shown in the table below, we are rated by three leading rating agencies. All three agencies upgraded us during the year to the level of investment

grade with a Stable Outlook.

Debt Ratings AGENCY RATING OUTLOOK

Dominion Bond Rating Service BBB(low) Stable

Moody’s Baa3 Stable

Standard & Poor’s BBB- Stable

These ratings are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating agencies.

Selected Cash Flow Items ($ millions)

For the year ended December 31 2013 2012

Operating Activities Earnings 349 77

Amortization 160 152

Change in income taxes (68 ) 27

Contributions to benefit plans in excess of expense (52 ) (21 )

Other 30 (31 )

Cash provided by operating activities 419 204

Financing Activities Debt 8 —

Finance expense paid (18 ) (18 )

Dividends (24 ) (24 )

Common share repurchases (3 ) —

Other (2 ) —

Cash used in financing activities (39 ) (42 )

Investing Activities Acquisition — (30 )

Additions to capital assets (338 ) (159 )

Other 12 61

Cash used in investing activities (326 ) (128 )

Increase in cash 54 34

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Contractual Obligations as at December 31, 2013 ($ millions)1

2014 2015 2016 2017 THEREAFTER TOTAL

Long-term debt 319 2 — — — 10 329

Operating leases 2 2 2 1 6 13

Asset purchase commitments 79 — — — — 79

Total 400 2 2 1 16 421

1. Contractual obligations means an agreement related to debt, leases and enforceable agreements to purchase goods or services on specified terms, but does not include reforestation and decommissioning obligations, energy purchases under various agreements, pension contributions payable, accounts payable in the ordinary course of business or contingent amounts payable.

2. Represents U.S. dollar-denominated debt of US$300 million.

SIGNIFICANT MANAGEMENT JUDGMENTS AFFECTING FINANCIAL RESULTSThe preparation of financial statements requires management to make estimates and assumptions, and to select accounting policies, that affect

the amounts reported. The significant accounting policies followed by our Company are disclosed in Note 3 to the audited consolidated financial

statements. The following judgments are considered the most significant:

Recoverability of Long-lived AssetsAs required by IFRS, we assess the carrying value of an asset when there are indicators of impairment. The assessment compares the estimated

discounted future cash flows of the asset to the carrying value of the asset. If the carrying value of the asset exceeds the estimated discounted

future cash flows relating to the asset, the carrying value is written down to the higher of fair value less costs to sell and value-in-use. During 2013

an impairment charge of $13 million was recorded related to the planned closure of our Houston, B.C. sawmill.

We review the amortization periods for our manufacturing equipment and machinery to ensure that the periods appropriately reflect anticipated

obsolescence and technological change. Current amortization periods for manufacturing equipment range from 6 to 20 years. Timber licences

are amortized over 40 years.

Goodwill is not amortized. We compare the carrying value of goodwill and related assets, at least once a year, to the estimated discounted cash

flows that the assets are expected to generate. If it is determined that the carrying value is more than the estimated discounted cash flows, then a

goodwill impairment will be recorded. We tested goodwill for impairment in 2013 and concluded that its carrying value is not impaired. The testing

of goodwill for impairment involves significant estimates including future production and sales volumes, product selling prices, foreign currency

exchange rates, operating costs, capital expenditures and the appropriate discount rate to apply. In all cases, we have used our best estimates of

these projected amounts and values. Given the current global economic uncertainty and the volatility of the markets for our products, it is possible

that our estimates will be adjusted in the future and that these adjusted estimates could result in the future impairment of goodwill.

We also review the carrying value of deferred income tax assets to ensure that the carrying value is appropriate. The key factors considered are the

Company’s history of profitability, future expectations of profitability and the timing of expiry of tax loss carry-forwards.

Reforestation and Decommissioning ObligationsIn Canada, provincial regulations require timber quota holders to carry out reforestation to ensure re-establishment of the forest after harvesting.

Reforested areas must be tended for a period sufficient to ensure that they are well-established. The time needed to meet regulatory requirements

depends on a variety of factors.

In our operating areas, the time to meet reforestation standards usually spans 12 to 15 years from the time of harvest. We record a liability for the

estimated cost of the future reforestation activities when the harvesting takes place. This liability is reviewed, at least annually, and adjusted to our

current estimate of the costs to complete the remainder of the reforestation activities. In 2013 the review of the reforestation obligation resulted in

an increase to the obligation of $2 million (2012 – increase of $1 million).

We record the estimated fair value of a liability for decommissioning obligations, such as landfill closures, in the period when a reasonable estimate

of fair value can be made. We review these estimates at least annually, and adjust the obligations as appropriate. In 2013 the review resulted in

an increase of the obligation by $6 million (2012 – increase of $1 million).


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Defined Benefit Pension Plan (“D.B. Plan”) AssumptionsWe maintain several D.B. Plans for many of our employees. The annual funding requirements and pension expenses are based on (i) various

assumptions that we determine in consultation with our actuaries, (ii) actual investment returns on the pension fund assets, and (iii) changes to the

employee groups in the pension plans.

D.B. Plan Obligation Assumptions 2013 2012

Discount rate 4.75% 4.50%

Rate of increase in future compensation 3.50% 3.50%

Impact on D.B. Plan Obligations of a Change in Key Assumptions ($ millions)1 OBLIGATION

Discount rate

Decrease in assumption from 4.75% to 4.25% 88

Increase in assumption from 4.75% to 5.25% (82 )

Rate of increase in future compensation

Decrease in assumption from 3.5% to 3.0% (18)

Increase in assumption from 3.5% to 4.0% 18

1. Each sensitivity has been calculated on the basis that all other variables remain constant.

ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIEDThe International Accounting Standards Board periodically issues new standards and amendments or interpretations to existing standards. The

new pronouncement listed below is one we consider most significant.

IFRS 9 - Financial Instruments

IFRS 9 was issued in November 2009 and was amended in October 2010. This standard addresses classification and measurement of financial

assets and replaces the multiple category and measurement models in International Accounting Standards (“IAS”) 39 – Financial Instruments:

Recognition and Measurement for debt instruments with a new mixed measurement model having only two categories: amortized cost and

fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments which are either recognized at fair value

through profit or loss or at fair value through other comprehensive earnings. In December 2009 the implementation of IFRS 9 was deferred and

is scheduled to be effective for annual periods beginning on or after January 1, 2015 with earlier application permitted. We do not expect this

standard to have a significant effect on our consolidated financial statements.

NEW ACCOUNTING PRONOUNCEMENTS ADOPTEDOn January 1, 2013 we adopted new and revised accounting standards as disclosed in Note 4 to the annual consolidated financial statements.

RISKS AND UNCERTAINTIES

Product Demand and Price FluctuationsOur financial results are primarily dependent on the demand for, and selling prices of, our products, which are subject to significant fluctuations.

The demand and prices for lumber, panels, pulp, newsprint, wood chips and other wood products are highly volatile and are affected by factors

such as global economic conditions including the strength of the U.S. housing market and of Asian markets, particularly China and Japan, changes

in industry production capacity, changes in world inventory levels and other factors beyond our control. In addition, unemployment levels, interest

rates and the rate of mortgage foreclosures have a significant effect on residential construction and renovation activity, which in turn influences the

demand for, and price of, building materials such as lumber and panel products.

We cannot predict future market conditions, demand or pricing for any of our products due to factors outside our control. Prolonged or severe

weakness in the market for any of our principal products would adversely affect our financial condition. Our earnings sensitivity to changes in

certain product prices is set out in the table titled “Earnings Sensitivity to Key Variables”.

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Operations

Availability of Fibre and Changes in Stumpage Fees

Substantially all of our Canadian log requirements are harvested from Crown lands. Provincial governments prescribe the methodologies that

determine the amounts of stumpage fees that are charged in respect of harvesting on Crown lands and changes to the methodologies or rates may

adversely affect our results. In addition, provincial governments control the volumes that can be harvested under provincially-granted tenures and

otherwise regulate the availability of Crown timber for harvest.

We rely on log supply agreements in the U.S. which are subject to log availability and based on market prices. Based on year-end capacity,

approximately 25% of the aggregate log requirements for our U.S. sawmills are supplied under long-term agreements with the balance purchased

on the open market. Changes in market conditions for these logs may adversely affect our results.

Natural Disasters

Our operations are subject to adverse natural events such as forest fires, severe weather conditions, timber disease and insect infestation, and

earthquake activity. These events could damage or destroy our physical facilities or our timber supply and similar events could also affect the

facilities of our suppliers or customers. Any such damage or destruction could adversely affect our financial results. Although we believe we have

reasonable insurance arrangements in place to cover certain of such incidents, there can be no assurance that these arrangements will be sufficient

to fully protect us against such losses. As is common in the industry, we do not insure loss of standing timber for any cause.

Mountain Pine Beetle

The long-term effect of the mountain pine beetle infestation on our Canadian operations is uncertain. The potential effects include a reduction of

future AAC levels to below current and pre-infestation AAC levels. Many of our B.C. operations are experiencing a diminished grade and volume of

lumber recovered from beetle-killed logs and increased production costs and these effects could spread to our Alberta operations as the mountain

pine beetle infestation expands. The timing and extent of the future effect on our timber supply, lumber grade and recovery, and production costs will

depend on a variety of factors and at this time cannot be reasonably determined. The effects of the deterioration of beetle-killed logs could include

increased costs, reduced operating rates due to shortages of commercially merchantable timber and mill closures.

Wood Dust

Our operations generate wood dust which has been recognized for many years as a potential health and safety hazard. The potential risks

associated with wood dust have been increased in those of our B.C. and Alberta facilities that have been processing mountain pine beetle-killed logs

as the wood dust generated from these logs tends to be drier, lighter and finer than wood dust typically generated. Two sawmill explosions which

occurred in B.C. in 2012 which may have been at least partially attributable to the presence of dry wood dust have resulted in a greater industry

focus on the risk. We have adopted a variety of measures to reduce or eliminate the risks posed by the presence of wood dust in our facilities and

we continue to work with industry and regulators to develop and adopt best mitigation practices. In light of the two recent sawmill explosions, any

explosion or similar event at any of our facilities could have a material adverse effect on our business.

Operational Curtailments and Transportation Limitations

From time to time, we suspend operations at one or more of our facilities in response to market conditions, environmental risks, or other operational

issues, including, but not limited to, power failures, equipment breakdowns, adverse weather conditions, labour disruptions and fire hazards. These

unscheduled operational suspensions could have a material adverse effect on our financial condition. If wood chip production is reduced because of

production curtailments, improved manufacturing efficiencies or any other reason, pulp and paper operations may incur additional costs to acquire

or produce additional wood chips or be forced to reduce production. Conversely, pulp and paper mill production curtailments may require sawmills

and panel mills to find other ways to dispose of residual wood fibre and may result in curtailment or suspension of lumber and panel production.

We rely primarily on third parties for the delivery of raw materials and the transportation of our products. From time to time, we must also respond

to railcar and truck shortages that limit raw material deliveries to us and product deliveries to our customers, which may have a material adverse

effect on our business.


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Labour and Services

Our operations rely on both skilled and unskilled workers as well as third-party services such as logging and transportation. Because our operations

are generally located away from major urban centres, we often face strong competition for workers, particularly skilled workers, and services from

our competitors and other industries such as oil and gas production and mining. Shortages of workers or key services could impair our operations

by reducing production or increasing costs.

We employ a unionized workforce in a number of our operations. Walkouts or strikes by employees could result in lost production and sales, higher

costs and supply constraints that could have a material adverse effect on our business. Also, we depend on a variety of third parties that employ

unionized workers to provide critical services to us. Labour disputes experienced by these third parties could lead to disruptions at our facilities.

Environment

Our operations are subject to regulation by federal, provincial, state and local environmental authorities, including industry-specific environmental

regulations relating to air emissions and pollutants, wastewater (effluent) discharges, solid waste, landfill operations, forestry practices, site

remediation and the protection of endangered species and critical habitat. We have incurred, and will continue to incur, capital expenditures and

operating costs to comply with environmental laws and regulations. No assurance can be given that changes in these laws and regulations or their

application will not have a material adverse effect on our business, operations, financial condition and operational results. Similarly, no assurance

can be given that capital expenditures necessary for future compliance with existing and new environmental laws and regulations could be financed

from our available cash flow. We may discover currently unknown environmental problems, contamination, or conditions relating to our past or

present operations. This may require site or other remediation costs to maintain compliance or correct violations or result in governmental or

private claims for damage to person, property or the environment, which could have a material adverse effect on our business, financial condition

and operational results.

We have in place internal programs under which all our forestry and manufacturing operations are audited for compliance with laws and accepted

standards and with our management systems. Our woodlands operations in Canada, and the harvesting operations of many of our key U.S.

suppliers, are third-party certified to internationally-recognized sustainable forest management standards. Our operations and our ability to sell

our products could be adversely affected if those operations did not, or were perceived by the public as failing to, comply with applicable laws and

standards, including responsible environmental and sustainable forestry standards.

First Nations Claims

Issues relating to First Nations groups have the potential for a significant adverse effect on Canadian forest products companies including West

Fraser. The main First Nations’ issues that are relevant to West Fraser relate to aboriginal rights and title, and consultation. We participate as

requested by government in the consultation process, but rely on provincial governments to adequately discharge obligations to First Nations groups

in order to preserve the validity of actions dealing with public rights, including the granting or transfer of Crown timber harvesting rights. As the

jurisprudence and government policies respecting aboriginal rights and title and the consultation process continue to evolve, we cannot assure that

First Nations claims will not in the future have a material adverse effect on our timber harvesting rights or our ability to exercise or renew them or

secure other timber harvesting rights.

Regulatory

Our operations are subject to extensive general and industry-specific federal, provincial, state, municipal and other local laws and regulations,

including those governing forestry, exports, taxes, employees, labour standards, occupational health and safety, waste disposal, environmental

protection and remediation, protection of endangered and protected species and land use and expropriation. We are required to obtain approvals,

permits and licences for our operations, which may impose conditions that must be complied with. If we are unable to extend or renew, or are

delayed in extending or renewing, a material approval, permit or licence, our operations or financial condition could be adversely affected. There is

no assurance that these laws, regulations or government policy, or the administrative interpretation or enforcement of existing laws and regulations,

will not change in the future in a manner that may require us to incur significant capital expenditures, pay higher taxes or otherwise could adversely

affect our operations or financial condition. Failure to comply with applicable laws or regulations, including approvals, permits and licences, could

result in fines, penalties or enforcement actions, including orders suspending or curtailing our operations or requiring corrective measures or

remedial actions.

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Foreign Currency Exchange RatesWe sell the majority of our products at prices denominated in U.S. dollars or based on prevailing U.S. dollar prices. A significant portion of our

operational costs and expenses are incurred in Canadian dollars. Therefore, an increase in the value of the Canadian dollar relative to the U.S.

dollar reduces the revenue in Canadian dollar terms realized by us from sales made in U.S. dollars, which reduces operating margin and the cash

flow available to fund operations. We are also exposed to the risk of exchange rate fluctuations in the period between sale and payment. We also

have a substantial amount of long-term debt repayable in U.S. dollars which is valued in Canadian dollars at the end of each reporting period by

applying the prevailing exchange rate. Exchange rate fluctuations result in exchange gains or losses. This results in significant earnings sensitivity

to changes in the Canadian/U.S. dollar exchange rate as disclosed in the table titled “Earnings Sensitivity to Key Variables”. The Canadian/U.S. dollar

exchange rate is affected by a broad range of factors which makes future rates difficult to accurately predict.

CompetitionMarkets for our products are highly competitive. Our ability to maintain or improve the cost of producing and delivering products to those markets

is crucial. Factors such as cost and availability of raw materials, energy and labour, the ability to maintain high operating rates and low per-unit

manufacturing costs, and the quality of our final products and our customer service all affect our earnings.

Trade RestrictionsA substantial portion of our products that are manufactured in Canada are exported for sale. Our financial results are dependent on continued

access to the export markets and tariffs and other trade barriers that restrict or prevent access represent a continuing risk to us. Our Canadian

softwood lumber exports to the U.S. are currently subject to export duties imposed under the SLA which is currently scheduled to expire in October

2015. National economic protectionist measures more commonly arise during periods of broad economic downturn and so a deterioration of global

economic conditions could result in the adoption of additional trade barriers.

FinancialWe rely on long-term borrowings and access to revolving credit in order to finance our ongoing operations. Any change in availability of credit in

the market, as would happen during an economic downturn, could affect our ability to access credit markets on commercially reasonable terms.

Although we have no immediate needs for new credit, in the future we may need to access public or private debt markets to issue new debt to

replace or partially replace current borrowings.

Pension Plan FundingWe are the sponsor of several defined benefit pension plans which exposes us to market risks related to plan assets. Funding requirements for

these plans are based on actuarial assumptions concerning expected return on plan assets, future salary increases, life expectancy and interest

rates. If any of these assumptions differs from actual outcomes such that a funding deficiency occurs or increases, we would be required to

increase cash funding contributions which would in turn reduce the availability of capital for other purposes.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTINGWest Fraser’s management, including our President and Chief Executive Officer and our Vice-President, Finance and Chief Financial Officer,

acknowledge responsibility for the design and operation of disclosure controls and procedures and internal controls over financial reporting, and the

requirement to evaluate the effectiveness of these controls on an annual basis.

Management evaluated the effectiveness of these controls at the end of the reporting period and based on this evaluation concluded that our

internal controls over financial reporting and the disclosure controls and procedures were effective as at December 31, 2013.

No Changes in Internal Controls Over Financial ReportingThere has been no change in our internal controls over financial reporting during the year ended December 31, 2013 that has materially affected,

or is reasonably likely to materially affect, our internal controls over financial reporting.


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RESPONSIBILITY OF MANAGEMENT

The management of West Fraser Timber Co. Ltd. (“West Fraser”, “we”, “us” or “our”) is responsible for the preparation, integrity, objectivity and

reliability of the consolidated financial statements. The consolidated financial statements have been prepared in accordance with International

Financial Reporting Standards and necessarily include amounts that represent the best estimates and judgments of management.

We maintain a system of internal controls over financial reporting that encompasses policies, procedures and controls to provide reasonable

assurance that assets are safeguarded against loss or unauthorized use, transactions are executed and recorded in accordance with the appropriate

authorization and financial records are accurate and reliable.

Our independent auditor, which is appointed by the shareholders upon the recommendation of the Audit Committee and the Board of Directors, has

completed its audit of the consolidated financial statements in accordance with generally accepted auditing standards in Canada and its report follows.

The Board of Directors provides oversight to the financial reporting process through its Audit Committee, comprised of three Directors, none of

whom is an officer or employee of West Fraser. The Audit Committee meets regularly with representatives of management and of the auditor to

review the consolidated financial statements and matters relating to the audit. The auditor has full and free access to the Audit Committee. The

Audit Committee reports its findings to the Board of Directors for consideration in approving the consolidated financial statements for issuance to

the shareholders.

Ted Seraphim Larry HughesPresident and Vice-President, FinanceChief Executive Officer and Chief Financial Officer

February 13, 2014

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of West Fraser Timber Co. Ltd.

We have audited the accompanying consolidated financial statements of West Fraser Timber Co. Ltd., which comprise the consolidated balance

sheets as at December 31, 2013 and December 31, 2012 and the consolidated statements of earnings and comprehensive earnings, changes in

shareholders’ equity and cash flows for the years then ended, and the related notes, which comprise a summary of significant accounting policies

and other explanatory information.

Management’s responsibility for the consolidated financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International

Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated

financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance

with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The

procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial

statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation

and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness

of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation

of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of West Fraser Timber Co. Ltd.

as at December 31, 2013 and December 31, 2012 and its financial performance and its cash flows for the years then ended in accordance with

International Financial Reporting Standards.

Chartered AccountantsVancouver, British Columbia

February 13, 2014

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CONSOLIDATED BALANCE SHEETSAS AT DECEMBER 31, 2013 AND 2012

(IN MILLIONS OF CANADIAN DOLLARS, EXCEPT WHERE INDICATED)

2013 2012

ASSETS

Current assets

Cash and short-term investments (note 7) $ 162 $ 102

Receivables (note 27) 279 251

Inventories (note 8) 519 459

Prepaid expenses 11 11

971 823

Property, plant and equipment (note 9) 1,144 959

Timber licences (note 10) 489 496

Goodwill and other intangibles (note 11) 321 330

Other assets (note 12) 83 24

Deferred income tax assets (note 22) 96 —

$ 3,104 $ 2,632

LIABILITIES Current liabilities

Payables and accrued liabilities (note 13) $ 385 $ 322

Income taxes payable 30 20

Reforestation and decommissioning obligations (note 14) 39 43

Current portion of long-term debt (note 15) 319 —

773 385

Long-term debt (note 15) 9 300

Other liabilities (note 14) 197 327

Deferred income tax liabilities (note 22) 178 128

1,157 1,140

SHAREHOLDERS’ EQUITY

Share capital (note 17) 602 602

Accumulated other comprehensive earnings 10 (9 )

Retained earnings 1,335 899

1,947 1,492

$ 3,104 $ 2,632

Approved by the Board of Directors

Janice G. Rennie J. Duncan GibsonDirector Director

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CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGSFOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012


2013 2012

Sales $ 3,474 $ 3,000

Costs and expenses

Cost of products sold 2,260 2,024

Freight and other distribution costs 491 477

Export taxes 9 48


Selling, general and administration 131 115

Equity-based compensation (note 18) 54 61

Restructuring charges (note 19) 24 —

3,129 2,877

Operating earnings 345 123

Finance expense (note 20) (29 ) (28 )

Exchange gain (loss) on long-term debt (21 ) 7

Other income (note 21) 22 —

Earnings before tax 317 102

Tax recovery (provision) (note 22) 32 (25 )

Earnings $ 349 $ 77

Earnings per share (dollars) (note 24)

Basic and diluted1 $ 4.07 $ 0.90

Cash dividends per share1 $ 0.28 $ 0.28

Comprehensive earnings

Earnings $ 349 $ 77

Other comprehensive earnings

Translation gain (loss) on foreign operations2 19 (3 )

Actuarial gain (loss) on post-retirement benefits3 113 (42 )

Comprehensive earnings $ 481 $ 32

1. Per share amounts have been retroactively adjusted to take into account the Stock Dividend described in note 17.2. Recycled through earnings in the event of a disposal in net investment in foreign operations.3. Adjusted through retained earnings. Net of income tax charge of $34 million (2012 – recovery of $14 million).

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012


SHARE CAPITAL TRANSLATION NUMBER OF FOREIGN RETAINED TOTAL OF SHARES AMOUNT OPERATIONS EARNINGS EQUITY

Balance – December 31, 2011 42,846,113 $ 601 $ (6 ) $ 888 $ 1,483

Changes in Shareholders’ Equity for 2012 Translation loss on foreign operations — — (3 ) — (3 )

Actuarial loss on post-retirement benefits — — — (42 ) (42 )

Issuance of Common shares 16,607 1 — — 1

Earnings for the year — — — 77 77

Dividends — — — (24 ) (24 )

Balance – December 31, 2012 42,862,720 602 (9 ) 899 1,492

Changes in Shareholders’ Equity for 2013

Translation gain on foreign operations — — 19 — 19Actuarial gain on post-retirement benefits — — — 113 113 Issuance of Common shares 5,309 1 — — 1Common share repurchases (32,277 ) (1 ) — (2 ) (3 )Earnings for the year — — — 349 349Dividends — — — (24 ) (24 )

Balance – December 31, 2013 42,835,752 $ 602 $ 10 $ 1,335 $ 1,947

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CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012


2013 2012

Operating activities Earnings $ 349 $ 77

Adjustments


Finance expense 29 28

Exchange (gain) loss on long-term debt 21 (7 )

Tax (recovery) provision (32 ) 25

Income taxes received (paid) (36 ) 2

Post-retirement expense 54 51

Contributions to post-retirement benefit plans (106 ) (72 )

Other (7 ) (11 )

Changes in non-cash working capital

Receivables (15 ) (22 )

Inventories (55 ) (58 )

Prepaid expenses — (2 )

Payables and accrued liabilities 57 41

Cash flows from operating activities 419 204

Financing activities

Proceeds from long-term debt 8 —

Finance expense paid (18 ) (18 )

Dividends (24 ) (24 )

Common share repurchases (3 ) —

Other (2 ) —

Cash flows from financing activities (39 ) (42 )

Investing activities

Acquisition (note 6) — (30 )

Additions to capital assets (338 ) (159 )

Government assistance (note 26) 11 51

Proceeds from disposal of capital assets 2 9

Other (1 ) 1

Cash flows from investing activities (326 ) (128 )

Increase in cash 54 34

Foreign exchange effect on cash 6 —

Cash – beginning of year 102 68

Cash – end of year $ 162 $ 102

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Description Page 1 Nature of operations 48

2 Statement of compliance 48

3 Significant accounting policies 48

4 Changes in accounting policies 51

5 Accounting standards issued but not yet applied 52

6 Acquisition 52

7 Cash and short-term investments 52

8 Inventories 52

9 Property, plant and equipment 53

10 Timber licences 53

11 Goodwill and other intangibles 54

12 Other assets 54

13 Payables and accrued liabilities 55

14 Other liabilities 55

15 Long-term debt and operating loans 56

16 Post-retirement benefits 56

17 Share capital 59

18 Equity-based compensation 60

19 Restructuring charges 62

20 Finance expense 62

21 Other income 62

22 Tax provision 62

23 Employee compensation 63

24 Earnings per share 63

25 Commitments 64

26 Government assistance 64

27 Financial instruments 65

28 Capital disclosures 67

29 Segment and geographic information 68

INDEX OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

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1. NATURE OF OPERATIONSWest Fraser Timber Co. Ltd. (“West Fraser”, “we”, “us” or “our”) is an integrated wood products company producing lumber, wood chips, LVL, MDF,

plywood, pulp and newsprint 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. STATEMENT OF COMPLIANCEThese consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the

International Accounting Standards Board and were authorized for publication by our Board of Directors on February 13, 2014.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of measurementOur consolidated financial statements have been prepared on the historical cost basis, except for the following significant items:

• Derivative financial instruments which are measured at fair value;

• Share option liability which is measured using the Black-Scholes valuation model;

• Reforestation and decommissioning obligations which are measured at the present value of expected future cash flows required to

discharge those obligations; and

• Post-retirement benefits which are actuarially determined, with plan assets measured at fair value and accrued benefit obligations

measured using the projected unit credit method.

Basis of consolidationThese consolidated financial statements include the accounts of West Fraser and its wholly-owned subsidiaries after elimination of intercompany

transactions and balances. Principal operating subsidiaries are West Fraser Mills Ltd., West Fraser, Inc., Blue Ridge Lumber Inc., Sundre Forest

Products Inc. and West Fraser Newsprint Ltd.

Our 50% joint operations, Alberta Newsprint Company and Cariboo Pulp & Paper Company, are accounted for by the proportionate consolidation

method.

Financial instrumentsOur financial assets are categorized as loans and receivables and our financial liabilities are categorized as other financial liabilities. All financial

assets and liabilities, except for derivatives, are initially measured at fair value and subsequently measured at amortized cost using the effective

interest rate method. Derivatives are measured at fair value through earnings with changes reflected in other income. A list of our financial assets

and liabilities is included in note 27.

Deferred financing charges are amortized over the life of the associated debt.

Use of estimatesThe preparation of consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in

the consolidated financial statements and accompanying notes. Significant areas requiring estimates include recoverability of long-lived assets and

goodwill, reforestation and decommissioning obligations, employee future benefits, equity-based compensation, income taxes and litigation. Actual

amounts could differ materially from these and other estimates, the impact of which would be recorded in future periods.

Revenue recognitionRevenues are derived from product sales and are recognized upon the transfer of significant risks and rewards of ownership, provided collectibility

is reasonably assured.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012


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Foreign currency translationWest Fraser’s functional and presentation currency is Canadian dollars.

U.S. operations

Assets and liabilities of our U.S. operations have a functional currency of U.S. dollars and are translated at the period-end exchange rate. Revenues

and expenses are translated at average exchange rates during the reporting period. The resulting unrealized translation gains or losses are included

in other comprehensive earnings.

Translation of other foreign currency balances and transactions

Monetary assets and liabilities denominated in foreign currencies, including long-term debt, are translated at the period-end exchange rate. Income

and expense items are translated at the average or transaction date exchange rates during the reporting period. The resulting translation gains or

losses are included in other income.

Cash and short-term investmentsCash and short-term investments consist of cash on deposit and short-term interest-bearing securities maturing within three months of the date

of purchase.

InventoriesInventories of logs, other raw materials and manufactured products are valued at the lower of average cost and net realizable value. Processing

materials and supplies are valued at the lower of average cost and replacement cost.

Property, plant and equipmentProperty, plant and equipment are stated at historical cost, less accumulated amortization and impairment losses. Expenditures for additions and

improvements are capitalized. Borrowing costs are capitalized when the asset construction period exceeds 12 months and the borrowing costs are

directly attributable to the asset. Expenditures for maintenance and repairs are charged to earnings. Upon retirement, disposal or destruction of an

asset, the cost and related amortization are removed from the accounts and any gain or loss is included in earnings.

Property, plant and equipment are amortized on a straight-line basis over their estimated useful lives as follows:

Buildings 10 – 30 years

Manufacturing equipment and machinery 6 – 20 years

Fixtures, mobile and other equipment 3 – 10 years

Roads Not exceeding 40 years

Major maintenance shutdowns 12 to 36 months

Timber licences and other intangiblesTimber licences and other intangible assets are stated at historical cost, less accumulated amortization and impairment losses, and are amortized

on a straight-line basis over their estimated useful lives as follows:

Timber licences 40 years

Power purchase agreement Over the life of the agreement

Software 3 – 5 years

Non-replaceable timber rights As timber is logged

Impairment of property, plant, equipment, timber licences and other intangiblesWe review property, plant, equipment, timber licences and other intangible assets for impairment whenever events or changes in circumstances

indicate that the carrying amount may not be fully recoverable. For the purpose of impairment testing, property, plant, equipment, timber licences

and other intangible assets are separated into cash generating units (“CGU”). We have identified each of our mills as a CGU for impairment testing

of property, plant, equipment and other intangibles. Timber licences are tested for impairment by combining CGUs within the economic area of the

related licence.

Recoverability is assessed by comparing the CGU carrying amount to the discounted estimated net future cash flows the assets are expected to

generate. If the carrying amount exceeds the discounted estimated net future cash flows, the assets of the CGU are written down to the higher of

fair value less costs to sell and value-in-use (being the present value of the estimated net future cash flows of the relevant asset or CGU).

Estimated net future cash flows are based on several assumptions concerning future circumstances including selling prices of products,

U.S./Canadian dollar exchange rates, production rates, input costs and capital requirements. The estimated net future cash flows are discounted

at rates reflective of market risk.

Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the lesser of the revised estimate of its

recoverable amount and the carrying amount that would have been recorded had no impairment loss been previously recognized.

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GoodwillGoodwill represents the excess of the purchase price paid for an acquisition over the fair value of the net assets acquired. Goodwill is not amortized,

but is subject to an impairment test annually or more frequently if events or circumstances indicate that it may be impaired.

Goodwill impairment is assessed by comparing the fair value of its CGU to the underlying carrying amount of the CGU’s net assets, including

goodwill. When the carrying amount of the CGU exceeds its fair value, the fair value of the CGU’s goodwill is compared with its carrying amount. An

impairment loss is recognized for any excess of the carrying value of goodwill over its fair value.

Reforestation and decommissioning obligationsTimber is harvested under various timber licences that require us to conduct reforestation. Future reforestation obligations are measured at

the present value of the expenditures expected to be required to settle the obligations and are accrued and charged to earnings when timber is

harvested. The reforestation obligation is reviewed periodically and changes to estimates are credited or charged to earnings.

We record the present value of a liability for decommissioning obligations in the period that a reasonable estimate can be made. The present

value of the liability is added to the carrying amount of the associated asset and amortized over its useful life or, if there is no associated asset, it

is expensed. Decommissioning obligations are reviewed annually and changes to estimates result in an adjustment of the carrying amount of the

associated asset or, where there is no asset, they are credited or charged to earnings.

Reforestation and decommissioning obligations are discounted at the risk-free rate at the balance sheet date and accreted over time through

periodic charges to earnings. The liabilities are reduced by actual costs of settlement.

Government assistanceGovernment assistance received that relates to the construction of manufacturing assets is applied to reduce the cost of those assets. Government

assistance received that relates to operational expenses is applied to reduce the amount charged to earnings for the operating item.

Equity-based compensationWest Fraser’s share option plan gives share option holders the right to elect to receive a cash payment in lieu of exercising an option to purchase

Common shares. We estimate the fair value of outstanding options using the Black-Scholes valuation model at each balance sheet date and record

the resulting expense or recovery, over the vesting period, through a charge to earnings. The vesting period over which the expense or recovery is

recorded is the lesser of five years from the date the option was granted and the time period until the option holder reaches eligible retirement age.

If the option holder is eligible to retire, the expense or recovery is charged to earnings immediately.

If an option holder elects to purchase Common shares, both the exercise price and the accrued liability are credited to shareholders’ equity.

Post-retirement benefitsWe record a post-retirement asset or liability for our employee defined benefit pension and other retirement benefit plans by netting our plan assets

with our plan obligations, on a plan-by-plan basis.

The cost of defined benefit pensions and other retirement benefits earned by employees is actuarially determined using the projected unit credit

method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yields

from high quality Canadian corporate bonds with cash flows that approximate expected benefit payments at the balance sheet date. Plan assets are

valued at fair value at each balance sheet date.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other

comprehensive earnings in the period in which they arise.

Past service costs arising from plan amendments are recognized immediately.

The finance amount on net post-retirement balances is classified as finance expense.

For defined contribution plans, pension expense is the amount of contributions we are required to make in respect of services rendered by employees.

Income taxesThe tax expense for the period is comprised of current and deferred tax. Tax is recognized in the statement of earnings, except to the extent that it

relates to items recognized in other comprehensive earnings in which case it is recognized in other comprehensive earnings.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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Deferred taxes are provided for using the liability method. Under this method, deferred taxes are recognized for temporary differences between the

tax and financial statement basis of assets, liabilities and certain carry-forward items.

Deferred tax assets are recognized only to the extent that it is probable that they will be realized. Deferred income tax assets and liabilities are

adjusted for the effects of changes in tax laws and rates on the date of substantive enactment.

4. CHANGES IN ACCOUNTING POLICIESWe have adopted the following new and revised standards, along with any consequential amendments, effective January 1, 2013. These changes

were made in accordance with the applicable transitional provisions.

IFRS 10 – Consolidated Financial Statements

In May 2011 IFRS 10 was issued which provides a single model to be applied in the control analysis for all investees and supersedes International

Accounting Standards (“IAS”) 27 – Consolidated and Separate Financial Statements and Standing Interpretations Committee – 12 Consolidation –

Special Purpose Entities. The adoption of this standard did not result in any changes to our consolidation accounting.

IFRS 11 – Joint Arrangements

In May 2011 IFRS 11 was issued which provides guidance for determining if a joint arrangement is a joint venture or joint operation. The standard

requires that joint ventures be accounted for by the equity method as opposed to the choice, previously available under IAS 31 – Interests in Joint

Ventures, of applying the equity method or proportionate consolidation. Joint operations are required to be accounted for using the proportionate

consolidation method. The adoption of this standard did not result in any changes to our joint arrangement accounting.

IFRS 12 – Disclosure of Interests in Other Entities

In May 2011 IFRS 12 was issued which sets out the required disclosures for companies that have adopted IFRS 10 and 11 described above. It

requires disclosure of information that helps users to evaluate the nature, risks and financial effects associated with a company’s interests in

subsidiaries, associates and joint arrangements. These changes have been incorporated into the notes of these consolidated financial statements.

IFRS 13 – Fair Value Measurement

In May 2011 IFRS 13 was issued which defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements

for fair value measurements. Prior to the introduction of the standard, there was no single source of guidance on fair value measurement. The

adoption of IFRS 13 did not require any adjustments to our valuation techniques used to measure fair value and did not result in any measurement

adjustments.

IAS 19 – Amendment, Employee Benefits

In June 2011 IAS 19 was amended, resulting in significant changes to the recognition and measurement of post-retirement and termination

benefits. The most significant change was to replace interest cost and expected return on plan assets with a net interest amount that is calculated

by applying the obligation discount rate to the net defined benefit asset or liability.

Under the standard, the net finance amount on employee future benefits can be reported in the statement of earnings as finance expense or as

salaries and wages within operating earnings. We have classified these costs as finance expense.

The effect of adopting the amended standard is as follows: PREVIOUS AMENDED STANDARD CHANGE STANDARD

January 1 to December 31, 2013 Post-retirement and other long-term employee benefits expense $ 35 $ 9 $ 44Finance expense — 10 10Tax recovery (9 ) (4 ) (13 ) $ 26 $ 15 $ 41Actuarial gain on post-retirement benefits – net of tax $ (98 ) $ (15 ) $ (113 )Basic and diluted earnings per share1 $ 4.24 $ (0.17 ) $ 4.07

January 1 to December 31, 2012 Post-retirement and other long-term employee benefits expense $ 39 $ 4 $ 43

Finance expense — 9 9

Tax recovery (10 ) (3 ) (13 )

$ 29 $ 10 $ 39

Actuarial loss on post-retirement benefits – net of tax $ 52 $ (10 ) $ 42

Basic and diluted earnings per share1 $ 1.01 $ (0.11 ) $ 0.90

1. Per share amounts have been retroactively adjusted to take into account the Stock Dividend described in note 17.

There is no impact on balance sheet amounts resulting from the amended standard.

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5. ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED

IFRS 9 – Financial Instruments

In November 2009 IFRS 9 was issued and in October 2010 was further amended. IFRS 9 addresses classification and measurement of financial

assets and replaces the multiple category and measurement models in IAS 39 – Financial Instruments: Recognition and Measurement for debt

instruments with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also

replaces the models for measuring equity instruments and such instruments are either recognized at fair value through profit or loss or at fair value

through other comprehensive earnings. In December 2009 IFRS 9 was deferred. We do not expect this standard to have a significant effect on

our consolidated financial statements.

There are no other standards or amendments or interpretations to existing standards issued but not yet effective that are expected to have a

material impact on our consolidated financial statements.

6. ACQUISITIONOn October 31, 2012 West Fraser acquired a sawmill and the associated timber licences located in Alberta for $30 million. We accounted for the

transaction as an acquisition of a business and have allocated the purchase price based on the estimated fair value of the assets acquired and the

liabilities assumed. The purchase price allocation is as follows:

2012

Current assets $ 8

Current liabilities (4 )

Property, plant and equipment 8

Timber licences 22

Long-term liabilities (4 )

Cash consideration $ 30

7. CASH AND SHORT-TERM INVESTMENTSIncluded within cash and short-term investments is $24 million of restricted cash related to capital projects that are currently underway. The

restricted cash is expected to be released within 12 months.

8. INVENTORIES 2013 2012

Logs and other raw materials $ 160 $ 131

Manufactured products 261 235

Processing materials and supplies 98 93

$ 519 $ 459

Inventories at December 31, 2013 were written down by $6 million (December 31, 2012 – $3 million) to reflect net realizable value being lower

than cost.

The carrying amount of inventory recorded at net realizable value was $27 million at December 31, 2013 (December 31, 2012 – $22 million), with

the remaining inventory recorded at cost.



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9. PROPERTY, PLANT AND EQUIPMENT MANUFACTURING PLANT, EQUIPMENT & CONSTRUCTION- ROADS AND MACHINERY IN-PROGRESS BRIDGES OTHER TOTAL

As at December 31, 2011 $ 827 $ 45 $ 35 $ 29 $ 936

Additions 79 60 11 — 150

Acquisition 8 — — — 8

Disposals — — — (4 ) (4 )

Amortization1 (119 ) — (8 ) (1 ) (128 )

Foreign exchange (3 ) — — — (3 )

Transfers 44 (44 ) — — —

As at December 31, 2012 $ 836 $ 61 $ 38 $ 24 $ 959

As at December 31, 2012 Cost $ 2,679 $ 61 $ 97 $ 31 $ 2,868

Accumulated amortization (1,843 ) — (59 ) (7 ) (1,909 )

Net $ 836 $ 61 $ 38 $ 24 $ 959

As at December 31, 2012 $ 836 $ 61 $ 38 $ 24 $ 959

Additions 147 165 10 — 322Amortization1 (121 ) — (13 ) — (134 )Asset impairment (13 ) — — — (13 )Foreign exchange 10 — — — 10Transfers 28 (28 ) — — —As at December 31, 2013 $ 887 $ 198 $ 35 $ 24 $ 1,144

As at December 31, 2013 Cost $ 2,845 $ 198 $ 107 $ 31 $ 3,181Accumulated amortization (1,958 ) — (72 ) (7 ) (2,037 )Net $ 887 $ 198 $ 35 $ 24 $ 1,1441. Amortization of $133 million relates to cost of products sold and $1 million relates to selling, general and administration expense (2012 – $126 million and $2 million, respectively).

10. TIMBER LICENCES TIMBER LICENCES

As at December 31, 2011 $ 490

Acquisition 22

Amortization1 (16 )


As at December 31, 2012 Cost $ 673

Accumulated amortization (177 )

Net $ 496


Additions 20Amortization1 (17 )Disposals (10 )As at December 31, 2013 $ 489

As at December 31, 2013 Cost $ 681Accumulated amortization (192 )Net $ 4891. Amortization relates to cost of products sold.

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11. GOODWILL AND OTHER INTANGIBLES POWER PURCHASE GOODWILL AGREEMENT OTHER TOTAL

As at December 31, 2011 $ 264 $ 66 $ 6 $ 336

Additions — — 2 2

Amortization1 — (7 ) (1 ) (8 )

As at December 31, 2012 $ 264 $ 59 $ 7 $ 330

As at December 31, 2012 Cost $ 264 $ 115 $ 25 $ 404

Accumulated amortization — (56 ) (18 ) (74 )

Net $ 264 $ 59 $ 7 $ 330

As at December 31, 2012 $ 264 $ 59 $ 7 $ 330

Amortization1 — (7 ) (2 ) (9 )As at December 31, 2013 $ 264 $ 52 $ 5 $ 321

As at December 31, 2013

Cost $ 264 $ 115 $ 25 $ 404Accumulated amortization — (63 ) (20 ) (83 )Net $ 264 $ 52 $ 5 $ 3211. Amortization of $8 million relates to cost of products sold and $1 million relates to selling, general and administration expense (2012 – $7 million and $1 million, respectively).

GoodwillWe have attributed $218 million of goodwill to a CGU made up of our Canadian lumber operations and $46 million of goodwill to a CGU made up

of our plywood and LVL operations.

For the purpose of the annual impairment test of goodwill, the fair value of CGUs has been determined based on value-in-use calculations.

These calculations use pre-tax cash flow projections based on the 2014 operating plan, a forecast of 2015 and 2016 and trend level earnings

for subsequent years, all approved by management. Assumptions were developed by management based on industry sources, including Forest

Economic Advisors, LLC, Resource Information Systems, Inc., and other industry analysts, taking into account management’s best estimates.

Power purchase agreementWest Fraser has an interest in a power purchase agreement to acquire a portion of the electricity generated from a power plant in Alberta at

substantially predetermined prices. Our share of electricity capacity to 2020 is expected to be approximately 115 megawatts per year. We sell the

electricity acquired at prevailing market prices at the same time as our Alberta operations purchase electricity at prevailing market prices. The cost

of the power purchase agreement is amortized over its term.

12. OTHER ASSETS 2013 2012

Post-retirement (note 16) $ 72 $ 14

Deferred financing costs on lines of credit 4 4

Other 7 6

$ 83 $ 24



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13. PAYABLES AND ACCRUED LIABILITIES 2013 2012

Trade accounts $ 188 $ 163

Equity-based compensation 98 80

Compensation 54 47

Severance 10 —

Dividends 6 —

Interest 4 4

Other 25 28

$ 385 $ 322

14. OTHER LIABILITIES 2013 2012

Post-retirement (note 16) $ 82 $ 215

Reforestation 66 69

Decommissioning 22 16

Other 27 27

$ 197 $ 327

Reforestation and decommissioning obligationsReforestation and decommissioning obligations relate to our responsibility for reforestation under various timber licences, landfill closures and other

site remediation costs.

Changes in reforestation and decommissioning obligations are as follows:

Reforestation Decommissioning 2013 2012 2013 2012

Beginning of year $ 112 $ 111 $ 16 $ 15

Liabilities recognized 39 42 — —

Liabilities settled (48 ) (46 ) — —

Acquired obligation — 4 — —

Change in estimates 2 1 6 1

End of year 105 112 22 16

Less: current portion (39 ) (43 ) — —

$ 66 $ 69 $ 22 $ 16

The total undiscounted amount of the estimated cash flows required to satisfy these obligations is $138 million (2012 – $136 million). The cash

flows have been discounted using interest rates ranging from 1.13% to 1.95% (2012 – 1.14% to 1.38%).

The timing of the reforestation payments is based on the estimated period required to attain free to grow status in a given area, which is generally

between 12 to 15 years. Payments relating to landfill closures and site remediation are expected to occur over periods ranging up to 33 years.

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15. LONG-TERM DEBT AND OPERATING LOANS

Long-term debt 2013 2012

US$300 million senior notes due October 2014; interest at 5.2% $ 319 $ 299

US$8 million note payable due October 2020; interest at 2% 8 —

Note payable due in instalments to 2020; interest at 5.5% 2 2

329 301

Current portion (319 ) —

Deferred financing costs (1 ) (1 )

$ 9 $ 300

Required principal repayments are disclosed in note 27.

Operating loansWe have $530 million in revolving lines of credit which were undrawn as at December 31, 2013 (December 31, 2012 – undrawn). Deferred

financing costs related to these lines of $4 million are included in other assets at December 31, 2013 (December 31, 2012 – $4 million).

In September 2013, our $500 million revolving line of credit was extended until September 30, 2018. In addition, we have a $25 million demand

line of credit dedicated to letters of credit and a $5 million demand line of credit dedicated to a jointly owned newsprint operation. Interest on the

three facilities is payable at floating rates based on Prime, U.S. base, Bankers’ Acceptances or LIBOR at our option. As at December 31, 2013,

letters of credit in the amount of $46 million have been issued under these facilities.

In April 2013, the security on our assets was removed following a rating upgrade to investment grade by one of our external debt rating agencies.

The result is that all debt is unsecured except the $5 million joint operation demand line of credit, which is secured by that joint operation’s

current assets.

16. POST-RETIREMENT BENEFITSWe 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 commencement of retirement.

The defined benefit pension plans are operated in Canada and the U.S. under broadly similar regulatory frameworks. The majority are funded

arrangements where benefit payments are made from plan assets which are held in trust. Responsibility for the governance of the plans, including

investment and contribution decisions, resides with our pension committee which reports to the Board of Directors. For the registered defined

benefit pension plans, regulations set minimum requirements for contributions for benefit accruals and the funding of deficits.

The actual return on plan assets is a gain of $153 million for the year ended December 31, 2013 (2012 – $73 million).

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The total pension expense for the defined benefit plans is $49 million (2012 – $46 million). In 2013 we made contributions of $92 million (2012

– $59 million). We expect to contribute approximately $40 million to our defined benefit pension plans during 2014. We also provide group life

insurance, medical and extended health benefits to certain employee groups, for which we contributed $3 million (2012 – $3 million).

The total pension expense and funding contributions for the defined contribution pension plans is $11 million (2012 – $10 million).

Our defined benefit pension plan obligations are either wholly or partially funded and our other retirement benefit plans continue to be unfunded.

The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:

DEFINED BENEFIT OTHER RETIREMENT PENSION PLANS BENEFIT PLANS

2013 2012 2013 2012

Accrued benefit obligations

Benefit obligations – opening $ 1,168 $ 1,049 $ 51 $ 49

Current service cost 42 40 1 1

Finance cost on obligation 54 53 2 2

Benefits paid (57 ) (52 ) (3 ) (3 )

Actuarial (gain) loss due to change in discount rate (43 ) 83 (1 ) 2

Actuarial (gain) due to other — (4 ) (2 ) —

Other — (1 ) — —

Benefit obligations – ending $ 1,164 $ 1,168 $ 48 $ 51

Plan assets Fair value – opening $ 1,018 $ 939 $ — $ —

Finance income on plan assets 47 47 — —

Actuarial gain due to returns on plan assets being higher than finance income 106 26 — —

Employer contributions 92 59 3 3

Benefits paid (57 ) (52 ) (3 ) (3 )

Other 1 (1 ) — —

Fair value – ending $ 1,207 $ 1,018 $ — $ —

Funded status1

Post-retirement assets $ 77 $ 14 $ — $ —

Actuarial loss due to impact of minimum funding requirement 2 (5) — — —

Post-retirement assets (note 12) 72 14 — —

Post-retirement liabilities (note 14) (34 ) (164 ) (48 ) (51 )

$ 38 $ (150 ) $ (48 ) $ (51 )

1. Plans in a surplus position are classified as assets and plans in a deficit position are shown as liabilities on the balance sheet.2. Some of our plans have a surplus that is not recognized on the basis that future economic benefits may not be available to us in the form of a reduction in future contributions or a cash refund.


2013 2012 2013 2012

Expense

Current service cost $ 42 $ 40 $ 1 $ 1

Net finance expense 7 6 2 2

$ 49 $ 46 $ 3 $ 3

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Assumptions and sensitivitiesThe weighted average duration of the defined benefit pension obligations is 15 years. The expected maturity analysis of the undiscounted defined

benefit pension plans at December 31, 2013 is as follows: 2014 2015 2016 TO 2018 THEREAFTER TOTAL

Defined benefit pension plans $ 57 $ 57 $ 174 $ 2,214 $ 2,502

The estimation of post-retirement benefit obligations involves a high degree of judgment for matters such as discount rate, employee service

periods, compensation escalation rates, expected retirement ages of employees, expected health-care costs and other variable factors. These

estimates are reviewed annually with independent actuaries. The significant actuarial assumptions used to determine our balance sheet date post-

retirement assets and liabilities and our post-retirement benefit plan expenses are as follows:


2013 2012 2013 2012

Benefit obligations:

Discount rate 4.75% 4.50% 4.75% 4.50%

Future compensation rate increase 3.50% 3.50% n/a n/a

Benefit expense:

Discount rate – beginning of year 4.50% 5.00% 4.50% 5.00%

Future compensation rate increase 3.50% 3.50% n/a n/a

Health-care benefit costs, shown under other retirement benefit plans, are funded on a pay-as-you-go basis. The actuarial assumptions for

extended health-care costs are estimated to increase 10% per year for two years, grading down 0.5% per year for years three to twelve, to 5% per

year thereafter. The actuarial assumptions for medical service plan costs are estimated to increase by 4% per year.

The impact of a change in these assumptions on our post-retirement obligations is as follows:

OBLIGATIONSDiscount rate

Decrease in assumption from 4.75% to 4.25% $ 88

Increase in assumption from 4.75% to 5.25% $ (82 )

Rate of increase in future compensation

Decrease in assumption from 3.5% to 3.0% $ (18 )

Increase in assumption from 3.5% to 4.0% $ 18

Health-care cost trend rates

Increase in assumption by 1.0% $ 3

Decrease in assumption by 1.0% $ (3 )

Each sensitivity has been calculated on the basis that all other variables remain constant. When calculating the sensitivity of the defined benefit

obligation, the same methodology is applied as was used to generate the financial statement asset/liability.



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AssetsThe weighted average asset allocations of the defined benefit plans at December 31, by asset category, are as follows:

ACCEPTABLE NORMAL RANGE POLICY 2013 2012

Canadian equities 20% – 50% 30% 31% 32%

Foreign equities 0% – 50% 30% 32% 28%

Fixed income investments 25% – 75% 40% 35% 40%

Other investments 2% —

100% 100%

Risk management practicesThe defined benefit pension plans’ investments are exposed to various risks. These risks include market risk (including foreign currency risk,

interest rate risk and price risk), credit risk and liquidity risk. The pension committee manages these risks in accordance with a Statement of

Investment Policies, Guidelines, Objectives and Procedures of the Pension Plans Master Investment Trust. The following are some specific risk

management practices employed:

• Monitoring credit exposure of counterparties;

• Monitoring adherence to asset allocation guidelines and permitted categories of investments; and

• Monitoring performance of investment managers and asset performance against benchmarks.

17. SHARE CAPITAL

Authorized

200,000,000 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 2013 2012 NUMBER AMOUNT NUMBER AMOUNT

Common 40,554,274 $ 602 40,281,242 $ 602

Class B Common 2,281,478 — 2,581,478 —

Total Common 42,835,752 $ 602 42,862,720 $ 602

During 2013 300,000 (2012 – 200,000) Class B Common shares were exchanged for Common shares.

On September 12, 2013 our Board of Directors authorized the initiation of a normal course issuer bid to repurchase for cancellation up to 1,000,000

Common shares or approximately 2.5% of our issued and outstanding Common shares. The normal course issuer bid expires September 16, 2014.

In September 2013 we repurchased 32,277 Common shares at a cost of approximately $3 million.

Stock dividendOn December 10, 2013 the Board of Directors declared a stock dividend (the “Stock Dividend”) of one Common share for each issued and

outstanding Common share and Class B Common share in the capital of the Company, which has the same effect as a two-for-one stock split. The

Stock Dividend was paid on January 13, 2014 to shareholders of record on December 31, 2013. For comparative purposes the Stock Dividend

has been applied retroactively to earlier periods so that the number of shares used to calculate earnings per share is doubled resulting in earnings

per share for 2013 and prior years being half of the amount that would otherwise have been reported.

On January 13, 2014 we issued 42,835,752 Common shares pursuant to the Stock Dividend. Also on January 13, 2014 the number of options

and units outstanding under our share option, phantom share, and directors’ deferred share unit plans were doubled and the exercise price of

outstanding share options was halved to reflect the Stock Dividend.

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Rights and restrictions of Common sharesCommon shares and Class B Common shares are equal in all respects except that each Class B Common share may at any time be exchanged for

one Common share. Certain circumstances or corporate transactions may require the approval of the holders of our Common shares and Class B

Common shares on a separate class by class basis.

18. EQUITY-BASED COMPENSATIONWest Fraser has a share option plan, a phantom share unit plan and a directors’ deferred share unit plan which are described below. The

compensation cost included in earnings for these plans in 2013 was a charge of $54 million (2012 – $61 million). The units and pricing information

below are before any adjustments for the Stock Dividend.

Share option planWest Fraser has a share option plan for its officers and employees under which options may be granted to purchase up to 5,005,506 Common

shares of which 287,048 remain available for issuance. The exercise price of a share option is the closing price of a Common share on the trading

day immediately preceding the grant date. Options vest at the earlier of the date of retirement or death and 20% per year from the grant date, and

expire after 10 years. We have recorded an expense of $44 million (2012 – $45 million) related to the share option plan.

A summary of the activity in the share option plan is presented below: 2013 2012 WEIGHTED WEIGHTED AVERAGE AVERAGE NUMBER PRICE NUMBER PRICE

Outstanding – beginning of year 1,497,152 $ 39.29 1,956,967 $ 37.92

Granted 99,975 $ 81.64 168,470 $ 47.35

Exercised (338,741 ) $ 40.78 (628,285 ) $ 37.20

Outstanding – end of year 1,258,386 $ 42.25 1,497,152 $ 39.29

Exercisable – end of year 876,415 $ 37.44 1,051,286 $ 38.64

The following table summarizes information about the share options outstanding at December 31, 2013:

WEIGHTED AVERAGE NUMBER OF REMAINING WEIGHTED NUMBER OF WEIGHTED OUTSTANDING CONTRACTUAL AVERAGE EXERCISABLE AVERAGEEXERCISE PRICE RANGE OPTIONS LIFE EXERCISE OPTIONS EXERCISE(DOLLARS) (NUMBER) (YEARS) PRICE (NUMBER) PRICE

$24.71 297,600 5.1 $ 24.71 231,300 $ 24.71

$33.30 – $39.00 254,175 4.1 $ 33.97 254,175 $ 33.97

$41.19 – $47.35 373,114 5.2 $ 45.52 239,258 $ 44.50

$51.50 – $51.56 233,522 5.2 $ 51.52 151,682 $ 51.53

$81.64 99,975 9.1 $ 81.64 — $ —

1,258,386 5.3 $ 42.25 876,415 $ 37.44

The weighted average share price at the date of exercise for share options exercised during the year was $90.76 per share (2012 – $64.93 per share).



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The accrued liability related to the share option plan, determined by applying the Black-Scholes valuation model, is $78 million at December 31,

2013 (December 31, 2012 – $51 million). The weighted average fair value of the options using the Black-Scholes valuation model was $61.72

per option at December 31, 2013 (December 31, 2012 – $33.90 per option).

The inputs to the option model are as follows:

2013 2012

Share price on balance sheet date $103.52 $70.58

Weighted average exercise price $42.25 $39.29

Expected dividend $0.56 $0.56

Expected volatility 35.72% 38.22%

Weighted average interest rate 1.21% 1.24%

Weighted average expected remaining life in years 2.0 3.7

The expected dividend on our shares was based on the annualized dividend rate at each period-end. Expected volatility was based on five years

of historical data. The interest rate for the life of the options was based on the implied yield available on government bonds with an equivalent

remaining term at each period-end. Historical data was used to estimate the expected life of the options and forfeiture rates.

The intrinsic value of options issued under the share option plan at December 31, 2013 was $75 million (December 31, 2012 – $46 million). The

intrinsic value is determined based on the difference between the period-end share price and the exercise price, multiplied by the sum of the related

vested options plus unvested options for those holders eligible to retire.

Phantom share unit planOur phantom share unit plan is intended to supplement or, in whole or in part, replace the granting of share options as long-term incentives for

officers and employees. The plan provides for two types of units which vest on the third anniversary of the grant date. A restricted share unit pays

out based on the Common share price over the 20 trading days immediately preceding its vesting date (the “vesting date value”). A performance

share unit pays out at a value between 0% and 200% of its vesting date value contingent upon West Fraser’s performance relative to a peer group

of companies over the three-year performance period. Officers and employees granted units under the plan are also entitled to additional units to

reflect cash dividends paid on Common shares from the applicable grant date until payout.

We record an expense or recovery through earnings over the vesting period based on the quoted market price of our Common shares at each

balance sheet date. The expense or recovery is charged over three years from the issuance date. We have recorded an expense of $7 million (2012

– $14 million) related to the phantom share unit plan. The number of units outstanding as at December 31, 2013 was 176,930 (December 31,

2012 – 337,765), including performance share units totalling 36,600 (December 31, 2012 – 72,390).

Directors’ deferred share unit planWe have a deferred share unit plan (“DSU Plan”) which provides a structure for non-employee directors to accumulate an equity-like holding in

West Fraser. The DSU Plan allows directors to participate in the growth of West Fraser by providing a deferred payment based on the value of a

Common share at the time of redemption. Each director receives deferred share units (“Units”) in payment of an annual equity retainer and may

elect to receive Units in payment of up to 100% of other fees earned. The Units are issued based on our Common share price at the time of issue.

Additional Units are issued to take into account the value of dividends paid on Common shares from the date of issue to the date of redemption.

Units are redeemable only after a director retires, resigns or otherwise leaves the board. The redemption value is equal to the Common share price

at the date of redemption. A holder of Units may elect to redeem Units in cash or receive Common shares having an equivalent value. The number

of Units outstanding as at December 31, 2013 was 61,017 (December 31, 2012 – 71,156).

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19. RESTRUCTURING CHARGESOn October 24, 2013 we announced our intention to permanently close our Houston, B.C. sawmill. The closure is expected to be complete in the

second quarter of 2014 and the resulting restructuring charges are as follows:

2013Asset impairment $ 13Severance 10Decommissioning obligations 1 $ 24

20. FINANCE EXPENSE 2013 2012

Interest expense $ (20 ) $ (20)

Interest income 1 1

Finance expense on employee future benefits (10 ) (9 )

$ (29 ) $ (28 )

21. OTHER INCOME 2013 2012

Foreign exchange gain (loss) – net $ 10 $ (5)

Gain on asset sales 11 4

Other – net 1 1

$ 22 $ —

22. TAX PROVISIONThe major components of income tax included in comprehensive earnings are as follows:

2013 2012

Earnings

Current tax $ (49) $ (24 )

Deferred tax 81 (1 )

Tax recovery (provision) $ 32 $ (25 )

Other comprehensive earnings Current tax on post-retirement actuarial gains and losses $ — $ 4

Deferred tax on post-retirement actuarial gains and losses (34 ) 10

Tax recovery (provision) $ (34 ) $ 14

Tax provision on comprehensive earnings $ (2 ) $ (11 )



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The tax recovery (provision) differs from the amount that would have resulted from applying the Canadian statutory income tax rates to earnings

before tax as follows:

2013 2012

Income tax expense at statutory rate of 25.75% (2012 – 25%) $ (82 ) $ (26 )

Non-taxable amounts (12 ) (9 )

Rate differentials between jurisdictions and on specified activities (10 ) (1 )

Recognized tax assets 140 11

Increase in statutory tax rate (2 ) —

Other (2 ) —

Tax recovery (provision) $ 32 $ (25 )

Of the following components of deferred income taxes, $10 million of the deferred tax assets and $11 million of the deferred tax liabilities are

expected to be recovered within 12 months: 2013 2012

Property, plant, equipment and intangibles $ 224 $ 210

Reforestation and decommissioning obligations (28 ) (28 )

Post-retirement benefits (24 ) (55 )

Tax loss carry-forwards (101 ) —

Other 11 1

$ 82 $ 128

Represented by

Deferred income tax assets $ (96 ) $ —

Deferred income tax liabilities 178 128

$ 82 $ 128

Deferred income tax assets of $101 million have been recognized for non-capital loss carry-forwards of $261 million that expire in various amounts

in the years 2023 to 2031.

23. EMPLOYEE COMPENSATIONOur employee compensation expense includes salaries and wages, employee future benefits, termination costs and bonuses, where applicable.

Total compensation expense is $668 million (2012 – $601 million).

Salaries, benefits and incentive compensation expense for key management (directors and officers) is $9 million (2012 – $6 million). In addition,

various equity-based compensation plans are offered to key management. See note 18 for additional details.

24. EARNINGS PER SHAREBasic 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 after adjusting for the Stock Dividend (note 17).

Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option 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.

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2013 2012

Earnings

Basic $ 349 $ 77

Share option expense 44 45

Equity settled share option adjustment (3 ) (3 )

Diluted $ 390 $ 119

Weighted average number of shares (thousands)

Basic 85,712 85,714

Share options 1,628 1,111

Diluted 87,340 86,825

Earnings per share (dollars)

Basic and diluted $ 4.07 $ 0.90

25. COMMITMENTS

Operating leasesWe are committed to make payments under certain operating leases for equipment, land, buildings and office space. Operating lease costs

expensed during the year were $4 million (2012 – $4 million). The future payments required under operating leases are as follows:

2014 $ 22015 22016 22017 1Thereafter 6

$ 13

Product purchase and sale commitments We have long-term purchase and sale contracts with minimum annual volume commitments. All contracts are at market prices and on normal

business terms.

Capital commitmentsCapital commitments at December 31, 2013 are $79 million.

26. GOVERNMENT ASSISTANCE

Construction of manufacturing assetsGovernment assistance of $11 million (2012 – $51 million) was received for capital projects and recorded as a reduction to property, plant and

equipment.

Operational expensesGovernment assistance of $12 million (2012 – $14 million) was recorded as a reduction to cost of products sold. The government assistance

related primarily to research and development, bioenergy producer credits and apprentice tax credits.

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27. FINANCIAL INSTRUMENTSa) Carrying and fair value of financial instruments by category OTHER LOANS & FINANCIAL CARRYING FAIR2013 RECEIVABLES LIABILITIES VALUE VALUE

Financial assets

Cash and short-term investments $ 162 $ — $ 162 $ 162Receivables 279 — 279 279 $ 441 $ — $ 441 $ 441

Financial liabilities

Payables and accrued liabilities $ — $ 385 $ 385 $ 385Long-term debt (note 15)1 — 329 329 341 $ — $ 714 $ 714 $ 7261. The fair value of the long-term debt is based on rates available to us at December 31, 2013 for long-term debt with similar terms and remaining maturities.

OTHER LOANS & FINANCIAL CARRYING FAIR2012 RECEIVABLES LIABILITIES VALUE VALUE

Financial assets

Cash and short-term investments $ 102 $ — $ 102 $ 102

Receivables 251 — 251 251

$ 353 $ — $ 353 $ 353

Financial liabilities Payables and accrued liabilities $ — $ 322 $ 322 $ 322

Long-term debt (note 15)1 — 301 301 313

$ — $ 623 $ 623 $ 635

1. The fair value of the long-term debt is based on rates available to us at December 31, 2012 for long-term debt with similar terms and remaining maturities.

b) Financial risk managementOur activities result in exposure to a variety of financial risks including risks related to currency fluctuation, credit, liquidity and interest rates.

Currency fluctuation

Most of our products are sold at prices denominated in U.S. dollars or based on prevailing U.S. dollar prices, and a significant portion of operational

costs and expenses are incurred in Canadian dollars. Therefore, an increase in the value of the Canadian dollar relative to the U.S. dollar reduces

the revenue in Canadian dollar terms realized by us from sales made in U.S. dollars, which reduces operating margin and the cash flow available

to fund operations. U.S. dollar-denominated debt and operations in the U.S. provide a partial offset to exchange exposure.

From time to time, we use derivatives to manage our exposure to U.S. dollar exchange fluctuations and commodity prices. We do not utilize

derivative financial instruments for trading or speculative purposes.

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Impact of U.S. dollar currency fluctuation

The U.S. dollar balance sheet exposure at December 31, 2013 was as follows: 2013Canadian operations Net working capital US$ 189Long-term debt (300 ) US$ (111 )

U.S. operations Net investment US$ 468

Based on these balances, with other variables unchanged, a $0.01 increase in the exchange rate for one U.S. dollar into Canadian currency would

have resulted in a $1 million increase in earnings and an increase of $5 million in the translation gain on foreign operations. A $0.01 decrease

in this rate would have resulted in a $1 million decrease in earnings and a decrease of $5 million in the translation gain on foreign operations.

Credit

Credit risk arises from the non-performance by counterparties of contractual financial obligations. Investments in cash and short-term investments

and derivative contracts are primarily made using major banks and only made with counterparties meeting certain credit worthiness criteria.

Credit risk for trade and other receivables is managed through established credit monitoring activities. Customer credit limits are established

and monitored. Ongoing evaluations of key customer financial conditions are performed. In certain market areas we have undertaken additional

measures to reduce credit risk including credit insurance, letters of credit and prepayments. At December 31, 2013 approximately 58% of trade

accounts receivable were covered by at least some of these additional measures. We have historically experienced minimal customer defaults

and, as a result, consider the credit quality of the trade accounts receivable at December 31, 2013 to be high. A bad debt recovery of $1 million

(2012 – $2 million expense) was recorded for the year. The aging analysis of trade accounts receivable is presented below:

2013 2012

Trade accounts receivable – gross

Current $ 216 $ 194

Past due 1 to 30 days 11 8

Past due 31 to 60 days 1 1

Past due over 60 days 1 —

229 203

Allowance for doubtful accounts — (1 )

Trade accounts receivable – net 229 202

Other 50 49

Receivables $ 279 $ 251

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Liquidity

We manage liquidity by maintaining adequate cash and short-term investment balances and by having appropriate lines of credit available. In

addition, we regularly monitor and review both actual and forecasted cash flows. Refinancing risks are managed by ensuring long-term debt has

a balanced maturity schedule where possible.

The following table summarizes the aggregate amount of contractual future cash outflows for long-term debt:

2014 2015 2016 2017 2018 Thereafter Total

Long-term debt (note 15) $ 319 $ — $ — $ — $ — $ 10 $ 329

Interest on debt1 13 — — — — — 13

$ 332 $ — $ — $ — $ — $ 10 $ 342

1. Assumes debt level, foreign exchange rate and floating interest rates remain at December 31, 2013 levels and rates.

Interest rates on financial instruments

Interest rate risk relates mainly to cash and short-term investments and floating rate debt. Our general practice is to fund long-term capital with debt

at fixed rates and various maturities. In addition, we have revolving lines of credit available that bear interest at floating rates on amounts drawn.

At December 31, 2013, with other variables unchanged, a 1% change in interest rates would not have a significant impact on earnings or other

comprehensive earnings.

28. CAPITAL DISCLOSURESOur business is cyclical and is subject to significant changes in cash flow over the business cycle. In addition, financial performance can be materially

influenced by changes in product prices and the relative values of the Canadian and U.S. dollar. Our objective in managing capital is to ensure

adequate liquidity and financial flexibility at all times, particularly at the bottom of the business cycle and in a strong Canadian dollar environment.

Our main policy relating to capital management is to maintain a strong balance sheet and otherwise meet financial tests that are commonly applied

by rating agencies for investment grade issuers of public debt. Our debt is currently rated as investment grade by three major rating agencies.

We monitor and assess our financial performance in order to ensure that net debt levels are prudent taking into account the anticipated direction of

the business cycle. When financing acquisitions, we combine debt and equity financing in a proportion that is intended to maintain an investment

grade rating for debt throughout the cycle. Long-term debt repayments are arranged, where possible, on a staggered basis that takes into account

the uneven nature of anticipated cash flows. We have also established committed revolving lines of credit that provide liquidity and flexibility when

capital markets are restricted.

One key measurement used to monitor our capital position is net debt to total capital, calculated as follows at December 31:

2013 2012

Net debt

Cash and short-term investments $ (162 ) $ (102 )

Deferred financing costs (4 ) (4 )

Long-term debt1 328 300

162 194

Shareholders’ Equity 1,947 1,492

Total capital $ 2,109 $ 1,686

Net debt to total capital 8% 12%

1. Balance sheet presentation is net of deferred financing fees, where applicable.

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29. SEGMENT AND GEOGRAPHICAL INFORMATIONThe segmentation of manufacturing operations into lumber, panels and pulp and paper is based on a number of factors, including similarities in

products, production processes and economic characteristics. Transactions between segments are at market prices and on normal business terms.

The accounting policies of each segment are those described in note 3. PULP & CORPORATE & LUMBER PANELS PAPER OTHER TOTAL 2013

Sales at market prices

To external customers $ 2,234 $ 460 $ 780 $ — $ 3,474 To other segments 81 7 — — $ 2,315 $ 467 $ 780 $ —

EBITDA1 $ 437 $ 43 $ 103 $ (54 ) $ 529Amortization (99 ) (15 ) (45 ) (1 ) (160 )Restructuring charges (24 ) — — — (24 )Operating earnings 314 28 58 (55 ) 345Finance expense (15 ) (5 ) (9 ) — (29 )Exchange loss on long-term debt — — — (21 ) (21 )Other income (expense) 16 1 8 (3 ) 22Earnings before tax $ 315 $ 24 $ 57 $ (79 ) $ 317

Total assets $ 2,082 $ 293 $ 615 $ 114 $ 3,104Total liabilities $ 313 $ 48 $ 108 $ 688 $ 1,157Capital employed1 $ 1,939 $ 268 $ 544 $ (62 ) $ 2,689Capital expenditures $ 281 $ 5 $ 71 $ 1 $ 3581. Non-IFRS measures: a) EBITDA is defined as operating earnings plus amortization and restructuring charges. b) Capital employed is defined as total assets less current non interest bearing liabilities at year-end.

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PULP & CORPORATE & LUMBER PANELS PAPER OTHER TOTAL

2012

Sales at market prices

To external customers $ 1,783 $ 442 $ 775 $ — $ 3,000

To other segments 72 6 — —

$ 1,855 $ 448 $ 775 $ —

EBITDA1 $ 176 $ 54 $ 109 $ (64 ) $ 275

Amortization (86 ) (16 ) (47 ) (3 ) (152 )

Operating earnings 90 38 62 (67 ) 123

Finance expense (13 ) (4 ) (9 ) (2 ) (28 )

Exchange gain on long-term debt — — — 7 7

Other income (expense) (4 ) — 1 3 —

Earnings before tax $ 73 $ 34 $ 54 $ (59 ) $ 102

Total assets $ 1,691 $ 293 $ 584 $ 64 $ 2,632

Total liabilities $ 279 $ 46 $ 110 $ 705 $ 1,140

Capital employed1 $ 1,572 $ 270 $ 520 $ (72 ) $ 2,290

Capital expenditures $ 114 $ 5 $ 38 $ 2 $ 159

Acquisition $ 30 $ — $ — $ — $ 30

1. Non-IFRS measures: a) EBITDA is defined as operating earnings plus amortization and restructuring charges. b) Capital employed is defined as total assets less current non interest bearing liabilities at year-end.

The geographic distribution of non-current assets and external sales is as follows: NON-CURRENT ASSETS SALES BY GEOGRAPHIC AREA1

2013 2012 2013 2012

Canada $ 1,796 $ 1,647 $ 821 $ 747

United States 337 162 1,761 1,435

China — — 537 513

Other Asia — — 263 201

Other — — 92 104

$ 2,133 $ 1,809 $ 3,474 $ 3,000

1. Sales distribution is based on the location of product delivery.

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2013 2012 2011 1 2010 1 2009 1,2

Earnings Sales 3,474 3,000 2,762 2,886 2,353 Cost of product sold 2,260 2,024 1,917 1,787 1,725 Freight and other distribution costs 491 477 460 441 396 Export taxes 9 48 58 60 47 Amortization 160 152 168 185 245 Selling, general and administration 131 115 104 107 95 Equity-based compensation 54 61 (3 ) 31 3 Asset impairments & restructuring charges 24 — — — 22Operating earnings 345 123 58 275 (180 ) Finance expense (29 ) (28 ) (20 ) (28 ) (27 )Exchange gain (loss) on long-term debt (21 ) 7 (7 ) 17 50 Other income (expense) 22 — 14 (9 ) (4 ) Income tax recovery (expense) 32 (25 ) (18 ) (74 ) (33 )Earnings from continuing operations 349 77 27 181 (194 ) Earnings from discontinued operations — — 46 5 (147 ) Earnings 349 77 73 186 (341 )

Cash flows from operating activities 419 204 85 421 96

Capital expenditures & acquisitions 358 159 213 89 18

Financial position Current assets 971 823 745 789 704 PPE & timber licenses 1,633 1,455 1,426 1,434 1,624 Goodwill & other intangibles 321 330 336 345 350 Other assets 83 24 30 42 135 Deferred income tax assets 96 — — — — Total assets 3,104 2,632 2,537 2,610 2,813 Current liabilities 454 385 315 388 495 Long-term debt (including current portion) 328 300 306 300 316 Other liabilities 197 327 289 226 167 Deferred income tax liabilities 178 128 144 162 217 Shareholders’ equity 1,947 1,492 1,483 1,534 1,618Total liabilities & equity 3,104 2,632 2,537 2,610 2,813

Per common share (dollars)3 Basic EPS from continuing operations 4.07 0.90 0.32 2.12 (2.27 ) Basic EPS after discontinued operations 4.07 0.90 0.85 2.18 (3.98 ) Price range — high 52.67 37.62 31.43 24.48 17.25 — low 36.25 20.08 17.45 15.76 9.96 — close 51.80 35.03 20.70 23.42 16.50 Cash dividends per share 0.28 0.28 0.28 0.09 0.12 Shares outstanding at year-end (‘000s) 85,672 85,726 85,692 85,670 85,632

Ratios (before unusual items) EBITDA margin 15.2% 9.2% 8.2% 15.9% 3.4% Return on capital employed 15.0% 4.3% 3.9% 9.1% -11.4% Return on common shareholders’ equity 20.8% 5.3% 4.7% 12.5% -18.7% Net debt to capitalization 8.0% 12.0% 14.0% 9.0% 24.0%Number of employees at year-end2 7,300 7,200 6,850 6,740 7,300

Production Lumber (MMfbm) 5,153 4,954 4,911 4,683 4,152 Pulp (Mtonnes) 1,099 1,149 1,132 1,141 1,024 Newsprint (Mtonnes) 119 128 122 131 111 Plywood (3/8” MMsf) 781 793 780 791 745 MDF (3/4” MMsf) 204 195 186 192 195 LVL (Mcf) 1,848 1,964 1,634 1,918 1,643

1. Amounts for years prior to 2012 have not been restated for the amendments to IAS 19 Employee benefits. 2. 2009 has not been restated to IFRS and is prepared under previous Canadian generally accepted accounting principles. 3. Per share amounts have been retroactively adjusted to take into account the Stock Dividend described in Note 17 of our annual consolidated financial statements. 4. 2009 includes discontinued operation employees.

FIVE-YEAR FINANCIAL REVIEW(IN MILLIONS OF CANADIAN DOLLARS, EXCEPT WHERE INDICATED)

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CORPORATE INFORMATION

DIRECTORS PRINCIPAL OCCUPATION


Clark S. Binkley Chief Investment Officer, GreenWood Resources, Inc. (a timberland investment management organization)

J. Duncan Gibson Investor

Samuel W. Ketcham Managing Partner, Ketcham Capital, Inc.

Harald H. Ludwig President, Macluan Capital Corporation (diversified private equity investment company)

Gerald J. Miller Corporate Director

Robert L. Phillips Corporate Director

Janice G. Rennie Corporate Director


OFFICERS OFFICE HELD



Raymond W. Ferris Vice-President, Wood Products

Larry S. Hughes Vice-President, Finance and Chief Financial Officer Secretary

Rodger M. Hutchinson Vice-President, Corporate Controller and Investor Relations

Maureen F. Kuper Treasurer

David P. Lehane Vice-President, Canadian Woodlands

Christopher D. McIver Vice-President, Lumber Sales and Corporate Development

Sean P. McLaren Vice-President, U.S. Lumber Operations

Peter A. Rippon Vice-President, Pulp and Energy

Tom V. Theodorakis Assistant Secretary

Russell L. Wiggins Vice-President, Operations Controller

CORPORATE INFORMATION

ANNUAL GENERAL MEETINGThe Annual General Meeting of

the shareholders of the Company

will be held on April 29, 2014 at

11:30 a.m. at Quesnel, British

Columbia, Canada.

AUDITORSPricewaterhouseCoopers LLPVancouver, British Columbia,

Canada

LEGAL COUNSELMcMillan LLPVancouver, British Columbia,

Canada

TRANSFER AGENTCST Trust CompanyVancouver, Calgary, Toronto,

Montreal and Halifax, Canada

FILINGSwww.sedar.com

Shares are listed on the

Toronto Stock Exchange under

the symbol: WFT

INVESTOR CONTACTSLarry S. HughesVice-President,

Finance and Chief Financial Officer

Rodger HutchinsonVice-President,

Corporate Controller

and Investor Relations

Tel: (604) 895-2700

Fax: (604) 681-6061

Email Address

[email protected]

WEBSITEwww.westfraser.com

CORPORATE OFFICE858 Beatty Street, Suite 501,

Vancouver, British Columbia,

Canada, V6B 1C1

Tel: (604) 895-2700

Fax: (604) 681-6061

SALES OFFICESSPF LumberPlywoodMDFLVL1250 Brownmiller Road,

Quesnel, British Columbia,

Canada, V2J 6P5

Tel: (250) 992-9254

Fax: (250) 992-3034

SPF Export Lumber858 Beatty Street, Suite 501,


Canada, V6B 1C1

Tel: (604) 895-2700

Fax: (604) 681-6061

SYP Lumber1900 Exeter Road, Suite 105,

Germantown, Tennessee,

USA, 38138

Tel: (901) 419-3800

Fax: (901) 419-0950

Pulp858 Beatty Street, Suite 501,


Canada, V6B 1C1

Tel: (604) 895-2700

Fax: (604) 681-6061

Newsprint2900-650 W Georgia Street,


Canada, V6B 4N8

Tel: (604) 681-8817

Fax: (604) 681-8861

OPERATIONSLumber, Plywood and LVL

Canadian Operations1250 Brownmiller Road,


Canada, V2J 6P5

Tel: (250) 992-9244

Fax: (250) 992-9233

US Operations1900 Exeter Road, Suite 105,

Germantown, Tennessee,

USA, 38138

Tel: (901) 419-3800

Fax: (901) 419-0950

MDF

WestPine300 Carradice Road,


Canada, V2J 5Z7

Tel: (250) 991-7100

Fax: (250) 991-7115

Ranger BoardBox 2000,

Whitecourt, Alberta,

Canada, T7S 1P9

Tel: (780) 648-6333

Fax: (780) 648-6397

Pulp & Paper

Cariboo Pulp & PaperP.O. Box 7500,

50 North Star Road,


Canada, V2J 3J6

Tel: (250) 992-0200

Fax: (250) 992-2164

Quesnel River Pulp1000 Finning Road,


Canada, V2J 6A1

Tel: (250) 992-8919

Fax: (250) 992-2612

Hinton Pulp760 Switzer Drive,

Hinton, Alberta,

Canada, T7V 1V7

Tel: (780) 865-2251

Fax: (780) 865-6666

Slave Lake PulpP.O. Box 1790,

Slave Lake, Alberta,

Canada, T0G 2A0

Tel: (780) 849-7777

Fax: (780) 849-7725

Alberta Newsprint CompanyPostal Bag 9000,

Whitecourt, Alberta,

Canada, T7S 1P9

Tel: (780) 778-7000

Fax: (780) 778-7070

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AAC Annual Allowable CutThe volume of timber that may be harvested annually from a specific

timber tenure.

BCTMP Bleached Chemithermomechanical Pulp

Dimension Lumber Standard commodity lumber ranging in sizes from 1 x 3’s to 4 x 12’s,

in various lengths.

EBITDA

Refers to operating earnings plus amortization and restructuring

charges.

FMA Forest Management Agreement An FMA is granted by the Alberta government and entitles the holder

to establish, grow and harvest timber on specified lands.

LVL Laminated Veneer Lumber Large sheets of veneer bonded together with resin then cut to lumber

equivalent sizes.

m3

A solid cubic metre, a unit of measure for timber, equal

to approximately 35 cubic feet.

Mcf One thousand cubic feet. A unit of measure for laminated veneer

lumber.

MDF Medium Density Fibreboard A composite product made from wood fibre.

MfbmOne thousand board feet (equivalent to one thousand square feet of

lumber, one inch thick). MMfbm means one million board feet.

Msf A unit of measure for MDF and plywood equal to one thousand square

feet on a 3/4 inch basis for MDF and on a 3/8 inch basis for plywood.

MMsf means one million square feet.

Net Debt to Capitalization

Net debt (total debt less cash and short-term investments and less

deferred financing costs) divided by net debt plus shareholders’ equity.

NBSK Northern Bleached Softwood Kraft Pulp

Return on Capital Employed

Earnings before after-tax financing expense divided by average assets

less average current non-interest bearing liabilities.

Return on Common Shareholders’ EquityEarnings available to common shareholders divided by average

shareholders’ equity.

SPF

Dimension lumber produced from spruce/pine/balsam fir species.

SYP Dimension lumber produced from southern yellow pine species.

Ton

A unit of weight equal to 2,000 pounds, generally known as a U.S. ton.

Tonne

A unit of weight in the metric system equal to one thousand kilograms

or approximately 2,204 pounds. Mtonne means one thousand tonnes.

GLOSSARY OF INDUSTRY TERMS

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WEST FRASER TIMBER CO. LTD.TEL: 604.895.2700

FAX: 604.681.6061

www.westfraser.com

Documents

WEST Fraser... · FLORIDA MEMPHIS 21 23 27. Seaboard 26. Armour 25. Newberry 24. Augusta NORT H CAROLINA 0 0 0 0 0 LUMBER PULP & PAPER PLYWOOD MDF VENEER & LVL 38 10 30 LUMBER Canada