VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jul 21, 2015) - West Fraser Timber Co. Ltd. (TSX:WFT) reported earnings of $14 million or $0.17 basic earnings per share on sales of $1,029 million in the second quarter of 2015. These results compare with previous periods as shown in the table below.

Adjusted EBITDA, Adjusted earnings and Adjusted basic EPS as described in this News Release reflect the adjustments described in the tables referred to in the section titled "Non-IFRS Measures" on page 12 of our 2015 second quarter Management's Discussion & Analysis.

($ millions except earnings per20152014
share ("EPS"))Q2Q1YTDQ2YTD
Sales 1,029 1,014 2,043 1,053 1,862
Adjusted EBITDA1 72 173 245 148 297
Operating earnings 18 125 143 106 212
Earnings 14 49 63 74 146
Basic EPS ($) 0.17 0.58 0.76 0.87 1.71
Adjusted Earnings1 13 100 113 66 150
Adjusted basic EPS ($)1 0.16 1.19 1.35 0.77 1.74
1 In this News Release, reference is made to Adjusted EBITDA, Adjusted earnings and Adjusted EPS (collectively "these measures"). We believe that, in addition to earnings, these measures are useful performance indicators. None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ("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, 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. Refer to the tables in the section titled "Non-IFRS Measures" on page 12 of our 2015 second quarter Management's Discussion & Analysis for details of these adjustments.

Operational Results

In the quarter our lumber operations generated operating earnings of $13 million (Q1-15 - $84 million) and Adjusted EBITDA of $45 million (Q1-15 - $117 million). A sharp decline in U.S. lumber prices which triggered the imposition of export duties on shipments of lumber from Canada into the U.S., a slightly stronger Canadian dollar and increased inventory writedowns were major factors in the decreases. Significantly improved lumber production and shipments partially mitigated the operating earnings decline.

The panel segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $17 million (Q1-15 - $23 million) and Adjusted EBITDA of $21 million (Q1-15 - $26 million). The decline mostly reflects decreased plywood prices partially offset by improved shipments for all of our panel products.

Our pulp & paper operations generated an operating loss of $1 million (Q1-15 - earnings of $20 million) and Adjusted EBITDA of $8 million (Q1-15 - $30 million). Decreased prices for all of our pulp & paper products and scheduled maintenance shutdowns at our Cariboo NBSK mill and both BCTMP mills were significant factors in the reduced earnings.

Outlook

Ted Seraphim, our President and CEO, said "This was a very challenging quarter as lumber prices reached lows that we haven't seen for some time. In the second half of the quarter we saw a gradual strengthening of key SPF benchmark prices, which is encouraging, but we expect continuing volatility until demand reaches more normal levels. Despite the quarter's results I am encouraged by the benefits that we are seeing from the capital investments that we have made over the past few years and look forward to that trend continuing."

Management's Discussion & Analysis ("MD&A")

The Company's MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.

The Company

West Fraser is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States.

Forward-Looking Statements

This Report contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook", 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. 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 those matters described in the 2014 annual Management's Discussion & Analysis 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 the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.

Conference Call

Investors are invited to listen to the quarterly conference call on Wednesday, July 22, 2015 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-800-355-4959 (toll-free North America). The call may also be accessed through West Fraser's website at www.westfraser.com.

West Fraser Timber Co. Ltd.
Condensed Consolidated Balance Sheets
(in millions of Canadian dollars, except where indicated - unaudited)
June 30 December 31
2015 2014
Assets
Current assets
Cash and short-term investments$30 $ 21
Receivables319 288
Income taxes receivable3 -
Inventories (note 3)533 586
Prepaid expenses28 12
913 907
Property, plant and equipment1,526 1,469
Timber licences520 530
Goodwill and other intangibles357 350
Other assets58 79
Deferred income tax assets60 62
$3,434 $ 3,397
Liabilities
Current liabilities
Cheques issued in excess of funds on deposit$8 $ 36
Operating loans (note 4)32 103
Payables and accrued liabilities426 411
Income taxes payable- 26
Reforestation and decommissioning obligations42 40
508 616
Long-term debt (note 4)381 354
Other liabilities (note 5)249 244
Deferred income tax liabilities164 154
1,302 1,368
Shareholders' Equity
Share capital587 587
Accumulated other comprehensive earnings98 55
Retained earnings1,447 1,387
2,132 2,029
$3,434 $ 3,397

Number of Common shares and Class B Common shares outstanding at July 21, 2015 was 83,531,287.

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(in millions of Canadian dollars, except where indicated - unaudited)
April 1 to June 30 January 1 to June 30
2015 20142015 2014
Share capital
Balance - beginning of period$587 $ 602$587 $ 602
Common share repurchases- (6 )- (6 )
Balance - end of period$587 $ 596$587 $ 596
Accumulated other comprehensive earnings
Balance - beginning of period$106 $ 27$55 $ 10
Translation gain (loss) on foreign operations(8) (16 )43 1
Balance - end of period$98 $ 11$98 $ 11
Retained earnings
Balance - beginning of period$1,385 $ 1,397$1,387 $ 1,335
Actuarial gain (loss) on post-retirement benefits54 (45 )9 (49 )
Common share repurchases- (37 )- (37 )
Earnings for the period14 7463 146
Dividends(6) (6 )(12) (12 )
Balance - end of period$1,447 $ 1,383$1,447 $ 1,383
Shareholders' Equity$2,132 $ 1,990$2,132 $ 1,990
West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
(in millions of Canadian dollars, except where indicated - unaudited)
April 1 to June 30 January 1 to June 30
2015 20142015 2014
Sales$1,029 $ 1,053$2,043 $ 1,862
Costs and expenses
Cost of products sold749 7091,406 1,225
Freight and other distribution costs159 158303 267
Export taxes12 -12 -
Amortization45 4092 82
Selling, general and administration37 3877 73
Equity-based compensation9 210 3
1,011 9471,900 1,650
Operating earnings18 106143 212
Finance expense(7) (8 )(15) (14 )
Exchange gain (loss) on long-term debt5 12(27) (1 )
Fair value adjustment to power agreements (note 7)18 -(12) -
Other income (expense) (note 8)(2) (7 )13 6
Earnings before tax32 103102 203
Tax provision (note 9)(18) (29 )(39) (57 )
Earnings$14 $ 74$63 $ 146
Earnings per share (dollars) (note 10)
Basic$0.17 $ 0.87$0.76 $ 1.71
Diluted$0.17 $ 0.87$0.76 $ 1.66
Comprehensive earnings
Earnings$14 $ 74$63 $ 146
Other comprehensive earnings
Translation gain (loss) on foreign operations(8) (16 )43 1
Actuarial gain (loss) on post-retirement benefits154 (45 )9 (49 )
Comprehensive earnings$60 $ 13$115 $ 98

1 Net of tax provision of $19 million for the three months ended June 30, 2015 (three months ended June 30, 2014 - $15 million recovery) and $2 million for the six months ended June 30, 2015 (six months ended June 30, 2014 - $17 million recovery).

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Cash Flows
(in millions of Canadian dollars, except where indicated - unaudited)
April 1 to June 30 January 1 to June 30
2015 20142015 2014
Operating activities
Earnings$14 $ 74$63 $ 146
Adjustments
Amortization45 4092 82
Finance expense7 815 14
Exchange loss (gain) on long-term debt(5) (12 )27 1
Fair value adjustment to power agreements(18) -12 -
Tax provision18 2939 57
Income taxes paid(12) (10 )(54) (47 )
Post-retirement expense15 1128 25
Contributions to post-retirement benefit plans(18) (22 )(21) (29 )
Other(5) (9 )- 2
Changes in non-cash working capital
Receivables28 (26 )(26) (37 )
Inventories119 19262 27
Prepaid expenses(15) (14 )(16) (17 )
Payables and accrued liabilities21 (25 )19 (27 )
Cash flows from operating activities194 236240 197
Financing activities
Proceeds from (repayment of) operating loans(124) 68(75) 129
Finance expense paid(9) (10 )(11) (11 )
Dividends(6) (6 )(12) (12 )
Common share repurchases- (43 )- (43 )
Cash flows from financing activities(139) 9(98) 63
Investing activities
Acquisitions- (142 )- (202 )
Additions to capital assets(49) (121 )(118) (214 )
Government assistance- 4- 13
Other6 (10 )6 (11 )
Cash flows from investing activities(43) (269 )(112) (414 )
Change in cash12 (24 )30 (154 )
Foreign exchange effect on cash2 17 3
Cash - beginning of period8 34(15) 162
Cash - end of period$22 $ 11$22 $ 11
Cash consists of
Cash and short-term investments$30 $ 26
Cheques issued in excess of funds on deposit(8) (15 )
$22 $ 11
West Fraser Timber Co. Ltd.
Notes to Condensed Consolidated Interim Financial Statements
(figures are in millions of dollars, except where indicated - unaudited)

1. Nature of operations

West Fraser Timber Co. Ltd. ("West Fraser", "we", "us" or "our") is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy 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. Basis of presentation and statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board and using the same accounting policies and methods of their application as the December 31, 2014 annual financial statements. These condensed consolidated interim financial statements should be read in conjunction with our 2014 annual financial statements.

3. Inventories

Inventories at June 30, 2015 were written down by $22 million (March 31, 2015 - $7 million December 31, 2014 - $5 million; June 30, 2014 - $7 million) to reflect net realizable value being lower than cost.

4. Long-term debt and operating loans

Long-term debt

June 30, 2015 December 31, 2014
US$300 million senior notes due October 2024; interest at 4.35%$375 $ 348
US$8 million note payable due October 2020; interest at 2%9 9
Note payable due in installments to 2020; interest at 5.5%2 2
386 359
Deferred financing costs(5) (5 )
$381 $ 354

The fair value of the long-term debt is $364 million (December 31, 2014 - $354 million) based on rates available to us at the balance sheet date for long-term debt with similar terms and remaining maturities.

Operating loans

We have $583 million in revolving lines of credit of which $32 million (net of deferred financing costs of $3 million) were drawn as at June 30, 2015 (December 31, 2014 - $103 million, net of deferred financing costs of $3 million).

Our revolving lines of credit consist of a $500 million revolving credit facility which matures September 30, 2018, two demand lines of credit totalling $75 million dedicated to letters of credit, and an $8 million demand line of credit dedicated to our jointly owned newsprint operation. Interest on the facilities is payable at floating rates based on Prime, U.S. base, Bankers' Acceptances or LIBOR at our option. As at June 30, 2015, letters of credit in the amount of $56 million have been issued under these facilities.

All debt is unsecured except the $8 million joint operation demand line of credit, which is secured by that joint operation's current assets.

5. Other liabilities

June 30, 2015 December 31, 2014
Post-retirement (note 6)$126 $ 129
Reforestation79 71
Decommissioning26 23
Other18 21
$249 $ 244

6. Post-retirement benefits

We maintain defined benefit and defined contribution pension plans covering a majority of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service, and in most cases do not increase after commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.

The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:

June 30, 2015 December 31, 2014
Projected benefit obligations$(1,499) $ (1,464 )
Fair value of plan assets1,393 1,354
Impact of minimum funding requirement(10) (5 )
$(116) $ (115 )
Represented by
Post-retirement assets$10 $ 14
Post-retirement liabilities (note 5)(126) (129 )
$(116) $ (115 )

The significant actuarial assumptions used to determine our balance sheet date post-retirement assets and liabilities are as follows:

June 30, 2015 March 31, 2015 December 31, 2014
Discount rate4.00% 3.50 % 4.00 %
Future compensation rate increase3.50% 3.50 % 3.50 %

The change in the discount rate on obligations and the difference between the actual rate of return and the discount rate on plan assets generated an actuarial gain (loss) on post-retirement benefits, included in other comprehensive earnings, as follows:

April 1 to June 30 January 1 to June 30
2015 20142015 2014
Actuarial gain (loss)$73 $ (60 ) $11 $ (66 )
Tax recovery (provision)(19) 15(2) 17
$54 $ (45 ) $9 $ (49 )

7. Power agreements

Effective October 1, 2014 certain power agreements were classified as derivative financial instruments and are recorded at fair value at each balance sheet date, (see note 12 to our 2014 annual financial statements). The fair value adjustment for the six months ended June 30, 2015 resulted in an unrealized loss of $12 million (unrealized gain of $18 million for the three months ended June 30, 2015 and an unrealized loss of $2 million for the three months ended December 31, 2014).

8. Other income (expense)

April 1 to June 30 January 1 to June 30
2015 20142015 2014
Foreign exchange gain (loss) - net$(3) $ (8 )$14 $ -
Other1 1(1) 6
$(2) $ (7 )$13 $ 6

9. Tax provision

The tax provision differs from the amount that would have resulted from applying the Canadian statutory income tax rates to earnings before tax as follows:

April 1 to June 30 January 1 to June 30
2015 20142015 2014
Income tax expense at statutory rate of 26% (2014 - 26%)$(9) $ (27 )$(27) $ (53 )
Non-taxable amounts(2) 1(5) -
Rate differentials between jurisdictions and on specified activities1 (2 )1 (3 )
Increase in Alberta provincial tax rate(7) -(7) -
Other(1) (1 )(1) (1 )
Tax provision$(18) $ (29 )$(39) $ (57 )

Effective June 18, 2015, the government of Alberta enacted a change in the provincial tax rate from 10% to 12%. This new tax rate increased our tax provision by $7 million dollars in the quarter.

10. Earnings per share

Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.

Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense (recovery) 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.

April 1 to June 30 January 1 to June 30
2015 20142015 2014
Earnings
Basic$14 $ 74$63 $ 146
Share option expense8 26 1
Equity settled share option adjustment- -(2) (2 )
Diluted$22 $ 76$67 $ 145
Weighted average number of shares (thousands)
Basic83,530 85,40883,529 85,540
Share options1,350 1,3891,391 1,464
Diluted84,880 86,79784,920 87,004
Earnings per share (dollars)
Basic$0.17 $ 0.87$0.76 $ 1.71
Diluted$0.17 $ 0.87$0.76 $ 1.66

11. Segmented information

LumberPanelsPulp & paperCorporate & otherTotal
April 1, 2015 to June 30, 2015
Sales
To external customers$675$134$220$-$1,029
To other segments272--
$702$136$220$-
Operating earnings before amortization$45$21$8$(11)$63
Amortization(32)(4)(9)-(45)
Operating earnings1317(1)(11)18
Finance expense(4)(1)(2)-(7)
Exchange gain on long-term debt---55
Fair value adjustment to power agreements1116-18
Other income (expense)(3)-1-(2)
Earnings before tax$7$17$14$(6)$32
April 1, 2014 to June 30, 2014
Sales
To external customers $ 696 $ 131 $ 226 $ - $ 1,053
To other segments 26 2 - -
$ 722 $ 133 $ 226 $ -
Operating earnings before amortization $ 106 $ 13 $ 30 $ (3 ) $ 146
Amortization (25 ) (3 ) (11 ) (1 ) (40 )
Operating earnings 81 10 19 (4 ) 106
Finance expense (4 ) (2 ) (2 ) - (8 )
Exchange gain on long-term debt - - - 12 12
Other expense (3 ) - (4 ) - (7 )
Earnings before tax $ 74 $ 8 $ 13 $ 8 $ 103
LumberPanelsPulp & paperCorporate & otherTotal
January 1, 2015 to June 30, 2015
Sales
To external customers$1,330$263$450$-$2,043
To other segments534--
$1,383$267$450$-
Operating earnings before amortization$162$47$38$(12)$235
Amortization(65)(7)(19)(1)(92)
Operating earnings974019(13)143
Finance expense(9)(2)(4)-(15)
Exchange loss on long-term debt---(27)(27)
Fair value adjustment to power agreements-(2)(10)-(12)
Other income6-7-13
Earnings before tax$94$36$12$(40)$102
January 1, 2014 to June 30, 2014
Sales
To external customers $ 1,198 $ 243 $ 421 $ - $ 1,862
To other segments 48 4 - -
$ 1,246 $ 247 $ 421 $ -
Operating earnings before amortization $ 213 $ 24 $ 62 $ (5 ) $ 294
Amortization (53 ) (7 ) (21 ) (1 ) (82 )
Operating earnings 160 17 41 (6 ) 212
Finance expense (8 ) (2 ) (4 ) - (14 )
Exchange loss on long-term debt - - - (1 ) (1 )
Other income 5 - 1 - 6
Earnings before tax $ 157 $ 15 $ 38 $ (7 ) $ 203

The geographic distribution of external sales is as follows1:

April 1 to June 30 January 1 to June 30
2015 20142015 2014
Canada$228 $ 234$446 $ 427
United States551 5301,084 964
China166 172330 276
Other Asia68 95148 146
Other16 2235 49
$1,029 $ 1,053$2,043 $ 1,862
1. Sales distribution is based on the location of product delivery.