# EDGAR Filing Document

**Accession Number:** 0001402388
**File Stem:** 0001628280-23-003555
**Filing Date:** 2023-2
**Character Count:** 526562
**Document Hash:** 9ccd54093d56c0e9f0a35087ce02276c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001628280-23-003555.hdr.sgml**: 20230214

**ACCESSION NUMBER**: 0001628280-23-003555

**CONFORMED SUBMISSION TYPE**: 40-F

**PUBLIC DOCUMENT COUNT**: 137

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230214

**DATE AS OF CHANGE**: 20230214

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** WEST FRASER TIMBER CO., LTD
- **CENTRAL INDEX KEY:** 0001402388
- **STANDARD INDUSTRIAL CLASSIFICATION:** SAWMILLS, PLANNING MILLS, GENERAL [2421]
- **IRS NUMBER:** 000000000

**FILING VALUES:**
- **FORM TYPE:** 40-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39974
- **FILM NUMBER:** 23631464

**BUSINESS ADDRESS:**
- **STREET 1:** 501-858 BEATTY STREET
- **CITY:** VANCOUVER, BRITISH COLUMBIA
- **STATE:** A1
- **ZIP:** V6B 1C1

**MAIL ADDRESS:**
- **STREET 1:** 501-858 BEATTY STREET
- **CITY:** VANCOUVER, BRITISH COLUMBIA
- **STATE:** A1
- **ZIP:** V6B 1C1

?xml version="1.0" ? wfg-20221231

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 40-F**

---

| | |
|:---|:---|
| □ | **REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934** |
| | OR |
| ⌧ | **ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

---

| | | | |
|:---|:---|:---|:---|
| **For the fiscal year ended** | **December 31, 2022** | Commission File Number: | 001-39974 |

---

![wfg-20221231_g1.jpg](wfg-20221231_g1.jpg)

---

| | | |
|:---|:---|:---|
| | **WEST FRASER TIMBER CO. LTD.** | |
|  | *(Exact name of Registrant as specified in its charter)* |  |
| **British Columbia Canada** | **2421** | **98-1630330** |
| *(Province or Other Jurisdiction of Incorporation or Organization)* | *(Primary Standard Industrial Classification Code)* | *(I.R.S. Employer <br>Identification No.)* |

---

**1500 – 885 West Georgia Street** 

**Vancouver, British Columbia**

 **Canada V6C 3E8** 

**Tel: (604) 895-2700**

*(Address and telephone number of Registrant's principal executive offices)*

**West Fraser, Inc.** 

**1900 Exeter Road, Suite 105** 

**Germantown, TN 38138** 

**Tel: (901) 620-4200**

*(Name, address (including zip code) and telephone number (including* 

*area code) of agent for service in the United States)*

Securities registered or to be registered pursuant to section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| <u>Title Of Each Class</u> | <u>Trading Symbol(s)</u> | <u>Name Of Each Exchange On Which Registered</u> |
| **Common Shares, no par value** | **WFG** | **New York Stock Exchange** |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act: **None** 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: **None** 

For annual reports, indicate by check mark the information filed with this Form:

 ⌧ Annual Information Form ⌧ Audited Annual Financial Statements

Indicate the number of outstanding shares of each of the Registrant's classes of capital or common stock as of the close of the period covered by the annual report: **83,555,414 Common Shares**

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧ No □

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes ⌧ No □

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company □

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ⌧

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. □

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). □

------

**INTRODUCTORY INFORMATION**

West Fraser Timber Co. Ltd. ("**West Fraser**") is a company amalgamated under the laws of British Columbia, Canada. West Fraser's common shares were registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the "**Exchange Act**") effective February 1, 2021. West Fraser is a Canadian issuer eligible to file its annual report pursuant to Section 13 of the Exchange Act on Form 40-F pursuant to the multi-jurisdictional disclosure system (the "**MJDS**") adopted by the United States Securities and Exchange Commission (the "**SEC**"). The equity securities of the Company are further exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 of the Exchange Act. The common shares of West Fraser are traded in the United States on the New York Stock Exchange ("**NYSE**") under the symbol "**WFG**".

In this annual report, references to "we", "our", "us", the "Company" or "West Fraser", mean West Fraser Timber Co. Ltd. and its consolidated subsidiaries, unless the context suggests otherwise.

Unless otherwise indicated, all amounts in this annual report are in United States dollars and all references to "$" mean United States dollars.

**PRINCIPAL DOCUMENTS**

The following documents have been filed as part of this annual report on Form 40-F:

---

| | |
|:---|:---|
| **Document** | **Exhibit No.** |
| Annual Information Form of the Company for the year ended December 31, 2022 (our "**2022 AIF**") | 99.1 |
| Audited consolidated financial statements of the Company and notes thereto as at December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021, together with the report of the Independent Registered Public Accounting Firm (our "**2022 Audited Annual Financial Statements**") | 99.2 |
| Management's Discussion and Analysis of the Company for the year ended December 31, 2022 (our "**2022 Annual MD&A**") | 99.3 |

---

**FORWARD-LOOKING STATEMENTS**

This annual report includes or incorporates by reference certain statements that constitute "forward-looking statements" within the meaning of Section 21E under the Exchange Act and Section 27A of the U.S. Securities Act of 1933, and related assumptions concerning its operations, economic performance and financial matters. Actual results or events could differ materially from those set forth in, or implied by, the forward-looking statements and the related assumptions due to a variety of factors. Investors are referred to the cautionary notes entitled "Forward-Looking Statements" that are included in each of our 2022 AIF and 2022 Annual MD&A for a discussion of these forward-looking statements and the risks that impact these forward-looking statements. Investors are also referred to the risks described under the title "Risks and Uncertainties" in our 2022 Annual MD&A and in our 2022 AIF. This list of important factors affecting forward-looking statements is not exhaustive, and reference should be made to the other factors discussed in public filings with securities regulatory authorities, including the SEC. Accordingly, investors should exercise caution in relying upon forward-looking statements, and West Fraser undertakes no obligation to publicly update or revise any forward-looking statements, whether written or oral, to reflect subsequent events or circumstances except as required by applicable securities laws.

**NOTE TO UNITED STATES READERS REGARDING DIFFERENCES** 

**BETWEEN UNITED STATES AND CANADIAN REPORTING PRACTICES**

West Fraser is permitted to prepare this annual report in accordance with Canadian disclosure requirements which require Canadian public companies to prepare financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("**IFRS**"). Accordingly, the Company's audited consolidated financial statements as at December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021 have been prepared in accordance with IFRS. Therefore, West Fraser's audited consolidated financial statements incorporated by reference in this annual report may not be comparable to financial statements prepared in accordance with US GAAP. Our Independent Registered Public Accounting Firm performs an audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("**PCAOB**"). Our Independent Registered Public Accounting Firm is independent within the meaning of the Chartered

------

Professional Accountants of British Columbia Code of Professional Conduct in addition to the auditor independence standards of the PCAOB and the SEC.

**CONTROLS AND PROCEDURES**

West Fraser is responsible for establishing and maintaining disclosure controls and procedures (as such term is defined in Rules 13a-15(e) of the Exchange Act) and internal control over financial reporting (as such term is defined in Rules 13a-15(f) of the Exchange Act).

***Disclosure Controls and Procedures***

Disclosure controls and procedures are defined in Rule 13a-15(e) of the Exchange Act to mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and includes, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our President and Chief Executive Officer ("**CEO**") and the Senior Vice-President, Finance and Chief Financial Officer ("**CFO**"), has conducted an evaluation of our disclosure controls and procedures as of December 31, 2022. Based on this evaluation, management, under the supervision of our CEO and CFO, have concluded that our disclosure controls and procedures are effective as of December 31, 2022.

***Management's Report on Internal Control over Financial Reporting***

Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with IFRS.

Our management, under the supervision of the CEO and CFO, is required to evaluate the effectiveness of our internal control over financial reporting as of December 31, 2022. Our management completed this evaluation using Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management, including the CEO and CFO, has concluded that the Company's internal control over financial reporting was effective as of December 31, 2022.

The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, in accordance with the standards of the Public Company Accounting Oversight Board (United States). PricewaterhouseCoopers LLP have expressed their opinion in their attestation report included with our 2022 Audited Annual Financial Statements (the "**Attestation Report**").

***Attestation Report of the Independent Registered Public Accounting Firm***

The Attestation Report is included in Exhibit 99.2 attached hereto which is incorporated by reference into this Annual Report on Form 40-F.

***Changes in Internal Control over Financial Reporting***

There has been no change in our internal control over financial reporting during the year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**AUDIT COMMITTEE** 

Our Board of Directors (the **"Board"**) has established a separately-designated independent Audit Committee (the **"Audit Committee"**) of the Board in accordance with Section 3(a)(58)(A) of the Exchange Act for the purpose of overseeing our accounting and financial reporting processes and the audits of our annual financial statements. As at the date of this annual report, the Audit Committee was comprised of Reid Carter (Chair), Janice G. Rennie, Gillian D. Winckler, Colleen

------

M. McMorrow and Ellis Ketcham Johnson. The Board has determined that each of the members of the Audit Committee is independent as determined under Rule 10A-3 of the Exchange Act and Section 303A.02 of the NYSE Listed Company Manual.

**AUDIT COMMITTEE FINANCIAL EXPERT**

Our Board of Directors has determined that Gillian D. Winckler is an audit committee financial expert (as that term is defined in Form 40-F) and is an independent director under applicable securities laws and the listing requirements of the NYSE.

**PRINCIPAL ACCOUNTING FEES AND SERVICES**

Our independent registered public accounting firm is PricewaterhouseCoopers LLP, Vancouver, British Columbia, Canada, (PCAOB Auditor Firm ID: 271).

The following table sets forth information regarding amounts billed to us by our independent registered public accounting firm for each of our last two fiscal years ended December 31 in thousands of United States dollars<sup>1</sup>:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Audit Fees | $2531 | $1734 |
| Audit-Related Fees | 84 | 249 |
| Tax Fees | 43 | 250 |
| All Other Fees | 74 | 36 |
| **Total** | $**2732** | $**2269** |

---

1. Amounts represent actual and estimated fees related to the respective fiscal years noted. Amounts are billed and paid in Canadian dollars, British pound sterling, and Euros and have been translated to United States dollars using the average exchange rate for the respective years noted.

**Audit Fees**

Audit fees relate to the integrated audit of our annual consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022, reviews of our interim consolidated financial statements, and statutory audits of the financial statements of our subsidiaries.

**Audit-Related Fees**

Audit-Related Fees include employee benefit audits, services associated with registration statements, prospectuses, and other documents filed with securities regulators, and due diligence assistance.

**Tax Fees**

Tax fees relate to tax compliance, tax advice, and tax planning services.

**All Other Fees**

All other fees relate to fees in connection with translation services and limited assurance engagements relating to climate matters.

**Audit Committee Pre-Approval Policies**

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

None of the services provided by PricewaterhouseCoopers in 2022 were treated as exempt from pre-approval pursuant to the de minimis provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

**OFF-BALANCE SHEET ARRANGEMENTS**

West Fraser has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

**CONTRACTUAL OBLIGATIONS**

The required tabular disclosure of contractual obligations is included in "*Liquidity & Capital Resources – Contractual Obligations*" of the 2022 Annual MD&A, filed as Exhibit 99.3 to this annual report, and incorporated herein by reference.

**CODE OF ETHICS**

West Fraser has adopted a "code of ethics" (as that term is defined in Form 40-F), entitled the West Fraser Code of Conduct that applies to all directors, officers and employees of West Fraser, including its CEO and CFO (the "**Code of Ethics**"). A copy of the Code of Ethics is posted on West Fraser's website at <u>https://www.westfraser.com/investors/corporate/code-conduct.</u> 

No substantive amendments were made to the Code of Ethics during the fiscal year ended December 31, 2022, and no waivers of the Code of Ethics were granted to any principal officer of West Fraser or any person performing similar functions during the fiscal year ended December 31, 2022.

**NYSE CORPORATE GOVERNANCE**

West Fraser's common shares are listed for trading on the New York Stock Exchange ("**NYSE**"). Section 303A.11 of the NYSE Listed Company Manual requires foreign private issuers, such as West Fraser, to disclose any significant ways in which their corporate governance practices differ from those followed by domestic companies under NYSE Listing Standards. West Fraser's quorum requirement for meetings of shareholders is a minimum of 25% of the outstanding common shares in attendance at each meeting of shareholders, which is less than the 50% majority quorum requirement of many U.S. incorporated NYSE listed issuers. Other than with respect to this quorum requirement, there are no significant differences between our corporate governance practices and those practices required by the NYSE of other publicly listed companies.

**INTERACTIVE DATA FILE**

West Fraser has submitted to the SEC an Interactive Data File in connection with this annual report.

**UNDERTAKING** 

West Fraser undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

**CONSENT TO SERVICE OF PROCESS**

West Fraser has previously filed an Appointment of Agent for Service of Process and Undertaking on Form F-X signed by the Company and its agent for service of process with respect to the class of securities in relation to which the obligation

------

to file this annual report arises, which Form F-X is incorporated herein by reference. Any change to the name or address of West Fraser's agent for service shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of the Company.

------

**SIGNATURES**

Pursuant to the requirements of the Exchange Act, West Fraser certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| Date: February 14, 2023 | **WEST FRASER TIMBER CO. LTD.**<br>By: */s/ Raymond W. Ferris* |
|  | **Raymond W. Ferris<br>President and Chief Executive Officer** |

---

------

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit <br>Number** | **Exhibit Description** |
| <u>[99.1](exhibit991-2022aif.htm)</u> | Annual Information Form of the Company for the year ended December 31, 2022 |
| <u>[99.2](wfg-20221231_d2.htm)</u> | Audited consolidated financial statements of the Company and notes thereto as at December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021, together with the report of the Independent Registered Public Accounting Firm |
| <u>[99.3](exhibit993-2022annualmda.htm)</u> | Management's Discussion and Analysis for the year ended December 31, 2022 |
| <u>[99.4](exhibit994-2022ceosoxsecti.htm)</u> | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| <u>[99.5](exhibit995-2022cfosoxsecti.htm)</u> | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| <u>[99.6](exhibit996-2022ceosection9.htm)</u> | Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| <u>[99.7](exhibit997-2022cfosection9.htm)</u> | Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| <u>[99.8](exhibit998-2022pwcconsent.htm)</u> | Consent of PricewaterhouseCoopers LLP |
| 101 | The following financial information from the Company's annual report on Form 40-F for the year ended December 31, 2022 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings and Comprehensive Earnings, (iii) the Consolidated Statements of Changes in Shareholders' Equity, (iv) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

## Exhibit 99.1

Exhibit 99.1

**WEST FRASER TIMBER CO. LTD.**

**ANNUAL INFORMATION FORM**

**DATED FEBRUARY 14, 2023**

------

**TABLE OF CONTENTS**<br>

---

| | | |
|:---|:---|:---|
| [ITEM 1](#i0e744ae5d64c4db69c61c732a37204c0_7) | [GENERAL INFORMATION](#i0e744ae5d64c4db69c61c732a37204c0_7) | [1](#i0e744ae5d64c4db69c61c732a37204c0_7) |
| [ITEM 2](#i0e744ae5d64c4db69c61c732a37204c0_10) | [CORPORATE STRUCTURE](#i0e744ae5d64c4db69c61c732a37204c0_10) | [1](#i0e744ae5d64c4db69c61c732a37204c0_10) |
| [ITEM 3](#i0e744ae5d64c4db69c61c732a37204c0_13) | [GENERAL DEVELOPMENT OF THE BUSINESS](#i0e744ae5d64c4db69c61c732a37204c0_13) | [2](#i0e744ae5d64c4db69c61c732a37204c0_13) |
| | [3.1](#i0e744ae5d64c4db69c61c732a37204c0_16)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_16)[General Development of the Business Over the Last Three Years](#i0e744ae5d64c4db69c61c732a37204c0_16) | [2](#i0e744ae5d64c4db69c61c732a37204c0_16) |
| | [3.2](#i0e744ae5d64c4db69c61c732a37204c0_19)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_19)[Corporate Strategy](#i0e744ae5d64c4db69c61c732a37204c0_19) | [5](#i0e744ae5d64c4db69c61c732a37204c0_19) |
| [ITEM 4](#i0e744ae5d64c4db69c61c732a37204c0_22) | [DESCRIPTION OF THE BUSINESS](#i0e744ae5d64c4db69c61c732a37204c0_22) | [6](#i0e744ae5d64c4db69c61c732a37204c0_22) |
| | [4.1](#i0e744ae5d64c4db69c61c732a37204c0_25)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_25)[Principal Products and Markets](#i0e744ae5d64c4db69c61c732a37204c0_25) | [6](#i0e744ae5d64c4db69c61c732a37204c0_25) |
| | [4.2](#i0e744ae5d64c4db69c61c732a37204c0_28)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_28)[Market](#i0e744ae5d64c4db69c61c732a37204c0_28)s | [7](#i0e744ae5d64c4db69c61c732a37204c0_28) |
| | [4.3](#i0e744ae5d64c4db69c61c732a37204c0_31)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_31)[Manufacturing Inputs](#i0e744ae5d64c4db69c61c732a37204c0_31) | [7](#i0e744ae5d64c4db69c61c732a37204c0_31) |
| | [4.4](#i0e744ae5d64c4db69c61c732a37204c0_34)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_34)[Fibre Consumption](#i0e744ae5d64c4db69c61c732a37204c0_34) | [9](#i0e744ae5d64c4db69c61c732a37204c0_34) |
| | [4.5](#i0e744ae5d64c4db69c61c732a37204c0_37)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_37)[Forestry Certification](#i0e744ae5d64c4db69c61c732a37204c0_37) | [10](#i0e744ae5d64c4db69c61c732a37204c0_37) |
| | 4.6 Resin and Wax | [10](#i0e744ae5d64c4db69c61c732a37204c0_37) |
| | [4.7](#i0e744ae5d64c4db69c61c732a37204c0_43)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_43)[Seasonality and Cyclicality of Business](#i0e744ae5d64c4db69c61c732a37204c0_43) | [10](#i0e744ae5d64c4db69c61c732a37204c0_43) |
| | [4.8](#i0e744ae5d64c4db69c61c732a37204c0_46)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_46)[Indigenous Relations](#i0e744ae5d64c4db69c61c732a37204c0_46) | [10](#i0e744ae5d64c4db69c61c732a37204c0_46) |
| | [4.9](#i0e744ae5d64c4db69c61c732a37204c0_49)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_49)[Human Resources](#i0e744ae5d64c4db69c61c732a37204c0_49)[, Diversity, Equity](#i0e744ae5d64c4db69c61c732a37204c0_49)[& Inclusion](#i0e744ae5d64c4db69c61c732a37204c0_49)[and Safety](#i0e744ae5d64c4db69c61c732a37204c0_49) | [11](#i0e744ae5d64c4db69c61c732a37204c0_49) |
| | [4.10](#i0e744ae5d64c4db69c61c732a37204c0_52)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_52)[Environmental Performance](#i0e744ae5d64c4db69c61c732a37204c0_52) | [11](#i0e744ae5d64c4db69c61c732a37204c0_52) |
| | [4.11](#i0e744ae5d64c4db69c61c732a37204c0_55)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_55)[Responsible Resource Efficiency](#i0e744ae5d64c4db69c61c732a37204c0_55) | [12](#i0e744ae5d64c4db69c61c732a37204c0_55) |
| | [4.12](#i0e744ae5d64c4db69c61c732a37204c0_58)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_58)[Community and Stakeholder Engagement](#i0e744ae5d64c4db69c61c732a37204c0_58) | [13](#i0e744ae5d64c4db69c61c732a37204c0_58) |
| | [4.13](#i0e744ae5d64c4db69c61c732a37204c0_61)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_61)[Governance and Oversight](#i0e744ae5d64c4db69c61c732a37204c0_61) | [13](#i0e744ae5d64c4db69c61c732a37204c0_61) |
| | [4.14](#i0e744ae5d64c4db69c61c732a37204c0_64)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_64)[Research and Development](#i0e744ae5d64c4db69c61c732a37204c0_64) | [14](#i0e744ae5d64c4db69c61c732a37204c0_64) |
| | [4.15](#i0e744ae5d64c4db69c61c732a37204c0_67)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_67)[Capital Expenditures and Acquisitions](#i0e744ae5d64c4db69c61c732a37204c0_67) | [14](#i0e744ae5d64c4db69c61c732a37204c0_67) |
| | [4.16](#i0e744ae5d64c4db69c61c732a37204c0_70)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_70)[Lumber](#i0e744ae5d64c4db69c61c732a37204c0_70) | [14](#i0e744ae5d64c4db69c61c732a37204c0_70) |
| | [4.17](#i0e744ae5d64c4db69c61c732a37204c0_73)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_73)[North America Engineered Wood Products](#i0e744ae5d64c4db69c61c732a37204c0_73) | [16](#i0e744ae5d64c4db69c61c732a37204c0_73) |
| | [4.18](#i0e744ae5d64c4db69c61c732a37204c0_76)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_76)[Pulp & Paper](#i0e744ae5d64c4db69c61c732a37204c0_76) | [18](#i0e744ae5d64c4db69c61c732a37204c0_76) |
| | [4.19](#i0e744ae5d64c4db69c61c732a37204c0_79)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_79)[Europe Engineered Wood Products](#i0e744ae5d64c4db69c61c732a37204c0_79) | [19](#i0e744ae5d64c4db69c61c732a37204c0_79) |
| | [4.20](#i0e744ae5d64c4db69c61c732a37204c0_82)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_82)[Risks and Uncertainties](#i0e744ae5d64c4db69c61c732a37204c0_82) | [19](#i0e744ae5d64c4db69c61c732a37204c0_82) |
| [ITEM 5](#i0e744ae5d64c4db69c61c732a37204c0_85) | [CAPITAL STRUCTURE](#i0e744ae5d64c4db69c61c732a37204c0_85) | [20](#i0e744ae5d64c4db69c61c732a37204c0_85) |
| [ITEM 6](#i0e744ae5d64c4db69c61c732a37204c0_88) | [TRANSFER AGENT](#i0e744ae5d64c4db69c61c732a37204c0_88) | [22](#i0e744ae5d64c4db69c61c732a37204c0_88) |
| [ITEM 7](#i0e744ae5d64c4db69c61c732a37204c0_91) | [INTEREST OF EXPERTS](#i0e744ae5d64c4db69c61c732a37204c0_91) | [22](#i0e744ae5d64c4db69c61c732a37204c0_91) |
| [ITEM 8](#i0e744ae5d64c4db69c61c732a37204c0_94) | [DIRECTORS AND EXECUTIVE OFFICERS](#i0e744ae5d64c4db69c61c732a37204c0_94) | [23](#i0e744ae5d64c4db69c61c732a37204c0_94) |
| | [8.1](#i0e744ae5d64c4db69c61c732a37204c0_97)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_97)[Directors](#i0e744ae5d64c4db69c61c732a37204c0_97) | [23](#i0e744ae5d64c4db69c61c732a37204c0_97) |
| | [8.2](#i0e744ae5d64c4db69c61c732a37204c0_100)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_100)[Senior Executive Officers](#i0e744ae5d64c4db69c61c732a37204c0_100) | [24](#i0e744ae5d64c4db69c61c732a37204c0_100) |
| | [8.3](#i0e744ae5d64c4db69c61c732a37204c0_103)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_103)[Shareholdings of Directors and Senior Executive Officers](#i0e744ae5d64c4db69c61c732a37204c0_103) | [25](#i0e744ae5d64c4db69c61c732a37204c0_103) |
| | [8.4](#i0e744ae5d64c4db69c61c732a37204c0_106)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_106)[Cease Trade Orders, Bankruptcies, Penalties or Sanctions](#i0e744ae5d64c4db69c61c732a37204c0_106) | [25](#i0e744ae5d64c4db69c61c732a37204c0_106) |
| | [8.5](#i0e744ae5d64c4db69c61c732a37204c0_109)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_109)[Legal Proceedings and Regulatory Actions](#i0e744ae5d64c4db69c61c732a37204c0_109) | [25](#i0e744ae5d64c4db69c61c732a37204c0_109) |
| | [8.6](#i0e744ae5d64c4db69c61c732a37204c0_112)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_112)[Governance](#i0e744ae5d64c4db69c61c732a37204c0_112) | [26](#i0e744ae5d64c4db69c61c732a37204c0_112) |
| | [8.7](#i0e744ae5d64c4db69c61c732a37204c0_115)[&nbsp;&nbsp;&nbsp;&nbsp;](#i0e744ae5d64c4db69c61c732a37204c0_115)[Audit Committee](#i0e744ae5d64c4db69c61c732a37204c0_115) | [26](#i0e744ae5d64c4db69c61c732a37204c0_115) |
| [ITEM 9](#i0e744ae5d64c4db69c61c732a37204c0_118) | [MATERIAL CONTRACTS](#i0e744ae5d64c4db69c61c732a37204c0_118) | [28](#i0e744ae5d64c4db69c61c732a37204c0_118) |
| [ITEM 10](#i0e744ae5d64c4db69c61c732a37204c0_121) | [ADDITIONAL INFORMATION](#i0e744ae5d64c4db69c61c732a37204c0_121) | [28](#i0e744ae5d64c4db69c61c732a37204c0_121) |
| [ITEM 11](#i0e744ae5d64c4db69c61c732a37204c0_124) | [GLOSSARY](#i0e744ae5d64c4db69c61c732a37204c0_124) | [32](#i0e744ae5d64c4db69c61c732a37204c0_124) |
| [SCHEDULE 1 – AUDIT COMMITTEE CHARTER](#i0e744ae5d64c4db69c61c732a37204c0_127) | [SCHEDULE 1 – AUDIT COMMITTEE CHARTER](#i0e744ae5d64c4db69c61c732a37204c0_127) | [35](#i0e744ae5d64c4db69c61c732a37204c0_127) |

---

------

**ITEM 1 - GENERAL INFORMATION**

**Basis of Presentation**

This Annual Information Form ("AIF") of West Fraser Timber Co. Ltd. ("West Fraser"), the "Company", "we", "us", or "our") is dated as of February 14, 2023. Except as otherwise indicated, the information contained in it is as of December 31, 2022.

For definitions of various abbreviations and technical terms used in this AIF, please see the Glossary located on page <u>[32](#i0e744ae5d64c4db69c61c732a37204c0_124)</u> of this AIF.

Where this AIF includes information from third parties, we believe that such information (including industry and general publications and surveys) is generally reliable. However, we have not independently verified any such third-party information and cannot assure you of its accuracy or completeness.

All financial information in this AIF is presented in United States ("U.S.") dollars, unless otherwise indicated. Information referred to in this AIF as being available on our website at <u>www.westfraser.com</u> does not form a part of this AIF.

**Forward-looking Statements**

This AIF includes statements and information that constitute "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of United States securities laws (collectively, "forward-looking statements"). Please refer to the cautionary note entitled "Forward-looking Statements" under Item 10 – "*Additional Information*" for a discussion of these forward-looking statements and the risks that impact these forward-looking statements. Additional risks impacting our business and these forward-looking statements are discussed under the heading "Risks and Uncertainties" in our Management Discussion and Analysis for the year ended December 31, 2022 (our "2022 MD&A").

**ITEM 2 - CORPORATE STRUCTURE**

West Fraser is organized under the *Business Corporations Act* (British Columbia) and assumed its present form in 1966 by the amalgamation of a group of companies under the laws of B.C.

Our executive office is located at 885 West Georgia Street, Suite 1500, Vancouver, B.C., Canada, V6C 3E8 and our registered office is located at 1500 - 1055 West Georgia Street, Vancouver, B.C., Canada, V6E 4N7.

– 1 –

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The operating subsidiaries of the Company are:

---

| | | |
|:---|:---|:---|
| <br>**Name** | **Jurisdiction of Incorporation** | **Percentage of Voting Securities Owned** |
| Angelina Forest Products, LLC | Texas | 100% |
| Blue Ridge Lumber Inc. | Alberta | 100% |
| Manning Forest Products Ltd. | Alberta | 100% |
| Norbord Alabama Inc. | Alabama | 100% |
| Norbord Europe Ltd. | United Kingdom | 100% |
| Norbord Georgia LLC | Delaware | 100% |
| Norbord Inc. | Canada | 100% |
| Norbord Minnesota Inc. | Delaware | 100% |
| Norbord Mississippi LLC | Delaware | 100% |
| Norbord NV | Belgium | 100% |
| Norbord Sales Inc. | Ontario | 100% |
| Norbord South Carolina Inc. | South Carolina | 100% |
| Norbord Texas (Jefferson) Inc. | Delaware | 100% |
| Norbord Texas (Nacogdoches) Inc. | Delaware | 100% |
| Sundre Forest Products Inc. | Alberta | 100% |
| West Fraser, Inc. | Delaware | 100% |
| West Fraser Wood Products Inc. | Delaware | 100% |
| West Fraser Mills Ltd. | British Columbia | 100% |
| West Fraser Newsprint Ltd. | Canada | 100% |

---

In addition, Alberta Newsprint Company and Cariboo Pulp & Paper Company are unincorporated 50%-owned joint operations governed, respectively, by the laws of Alberta and British Columbia.

West Fraser completed an internal reorganization and, effective December 31, 2022, all West Fraser Mills Ltd. U.S. operating subsidiaries are indirect subsidiaries of Norbord.

**ITEM 3 - GENERAL DEVELOPMENT OF THE BUSINESS**

**3.1&nbsp;&nbsp;&nbsp;&nbsp;General Development of the Business Over the Last Three Years**

***History and Development of Business***

West Fraser is a diversified wood products company with facilities in Canada, the U.S., the U.K. and Europe, manufacturing, selling, marketing and distributing lumber, engineered wood products (OSB, LVL, MDF, plywood, particleboard), pulp, newsprint, wood chips and other residuals and renewable energy. West 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 2021 the business expanded through the acquisition of a number of sawmills and related timber harvesting rights, the acquisition or development of lumber, panels and pulp & paper businesses and the acquisition of Norbord and its OSB, particleboard, MDF and related value added products businesses. As a result of the Norbord Acquisition, we are now a leading producer of OSB. Our business is comprised of 34 lumber mills, 15 OSB facilities, six renewable energy facilities, five pulp and paper mills, three plywood facilities, three MDF facilities, two particleboard facilities, one LVL facility, one treated wood facility and one veneer facility.

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

– 2 –

------

***Norbord Acquisition***

On November 19, 2020, we announced that we had entered into an arrangement agreement with Norbord under which we had agreed to acquire Norbord to create a leading diversified global wood products company (the "Arrangement Agreement").

We completed the acquisition of Norbord on February 1, 2021 (the "Norbord Acquisition") and Norbord is now a wholly-owned subsidiary of West Fraser. We issued 54,484,188 Common shares to the shareholders of Norbord in connection with this acquisition and assumed Norbord's outstanding stock options.

In accordance with our obligations under the Arrangement Agreement, West Fraser's common shares ("Common shares") were listed on and began trading on the NYSE under the symbol WFG on February 1, 2021. Concurrent with this listing, we changed our stock symbol on the TSX to WFG. In accordance with the *U.S. Exchange Act*, the Common shares have been deemed to be registered under Section 12g-3 of the *U.S. Exchange Act* as West Fraser is a "successor issuer" to Norbord under the *U.S. Exchange Act*. Accordingly, West Fraser files continuous disclosure reports with the United States Securities and Exchange Commission (the "SEC") under the requirements of the *U.S. Exchange Act*.

***Changes to Long-Term Debt and Operating Facilities***

On February 1, 2021, concurrent with the closing of the Norbord Acquisition, we completed various administrative amendments to our CAD$850 million committed revolving credit facility and our $200 million term loan to facilitate the Norbord Acquisition. We also replaced our CAD$150 million committed revolving credit facility with a $450 million committed revolving credit facility due 2024 on substantially the same terms. Norbord's accounts receivable securitization facility and secured revolving credit facilities were terminated at closing and the security related to all of Norbord's debt was discharged as of February 1, 2021. On July 28, 2021, we completed an amendment to our revolving credit facilities, combining our CAD$850 million and $450 million revolving facilities into a single $1 billion committed revolving facility with a five-year term.

As part of the Norbord Acquisition, we assumed Norbord's 2023 Notes, bearing interest at 6.25% and Norbord's 2027 Notes, bearing interest at 5.75%. On March 2, 2021, we made a mandatory change of control offer for the 2023 Notes and the 2027 Notes pursuant to which $1 million of the 2023 Notes and $1 million of the 2027 Notes were redeemed and were repaid in the second quarter of 2021. On April 6, 2021, we elected to redeem the remaining 2027 Notes on May 6, 2021. On May 6, 2021, we elected to redeem the remaining 2023 Notes on June 7, 2021. After the completion of the redemption of the Notes, the principal value of long-term debt was reduced by $665 million from the date of the Norbord Acquisition.

***Change in Functional and Reporting Currency***

As a result of the completion of the Norbord Acquisition, the functional currency of our Canadian operations changed from the Canadian dollar to the U.S. dollar as of February 1, 2021. Concurrent with the change in functional currency, we also changed our presentation currency for the purposes of our financial statements from Canadian dollars to U.S. dollars. Accordingly, we commenced presenting our financial statements in U.S. dollars with our unaudited interim financial statements as at and for the three months ended March 31, 2021.

***Share Repurchases***

Over the past three years, we have had in place several NCIBs, which have allowed us to repurchase our shares in accordance with the rules of the TSX in the following amounts:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 2020:&nbsp;&nbsp;&nbsp;&nbsp;No shares were purchased under this bid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 2021:&nbsp;&nbsp;&nbsp;&nbsp;7,059,196 Common shares were purchased at a cost of $527 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 2022:&nbsp;&nbsp;&nbsp;&nbsp;10,475,115 Common shares were purchased at a cost of $859 million.

– 3 –

------

The current 2022 NCIB has terminated as the maximum number of Common shares authorized for repurchase under the 2022 NCIB have been purchased.

In addition to the 2021 and 2022 NCIBs, we completed two substantial issuer bids as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• August 20, 2021 - purchased for cancellation a total of 10,309,278 Common shares at a price of CAD$97.00 ($76.84) per share for an aggregate purchase price of CAD$1.0 billion ($792 million).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• June 7, 2022 - purchased for cancellation a total of 11,898,205 Common shares at a price of $95.00 per share for an aggregate purchase price of $1.13 billion.

***Chambord, Quebec OSB Mill***

On March 29, 2021, we announced that our OSB mill in Chambord had restarted with panels being produced and shipped to customers. The Chambord mill is ramping up towards its stated annual production capacity of 550 million square feet (3/8-inch basis).

***Dudley, Georgia Lumber Mill***

Our new lumber manufacturing complex in Dudley became fully operational in the second quarter of 2021. As it ramps up over the next few years, it is expected to reach an annual production capacity of 270 million board feet, subject to market conditions.

***Dividend Currency Change***

On October 27, 2021, we announced that as the majority of our shareholder base is now outside Canada, and as the majority of our cash flows are denominated in U.S. dollars, future dividends will be declared and payable in U.S. dollars.

***Acquisition of Lufkin, Texas lumber mill***

On December 1, 2021, we completed the acquisition of the Angelina Forest Products' SYP lumber mill located in Lufkin, Texas for $303 million, net of cash acquired of $8 million and, subject to certain post-closing adjustments. The new turn-key facility began construction in 2018 and commenced operations in late 2019. The facility is expected to progress toward production capacity of approximately 305 million board feet over the next three to four years.

***Acquisition of Allendale, South Carolina OSB mill***

On December 6, 2021, we completed the acquisition of an idled OSB mill located near Allendale, South Carolina for $280 million, of which $276 million was allocated to property, plant and equipment. The Allendale facility commenced production in 2007, has been idle since late 2019 and has an estimated stated capacity of approximately 760 million square feet (3/8-inch basis). Our modernization capital investment in Allendale is continuing. Given ongoing supply chain delays, the timing for a potential restart has moved to the end of the second quarter of 2023.

***Senior Leadership Changes***

On December 7, 2021, we announced the following management changes: (i) Sean McLaren, formerly the Company's President, Solid Wood, has become the Company's Chief Operating Officer, (ii) Kevin Burke, formerly the Company's Vice-President, North American Engineered Wood Products and Renewable Energy, has become the Company's Senior Vice-President, Wood Products, (iii) Keith Carter, formerly the Company's Vice-President, Western Canada Operations, has become the Company's Senior Vice-President, Western Canada, and (iv) Alan McMeekin, formerly the Company's Vice-President, European Engineered Wood Products, has become the Company's Senior Vice-President, Europe.

– 4 –

------

On September 7, 2022, we approved the following management changes: (i) Christoper Virostek was appointed Senior Vice-President, Finance and Chief Financial Officer; and (ii) James Gorman was appointed Senior Vice-President, Corporate and Government Relations.

***Commitment to GHG Emissions Reductions***

On February 15, 2022, we announced a commitment to set and we set science-based targets to achieve near-term greenhouse gas ("GHG") reductions across all our operations located in the United States, Canada, United Kingdom and Europe.

***Hinton Pulp Reduction in Capacity And Move to Unbleached Kraft Pulp***

On April 5, 2022, we announced the permanent reduction in capacity at our Hinton, Alberta mill ("Hinton Pulp") by the end of 2022, the closure of one of Hinton Pulp's two production lines and the move to produce UKP rather than NBSK on the remaining line. The capacity reduction involves staffing levels transitioning from 345 positions to 270. We have and will continue to mitigate the impact on employees through natural attrition, retirements and by offering employment opportunities at other West Fraser operations.

***British Columbia Curtailments***

On August 9, 2022, we announced the permanent curtailment of 170 million board feet of combined production at our Fraser Lake and Williams Lake sawmills and approximately 85 million square feet of plywood production at our Quesnel Plywood mill, all in British Columbia. These capacity reductions were implemented to better align West Fraser's operating capacity with available timber and transport availability. The reduction in capacity impacted 77 positions at Fraser Lake Sawmill, 15 positions at Williams Lake Lumber, and 55 positions at Quesnel Plywood in the fourth quarter of 2022. We mitigated the impact on effected employees by providing work opportunities at other West Fraser operations.

***Henderson, Texas Lumber Manufacturing Complex***

On October 26, 2022, we announced the undertaking of a brownfield redevelopment of our Henderson, Texas facility. We are planning to construct the new mill next to the existing Henderson mill. Capital investment at the new mill is estimated at $255 million and construction began in the fourth quarter of 2022. Mill start-up is planned for the second quarter of 2024, with full run-rate production not being anticipated before 2025. Capacity at the new mill is anticipated to be 275 MMfbm, an approximate doubling of the existing mill's annual capacity.

***Perry, Florida Sawmill***

On January 10, 2023, we announced the indefinite curtailment of our Perry, Florida sawmill as a result of high fiber costs and softening lumber markets. The reduction in capacity impacted 126 employees and reduced annual U.S. lumber capacity by 100 million board feet.

***Curtailment of Cariboo Pulp & Paper***

On February 7, 2023, we announced the planned curtailment of operations at Cariboo Pulp & Paper located in Quesnel, British Columbia, beginning in mid-April for a month and then for another month in the third quarter, due to a decline in the availability of sawmill residuals. Downtime at Cariboo Pulp & Paper will help better align our production capacity during 2023 with the available fibre supply. These plans may be adjusted should fibre forecasts change.

**3.2&nbsp;&nbsp;&nbsp;&nbsp;Corporate Strategy**

Our goal at West Fraser is to generate strong financial results through the business cycle, relying on our committed workforce, the quality of our assets and our well-established people and culture. This culture emphasizes cost control

– 5 –

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in all aspects of the business and operating in a responsible, sustainable, financially conservative and prudent manner.

The North American wood products industry is cyclical and periodically faces difficult market conditions. Our earnings are sensitive to changes in world economic conditions, primarily those in North America, Asia and Europe and particularly to the U.S. housing market for new construction and repair and renovation spending. Most of our revenues are from sales of commodities for which prices are sensitive to variations in supply and demand. As many of our costs are denominated in Canadian dollars, British pound sterling and Euros, exchange rate fluctuations of the Canadian dollar, British pound sterling and Euro against the U.S. dollar are anticipated to be a significant source of earnings volatility for us.

West Fraser strives to make sustainability a central principle upon which our people operate, and we believe the Company's sustainable, renewable building materials that sequester carbon are a truly natural solution in the fight against climate change. There are numerous government initiatives and proposals globally to address climate-related issues. Within the jurisdictions of West Fraser's operations, some of these initiatives would regulate, and do regulate, and/or tax the production of carbon dioxide and other greenhouse gases to facilitate the reduction of carbon emissions, providing incentives to produce and use cleaner energy. In the first quarter of 2022, we joined the Science Based Targets Initiative ("SBTi") demonstrating the Company's commitment to sustainability leadership and contribution to global climate action, including setting specific science-based targets to achieve near-term greenhouse gas reductions across all our operations located in Canada, the U.S., the U.K. and Europe.

We believe that maintaining a strong balance sheet and liquidity profile, along with our investment grade debt rating, enables us to execute a balanced capital allocation strategy. Our goal is to reinvest in our operations across all market cycles to strategically enhance productivity, product mix, and capacity and to maintain a leading cost position. We believe that a strong balance sheet also provides the financial flexibility to capitalize on growth opportunities, including the pursuit of opportunistic acquisitions and larger-scale strategic growth initiatives, and is a key tool in managing our business over the long-term including returning capital to shareholders.

**Sales** 

($ millions - for the year ended December 31)

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021**<sup>1</sup> | **2020** |
| Lumber | 4381 | 4804 | 3258 |
| NA EWP | 3780 | 4264 | 467 |
| Pulp & Paper | 802 | 727 | 648 |
| Europe EWP | 738 | 723 |  |
|  | 9701 | 10518 | 4373 |

---

1. Includes sales of Norbord since the acquisition date of February 1, 2021, and sales of Angelina since the acquisition date of December 1, 2021.

**ITEM 4 - DESCRIPTION OF THE BUSINESS**

**4.1&nbsp;&nbsp;&nbsp;&nbsp;Principal Products and Markets**

West Fraser is a diversified wood products company producing lumber, OSB, LVL, MDF, plywood, particleboard, pulp, newsprint, wood chips, other residuals and energy with facilities across Canada, in the United States, in the United Kingdom and in Europe. We hold rights to timber resources that are sufficient to supply a significant amount of the fibre required by our Canadian operations and have long-term agreements for the supply of a portion of the fibre required by our U.S. lumber and U.K. OSB operations.

– 6 –

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**4.2&nbsp;&nbsp;&nbsp;&nbsp;Markets**

West Fraser's products are used in home construction, repair and remodelling, industrial applications, papers, tissue and box material. Our products are primarily sold to major retail chains, contractor supply yards and wholesalers, as well as industrial customers for further processing or as components for other products. Changes in new home construction activity levels in the U.S. are a significant driver of volatility in lumber and OSB demand. In general, the business is affected by the level of housing starts, the level of home repairs, the availability and cost of financing, changes in industry capacity, changes in raw material prices, changes in foreign exchange rates (primarily the Canadian dollar, Pound Sterling and Euro currencies) and other operating costs.

In Canada, our lumber operations are located in Western Canada and produce SPF lumber, wood chips and other residuals. In the U.S., our sawmills are located in the southern U.S. and produce SYP lumber, wood chips and other residuals. OSB operations are located in Alberta, Ontario, Quebec, the U.S., the U.K. and Belgium.

The markets for our products are highly competitive and product pricing can be volatile. Our products are sold in markets open to a number of companies with similar products and we compete with global producers. Our competitive position is affected by 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, the quality of our final products and our ability to transport products to our customers. Some of our products may also compete with non-wood fibre-based alternatives or with alternative products in certain market segments. Purchasing decisions by customers are generally based on price, quality, service and availability of supply. However, because commodity products such as ours have few distinguishing properties from producer to producer, competition for these products is based primarily on price. Prices and sales volumes are influenced by general economic conditions, the balance of supply and demand for the product, and the availability of transportation.

**4.3&nbsp;&nbsp;&nbsp;&nbsp;Manufacturing Inputs**

***Fibre Supply***

Our operations are dependent on the consistent supply of substantial quantities of wood fibre in various forms. The primary manufacturing facilities, which produce lumber, plywood, LVL and OSB, consume whole logs, while the pulp & paper, particleboard and MDF facilities mostly consume wood by-products in the form of wood chips (including from whole-log chipping operations), shavings and sawdust resulting from the production of lumber, plywood or LVL, as well as recycled materials. Many facilities also consume hog fuel and wood waste in energy systems.

West Fraser does not own any timberlands; wood fibre supply comes from several different sources. In Canada, we hold forest licences and agreements to source roundwood logs from Crown timberlands, which are supplemented by open market and private purchases, as discussed below under "Canadian Forest Tenures". In the U.S., roundwood logs for both lumber and OSB are primarily sourced from private and industry-owned woodlands. In Europe, wood fibre is purchased from government and private landowners.

***Canadian Forest Tenures***

Our plywood, LVL, pulp & paper manufacturing facilities and North American lumber, OSB and MDF operations that are located in Canada obtain fibre directly or indirectly from timberlands that are substantially all publicly owned. 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 10 to 20 years and are replaceable or have a shorter term but are not replaceable. Government objectives in granting licences include responsible management of timber, soils, wildlife, water and fish resources and the preservation of biodiversity and the protection of cultural values. The objectives also include achieving the fullest possible economic utilization of the forest resources and employment in local communities.

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Timber tenures across Canada require the payment of a fee, commonly known as stumpage, for timber harvested pursuant to its terms. Stumpage in Canada is primarily product/price specific and, in some provinces, varies on a lagged basis with the sales price of the product into which the logs will be converted. Stumpage in a number of provinces is also influenced by the results of certain publicly auctioned timber harvesting rights. Timber tenures in B.C. and Alberta also require the holder to carry out reforestation to ensure reestablishment of the forest after harvesting. 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.

While we have provincially granted timber tenures or licences granting the right to harvest timber up to a specified quantity of timber each year, our ability to access such timber or the availability of such timber can be affected by federal or provincial legislative changes, policies or other governmental actions and also by natural events such as infestations and wildfires. The Government of B.C. has recently adopted amendments to the *Forest Act* and the *Forest and Range Practices Act (British Columbia)* that may result in actions by the Government of B.C. that reallocate timber harvesting rights to Indigenous Nations and/or local communities or require the development of forest landscape plans by the Chief Forester of B.C. in consultation with affected Indigenous Nations. These actions could potentially impact both the area covered by our forest licences in B.C. and the amount of timber that we are able to harvest from these licences.

Also in B.C., the provincial and federal governments have entered into a conservation agreement for all Southern Mountain Caribou ranges in the Province that includes a partnership agreement with Indigenous communities and identify specific zones and harvest deferral areas to manage caribou recovery, which will impact our access to timber supply (although the full extent is yet to be determined). In 2020, the Government of Alberta signed an agreement with the Government of Canada consistent with Section 11 of the *Species at Risk Act* that commits the Government of Alberta to prepare and implement caribou recovery plans for at risk populations and has established a Regional Task Force to build plans and identify socio-economic impacts. We have been working with the Provinces of B.C. and Alberta to develop strategies that support caribou recovery while maintaining our access to the forest resource. The AAC impact from federal and provincial recovery plans will become evident when the final location of the conservation areas and the forest management regimes are identified and implemented.

The mountain pine beetle infestation has impacted the timber supply in B.C. and Alberta. In the B.C. interior the infestation reached a peak more than 15 years ago and the non-recoverable timber losses to the mature pine forests within our operating areas are significant. The Province of B.C. previously increased the AAC on dead pine stands and limited the harvest of non-pine species until the salvage of dead pine stands came to a conclusion with the intent that 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 substantially reduced the AAC in B.C.'s central interior in the past five years and we expect this process to continue for up to another five years as the province transitions AACs by incrementally reducing mountain pine beetle uplifts, reapportioning volume to Indigenous Nations and deferring harvest in defined old growth areas.

In Alberta, the Minister continues to implement an aggressive mountain pine beetle detection and single tree control program. In some portions of the province, the forest industry continues to focus timber harvest operations in healthy pine dominated sites which are susceptible to mountain pine beetle and to salvage stands of timber which were killed in the recent outbreak. Cold winter weather in the past couple of years, in combination with the government's control program, has resulted in a significant reduction in mountain pine beetle populations. However, the pest is now established across the province and could spread significantly under the right conditions.

Over the past five years wildfires in B.C. burned over two and a half million hectares of forest land. Our Cariboo region operating areas were significantly impacted. Salvage of fire damaged trees is on-going, and non-recoverable timber losses are significant in these burned forests due to a combination of burn intensity and relatively quick onset of subsequent decay resulting in timber being unusable for primary wood products.

As the timing of future AAC reductions and the effect on our AACs will depend on a variety of factors, including the impact of wildfires, the amount of non-pine species available for harvest, and the removal of land from the timber

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harvesting land-base due to changing government policies, the full effect on our operations cannot reasonably be determined at this time.

***Residual Fibre Supply***

In Canada, substantially all our requirements for wood chips, shavings, 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 and minimizes logistics costs.

Our B.C. sawmills and plywood plants produce substantially all of the fibre requirements of our B.C. pulp & energy operations and MDF plant. Changing government policies in B.C. are having an impact on the primary industry and the subsequent production of residual fibre for B.C. pulp & energy operations. Although still too early to say what the impacts on our operations will be, there is stress on the residual fibre supply across the interior of B.C. 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 to supplement the supply of residual chips from our various sawmills. The fibre requirements of our 50%-owned newsprint mill are obtained from local sawmills, including our sawmill in Blue Ridge and the Slave Lake veneer operation, through chip purchase agreements and log for chip trades using logs harvested from the newsprint mill's tenures. 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. sawmill operations are sold to pulp mills at market prices pursuant to long-term contracts. Our European particleboard facilities source recycled fibre from third party suppliers and our European MDF facilities source wood chips from third party sawmillers in the U.K.

**4.4&nbsp;&nbsp;&nbsp;&nbsp;Fibre Consumption**

Our Canadian sawmills, plywood facilities and LVL plant, if operating at the capacities described herein, would consume approximately 11.5 million m<sup>3</sup> of softwood logs (coniferous) per year. We access the majority of these requirements from quota-based tenures and the balance is typically acquired from third parties holding short or long-term timber harvesting rights, including independent logging contractors, Indigenous groups, 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 and our ability to secure approvals to harvest in economically viable stands.

Our Canadian OSB operations, if operating at the capacities described herein, would consume approximately 5 million m<sup>3</sup> of hardwood logs (deciduous) per year. Our volume requirements are largely filled within our quota-based tenures, consumption rights or wood guarantees with the balance purchased on a competitive market-based system.

Our U.S. operations, which produce both SYP lumber and OSB, if operating at the capacities described herein, would consume approximately 20.5 million tonnes of softwood logs per year. The majority of our volume requirements are purchased on the open market, with the balance under long-term supply contracts and/or timber deeds. Open market purchases come from timber real estate investment trusts, timberland investment management organizations, and private landowners.

Our U.K. and European operations, which produce OSB, particleboard, MDF and related value-added products, if operating at the capacities described herein, would consume approximately 2.7 million m<sup>3</sup> of fibre per year, consisting of softwood and hardwood logs, sawmill chips and recycled fibre.

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**4.5&nbsp;&nbsp;&nbsp;&nbsp;Forestry Certification** 

West Fraser holds third party verified sustainable forest management and fibre sourcing certification from the Sustainable Forestry Initiative (SFI*®*) program, and chain-of-custody certificates from SFI*®,* and the Programme for the Endorsement of Forest Certification (PEFC). In addition, West Fraser holds chain of custody and Controlled Wood certification from the Forest Stewardship Council.

**4.6**&nbsp;&nbsp;&nbsp;&nbsp;**Resin and Wax** 

The manufacturing inputs for OSB, plywood, MDF, LVL and particleboard include resin and/or wax which are sourced through tolling-like arrangements with outside suppliers with prices for the underlying feedstocks based on global indices. These feedstocks are widely-used industrial chemicals derived from oil and gas, such as benzene, phenol and methanol. Feedstock prices are influenced by global supply and demand conditions, and have exhibited significant volatility over time.

**4.7&nbsp;&nbsp;&nbsp;&nbsp;Seasonality and Cyclicality of Business** 

Our operating results are subject to seasonal fluctuations that may impact quarter-to-quarter comparisons. Consequently, interim operating results may not proportionately reflect operating results for a full year.

Market demand varies seasonally, as home building activity and repair-and-remodelling work are generally stronger in the spring and summer months. Extreme weather conditions, including wildfires or flooding in Western Canada and hurricanes in the U.S. South, may periodically affect operations, including logging, manufacturing and transportation. Log inventory is typically built up in the northern regions of North America and Europe during the winter to sustain our lumber and EWP production during the second quarter when logging is curtailed due to wet and inaccessible land conditions. This inventory is generally consumed in the spring and summer months.

**4.8&nbsp;&nbsp;&nbsp;&nbsp;Indigenous Relations**

West Fraser engages with Indigenous Nations and communities to develop and strengthen meaningful relationships. We commit to collaborative relationships that respect the unique culture and rights of Indigenous Peoples, incorporating Indigenous Peoples' perspective and knowledge into our work, and increasing the participation of Indigenous Peoples in our business through direct employment, the procurement of services, and other forms of partnership. West Fraser has received third-party verification for Phase 1 Committed Progressive Aboriginal Relations (PAR) through the Canadian Council of Aboriginal Business (CCAB), to ensure we improve consistency in our approach to community relations, focused on mutual respect and understanding of each other's interests, values, and goals. Through support of a variety of programs, including sponsorship of youth employment programs and scholarships, growing internship opportunities and paths to meaningful employment, ensuring our teams receive cultural awareness training, and a commitment to expand procurement from Indigenous-led business, we are working to establish the foundation of positive Indigenous relations.

Our voluntary forest certification standards include respect for Indigenous Peoples' rights and traditional knowledge. This is specifically addressed in the Sustainable Forestry Initiative (SFI) 2022 Standards and Rules, which recognizes the spirit of the United Nations Declaration for the Rights of Indigenous Peoples. As a program participant, West Fraser communicates and collaborates with local Indigenous Nations and communities to better understand Indigenous traditional practices with respect to forest management. West Fraser is and will continue to be proactive in its efforts to engage with Indigenous Nations and communities to seek positive and beneficial working relationships and maintain access to the timber harvesting land base.

Notwithstanding these efforts, our continued access to the forest resources in Canada could be impacted by Indigenous rights and title claims, treaties, non-treaty agreements, legislation related to Indigenous rights and other governmental decisions and policy changes. These, and related duties of government to consult Indigenous groups in respect of statutory decision-making could affect the issuance, validity, renewal and exercise, and terms and

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conditions of Crown timber rights and authorizations to harvest, or the timeliness of obtaining such rights. In an effort to reduce risk, West Fraser takes an approach to optimize mutual benefits and build resilient relationships.

Included in the above are actions that governments may take pursuant to the *B.C. Declaration on the Rights of Indigenous Peoples Act*, brought into force in November 2019 and the federal *United Nations Declaration on the Rights of Indigenous Peoples Act*, brought into force in December 2020. The Government of British Columbia may take actions concerning its relationships with Indigenous groups under the recent amendments to the *Forest Act* (British Columbia) and the *Forest and Range Practices Act* (British Columbia) and its plan to defer logging in "old growth" forest areas, and these actions may ultimately reduce the available timber supply from our British Columbia forest licenses.

As the jurisprudence, legislation and government policies respecting Indigenous title and rights and the consultation process continue to evolve, we cannot predict whether claims will have a material adverse effect on our timber harvesting rights or on our ability to exercise, renew or transfer them, or secure other timber harvesting rights.

**4.9&nbsp;&nbsp;&nbsp;&nbsp;Human Resources, Diversity, Equity & Inclusion and Safety**

As of December 31, 2022, we employed approximately 11,000 individuals, including our proportionate share of those in 50%-owned operations. Of these, approximately 5,900 are employed in our lumber segment, 3,200 in our NA EWP segment, 800 in our Europe EWP segment, 800 in our pulp & paper segment and 300 in our corporate & other segment. Approximately 34% of our employees are covered by collective agreements. There were no expired collective agreements remaining as at December 31, 2022, other than the collective agreement with respect to our Barwick OSB operations in Ontario, Canada. Collective agreements representing 36% and 12% of our unionized employees expire in 2023 and 2024, respectively.

West Fraser believes inclusive, diverse teams build a more vibrant workforce, safer operations and a stronger company overall. We strive to create workplaces and leadership teams that are reflective of the diverse communities where we live and work. At the end of 2022, approximately 15% of our workforce were women and a further approximately 25% were under-represented minorities. Plans have been developed to continue making measurable progress in 2023 in our ongoing journey of diversity and inclusion.

The safety of our employees is a core value and business priority and our safety goal is to eliminate serious incidents and injuries. We have achieved a 36% reduction in our medical recordable incident rate since 2016. We provide ongoing safety training for our employees to minimize potential risks inherent in forestry-related manufacturing industries. See Governance and Oversight section.

**4.10&nbsp;&nbsp;&nbsp;&nbsp;Environmental Performance** 

West Fraser's operations are subject to a range of general and industry-specific environmental laws and regulations relating to air emissions, wastewater discharges, solid and hazardous waste management, plant and wildlife protection and site remediation. In 2021 and continuing into 2022, we worked to integrate a standardized environmental management system framework.

***Regulatory Requirements***

Our manufacturing operations are subject to environmental protection laws and regulations. We have developed and apply internal environmental management programs and policies to help ensure that our operations are in compliance with applicable laws and standards and to address any instances of non-compliance. We have incurred, and will continue to incur, capital expenditures and operating costs to comply with environmental laws and regulations. We are required to carry out remediation activities, including site decommissioning, under applicable environmental protection laws and regulations. In addition, we are required to carry out reforestation activities under our various timber licences. We maintain accruals in our financial statements for certain environmental, reforestation and decommissioning obligations.

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***Environmental Attributes of Wood Products and Minimization of Waste***

Wood products have three beneficial roles in the carbon cycle and to mitigate climate change effects: as a store of carbon, as an alternative to fossil fuel-based materials, and for generating carbon-neutral energy.

West Fraser's 2022 production of harvested wood products stored 17.21 million metric tonnes of carbon dioxide equivalent (CO2e). The biogenic carbon sequestration of our annual production was calculated using The National Council for Air and Stream Improvement, Inc.'s ("NCASI") Tool to Calculate Carbon Stored in Forest Products, based on data developed by the U.S. Forest Service. It estimates the metric tonnes of biogenic carbon stored in products in use and retained in landfills as the annual average over a 100-year period. NCASI's Carbon Storage tool was developed to assist members in undertaking these types of calculations, whether for regulatory or voluntary reporting purposes.

West Fraser actively participates in numerous forestry sector and local associations. We support climate-smart and green building initiatives through our membership in the Softwood Lumber Board ("SLB") to increase market demand for wood products. The SLB, through programs such as WoodWorks and ThinkWood, supports initiatives that promote the benefits and encourage the use of softwood lumber products in outdoor, residential and non-residential construction.

Our lumber, OSB, particleboard, plywood, MDF and LVL products are backed by Life Cycle Assessments (LCA)'s, environmental product declarations ("EPD") and EPD transparency briefs that support its increased use in lower carbon, environmentally-conscious building construction. West Fraser's certified wood products are eligible for points in one of the most widely used green building rating systems globally, LEED (Leadership in Energy and Environmental Design), sponsored by the United States Green Building Council (USGBC).

Our high-efficiency primary manufacturing recovers raw materials for a range of valuable secondary products. We have reduced the waste and material sent to landfill through innovations to our production process to use more of wood residuals, recovering them for value-added products and renewable energy generation. Approximately ninety-nine percent of a log will be utilized: (i) sawdust and shavings are used in our MDF plants or are transformed into fuel and energy to run mill operations; (ii) wood chips and the wood cores from our plywood and veneer operations are used in pulping operations; and (iii) heat, steam, gases and biomass liquids (such as black liquor) that develop during our manufacturing processes are captured to generate bioenergy in our mills or used to create innovative bioproducts; and (iv) bark is used as fuel in our energy systems. Half of the weight of sustainably sourced wood products is stored as carbon for the life of the product, making it a valuable building and construction material relative to conventional products such as steel and concrete.

**4.11&nbsp;&nbsp;&nbsp;&nbsp;Responsible Resource Efficiency**

Our goal is to have a sustainable and resilient business. We are committed to consciously managing our air and water emissions, working towards efficiency, reducing consumption and developing sustainable energy solutions.

We are focused on replacing fossil fuel energy sources where feasible with renewable and carbon-neutral energy sources. Renewable sources now supply over half of our operations' energy needs. We use manufacturing by-products such as wood waste and pulp mill effluent to generate bioenergy and invest capital to improve manufacturing processes' energy efficiency.

In the fall of 2016, the Paris Agreement (Agreement) resulting from the United Nations Framework Convention on Climate Change entered into force. At present, Canada, the European Union and the U.K. have all ratified the agreement. The Canadian federal government and the four provinces in which West Fraser currently operates have enacted regulations to meet GHG reduction obligations through carbon taxes or cap-and-trade initiatives.

All of West Fraser's U.K. operations entered into Kyoto climate change energy efficiency agreements in 2001, which have resulted in significant tax and energy efficiency cost savings. A cap-and-trade carbon trading program has been in place in Europe since 2005. Biomass heat energy generating units have enabled our European mills to comply with

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energy efficiency targets and have resulted in a surplus of carbon credits and renewable heat incentives (RHI) across our European business.

**4.12&nbsp;&nbsp;&nbsp;&nbsp;Community and Stakeholder Engagement**

We value our relationship and engagement with stakeholders and rights holders and recognize the interdependency between our operations and investments with healthy societal, community and environmental ecosystems. In 2022, we conducted a materiality assessment of priority sustainability issues and opportunities with communities as well as a broad cross section of internal and external representatives to further inform our strategy and business decision making processes for the future. Stakeholder engagement and effective consultation is a crucial part of our business success and is broadly embedded in our forest management planning process through our sustainable forest management and fibre sourcing certifications as well as our approach with local and Indigenous communities. Furthermore, we comply with the legal framework in Canada that establishes standards and provincial regulations governing the permitting and approval of harvesting and forest management planning on public lands.

**4.13&nbsp;&nbsp;&nbsp;&nbsp;Governance and Oversight**

Our Board of Directors, particularly the Health, Safety & Environment Committee, together with our executive and our senior leadership teams, set the policy and practice of our environmental, social and governance activities within our business and are responsible for monitoring our safety and environmental performance, including identifying and managing environmental risks.

We have adopted and implemented social and environmental policies and practices that are essential to our operations. Our social, environmental and safety practices are governed by the principles set out in our Code of Conduct, our Environmental Policy and our Health and Safety Policy.

Our Code of Conduct emphasizes our overall commitment to sustainability and sets out specific requirements in areas related to: (i) legal and ethical business conduct; (ii) promotion of safe and healthy work practices; (iii) commitment to operating in an environmentally sustainable manner; (iv) the commitment to human rights and a harassment, discrimination and violence-free workplace; and (v) maintaining a confidential feedback mechanism and conducting regular audits to ensure adherence to the Code.

Our Environmental Policy sets out our commitment to do business in an environmentally, socially, and economically responsible manner. This commitment includes: (i) responsible stewardship of the environment; (ii) sustainable forest management; and (iii) protection of the health and safety of our employees, customers, and the public. Our operating philosophy involves continually improving our forest practices and manufacturing procedures, optimizing the use of resources, and minimizing or eliminating the impact of our operations on the environment.

Environmental excellence is an integral aspect of our long-term business success. We are committed to: (i) complying with all applicable environmental laws and regulations and striving to maintain biodiversity and to protect wildlife habitat and ecosystems; (ii) developing and implementing best practices to continuously improve our environmental performance; (iii) preventing pollution and continuing to improve our environmental performance by setting and reviewing environmental objectives and targets; (iv) conserving, reducing, reusing and recycling wherever practical the resources and materials that we use and ensuring that all waste is safely and responsibly handled and disposed of; (v) employing and encouraging the development and use of environmentally friendly practices and technology; (vi) conducting periodic environmental audits; (vii) providing training for employees and contractors to ensure environmentally responsible work practices; and (viii) communicating our sustainable forest management and environmental performance openly and transparently to our Board of Directors, employees, customers, shareholders, local communities and other stakeholders.

In addition, we have also adopted a Health and Safety Policy. Safety is a core value and a business priority, and we are committed to maintaining a safe workplace and strive to be an industry leader by managing an effective safety program, complying with all laws and regulations, and continuously improving our performance. Within our safety program, we have identified key responsibilities for executive management, operating site management, employees

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and contractors, as detailed in our safety policy. The Health and Safety Policy requires management to develop and maintain company-wide and site-specific occupational health and safety programs, that include core guidelines and systems to measure ongoing effectiveness. Our employees are also responsible for following established safe work procedures as outlined in their job duties and company safety guidelines, including reporting unsafe conditions, acts, and practices.

**4.14&nbsp;&nbsp;&nbsp;&nbsp;Research and Development**

Our research and development center in Ville Saint Laurent, Quebec operates a central research and development laboratory where it carries out research, customer driven product development and technology transfer. This work is aimed at identifying new processes to reduce manufacturing costs, enhance product attributes and develop products that are new to our industry while minimizing the environmental impact of our operations.

We also support industry research and development organizations (e.g. Forest Product Innovations, Alberta Innovates), partner with local universities and conduct research and development at certain operations to improve processes, maximize resource utilization and develop new products and environmental applications. In addition, in the previous five years we have focused on bioenergy generation projects and bioproducts. Such bioproducts include cellulose-based composites utilizing our pulp and combining it with polymers for new applications and extracting lignin from our pulping recovery process for producing new, sustainable, green alternative products.

**4.15&nbsp;&nbsp;&nbsp;&nbsp;Capital Expenditures and Acquisitions**

We regularly invest in upgrading and expanding our facilities and operations. The following table shows the capital expenditures and acquisitions during the past three years.

***Capital Expenditures and Acquisitions***

($ millions and for the year ended)

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2022** | **2021** | **1** | **2020** |
| Lumber | 184 | 146 |  | 149 |
| NA EWP | 235 | 424 | ² | 10 |
| Pulp & Paper | 29 | 35 |  | 19 |
| EU EWP | 20 | 28 |  |  |
| Corporate & Other | 9 | 2 |  | 2 |
| Total capital expenditures | 477 | 635 |  | 180 |
| Cash Acquisitions |  | 303 | 3 |  |
| Share Acquisitions |  | 3482 | 4 |  |

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1. Includes capital expenditures of Norbord since the acquisition date of February 1, 2021 and capital expenditures of Angelina since the acquisition date of December 1, 2021.

2. North America EWP capital expenditures for the year ended December 31, 2021 included $276 million relating to the acquisition of the idled OSB mill near Allendale, South Carolina.

3. Represents the Angelina Acquisition, net of cash acquired.

4. Represents the Norbord Acquisition share exchange.

**4.16&nbsp;&nbsp;&nbsp;&nbsp;Lumber**

***Sales***

Lumber produced at our Canadian sawmills and sold to North American customers is marketed and sold from our sales office in Quesnel, B.C. while sales to offshore markets are made from our export sales office in Vancouver, B.C. Offshore sales activities are complemented by a customer service office in Japan. Lumber produced at our U.S. sawmills is marketed by our sales group in Memphis, Tennessee. From time to time, we purchase lumber for resale in order to meet requirements of customers.

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In 2022, sales of lumber 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 our Canadian operations were made by rail and the balance by truck. Lumber sales to North American customers by our U.S. operations were either customer pick up or delivered by truck and the balance by rail. Offshore shipments from both Canada and the U.S. were made through various public terminals in bulk or container vessels.

Shipments and sales of our lumber products can be impacted by seasonal influences. Shipments from our Western Canadian mills can be affected by winter weather that affects rail and other transportation services. In the summer months, during fire season, logging, manufacturing and transportation can all be affected by wildfire activity or by evacuation alerts or orders in regions where we operate. Operations in the U.S. South can be affected by hurricanes and other extreme weather conditions. Home construction activity which significantly influences the demand for our products has historically been higher in the first half of the year and experiences a seasonal slowdown in the third quarter. A significant portion of our SYP products are used in treated wood applications and demand for these products is often highest in anticipation of spring and summer construction activity.

***Softwood Lumber Dispute***

The Canada - U.S. Softwood Lumber Agreement expired in October 2015 and on the expiry of that agreement a one-year moratorium on trade sanctions by the U.S. came into place. The Government of Canada and the U.S. Trade Representative have been unable to reach agreement on a new managed trade agreement.

In November of 2016 a coalition of U.S. lumber producers petitioned the USDOC and the USITC to investigate alleged subsidies to Canadian producers and levy CVD and ADD duties against Canadian imports.

The CVD and ADD details are fully described in Note 26 to the 2022 annual audited consolidated financial statements and under "Discussions & Analysis of Annual Results by Product Segment - Lumber Segment - Softwood Lumber Dispute" in the 2022 Management's Discussion & Analysis.

***Operations***

We have 34 sawmills and a wood treating facility at the Sundre, Alberta sawmill. Our Canadian sawmills, of which six are in B.C. and another six are in Alberta, produce SPF lumber of various grades and dimensions. Our 22 U.S. sawmills produce SYP lumber of various grades and dimensions.

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***Capacity and Production***

(MMfbm)

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| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Capacity (year-end) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;B.C. | 1460 | 1700 | 1835 |
| &nbsp;&nbsp;&nbsp;&nbsp;Alberta | 1655 | 1700 | 1700 |
| &nbsp;&nbsp;&nbsp;U.S. South | 3650 | 3600 | 3200 |
|  | 6765 | 7000 | 6735 |
| Production |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;B.C. | 1244 | 1566 | 1558 |
| &nbsp;&nbsp;&nbsp;&nbsp;Alberta | 1390 | 1616 | 1599 |
| &nbsp;&nbsp;&nbsp;U.S. South | 3018 | 2675 | 2801 |
|  | 5652 | 5857 | 5958 |

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Lumber production capacity is generally based on the current operating configuration of our sawmills for the period indicated. The capacity figures above for year-end 2022 give effect to permanent shift reductions at our B.C. sawmills and the indefinite curtailment of our Perry, Florida sawmill.

**4.17&nbsp;&nbsp;&nbsp;&nbsp;North America Engineered Wood Products** 

***Sales***

Our NA EWP segment includes our North American OSB and Canadian plywood, LVL and MDF products. OSB and plywood are marketed from our sales office in Toronto, Ontario, while our LVL and MDF products are marketed from our sales office in Quesnel, B.C.

In 2022 most of our North American OSB was sold to customers in the U.S., with the remaining production sold to Canadian customers and exported to Japan and China. Most of our plywood was sold to customers in Canada and our MDF and LVL was sold to customers in both the U.S. and Canada. Shipments from our Canadian mills are made primarily by rail and from our U.S. OSB mills primarily by truck. Products are primarily sold to major retail chains and contractor supply yards. Some mill products are sold to industrial customers, remanufacturers and treating businesses for further processing or as components for other products.

Our OSB products are used primarily for sheathing, flooring and roofing in the construction of new homes or the renovation and repair of existing structures. NA OSB products are marketed under the following brand names: Durastrand® pointSIX®, Pinnacle® and Stabledge® (premium flooring), TruFlor® pointSIX® and TruFlor® (commodity flooring), Rimboard™, SteadiTred® (industrial), QuakeZone®, Windstorm™, TallWall® and Trubord™ (wall sheathing) and SolarBord™ (radiant barrier sheathing), Trubord™ (roof sheathing), TruDeck® (flat roof sheathing for large industrial/commercial buildings) and StableDeck® (utility trailer floors).

Canadian MDF products are marketed under the brand names Ranger™, WestPine™, and EcoGold™ both from our sales office and through distributors. (Use of® or™ indicates Canadian trademark status. Trademark status may vary in other jurisdictions).

***Operations***

Our NA EWP operations include 10 multi-opening press OSB mills and 3 continuous press OSB mills. Continuous press technology allows for the production of OSB in non-standard sizes and with specialized performance characteristics.

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Our NA EWP operations also 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 our Edmonton plywood mill.

The capacity figures below for year-end 2022 give effect to the permanent curtailment of one shift at our Quesnel Plywood mill and excludes the idled OSB mill near Allendale, South Carolina.

***Capacity and Production***

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| | | | |
|:---|:---|:---|:---|
| | **2022** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2021**<sup>1</sup> | **2020** |
| **OSB** (MMsf 3/8" basis) |  |  |  |
| Capacity (year-end) | 7360 | 7360 |  |
| Production | 6109 | 5654 |  |
| **Plywood** (MMsf 3/8" basis) |  |  |  |
| Capacity (year-end) | 760 | 860 | 860 |
| Production | 716 | 763 | 762 |
| **MDF** (MMsf 3/4" basis) |  |  |  |
| Capacity (year-end) | 240 | 250 | 250 |
| Production | 204 | 227 | 209 |
| **LVL** (Mcf) |  |  |  |
| Capacity (year-end) | 2700 | 3000 | 2600 |
| Production | 2439 | 2439 | 1948 |

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1. Represents production from the date of the Norbord Acquisition of February 1, 2021 to December 31, 2021.

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**4.18&nbsp;&nbsp;&nbsp;&nbsp;Pulp & Paper**

***Sales***

Pulp is marketed out of our sales office in Vancouver, B.C. Most of our sales for NBSK and BCTMP in 2022 were to customers in Asia (predominantly China) with some products shipped to the U.S. and other offshore customers. Shipments within North America were primarily by rail and those to offshore customers were by rail and truck to Vancouver, B.C. and then by bulk or container vessels.

***Operations***

BCTMP is produced at our Slave Lake pulp mill, primarily from hardwood aspen, and is also produced at our Quesnel River pulp mill, primarily from softwood species. These pulps are used by paper manufacturers to produce paperboard products, printing and writing papers and a variety of other paper grades. In 2022, we announced the transition of the Hinton pulp mill from a double-line NBSK producer to a single-line UKP producer. NBSK is also produced at our Cariboo pulp mill and is used by paper manufacturers to produce a variety of paper products, including tissues and printing and writing papers.

Newsprint is sold to various publishers and printers in North America and delivered by rail and truck.

***Capacity and Production***

(Mtonnes)

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| **BCTMP** |  |  |  |
| Capacity (year-end) | 690 | 690 | 690 |
| Production | 581 | 623 | 662 |
| **NBSK** |  |  |  |
| Capacity (year-end)<sup>1</sup> | 170 | 520 | 570 |
| Production<sup>2</sup> | 359 | 428 | 462 |
| **Newsprint** |  |  |  |
| Capacity (year-end) | 135 | 135 | 135 |
| Production<sup>2</sup> | 106 | 113 | 105 |
| **UKP** |  |  |  |
| Capacity (year-end)<sup>1</sup> | 250 |  |  |
| Production<sup>3</sup> | 42 |  |  |

---

1.&nbsp;&nbsp;&nbsp;&nbsp;Reflects the impact of the closure of one of Hinton Pulp's two production lines and the move to produce UKP rather than NBSK on the remaining line.

2.&nbsp;&nbsp;&nbsp;&nbsp;Reflects West Fraser's 50% ownership.

3.&nbsp;&nbsp;&nbsp;&nbsp;Reflects West Fraser's production beginning in October 2022.

– 18 –

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**4.19&nbsp;&nbsp;&nbsp;&nbsp;Europe Engineered Wood Products**

***Sales***

Our Europe EWP segment includes OSB, particleboard, MDF and related value-added products that are marketed from our sales office in Cowie, Scotland. Our OSB is sold primarily to customers in the U.K., Germany, BeNeLux, France and Scandinavia while our particleboard, MDF and related value-added products are sold primarily to customers in the U.K. Our products sold within the U.K. and within continental Europe are shipped by truck and rail while our products sold to Scandinavia are shipped by vessel.

Our OSB and particleboard are used primarily in sheathing, flooring and other construction applications. MDF applications include cabinet doors, mouldings and interior wall paneling. Our European panel products are sold under the trademarks SterlingOSB Zero® (OSB), CaberFloor® (particleboard), Conti® (particleboard) and CaberWood® (MDF).

***Operations***

Our EWP mills in Scotland and Belgium utilize continuous press technology. Our South Molton, England particleboard mill employs single-opening press technology and is integrated with laminating operations and a flat-pack furniture manufacturing facility.

***Capacity and Production***

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2021**<sup>1</sup> | **2020** |
| **OSB** (MMsf 3/8" basis) |  |  |  |
| Capacity (year-end) | 1515 | 1505 |  |
| Production | 954 | 1035 |  |
| **MDF** (MMsf 3/8" basis) |  |  |  |
| Capacity (year-end) | 380 | 380 |  |
| Production | 269 | 299 |  |
| **Particleboard** (MMsf 3/8" basis) |  |  |  |
| Capacity (year-end) | 565 | 565 |  |
| Production | 447 | 494 |  |

---

1. Represents production from the date of the Norbord Acquisition of February 1, 2021 to December 31, 2021.

**4.20&nbsp;&nbsp;&nbsp;&nbsp;Risks and Uncertainties**

A detailed discussion of risk factors is included under the heading "Risks and Uncertainties" in Management's Discussion & Analysis for the year ended December 31, 2022, which is incorporated herein by reference. Our Management's Discussion & Analysis is available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at <u>www.sedar.com</u> and on the Electronic Document Analysis and Retrieval ("EDGAR") at <u>www.sec.gov/edgar</u>.

– 19 –

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**ITEM 5 - CAPITAL STRUCTURE**

***Share Capital***

Our authorized share capital consists of 430,000,000 shares divided into:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)400,000,000 Common shares,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)20,000,000 Class B Common shares, and

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

The Common shares and Class B Common shares are equal in all respects, including the right to dividends, rights upon dissolution or winding up and the right to vote, except that each Class B Common share may at any time be exchanged for one Common share. The Common shares are listed and traded on the TSX & NYSE under the symbol WFG 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.

As at December 31, 2022, the issued share capital consisted of 81,273,936 Common shares and 2,281,478 Class B Common shares for a total of 83,555,414 shares (December 31, 2021 - 105,928,734 shares). On February 1, 2021, West Fraser's Common shares were listed on the NYSE and began trading under the symbol WFG. At the same time, the symbol on the TSX was also changed to WFG.

***Share Repurchases***

See Share Repurchases on page 3 for a description of share repurchases completed by the Company over the past three years pursuant to the NCIBs and for share repurchases completed by the Company in 2021 and 2022 pursuant to the substantial issuer bids.

***Description of Debt Securities***

In October 2014, we issued $300 million of fixed-rate senior unsecured notes. The notes bear interest at the rate of 4.35% per annum and mature in October 2024. The notes are redeemable, in whole or in part, at our option at any time.

***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. The ratings are assigned both on a corporate level and specifically to our $300 million

– 20 –

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notes maturing October 2024. 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.

---

| | | |
|:---|:---|:---|
| **Agency** | **Rating** | **Outlook** |
| DBRS<sup>1</sup> | BBB | Stable |
| Moody's<sup>2</sup> | Baa3 | Stable |
| Standard & Poor's<sup>3</sup> | BBB- | Stable |

---

1.&nbsp;&nbsp;&nbsp;&nbsp;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. On December 15, 2021, DBRS upgraded our rating from BBB(low) to BBB.

2.&nbsp;&nbsp;&nbsp;&nbsp;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. On February 1, 2021, Moody's revised our outlook from negative to stable.

3.&nbsp;&nbsp;&nbsp;&nbsp;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 For Securities***

The following table sets forth adjusted market prices and trading volumes of our Common shares on the TSX and NYSE for each month of 2022.

**TSX Trading Data (CAD)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**2022** | **High** | **Low** | **Close** | **Volume** |
| **Month** | **($)** | **($)** | **($)** | **(000's)** |
| January | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;126.72 | 108.49 | 117.66 | 9620 |
| February | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;128.89 | 114.43 | 126.52 | 8285 |
| March | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;130.13 | 102.86 | 102.86 | 14620 |
| April | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;115.51 | 89.95 | 112.91 | 14443 |
| May | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;119.60 | 106.75 | 116.70 | 13204 |
| June | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;120.58 | 92.76 | 98.77 | 14456 |
| July | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;132.91 | 96.91 | 119.89 | 8581 |
| August | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;125.60 | 112.90 | 117.50 | 5248 |
| September | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;116.61 | 95.48 | 99.93 | 7574 |
| October | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;105.75 | 95.29 | 102.29 | 4854 |
| November | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;115.50 | 99.00 | 105.22 | 4059 |
| December | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;108.21 | 94.04 | 97.77 | 4398 |
| Total |  |  |  | 109341 |

---

Source : <u>http://tradingdata.tsx.com</u>

– 21 –

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**NYSE Trading Data (USD)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2022** | **High** | **Low** | **Close** | **Volume** |
| **Month** | **($)** | **($)** | **($)** | **(000's)** |
| January | 101.83 | 85.74 | 92.44 | 5562 |
| February | 101.70 | 89.13 | 99.73 | 5621 |
| March | 102.61 | 82.32 | 82.43 | 7859 |
| April | 91.57 | 71.42 | 87.82 | 7422 |
| May | 93.79 | 83.00 | 92.38 | 7696 |
| June | 95.77 | 71.35 | 76.73 | 11120 |
| July | 102.96 | 74.31 | 93.64 | 11157 |
| August | 97.12 | 87.13 | 89.70 | 3525 |
| September | 88.59 | 69.60 | 72.49 | 5364 |
| October | 77.88 | 69.51 | 75.03 | 3261 |
| November | 86.91 | 71.60 | 78.37 | 2276 |
| December | 80.48 | 68.75 | 72.29 | 2341 |
| Total |  |  |  | 73203 |

---

Source : <u>NYSE</u>

***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. In July 2022, our Board of Directors increased the quarterly dividend from US$0.25 to US$0.30 per share. Dividends of US$1.15 were declared in 2022. Dividends of CAD$0.70 and US$0.20 were declared in the first three quarters and fourth quarter respectively in 2021. Dividends of CAD$0.80 per share were declared in 2020. There can be no assurance that 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 current circumstances.

During the year ended December 31, 2022, we issued options to purchase an aggregate of 124,566 common shares at a weighted average price of CAD$123.63 per share. We did not issue any common shares during the year ended December 31, 2022. See Note 15 to our audited consolidated financial statements for the year ended December 31, 2022.

**ITEM 6 - TRANSFER AGENT**

Our transfer agent and registrar is Computershare Investor Services Inc. The contact information is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Phone**: 1-800-564-6253 (toll free in Canada and the United States) between 9:00 am and 6:00 pm Eastern Time or 514-982-7555 (international direct dial).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fax: 1-866-249-7775 (toll free North America- Int'l 416-263-9524)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Online**: <u>www.computershare.com/service</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Mail**: Computershare Investor Services, 100 University Ave., 8<sup>th</sup> Floor, North Tower, Toronto, Ontario, M5J 2Y1 Canada

**ITEM 7 - INTEREST OF EXPERTS**

Our Independent Registered Public Accounting Firm is PricewaterhouseCoopers LLP ("PwC"), who prepared the Report of the Independent Registered Public Accounting Firm dated February 14, 2023 with respect to the consolidated financial statements as at December 31, 2022 and 2021, and for the years ended December 31, 2022 and 2021 and on the effectiveness of the Company's internal control over financial reporting as at December 31,

– 22 –

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2022. PwC has confirmed that they are independent with respect to us, in compliance with the Chartered Professional Accountants of British Columbia Code of Professional Conduct and in compliance with Public Company Accounting Oversight Board (United States) ("PCAOB") Rule 3520, *Auditor Independence* and the independence requirements of the Securities and Exchange Commission ("SEC").

**ITEM 8 - DIRECTORS AND EXECUTIVE OFFICERS**

**8.1&nbsp;&nbsp;&nbsp;&nbsp;Directors**

The names and municipalities of residence of the Directors of the Company as of February 14, 2023, 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 Municipality<br>of Residence** | **Principal Occupation** | **Director Since** |
| **Henry H. Ketcham**<br>Vancouver, B.C. | Chair of the Board | September 16, 1985 |
| **Reid E. Carter**<sup>1 & 4</sup><br>West Vancouver, B.C. | Corporate Director | April 19, 2016 |
| **Raymond W. Ferris**<br> Vancouver, B.C. | President and Chief Executive Officer | April 23, 2019 |
| **John N. Floren**<sup>2, 3 & 4</sup><br>Oakville, Ontario | Corporate Director | April 19, 2016 |
| **Brian G. Kenning**<sup>2 & 4</sup><br>Vancouver, B.C. | Corporate Director | April 19, 2017 |
| **Ellis Ketcham Johnson**<sup>1 &</sup> <sup>3</sup><br>Greenwich, Connecticut | President, Private Philanthropic Foundation | April 20, 2021 |
| **Marian Lawson**<sup>2 & 3</sup>****<br> Toronto, Ontario | Corporate Director | February 1, 2021 |
| **Colleen M. McMorrow**<sup>1 & 3</sup><br>Oakville, Ontario | Corporate Director | February 1, 2021 |
| **Robert L. Phillips**<sup>2 & 4</sup> <br>Anmore, B.C. | Corporate Director | April 28, 2005 |
| **Janice G. Rennie**<sup>1, 2 & 4</sup><br>Edmonton, Alberta | Corporate Director | April 28, 2004 |
| **Gillian D. Winckler**<sup>1 & 3</sup><br>Vancouver, B.C. | Corporate Director | April 19, 2017 |

---

1.&nbsp;&nbsp;&nbsp;&nbsp;Member of the Audit Committee.

2.&nbsp;&nbsp;&nbsp;&nbsp;Member of the Human Resources & Compensation Committee.

3.&nbsp;&nbsp;&nbsp;&nbsp;Member of the Health, Safety & Environment Committee.

4.&nbsp;&nbsp;&nbsp;&nbsp;Member of the Governance & Nominating Committee.

All of our Directors have held the same or a similar principal occupation with the organization indicated or a predecessor thereof for the last five years except for:

Reid Carter who before December 31, 2018 was President, Brookfield Timberlands Management LP;

Raymond Ferris who before July 1, 2019 was our President and Chief Operating Officer;

John Floren who before December 31, 2022 was President and Chief Executive Officer, Methanex Corporation; and

– 23 –

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Marian Lawson who before 2018 was Executive Vice-President, Global Head, Financial Institutions and Transaction Banking, Scotiabank.

The term of office of each Director will expire at the conclusion of the Company's next annual general meeting.

For additional information about our Directors, please see our 2023 Management Proxy Circular, which, when published, will be posted on our website at www.westfraser.com, on SEDAR at <u>www.sedar.com</u> and on EDGAR at <u>www.sec.gov/edgar</u>.

**8.2&nbsp;&nbsp;&nbsp;&nbsp;Senior Executive Officers**

The names and titles of the senior executive officers of the Company on December 31, 2022 are as follows:

---

| | |
|:---|:---|
| **Name and Municipality<br>of Residence** | **Office Held** |
| **Raymond W. Ferris**<br>Vancouver, B.C. | President and Chief Executive Officer |
| **Christopher A. Virostek**<br> North Vancouver, B.C. | Senior Vice-President, Finance and Chief Financial Officer |
| **Sean P. McLaren**<br>Collierville, Tennessee | Chief Operating Officer |
| **Kevin J. Burke**<br>Greenville, South Carolina | Senior Vice-President, Wood Products |
| **Keith D. Carter**<br>Quesnel, B.C. | Senior Vice-President, Western Canada |
| **James W. Gorman**<br>Saanichton, B.C. | Senior Vice-President, Corporate and Government Relations |
| **Robin A. Lampard**<br>Toronto, Ontario | Senior Vice-President, Finance |
| **Christopher D. McIver**<br>North Vancouver, B.C. | Senior Vice-President, Marketing and Corporate Development |
| **Alan G. McMeekin**<br> Milngavie, Scotland | Senior Vice-President, Europe |

---

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:

Raymond Ferris who before July 1, 2019 was our President and Chief Operating Officer;

Christopher Virostek, who before September 7, 2022 was Vice-President, Finance and Chief Financial Officer;

Sean McLaren, who prior to December 7, 2021 was President, Solid Wood and before February 1, 2021 was our Vice-President, U.S. Lumber;

Kevin Burke, who before December 7, 2021, was Vice-President, North American Engineered Wood Products and Renewable Energy, before July 23, 2021 was our Vice-President, North American Engineered Wood Products, before February 1, 2021 was the Senior Vice-President, North American Operations of Norbord and before February 9, 2018 was the Vice-President – Operations, South of Norbord;

Keith Carter, who before December 7, 2021 was Vice-President, Western Canada Operations and before July 23, 2021 was our Vice-President, Pulp and Energy Operations;

James Gorman, who before September 7, 2022 was Vice-President, Corporate and Government Relations;

– 24 –

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Robin Lampard, who before February 1, 2021 was the Senior Vice-President and Chief Financial Officer of Norbord;

Christopher McIver, who before February 1, 2021 was our Vice-President, Sales and Marketing; and

Alan McMeekin, who before December 7, 2021 was Vice-President, European Engineered Wood Products, before February 1, 2021 was the Senior Vice-President, Europe of Norbord and before February 5, 2018 was the Vice-President, Finance and Operations Europe of Norbord.

**8.3&nbsp;&nbsp;&nbsp;&nbsp;Shareholdings of Directors and Senior Executive Officers**

The Directors and senior 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, 2022** |
| Common shares | 1445521 |
| % of total Common shares | 2% |
| Class B Common shares | 78728 |
| % of total Class B Common shares | 3% |
| % of all shares outstanding | 2% |

---

**8.4&nbsp;&nbsp;&nbsp;&nbsp;Cease Trade Orders, Bankruptcies, Penalties or Sanctions**

Christopher Virostek, our Senior Vice-President, Finance and Chief Financial Officer, was a director of Masonite (Africa) Limited ("MAL"), a majority owned subsidiary of Masonite International Corporation ("Masonite"), when MAL commenced voluntary business rescue proceedings in South Africa in December 2015. Mr. Virostek served as a director of MAL in connection with his duties as an employee of Masonite. The business rescue plan of MAL was substantially implemented as provided under its terms and the business rescue proceedings ended in August 2016, at which time Mr. Virostek resigned as a director.

**8.5&nbsp;&nbsp;&nbsp;&nbsp;Legal Proceedings and Regulatory Actions**

The Company is subject to various investigations, claims and legal, regulatory and tax proceedings covering matters that arise in the ordinary course of business activities, including civil claims and lawsuits, regulatory examinations, investigations, audits and requests for information by governmental regulatory agencies and law enforcement authorities in various jurisdictions. Each of these matters is subject to uncertainties and it is possible that some of these matters may be resolved unfavourably.

There are no legal proceedings to which we are or were a party, or to which any of our property is or was the subject of, during our financial year ended December 31, 2022, which involves claims that exceed 10% of our current assets.

On November 25, 2016, a coalition of U.S. lumber producers petitioned the USDOC and the USITC to investigate alleged subsidies to Canadian softwood lumber producers and levy CVD and ADD against Canadian softwood lumber imports. The USDOC chose us as a "mandatory respondent" to both the countervailing and antidumping investigations, and as a result, we have received unique company-specific rates. For a description of the developments related to the softwood lumber dispute and the impact on us, please refer to (i) the "Discussion & Analysis of Annual Results by Product Segment – Lumber – Softwood Lumber Dispute" in our 2022 annual Management's Discussion & Analysis; and (ii) Note 26 to our audited consolidated financial statements for the year ended December 31, 2022.

– 25 –

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**8.6&nbsp;&nbsp;&nbsp;&nbsp;Governance**

Corporate governance is guided by our Corporate Governance Policy, a copy of which may be viewed on our website: <u>www.westfraser.com</u>. The Board of Directors has established a Governance & Nominating Committee comprised of Robert Phillips (Chair), Reid Carter, John Floren, Brian Kenning and Janice Rennie, all of whom are independent 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 and all other corporate governance matters and practices. On the occasion of each regularly scheduled meeting of the Committee in 2022, the committee met without management representatives present and reviewed these and other issues.

The Corporate Governance Policy includes a Code of Conduct which sets out our policies and requirements relating to, among other categories, legal compliance, safety, environmental stewardship, human rights, anti-corruption and whistleblowing. Additional information is available on our website <u>www.westfraser.com</u> under Corporate Governance.

**8.7&nbsp;&nbsp;&nbsp;&nbsp;Audit Committee**

The 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.

*Reid E. Carter*

Mr. Carter holds a combined undergraduate degree in Forestry and Biology and a master's degree in Forest Soils. He was president of a large timberlands investment firm and was involved with that firm and related firms in various senior roles for the period 2003 to 2018. Prior to that he served as National Bank Financials' Paper and Forest Products Analyst.

*Ellis K. Johnson*

Ms. Johnson was appointed a member of our Audit Committee on April 20, 2022. Ms. Johnson is currently the President of a private philanthropic foundation. She completed her undergraduate degree at Lewis and Clark College, received a graduate degree from Yale University and recently completed a Directorship Program with an emphasis on Board Governance.

*Colleen M. McMorrow*

Ms. McMorrow was appointed a member of our Audit Committee on February 11, 2021. Ms. McMorrow, who holds a Bachelor of Commerce, is a Chartered Professional Accountant, Chartered Accountant and was a senior client assurance partner with Ernst & Young LLP until her retirement in 2016. She was elected as a Fellow of the Chartered Accountants in 2000. Ms. McMorrow has chaired or been a member of several audit committees of public and private companies in the past and is currently the chair of the audit committees of Exco Technologies Limited and Ether Capital Corporation.

– 26 –

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*Janice G. Rennie*

Ms. Rennie, who holds a Bachelor of Commerce, is a Chartered Professional Accountant, Chartered Accountant. She was elected as a Fellow of the Chartered Accountants in 1998. Ms. Rennie has chaired or been a member of several audit committees of public companies in the past and currently is chair of the audit committee of Major Drilling Group International Inc.

*Gillian D. Winckler*

Ms. Winckler, who holds a Bachelor of Science and Bachelor of Commerce (Honours) obtained in South Africa, is a Chartered Accountant (South Africa). Ms. Winckler worked in the audit profession for five years, in corporate finance for five years, and in a number of executive positions with Coalspur Limited and BHP Billiton. Ms. Winckler is currently a member of the audit committee of FLSmidth & Co. A/S.

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

***Fees Paid to Independent Registered Public Accounting Firm***<sup>1</sup>

($ thousands)

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Audit Fees | 2,531 | 1,734 |
| Audit-Related Fees | 84 | 249 |
| Tax Fees | 43 | 250 |
| All Other Fees | 74 | 36 |

---

1.&nbsp;&nbsp;&nbsp;&nbsp;Amounts represent actual and estimated fees related to the respective fiscal years noted. Amounts are billed and paid in CAD, GBP, and EUR and have been translated to USD using the average exchange rate for the respective years noted.

***Audit Fees***

Audit fees relate to the integrated audit of our annual consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022, reviews of our interim consolidated financial statements, and statutory audits of the financial statements of our subsidiaries.

***Audit-Related Fees***

Audit-Related Fees include employee benefit audits, services associated with registration statements, prospectuses, and other documents filed with securities regulators, and due diligence assistance.

***Tax Fees***

Tax fees relate to tax compliance, tax advice, and tax planning services.

– 27 –

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***All Other Fees***

All other fees relate to fees in connection with translation services and limited assurance engagements relating to climate matters.

**ITEM 9 - MATERIAL CONTRACTS**

1. On October 15, 2014, we issued $300 million of fixed rate senior unsecured notes due October 15, 2024 pursuant to a private placement in the U.S. The notes bear interest of 4.35% with semi-annual payments commencing on April 15, 2015 and are redeemable, in whole or in part, at our option at any time. In the event of a change in control in respect of the Company which is followed within 60 days by ratings downgrades to below investment grade in certain circumstances, unless we have exercised the right to redeem all of the notes, each holder will have the right to require us to repurchase all or any part of such holder's notes at a purchase price in cash equal to 101% of the principal amount of the notes plus any accrued and unpaid interest.

2. On July 18, 2019, we completed an amendment to our revolving lines of credit to extend the maturity date to August 28, 2024, and to increase the size of our Canadian and U.S. syndicated committed revolving credit facilities from CAD$500 million to CAD$850 million. At the same time, we also amended the terms of the $200 million term loan to extend the maturity date from August 25, 2022 to August 28, 2024. All other material terms of the revolving lines of credit and the term loan remained unchanged. On February 1, 2021, concurrent with the closing of the Norbord Acquisition, we completed various administrative amendments to our CAD$850 million committed revolving credit facility and our $200 million term loan to facilitate the Norbord Acquisition.

3. On April 8, 2020 we obtained from a syndicate of lenders an additional CAD$150 million committed revolving credit facility. This committed facility had a term of two years and was made available on substantially the same terms and conditions as the Company's existing syndicated revolving credit facility from certain lenders that are part of that syndicate. On February 1, 2021, concurrent with the closing of the Norbord Acquisition, we amended the terms of our CAD$150 million committed revolving credit facility due 2022 and replaced the CAD$150 million committed revolving credit facility with a $450 million committed revolving credit facility due 2024 on substantially the same terms.

4. On July 28, 2021, we completed an amendment to our revolving credit facilities, combining our CAD$850 million and $450 million revolving facilities into a single $1 billion committed revolving facility with a five-year term. The $200 million term loan remains outstanding and there were no other significant changes to the terms or conditions of the credit facilities.

**ITEM 10 - ADDITIONAL INFORMATION**

**Management Information Circular**

Additional information, including directors' and officers' remuneration and indebtedness, principal holders of our securities and securities authorized for issuance under equity compensation plans, will be contained in the Management Information Circular for the annual general meeting of the Company to be held on April 18, 2023. Additional financial information is provided in our annual consolidated financial statements and Management's Discussion & Analysis for the year ended December 31, 2022.

Copies of our Annual Report, and the documents incorporated by reference herein, our annual audited consolidated financial statements (including the report of our Independent Registered Public Accounting Firm) for the year ended December 31, 2022 and our Management Information Circular may be obtained at any time upon request from us

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once these documents have been published, 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 AIF, our Annual Report (once published) and additional information concerning the Company may also be obtained on our website at www.westfraser.com, on SEDAR at <u>www.sedar.com</u> and on EDGAR at <u>www.sec.gov/edgar</u>.

**Forward-looking Statements**

This AIF contains information that constitutes "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of United States securities laws (collectively, "forward-looking statements"). Forward-looking statements include statements that are forward-looking or predictive in nature and are dependent upon or refer to future events or conditions. We use words such as "expects," "anticipates," "plans," "believes," "estimates," "seeks," "intends," "targets," "projects," "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may," "will," "should," "would" and "could" to identify these forward-looking statements. These forward-looking statements generally include statements which reflect management's expectations regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of West Fraser and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods.

Forward-looking statements included in this AIF include references to:

---

| | |
|:---|:---|
| **Discussion** | **Forward-Looking Statements** |
| General Development of Business | our expected annual production capacity at Dudley lumber mill and Lufkin lumber mill and related timing, timing of potential restart of Allendale OSB mill, ability to achieve our SBTi commitment, capital investment, planned mill start up, full run rate production, anticipated capacity at Henderson lumber manufacturing complex and production curtailments at Cariboo Pulp & Paper |
| Corporate Strategy | our corporate strategy and objectives to maintain a strong balance sheet and liquidity profile, to maintain a leading cost position and to return capital to shareholders, and to reinvest in our operations across all market cycles; our ability to achieve science-based targets and near-term greenhouse gas reductions |
| Manufacturing Inputs | our ability to maintain adequate timber and fibre supply for our operations, including our expectations regarding (i) re-forestation, (ii) the impacts of mountain pine beetle, caribou recovery planning and forest fires on our timber supply and AAC, (iii) the impacts of recent amendment to British Columbia forest legislation and (iv) the impacts on residual fibre supply |
| Indigenous Relations | the potential impact to our operations and timber supply of Aboriginal title or rights and the actions of Canadian governments in relation to their relationships with Indigenous groups and "old growth" forest logging deferrals; our ability to develop and maintain positive resilient relationships with Indigenous Nations |
| Responsible Resource Efficiency | our goals to have a sustainable and resilient business, to manage our emissions and develop sustainable energy solutions |
| Capital Expenditures and Acquisitions | our plans relating to capital expenditures and acquisitions |
| Our Products | the capacities of our lumber, North American engineered wood products and pulp and paper operations, and the seasonality of these operations |
| Capital Structure - Cash dividends | future declarations and payment of dividends |

---

By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts, and other forward-

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looking statements will not occur. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• assumptions in connection with the economic and financial conditions in the U.S., Canada, U.K., Europe and globally and consequential demand for our products, including the impact of the conflict in the Ukraine;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• continued increases in interest rates and inflation could impact housing affordability and repair and remodelling demand, which could reduce demand for our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• global supply chain issues may result in increases to our costs and may contribute to a reduction in near-term demand for our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks inherent to product concentration and cyclicality;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effects of competition for logs and fibre resources and product pricing pressures, including continued access to log supply and fibre resources at competitive prices and the impact of third-party certification standards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effects of variations in the price and availability of manufacturing inputs, including energy, employee wages, resin and other input costs, and the impact of inflationary pressures on the costs of these manufacturing costs, including increases in stumpage fees and log costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability and costs of transportation services, including truck and rail services, and port facilities, and impacts on transportation services from wildfires and severe weather events and the impact of increases energy prices on the costs of transportation services and the continuation of transportation constraints in Western Canada;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transportation constraints may continue to negatively impact our ability to meet projected shipment volumes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the timing of our planned capital investments may be delayed, the ultimate costs of these investments may be increased as a result of inflation, and the projected rates of return may not be achieved;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• various events that could disrupt operations, including natural, man-made or catastrophic events including wildfires and any state of emergency and/or evacuation orders issued by governments, and ongoing relations with employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks inherent to customer dependence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impact of future cross border trade rulings or agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• implementation of important strategic initiatives and identification, completion and integration of acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impact of changes to, or non-compliance with, environmental or other regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the COVID-19 pandemic on our operations and on customer demand, supply and distribution and other factors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• government restrictions, standards or regulations intended to reduce greenhouse gas emissions and our ability to achieve our SBTi commitment for the reduction of greenhouse gases as planned;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the costs and timeline to achieve our greenhouse gas emissions objectives may be greater and take longer than anticipated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in government policy and regulation, including actions taken by the Government of British Columbia pursuant to recent amendments to forestry legislation and initiatives to defer logging of forests deemed "old growth" and the impact of these actions on our timber supply;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impact of weather and climate change on our operations or the operations or demand of its suppliers and customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ability to implement new or upgraded information technology infrastructure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impact of information technology service disruptions or failures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impact of any product liability claims in excess of insurance coverage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks inherent to a capital intensive industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impact of future outcomes of tax exposures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential future changes in tax laws, including tax rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investigations, claims and legal, regulatory and tax proceedings which if resolved unfavourably may result in a loss to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effects of currency exposures and exchange rate fluctuations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future operating costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability of financing, bank lines, securitization programs and/or other means of liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• continued access to timber supply in the traditional territories of Indigenous Nations;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to continue to maintain effective internal control over financial reporting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risks and uncertainties described in our 2022 MD&A; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other risks detailed from time-to-time in our annual information forms, annual reports, MD&A, quarterly reports and material change reports filed with and furnished to securities regulators.

In addition, actual outcomes and results of these statements will depend on a number of factors, including those matters described under "Risks and Uncertainties" in our 2022 MD&A, and may differ materially from those anticipated or projected. This list of important factors affecting forward-looking statements is not exhaustive, and reference should be made to the other factors discussed in public filings with securities regulatory authorities. Accordingly, readers should exercise caution in relying upon forward-looking statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether written or oral, to reflect subsequent events or circumstances except as required by applicable securities laws.

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**ITEM 11 - GLOSSARY**

**2023 Notes**

Norbord's 6.25% senior notes due April 2023

**2027 Notes**

Norbord's 5.75% senior notes due July 2027

**AAC** Annual Allowable Cut: The volume of timber that may be harvested annually from a specific timber tenure

**ADD**

Antidumping duties

**AR**

Administrative Review by the USDOC

**BCTMP**

Bleached Chemithermomechanical Pulp

**CAD**

Canadian Dollars

**CVD**

Countervailing duties

**Dimension Lumber** 

Standard commodity lumber ranging in sizes from 1 x 3's to 4 x 12's, in various lengths

**EU**

Europe

**EU EWP**

Europe Engineered Wood Products

**EWP**

Engineered wood products

**LVL** 

Laminated Veneer Lumber. Large sheets of veneer bonded together with resin then cut to lumber equivalent sizes

**m**<sup>3</sup>

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 panelboard produced by chemically bonding highly refined wood fibres of uniform size under heat and pressure

**Mfbm** 

One thousand board feet (equivalent to one thousand square feet of lumber, one inch thick)

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**MMfbm** 

One million board feet (equivalent to one million square feet of lumber, one inch thick)

**MMBTU**

Million British Thermal Units

**Msf** 

One thousand square feet. A unit of measure for Panel products (such as OSB, MDF and plywood) equal to one thousand square feet on a 3/4 inch basis for MDF, on a 3/8 inch basis for plywood and on either a 3/8-inch or 7/16-inch thick basis for OSB

**MMsf** 

One million square feet

**Mtonne** 

Means one thousand tonnes

**NA**

North America

**NA EWP**

North America Engineered Wood Products

**NBSK** 

Northern Bleached Softwood Kraft Pulp

**NCIB**

Normal course issuer bid

**Norbord**

Norbord Inc.

**Norbord Acquisition**

Acquisition of Norbord completed February 1, 2021

**NYSE**

New York Stock Exchange

**OSB** 

Oriented Strand Board. An engineered structural wood panel produced by chemically bonding wood strands in a uniform direction under heat and pressure

**Panelboard**

Oriented strand board, particleboard, medium density fibreboard and plywood

**Particleboard**

A panelboard produced by chemically bonding clean sawdust, small wood particles and recycled wood fibre under heat and pressure

**Plywood**

A panelboard produced by chemically bonding thin layers of solid wood veneers

**SPF** 

Lumber produced from spruce/pine/balsam fir species

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**SYP** 

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

**TSX**

Toronto Stock Exchange

**U.K.**

United Kingdom

**UKP**

Unbleached Kraft Pulp

**U.S.**

United States

**USD**

United States Dollars or $

**USDOC**

United States Department of Commerce

**USITC**

United States International Trade Commission

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**SCHEDULE 1 – AUDIT COMMITTEE CHARTER**

The Audit Committee Charter, which is set out below, was approved by the Board on April 20, 2021.

***General Mandate***

The Audit Committee (the "Committee") will 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.

The Committee will have oversight responsibility over:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the integrity of the Company's financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Company's compliance with legal and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the external auditors' appointment, qualifications, independence and performance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the performance of the Company's internal audit function ("Internal Audit").

The Committee's role is one of oversight. The Company's management is responsible for preparing the Company's financial statements and providing all required certifications relating to those financial statements, and the external auditor is responsible for auditing those financial statements. In carrying out its oversight role, the Committee will be entitled to rely on information provided by management of the Company ("Management") and the external auditor. The Committee is not responsible for providing any expert or special assurance or any guarantee as to the accuracy or completeness of the Company's financial statements or its public disclosure.

The Committee will also be responsible for those other matters as set out in this Charter and/or as may be delegated to it by the Board from time to time.

***Responsibilities***

The Committee will carry out the following responsibilities:

<u>Financial Statements</u>

• Review with Management and the external auditors the significant accounting and financial reporting matters relating to the Company's financial statements, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)significant matters regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)critical accounting policies and practices to be used by the Company in preparing its financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)significant judgments and critical accounting estimates made in connection with the preparation of the financial statements, including (i) any analysis prepared by Management and/or the external auditors in support of significant financial reporting issues and judgments, and (ii) any analysis of the effects of alternative accounting principles in accordance with IFRS;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)complex or unusual transactions, including any off-balance sheet transactions and any contingencies, and their impact on the Company's financial statements;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)all material alternative treatments of financial information in accordance with IFRS that have been discussed between the external auditor and Management, ramifications of the use of these alternative treatments, and the treatment recommended or preferred by the external auditors where either (i) the external auditor does not agree with the treatment proposed by Management, or (ii) the external auditor recommends an alternate treatment to that proposed by Management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)the effect of significant regulatory and accounting initiatives and pronouncements on the financial statements of the Company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)any material issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of material control deficiencies.

• Meet and review with Management and the external auditors prior to public disclosure:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the annual and interim financial statements of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)the related annual or interim management's discussion and analysis of financial condition and results of operations ("MD&A"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)each related news release.

In completing its review, the Committee will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)consider whether the financial statements, MD&A and news release are complete, are consistent with information known to Committee members, and reflect appropriate accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)obtain reasonable assurance that (i) the financial statements are presented fairly in accordance with IFRS, and (ii) the MD&A is in compliance with appropriate regulatory requirements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)provide a recommendation to the Board with respect to the approval of, or, if authority has been delegated by the Board, approve the financial statements, MD&A and news release and their filing with securities regulators in accordance with applicable securities laws.

In meeting, the Committee may meet in person, via telephone, via video-conference or by the use of any other equivalent communications platform that enables each participant to communicate with each other participant.

• Review and discuss with Management and the external auditors prior to public disclosure all earnings news releases and other press releases that contain "first-time disclosure" of significant financial information respecting the Company or contains estimates or information regarding the Company's future financial performance or prospect, which will include review and discussions as to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)"first-time disclosure" financial information and earnings guidance provided to analysts and, if applicable, ratings agencies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)the type and presentation of information to be included in such press releases (in particular the use of "pro forma" or "adjusted" information that is not in accordance with IFRS).

• Review and discuss with Management and the external auditors, and recommend to the Board for approval prior to public disclosure:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the portions of the Annual Information Form containing significant financial information derived from the Company's financial statements and within the Committee's mandate;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)the portions of any Company's annual or special management proxy circular that (i) contain significant financial information derived from the Company's financial statements and within the Committee's mandate, or (ii) relate to the Committee's composition and responsibilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)all prospectuses, registration statements and other offering or tender documents, including any prospectus supplement filed pursuant to a base shelf prospectus to the extent that any of these documents include significant financial information derived from the Company's financial statements and within the Committee's mandate that has not previously been reviewed and approved by the Committee or the Board; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)significant financial information, including "pro forma" or "adjusted" non-IFRS information, respecting the Company contained in a publicly disclosed document (other than routine investor relations or similar materials or communications that contain extracts of previously disclosed financial information) that has not previously been reviewed and approved by the Committee or the Board.

• Review with Management and the external auditors and, if necessary, legal counsel, any litigation, claim or contingency, including tax assessments, or material reports or inquiries from regulators or governmental agencies, that could have a material effect upon the financial position of the Company, and the manner in which these matters have been disclosed in the financial statements.

<u>Internal Control</u>

• Oversee Management's design and assessment of internal control procedures over financial reporting.

• Review and discuss Management's assessment of the effectiveness of the Company's internal controls over financial reporting on an annual basis or as more frequently required to ensure effectiveness of these internal control systems, including any identified significant deficiencies or material weaknesses in the design or operation of internal controls or any fraud that involves Management or other employees who have a significant role in the Company's internal controls.

• Review reports received from Management and/or the external auditors that include recommendations for improvement of such internal controls and processes and remediation of any identified significant deficiencies or material weaknesses on an annual basis or as more frequently required to ensure effectiveness of these internal controls.

• In connection with the Board's overall enterprise risk management responsibility, assist the Board with its responsibility to, with the advice of Management, identify the principal financial and audit risks of the Company and establish systems and procedures to ensure these principal financial and audit risks are monitored, and to make recommendations to the Board, which will include discussions with Management relating to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Identification of key risks, including, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.significant financial risk exposures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.significant audit risks; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.the principal information technology risks, including cyber security, data protection, information security and information systems risks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)the establishment of systems and procedures to ensure these risks are monitored;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)the steps Management has taken to assess, monitor and control, manage or mitigate the Company's exposures to these risks;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)the adoption of controls to prevent and detect fraud or improper or illegal transactions or payments and to ensure compliance with anti-fraud and anti-bribery laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)implementing guidelines and policies to govern the process by which risk assessment and management is undertaken; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)monitoring and reviewing, at least annually and more frequently as may be required, the processes and controls designed to identify, assess, monitor and manage the risks referred to above.

• Annually review the Company's disclosure controls and procedures, including any significant deficiencies in or material non-compliance with such controls and procedures.

• Commencing with the audit of the Company's financial statements for the year ending December 31, 2022, review the scope of the external auditors' assessment of internal control over financial reporting, and obtain and review reports on significant findings and recommendations, including those in respect of 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.

<u>External Audit</u>

• Recommend to the Board the appointment or removal of the external auditor to be appointed for the purpose of preparing or issuing any audit report or performing any other audit, review or attestation services for the Company, with any such appointment or removal to be confirmed by the shareholders of the Company at each annual general meeting in accordance with the requirements of the British Columbia *Business Corporations Act*.

• Be directly responsible for the compensation of the external auditors to be paid by the Company in connection with (i) preparing and issuing the audit report on the Company's financial statements, and (ii) performing other audit, review or attestation services.

• Be directly responsible for the oversight of the services of the external auditors for the purpose of preparing or issuing an audit report or performing other audit, review or attestation services for the Company (with the external auditors reporting directly to, and being accountable to, the Committee).

• Exercise sole authority to pre-approve all audit services and all permitted non-audit services to the Company, provided that the Committee need not approve in advance non-audit services where:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the aggregate amount of all such non-audit services provided to the Company constitutes not more than 5% of the total amount of fees paid by the Company to the external auditors during the fiscal year in which the non-audit services are provided; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)such services were not recognized by the Company at the time of the engagement to be non-audit services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee.

The Committee shall have the sole authority to delegate to one or more designated members of the Committee the authority to grant pre-approvals required by this section, provided that the decision of any member to whom authority is delegated to pre-approve a service shall be presented to the Committee at its next scheduled meeting. If the Committee approves an audit service within the scope of the engagement of the external auditors, such audit service shall be deemed to have been pre-approved for purposes of this section.

• Meet with the external auditors prior to the annual audit to review and approve the external auditors' proposed annual audit plan, scope, approach, staffing and fee schedule.

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• Annually receive from the external auditors, and review, a report on items required to be communicated to the Committee by applicable rules and regulations.

• Review the external auditors' report to the shareholders on the Company's annual financial statements.

• Review with Management and the external auditors all matters required to be communicated to the Committee under generally accepted auditing standards and other applicable regulatory requirements arising from the annual audit and quarterly review engagements.

• Review with the external auditors any audit problems or difficulties encountered in the course of the audit of the Company's financial statements, including any restrictions on the scope of the external auditors' activities or on access to any requested information, and any significant disagreements with Management, Management's response to such disagreements and the resolution of such disagreements.

• Annually review the independence of the external auditors, including their formal written statement of independence delineating all relationships between the external auditors and the Company, review all such relationships, and consider applicable auditor independence standards and take any decisions and actions that are necessary and appropriate where the Committee becomes aware of the potential for a conflict (or the reasonable perception of a conflict) between the interests of the external auditors and the interests of the Company.

• Ensure that the external auditors are in good standing with the Canadian Public Accountability Board and, if applicable, the United States Public Company Accounting Oversight Board by receiving, at least annually, a report by the external auditors on their internal quality control processes and procedures, such report to include any material issues raised by the most recent internal quality control review, or peer review, of the external auditors, or any governmental or professional authorities of the external auditors within the preceding five years, and any steps taken to deal with such issues.

• Ensure that the external auditors meet the rotation requirements for lead audit partner assigned to the Company's annual audit by receiving a report annually from the external auditors setting out the status of the lead audit partner with respect to the appropriate regulatory rotation requirements and plans to transition a new lead audit partner onto the audit engagement.

• Annually evaluate, taking into account the opinions of Management and the head of Internal Audit, the performance of the external auditors, including the lead audit partner, and report to the Board on its conclusions regarding the external auditors and recommendation to shareholders for appointment of the external auditors.

• Periodically review and approve the Company's hiring policies with respect to partners or employees (or former partners or employees) of either former or present external auditors of the Company.

<u>Internal Audit</u>

• The Committee will be responsible for reviewing and overseeing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the activities, organization structure and qualifications of the Internal Audit function;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)the adoption of a charter for the Internal Audit function (the "Internal Audit Charter"), and the approval of any amendments to the Internal Audit Charter from time-to-time to ensure the proper functioning of the Internal Audit function;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)during any period of transitional relief provided to the Company in implementing the Internal Audit function, the Committee will oversee Management's plans for implementation of the Internal Audit

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function and meet periodically with the Company personnel primarily responsible for the design and implementation of the Internal Audit function;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)the planned activities of the Internal Audit function;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)the Internal Audit findings and the implementation of any accepted recommendations and Management's response thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)ensure that appropriate steps have been taken to ensure that there are no unjustified or inappropriate restrictions or limitations on the functioning of the Internal Audit function or on access to requested information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)the budget, staffing and resources allocated to the Internal Audit function in order to ensure the effectiveness, objectivity and independence of the Internal Audit function; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)the adequacy of the line of communication between Internal Audit and the Committee, ensuring that is maintained.

<u>Compliance</u>

• 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.

• Obtain and review regular reports from Management and others (including, without limitation, the external auditors and legal counsel) with respect to the Company's compliance with laws and regulations having a material impact on the financial statements including: (i) tax and financial reporting laws and regulations; (ii) legal withholding requirements; (iii) environmental protection laws and regulations; and (iv) other laws and regulations which expose directors to liability.

• Review and discuss with Management and with the Company's legal counsel, if necessary, any legal matters or reports or inquiries received from regulators or governmental agencies that could have a material effect upon the financial position of the Company and that are not subject to the oversight of another committee of the Board.

<u>Reporting Requirements</u>

• Regularly report, at least quarterly, to the Board about Committee activities, issues and related recommendations.

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

<u>Other Responsibilities</u>

• Meet separately with Management of the Company, the head of Internal Audit and the external auditors of the Company as frequently as the Committee determines to be necessary and appropriate for the Committee to discharge its oversight duties.

• Annually review and, if requested by the Human Resources & Compensation Committee, approve the calculation provided by Management to the Human Resources & Compensation Committee of any performance metrics

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that may be required to be calculated under any executive incentive plans or equity based compensation plans used to determine executive bonuses or cash award payouts.

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

• Confirm annually to the Board that all responsibilities outlined in this Charter have been carried out, with the annual confirmation to follow the completion of the audit of the Company's financial statements for each year and to be targeted for to the Board by no later than the meeting of the Board to follow each annual meeting of the shareholders of the Company.

• Consider and, if deemed appropriate, approve in advance any "related party transactions" to which the Company may propose to become a party to.

***Qualifications and Procedures***

• The Committee will be comprised of at least three directors, each of whom will be "independent" as determined in accordance with the securities laws, rules, regulations and guidelines of all applicable securities regulatory authorities (collectively, "Securities Laws"), including without limitation the securities commissions in each of the provinces and territories of Canada and the United States Securities and Exchange Commission, and the stock exchanges on which the Company's securities are listed, including without limitation the Toronto Stock Exchange and the New York Stock Exchange ("NYSE").

• In addition to the foregoing requirements, the composition of the Committee will comply with all Securities Laws to which the Company is subject, including requirements for independence, financial literacy, audit committee financial experts and audit experience.

• The Chair of the Committee will be designated by the Board.

• The Committee will meet at least four times annually, and more frequently as circumstances dictate, and the Chief Financial Officer and the head of Internal Audit and the external auditors, as required by the Committee, should be available on request to attend all meetings.

• A quorum at meetings of the Committee shall be a majority of members present in person or by telephone, video communication or other telecommunication device that permits all persons participating in the meeting to speak and hear one another.

• The Committee should meet privately and separately in *in camera* sessions with representatives of each of Management, the head of Internal Audit and of the external auditors to discuss any matters of concern to the Committee or such members, including any post-audit management letter. In addition, the Committee will meet with the external auditors, upon the receipt of a request from the external auditors, to discuss any matter that the external auditors believe should be brought to the attention of the directors or the shareholders of the Company.

• The Committee will have the authority to engage and retain independent legal counsel and any outside professional advisor that it determines necessary to carry out its duties, at the expense of the Company, without the Board's approval, at any time and has the authority to determine any such advisor's fees and other retention terms.

• The Company will provide appropriate funding, as determined by the Committee, for payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties, including compensation paid to the Company's external auditor and to legal and other professional advisers retained by the Committee.

– 41 –

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• The Committee shall fix its own procedures for meeting and keep records of its proceedings. Minutes of each meeting should be prepared, approved by the Committee and circulated to the full Board. Copies of meeting records will be made available to the external auditors as requested.

***Annual Performance Evaluation and Charter Assessment***

• On an annual basis, the Board will conduct an annual performance evaluation of the Committee, taking into account this Charter, to determine the effectiveness of the Committee.

• The Committee will annually review and assess the adequacy of this Charter and will as required request Board approval for proposed changes, taking into account all applicable legislative and regulatory requirements as well as consideration of any best practice guidelines recommended by regulators or stock exchanges with whom the Company has a reporting relationship.

– 42 –

## Exhibit 99.2

?xml version="1.0" ? wfg-20221231_d2

Exhibit 99.2

**West Fraser Timber Co. Ltd.**

Consolidated Financial Statements

*December 31, 2022 and 2021*

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**RESPONSIBILITY OF MANAGEMENT**

**Management's Report on the Consolidated Financial Statements** 

The accompanying consolidated financial statements and related notes are the responsibility of the management of West Fraser Timber Co. Ltd. (the "Company"). They have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") and include amounts based on estimates and judgments. Financial information included elsewhere in this report is consistent with the consolidated financial statements.

The consolidated financial statements are approved by the Board of Directors on the recommendation of the Audit Committee. The Audit Committee, appointed by the Board of Directors, is composed entirely of independent directors. The Audit Committee reviews the Company's consolidated financial statements and reports its findings to the Board of Directors for consideration before the consolidated financial statements are approved for issuance to shareholders and submitted to securities commissions or other regulatory authorities.

The Audit Committee's duties also include reviewing critical accounting policies and significant estimates and judgments underlying the consolidated financial statements as presented by management and approving the fees of the Company's independent registered public accounting firm.

The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP, performed an audit of the consolidated financial statements, the results of which are reflected in their Report of Independent Registered Public Accounting Firm for 2022. PricewaterhouseCoopers LLP has full and independent access to the Audit Committee to discuss their audit and related matters.

**Management's Report on Internal Control over Financial Reporting** 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in National Instrument 52-109 – *Certification of Disclosure in Issuers' Annual and Interim Filings* and Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under our supervision, management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022, based on the criteria set forth in the *Internal Control – Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2022.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, the Company's independent registered public accounting firm, as stated in their report which appears herein.

---

| | |
|:---|:---|
| */s/ Raymond Ferris* | */s/ Chris Virostek* |
| **Raymond Ferris** | **Chris Virostek** |
| **President and Chief Executive Officer** | **Senior Vice-President, Finance and Chief Financial Officer** |
| February 14, 2023 | |

---

------

![wfg-20221231_g2.jpg](wfg-20221231_g2.jpg)

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of West Fraser Timber Co. Ltd.

**Opinions on the Financial Statements and Internal Control over Financial Reporting**

We have audited the accompanying consolidated balance sheets of West Fraser Timber Co. Ltd. and its subsidiaries (together, the Company) as of December 31, 2022 and 2021, and the related consolidated statements of earnings and comprehensive earnings, of changes in shareholders' equity and of cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control – Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control – Integrated Framework* (2013) issued by the COSO.

**Basis for Opinions**

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits

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![wfg-20221231_g2.jpg](wfg-20221231_g2.jpg)

also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

**Definition and Limitations of Internal Control over Financial Reporting**

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

**Critical Audit Matters** 

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

*Goodwill Impairment Assessments*

As described in Note 8 to the consolidated financial statements, the Company's goodwill balance was $1,944 million as of December 31, 2022. Management conducts an impairment assessment as of December 31 of each year, or more frequently if an indicator of impairment is identified. Management assesses the recoverability of goodwill by comparing the carrying value of each cash generating unit (CGU) associated with the goodwill balance to its estimated recoverable amount, which is the higher of

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![wfg-20221231_g2.jpg](wfg-20221231_g2.jpg)

its estimated fair value less costs of disposal and its value in use. An impairment charge is recorded if the carrying value exceeds the estimated recoverable amount of a CGU. Management has determined the recoverable amount of each applicable CGU based on its value in use through a discounted cash flow model. The key assumptions used in the discounted cash flow models include production volume, product pricing, raw material input cost, production cost, terminal multiple and the discount rates. The estimated recoverable amount of each applicable CGU exceeded its respective carrying amount in management's goodwill impairment assessments, and as such, no impairment losses were recorded by management.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments is a critical audit matter are (i) the significant judgment by management when determining the recoverable amount of each applicable CGU, including the development of key assumptions; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's key assumptions in the discounted cash flow models related to production volume, product pricing, raw material input cost, production cost, terminal multiple and the discount rates; and (iii) the audit effort involved the use of professionals with specialized skills and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's goodwill impairment assessments, including controls over the determination of the recoverable amount of the applicable CGUs. These procedures also included, among others, testing management's process for determining the recoverable amount of the applicable CGUs, including evaluating the appropriateness of the discounted cash flow models, testing the completeness and accuracy of underlying data used in the models and evaluating the reasonableness of the key assumptions used by management. Evaluating the reasonableness of the production volume, product pricing, raw material input cost and production cost involved considering the past performance of the CGUs, as well as economic and industry forecasts, as applicable. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the discounted cash flow models, and the reasonableness of the terminal multiple and the discount rates.

**/s/PricewaterhouseCoopers LLP**

Chartered Professional Accountants

Vancouver, Canada

February 14, 2023

We have served as the Company's auditor since 1973.

------

**West Fraser Timber Co. Ltd.**

**Consolidated Balance Sheets**

*(in millions of United States dollars, except where indicated)*

---

| | | | |
|:---|:---|:---|:---|
| | | **As at December 31, 2022** | **As at December 31, 2021** |
|  | **Note** | **As at December 31, 2022** | **As at December 31, 2021** |
| **Assets** | |  |  |
| **Current assets** | |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | 4 | $1162 | $1568 |
| &nbsp;&nbsp;Receivables | 23 | 350 | 508 |
| &nbsp;&nbsp;Income taxes receivable |  | 145 | 42 |
| &nbsp;&nbsp;Inventories | 5 | 1032 | 1061 |
| &nbsp;&nbsp;Prepaid expenses |  | 60 | 38 |
|  |  | 2749 | 3217 |
| **Property, plant and equipment** | 6 | 3982 | 4100 |
| **Timber licences** | 7 | 351 | 368 |
| **Goodwill and other intangible assets** | 8 | 2358 | 2440 |
| **Export duty deposits** | 26 | 354 | 242 |
| **Other assets** | 9 | 175 | 58 |
| **Deferred income tax assets** | 19 | 4 | 8 |
|  |  | $9973 | $10433 |
| **Liabilities** |  |  |  |
| **Current liabilities** |  |  |  |
| &nbsp;&nbsp;Payables and accrued liabilities | 10 | $722 | $848 |
| &nbsp;&nbsp;Current portion of reforestation and decommissioning obligations | 11 | 58 | 46 |
| &nbsp;&nbsp;Income taxes payable |  | 12 | 312 |
|  |  | 792 | 1206 |
| **Long-term debt** | 12 | 499 | 499 |
| **Other liabilities** | 11 | 268 | 360 |
| **Deferred income tax liabilities** | 19 | 795 | 712 |
|  |  | 2354 | 2777 |
| **Shareholders' Equity** |  |  |  |
| &nbsp;&nbsp;Share capital | 14 | 2667 | 3402 |
| &nbsp;&nbsp;Retained earnings |  | 5284 | 4503 |
| &nbsp;&nbsp;Accumulated other comprehensive loss |  | (332) | (249) |
|  |  | 7619 | 7656 |
|  |  | $9973 | $10433 |

---

Approved by the Board of Directors

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| | |
|:---|:---|
| */s/ Reid Carter* | */s/ Robert L. Phillips* |
| **Reid Carter** | **Robert L. Phillips** |
| Director | Director |

---

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**West Fraser Timber Co. Ltd.**

**Consolidated Statements of Earnings and Comprehensive Earnings**

*(in millions of United States dollars, except where indicated)*

---

| | | | |
|:---|:---|:---|:---|
| | | **Years Ended** | **Years Ended** |
| | | **December 31,** | **December 31,** |
| | | **2022** | **2021** |
| **Sales** |  | $9701 | $10518 |
| **Costs and expenses** |  |  |  |
| Cost of products sold |  | 5142 | 4645 |
| Freight and other distribution costs |  | 963 | 846 |
| Export duties, net | 26 | 18 | 146 |
| Amortization |  | 589 | 584 |
| Selling, general and administration |  | 365 | 312 |
| Equity-based compensation | 15 | 5 | 40 |
| Restructuring and impairment charges | 16 | 60 |  |
|  |  | 7142 | 6573 |
| **Operating earnings** |  | 2559 | 3945 |
| Finance expense, net | 17 | (3) | (45) |
| Other income (expense) | 18 | 37 | (2) |
| **Earnings before tax** |  | 2593 | 3898 |
| Tax provision | 19 | (618) | (951) |
| **Earnings** |  | $1975 | $2947 |
| **Earnings per share** (dollars) |  |  |  |
| Basic | 21 | $21.06 | $27.03 |
| Diluted | 21 | $20.86 | $27.03 |
| **Comprehensive earnings** |  |  |  |
| Earnings |  | $1975 | $2947 |
| **Other comprehensive earnings** |  |  |  |
| Items that may be reclassified to earnings |  |  |  |
| &nbsp;&nbsp;Translation loss on operations with different functional currencies |  | (83) | (9) |
| Items that will not be reclassified to earnings |  |  |  |
| &nbsp;&nbsp;Actuarial gain on retirement benefits, net of tax |  | 164 | 153 |
|  |  | 81 | 144 |
| **Comprehensive earnings** |  | $2056 | $3091 |

---

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**West Fraser Timber Co. Ltd.**

**Consolidated Statements of Changes in Shareholders' Equity**

*(in millions of United States dollars, except where indicated)*

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | | **Share Capital** | **Share Capital** | **Contributed<br>Surplus** | **Retained<br>Earnings** | **Accumulated Other Comprehensive Loss** | **Total<br>Equity** |
| | **Note** | **Number of shares** | **Amount** | **Contributed<br>Surplus** | **Retained<br>Earnings** | **Accumulated Other Comprehensive Loss** | **Total<br>Equity** |
| **Balance at December 31, 2020** |  | 68678622 | $481 | $— | $2237 | $(240) | $2478 |
| Earnings for the year |  |  |  |  | 2947 |  | 2947 |
| Other comprehensive earnings: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Translation loss on operations with different functional currencies |  |  |  |  |  | (9) | (9) |
| &nbsp;&nbsp;Actuarial gain on retirement benefits, net of tax |  |  |  |  | 153 |  | 153 |
| Acquired equity-settled share option plan |  |  |  | 14 |  |  | 14 |
| Equity-settled share option expense |  |  |  | 1 |  |  | 1 |
| Conversion of equity-settled share option plan to cash-settled |  |  |  | (15) |  |  | (15) |
| Issuance of Common shares | 3, 14 | 54618586 | 3491 |  |  |  | 3491 |
| Repurchase of Common shares for cancellation | 14 | (17368474) | (570) |  | (749) |  | (1319) |
| Dividends declared<sup>1</sup> |  |  |  |  | (85) |  | (85) |
| **Balance at December 31, 2021** |  | 105928734 | $3402 | $— | $4503 | $(249) | $7656 |
| Earnings for the year |  |  |  |  | 1975 |  | 1975 |
| Other comprehensive earnings: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Translation loss on operations with different functional currencies |  |  |  |  |  | (83) | (83) |
| &nbsp;&nbsp;Actuarial gain on retirement benefits, net of tax |  |  |  |  | 164 |  | 164 |
| Repurchase of Common shares for cancellation | 14 | (22373320) | (735) |  | (1255) |  | (1990) |
| Dividends declared<sup>1</sup> |  |  |  |  | (103) |  | (103) |
| **Balance at December 31, 2022** |  | 83555414 | $2667 | $— | $5284 | $(332) | $7619 |

---

1. Cash dividends declared during the year ended December 31, 2021 comprised of CAD$0.70 per share in aggregate for the first three quarters and USD$0.20 per share for the fourth quarter. Cash dividends declared during the year ended December 31, 2022 were USD$1.15 per share.

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**West Fraser Timber Co. Ltd.**

**Consolidated Statements of Cash Flows**

*(in millions of United States dollars, except where indicated)*

---

| | | | |
|:---|:---|:---|:---|
| | | **Years Ended** | **Years Ended** |
| | | **December 31,** | **December 31,** |
|  | **Note** | **2022** | **2021** |
| **Cash provided by operating activities** |  |  |  |
| Earnings |  | $1975 | $2947 |
| Adjustments |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization |  | 589 | 584 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and impairment charges | 16 | 60 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance expense, net | 17 | 3 | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange (gain) loss |  | (28) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Export duty | 26 | (99) | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retirement benefit expense | 13 | 103 | 111 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contributions to retirement benefit plans | 13 | (76) | (77) |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax provision | 19 | 618 | 951 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid |  | (982) | (946) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  | (11) | (13) |
| Changes in non-cash working capital |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables |  | 140 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories |  | 20 | (139) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses |  | (6) | (14) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payables and accrued liabilities |  | (99) | 79 |
|  |  | 2207 | 3552 |
| **Cash used for financing activities** |  |  |  |
| &nbsp;&nbsp;Repayment of long-term debt |  |  | (667) |
| &nbsp;&nbsp;Repayment of lease obligations |  | (14) | (9) |
| &nbsp;&nbsp;Make-whole premium paid |  |  | (60) |
| &nbsp;&nbsp;Finance expense paid |  | (23) | (37) |
| &nbsp;&nbsp;Financing fees paid |  |  | (4) |
| &nbsp;&nbsp;Repurchase of Common shares for cancellation | 14 | (1990) | (1319) |
| &nbsp;&nbsp;Issuance of Common shares |  |  | 7 |
| &nbsp;&nbsp;Dividends paid |  | (99) | (75) |
|  |  | (2126) | (2164) |
| **Cash used for investing activities** |  |  |  |
| &nbsp;&nbsp;Acquired cash and cash equivalents from Norbord Acquisition<sup>1</sup> | 3 |  | 642 |
| &nbsp;&nbsp;Angelina Acquisition, net of cash acquired | 3 |  | (302) |
| &nbsp;&nbsp;Additions to capital assets |  | (477) | (635) |
| &nbsp;&nbsp;Interest received |  | 17 | 2 |
| &nbsp;&nbsp;Other |  | 1 | 7 |
|  |  | (459) | (286) |
| **Change in cash and cash equivalents** |  | (378) | 1102 |
| **Foreign exchange effect on cash and cash equivalents** |  | (28) | 5 |
| **Cash and cash equivalents - beginning of period** |  | 1568 | 461 |
| **Cash and cash equivalents - end of period** |  | $1162 | $1568 |

---

1. The Norbord Acquisition was a non-cash share consideration transaction and therefore only the acquired cash is included in the cash flow statement. Changes in Norbord's cash position subsequent to February 1, 2021 are incorporated into the cash flow statement.

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**West Fraser Timber Co. Ltd.**

**Notes to Consolidated Financial Statements**

For the years ended December 31, 2022 and 2021

*(figures are in millions of United States dollars, except where indicated)*

**1. Nature of operations**

West Fraser Timber Co. Ltd. ("West Fraser", the "Company", "we", "us" or "our") is a diversified wood products company with more than 60 facilities in Canada, the United States ("U.S."), the United Kingdom ("U.K."), and Europe. From responsibly sourced and sustainably managed forest resources, the Company produces lumber, engineered wood products (OSB, LVL, MDF, plywood, and particleboard), pulp, newsprint, wood chips, other residuals and renewable energy. West Fraser's products are used in home construction, repair and remodelling, industrial applications, papers, tissue, and box materials. Our executive office is located at 885 West Georgia Street, Suite 1500, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the *Business Corporations Act* (British Columbia) and is registered in British Columbia, Canada. Our Common shares are listed for trading on the Toronto Stock Exchange ("TSX") and on the New York Stock Exchange ("NYSE") under the symbol WFG.

**2. Basis of presentation**

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") and were approved by our Board of Directors on February 14, 2023.

Our consolidated financial statements have been prepared under the historical cost basis, except for certain items as discussed in the applicable accounting policies. Figures have been rounded to millions of dollars to reflect the accuracy of the underlying balances and as a result certain tables may not add due to rounding impacts.

**Accounting policies**

Accounting policies that relate to the consolidated financial statements as a whole are incorporated in this note. Where an accounting policy is applicable to a specific note disclosure, the policy is described within the respective note.

***Basis of consolidation***

These consolidated financial statements include the accounts of West Fraser and its wholly-owned subsidiaries after the elimination of intercompany transactions and balances.

Our material subsidiaries are West Fraser Mills Ltd. and Norbord Inc. Our 50%-owned joint operations, Alberta Newsprint Company and Cariboo Pulp & Paper Company, are accounted for by recognizing our share of the assets, liabilities, revenues, and expenses related to these joint operations.

***Use of estimates and judgments***

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts could differ materially from these and other estimates, the impact of which would be recorded in future periods. Management is also required to exercise judgment in the process of applying accounting policies. Information about the significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is included in the following notes:

• Note 2 – Determination of functional currency

• Note 3 – Fair value of PPE and intangible assets acquired in business combinations

• Note 5 – Valuation of inventories

• Note 6-8, 16 – Recoverability of PPE, timber licences, and other intangible assets

• Note 6 – Estimated useful lives of PPE

• Note 8 – Recoverability of goodwill

• Note 11 – Reforestation and decommissioning obligations

• Note 13 – Defined benefit pension plans

• Note 15 – Equity-based compensation

• Note 19 – Income taxes

• Note 26 – CVD and ADD duty dispute

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***Revenue recognition***

Revenue is derived primarily from product sales and is recognized when a customer obtains control over the goods. The timing of transfer of control to customers varies depending on the individual terms of the sales contract and typically occurs when the product is loaded on a common carrier at our mill, loaded on an ocean carrier, or delivered to the customer. The amount of revenue recognized is net of our estimate for early payment discounts and volume rebates.

Revenue includes charges for freight and handling. The costs related to these revenues are recorded in freight and other distribution costs.

***Reporting currency and foreign currency translation***

The consolidated financial statements are presented in USD, which is determined to be the functional currency of our U.S. operations and the majority of our Canadian operations.

For these entities, all transactions not denominated in our U.S. functional currency are considered to be foreign currency transactions. Foreign currency denominated monetary assets and liabilities are translated using the rate of exchange prevailing at the reporting date. Gains or losses on translation of these items are included in earnings and reported as Other. Foreign currency denominated non-monetary assets and liabilities, measured at historic cost, are translated at the rate of exchange at the transaction date.

Our European operations have British pound sterling and Euro functional currencies and our jointly-owned newsprint operation has a Canadian dollar functional currency. Assets and liabilities of these entities are translated at the rate of exchange prevailing at the reporting date, and revenues and expenses at average rates during the period. Gains or losses on translation are included as a component of shareholders' equity in accumulated other comprehensive earnings.

***Impairment of capital assets***

We assess property, plant and equipment, timber licences, and other definite-lived intangible assets for indicators of impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Impairment testing is applied to individual assets or cash generating units ("CGUs"), the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets. We have identified each of our mills as a CGU for impairment testing unless there is economic interdependence of CGUs, in which case they are grouped for impairment testing.

When a triggering event is identified, the recoverability of an asset or CGU is assessed by comparing the carrying amount of the asset or CGU to the estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal and its value in use.

Fair value less costs of disposal is determined by ascertaining the price that would be received to sell an asset in an orderly transaction between market participants under current market conditions, less incremental costs directly attributable to the disposal. Value in use is determined using a discounted cash flow model by measuring the pre-tax cash flows expected to be generated from the asset over its estimated useful life discounted by a pre-tax discount rate.

Where an impairment loss for an asset or CGU 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.

***Fair value measurements***

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurement are observable and the significance of the inputs.

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The three levels of the fair value hierarchy are:

*Level 1*

Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

*Level 2*

Values based on inputs other than quoted prices that are observable for the asset or liability, directly or indirectly.

*Level 3*

Values based on valuation techniques that require inputs which are both unobservable and significant to the overall fair value measurement.

**Accounting standards, amendments and interpretations issued but not yet applied**

***Amendments to IAS 1, Presentation of Financial Statements***

In January 2020, the IASB issued *Classification of Liabilities as Current or Non-current (Amendments to IAS 1)*. The amendments clarify that the classification of liabilities as current or non-current should be based on rights that exist at the end of the reporting period. The amendments also clarify the definition of a settlement and provide situations that would be considered as a settlement of a liability. In October 2022, the IASB issued *Non-current Liabilities with Covenants (Amendments to IAS 1)*. These further amendments clarify how to address the effects on classification and disclosure of covenants that an entity is required to comply with on or before the reporting date and covenants that an entity must comply with only after the reporting date. The amendments are effective for reporting periods beginning on or after January 1, 2024. We have not yet determined the impact that these amendments will have on our consolidated financial statements.

There are no other standards or amendments or interpretations to existing standards issued but not yet effective which are expected to have a material impact on our consolidated financial statements.

**3. Business acquisitions**

**Accounting policies**

Business combinations are accounted for using the acquisition method. We measure goodwill at the acquisition date as the fair value of the consideration transferred less the fair value of the identifiable assets acquired and liabilities assumed. The determination of the fair value of the assets acquired and liabilities assumed requires management to use estimates that contain uncertainty and critical judgments. Transaction costs in connection with business combinations are expensed as incurred.

***Valuation techniques utilized***

We engaged a valuations expert to assist with the determination of estimated fair value for acquired working capital, property, plant and equipment, and certain intangible assets.

We applied the market comparison technique and cost technique in determining the fair value of acquired property, plant, and equipment. We considered market prices for similar assets when they were available, and depreciated replacement cost in other circumstances. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence. The key assumptions used in the estimation of depreciated replacement cost are the asset's estimated replacement cost at the time of acquisition and estimated useful life.

We applied the multi-period excess earnings method in determining the fair value of the customer relationship intangible recognized in the Norbord Inc. ("Norbord") and Angelina Forest Products acquisitions. The multi-period excess earnings method considers the present value of incremental after-tax cash flows expected to be generated by the customer relationship after deducting contributory asset charges. The key assumptions used in applying the valuation technique include: the forecasted revenues relating to the acquiree's existing customers at the time of acquisition, the forecasted attrition rates relating to these customers, forecasted operating margins, and discount rate.

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**Supporting information**

***Norbord acquisition***

On February 1, 2021, we acquired all of the outstanding shares of Norbord. According to the terms of the Norbord acquisition, Norbord shareholders received 0.675 of a West Fraser share for each Norbord share held. The result was the issuance of 54,484,188 Common shares of West Fraser at a price of US$63.90 per share (CAD$81.94 per share) for $3,482 million.

Included in the Norbord acquisition are five OSB mills in Canada, seven OSB mills in the U.S., one OSB mill, one MDF plant and two particleboard plants in the U.K., one OSB mill in Belgium, and their related corporate offices.

We have incorporated the North American operations of Norbord into our Panels segment and renamed that segment North America ("NA") Engineered Wood Products ("EWP"). This segment includes the results from North American operations for OSB, plywood, MDF, and LVL. In addition, we have identified a Europe EWP segment, which includes the results from the U.K. and Belgium operations for OSB, MDF and particleboard. The EWP segments have been separated due to differences in the operating region, customer base, operating margins and sales volumes.

The Norbord Acquisition has been accounted for as an acquisition of a business in accordance with IFRS 3, *Business Combinations.* We have allocated the purchase price based on our estimated fair value of the assets acquired and the liabilities assumed as follows:

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| | |
|:---|:---|
| **West Fraser purchase consideration:** | |
| Fair value of West Fraser shares issued | $3482 |
| Fair value of equity-based compensation instruments | 24 |
|  | $3506 |
| **Fair value of net assets acquired:** |  |
| Cash and cash equivalents | $642 |
| Accounts receivable | 232 |
| Inventories | 334 |
| Prepaid expenses | 12 |
| Property, plant and equipment | 2088 |
| Timber licenses | 10 |
| Other non-current assets | 6 |
| Other intangibles | 17 |
| Customer relationship intangible | 470 |
| Goodwill | 1339 |
| Payables and accrued liabilities | (301) |
| Income tax payable | (155) |
| Current portion of reforestation and decommissioning obligations | (2) |
| Long-term debt | (720) |
| Other non-current liabilities | (36) |
| Deferred income tax liabilities | (430) |
|  | $3506 |

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Balances that required significant fair value adjustments for purchase price accounting included inventory, property, plant and equipment, and customer relationship intangibles. The resulting goodwill and deferred income tax liabilities were also significant.

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***Angelina Forest Products acquisition***

On December 1, 2021, we acquired the Angelina Forest Products ("Angelina Acquisition" or "Angelina") lumber mill located in Lufkin, Texas for cash consideration of $311 million. This acquisition has been accounted for as an acquisition of a business in accordance with IFRS 3, *Business Combinations.* We have allocated the purchase price based on our estimated fair value of the assets acquired and the liabilities assumed as follows:

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| | |
|:---|:---|
| **West Fraser purchase consideration:** | |
| Cash consideration | $311 |
| **Fair value of net assets acquired:** |  |
| Cash | $8 |
| Accounts receivable | 7 |
| Inventories | 11 |
| Property, plant and equipment | 213 |
| Customer relationship intangible | 21 |
| Goodwill | 58 |
| Payables and accrued liabilities | (7) |
|  | $311 |

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Through the process of finalizing the purchase price allocation during the quarter ended March 31, 2022, we reclassified $21 million from goodwill to customer relationship intangible asset.

**4. Cash and cash equivalents**

**Accounting policies**

Cash and cash equivalents consist of cash on deposit and short-term interest-bearing securities maturing within three months of the date of purchase.

**Supporting information**

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| | | |
|:---|:---|:---|
| As at | **December 31, 2022** | **December 31, 2021** |
| Cash | $706 | $847 |
| Cash equivalents | 456 | 721 |
|  | $1162 | $1568 |

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**5. Inventories**

**Accounting policies**

Inventories are valued at the lower of cost and net realizable value, with cost determined on an average cost basis. The cost of finished goods inventories includes direct material, direct labour, and an allocation of overhead.

**Supporting information**

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| | | |
|:---|:---|:---|
| As at | **December 31, 2022** | **December 31, 2021** |
| Manufactured products | $428 | $446 |
| Logs and other raw materials | 376 | 412 |
| Materials and supplies | 228 | 203 |
|  | $1032 | $1061 |

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Inventories at December 31, 2022 were subject to a valuation reserve of $61 million (December 31, 2021 - $6 million) to reflect net realizable value being lower than cost.

The carrying amount of inventory recorded at net realizable value was $232 million at December 31, 2022 (December 31, 2021 - $42 million), with the remaining inventory recorded at cost.

**6. Property, plant and equipment**

**Accounting policies**

Property, plant and equipment are recorded 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 derecognized and any resulting 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:

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| | |
|:---|:---|
| Buildings | 10 - 30 years |
| Manufacturing plant, equipment and machinery | 6 - 25 years |
| Fixtures, mobile and other equipment | 3 - 10 years |
| Roads and bridges | Not exceeding 40 years |
| Major maintenance shutdowns | 1 - 2 years |

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Construction-in-progress includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for its intended use. Construction-in-progress is not depreciated. Once the asset is complete and available for use, the construction-in-progress balance is transferred to the appropriate category of property, plant and equipment, and depreciation commences.

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**Supporting Information**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Manufacturing<br>plant,<br>equipment and<br>machinery** | **Construction-<br>in-progress** | **Roads<br>and<br>bridges** | **Other** | **Total** |
| **As at December 31, 2020** | $1449 | $138 | $37 | $33 | $1657 |
| Acquisitions (note 3) | 2163 | 118 |  | 20 | 2301 |
| Additions<sup>2</sup> | 472 | 173 | 17 | 3 | 665 |
| Amortization<sup>1</sup> | (497) |  | (13) |  | (510) |
| Foreign exchange | (8) | (1) |  |  | (9) |
| Disposals | (4) |  |  |  | (4) |
| Transfers | 176 | (176) |  |  |  |
| As at December 31, 2021 | $3751 | $252 | $41 | $56 | $4100 |
| **As at December 31, 2021** |  |  |  |  |  |
| Cost | $6500 | $252 | $140 | $62 | $6954 |
| Accumulated amortization | (2749) |  | (99) | (6) | (2854) |
| Net | $3751 | $252 | $41 | $56 | $4100 |
| **As at December 31, 2021** | $3751 | $252 | $41 | $56 | $4100 |
| Additions | 117 | 343 | 16 | 6 | 482 |
| Amortization<sup>1</sup> | (494) |  | (13) |  | (507) |
| Impairment (note 16) | (43) | (3) |  | (2) | (48) |
| Foreign exchange | (37) | (2) |  | (1) | (40) |
| Disposals | (3) | (2) |  |  | (5) |
| Transfers | 229 | (229) |  |  |  |
| As at December 31, 2022 | $3520 | $359 | $44 | $59 | $3982 |
| **As at December 31, 2022** |  |  |  |  |  |
| Cost | $6702 | $359 | $157 | $65 | $7283 |
| Accumulated amortization | (3182) |  | (113) | (6) | (3301) |
| Net | $3520 | $359 | $44 | $59 | $3982 |

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1. Amortization of $499 million relates to cost of products sold and $8 million relates to selling, general and administration expense (2021 - $506 million and $4 million, respectively).

2. Manufacturing plant, equipment and machinery additions for the year ended December 31, 2021 include $276 million relating to the acquisition of the idled OSB mill near Allendale, South Carolina.

**7. Timber licences**

**Accounting policies**

Timber licences, which are renewable or replaceable, are recorded at historical cost, less accumulated amortization and impairment losses. Timber licences are amortized on a straight-line basis over their estimated useful lives of 40 years.

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**Supporting information**

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| | |
|:---|:---|
| | **Timber licences** |
| **As at December 31, 2020** | $372 |
| Acquisitions (note 3) | 10 |
| Additions | 2 |
| Amortization<sup>1</sup> | (16) |
| As at December 31, 2021 | $368 |
| **As at December 31, 2021** |  |
| Cost | $641 |
| Accumulated amortization | (273) |
| Net | $368 |
| **As at December 31, 2021** | $368 |
| Amortization<sup>1</sup> | (17) |
| As at December 31, 2022 | $351 |
| **As at December 31, 2022** |  |
| Cost | $641 |
| Accumulated amortization | (290) |
| Net | $351 |

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1. Amortization relates to cost of products sold.

**8. Goodwill and other intangibles**

**Accounting policies**

Goodwill represents the excess purchase price paid for a business acquisition over the fair value of the net assets acquired. Goodwill is tested annually for impairment at December 31, or more frequently if an indicator of impairment is identified.

The customer relationship intangible asset relates to the Norbord and Angelina Forest Products acquisitions and are amortized straight-line over 3 - 10 years.

Other intangibles are recorded at historical cost less accumulated amortization and impairments. Other intangibles include software which is amortized over periods of up to five years and non-replaceable finite term timber rights which are amortized as the related timber volumes are logged.

Goodwill is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination from which it arose. The allocation is based on the lowest level at which goodwill is monitored internally.

Recoverability of goodwill is assessed by comparing the carrying value of the CGU or group of CGUs associated with the goodwill balance to its estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal and its value in use.

An impairment write-down is recorded if the carrying value exceeds the estimated recoverable amount. Goodwill impairment losses cannot be reversed.

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**Supporting information**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Goodwill** | **Customer Relationship Intangible** | **Other** | **Total** |
| **As at December 31, 2020** | $559 | $— | $32 | $591 |
| Acquisitions (note 3) | 1417 | 470 | 17 | 1904 |
| Additions |  |  | 7 | 7 |
| Amortization<sup>1</sup> |  | (43) | (15) | (58) |
| Foreign exchange | (1) | (1) |  | (2) |
| Disposals |  |  | (2) | (2) |
| As at December 31, 2021 | $1975 | $426 | $39 | $2440 |
| **As at December 31, 2021** |  |  |  |  |
| Cost | $1975 | $469 | $79 | $2523 |
| Accumulated amortization |  | (43) | (40) | (83) |
| Net | $1975 | $426 | $39 | $2440 |
| **As at December 31, 2021** | $1975 | $426 | $39 | $2440 |
| Amortization<sup>1</sup> |  | (54) | (11) | (65) |
| Foreign exchange | (11) | (3) | (1) | (15) |
| Finalization of purchase price allocation on Angelina acquisition (note 3) | (20) | 21 |  | 1 |
| Other |  |  | (3) | (3) |
| As at December 31, 2022 | $1944 | $390 | $24 | $2358 |
| **As at December 31, 2022** |  |  |  |  |
| Cost | $1944 | $486 | $74 | $2504 |
| Accumulated amortization |  | (96) | (50) | (146) |
| Net | $1944 | $390 | $24 | $2358 |

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1. Amortization of $65 million relates to selling, general and administration expense (2021 - amortization of $1 million relates to cost of products sold and amortization of $57 million relates to selling, general and administration expense).

***Goodwill***

For the purposes of impairment testing, goodwill has been allocated to the following CGU groups:

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| | | |
|:---|:---|:---|
| As at | **December 31, 2022** | **December 31, 2021** |
| Canadian lumber | $171 | $171 |
| US lumber | 409 | 429 |
| North America EWP | 1280 | 1280 |
| Europe EWP | 84 | 95 |
| Total | $1944 | $1975 |

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The recoverable amounts of the above CGU groups were determined based on their value in use using discounted cash flow models. Cash flow forecasts were based on internal estimates for 2023 and 2024 and estimated mid-cycle earnings for subsequent years. Key assumptions include production volume, product pricing, raw material input cost, production cost, terminal multiple, and discount rate. Key assumptions were determined using external sources and historical data from internal sources. Specifically, product pricing has been estimated by reference to average historical prices as well as third-party analyst projections of long-term product pricing. Pre-tax discount rates used ranged from 9.60% to 10.30% (2021 - 11.30% to 13.10%).

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The estimated recoverable amounts of the CGU groups exceeded their respective carrying amounts and as such, no impairment losses were recognized for the year ended December 31, 2022 (2021 - nil).

**9. Other assets**

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| | | | |
|:---|:---|:---|:---|
| As at | **Note** | **December 31, 2022** | **December 31, 2021** |
| Retirement assets | 13 | $132 | $27 |
| Interest rate swap contracts | 12 | 12 |  |
| Other |  | 31 | 31 |
|  |  | $175 | $58 |

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**10. Payables and accrued liabilities**

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| | | | |
|:---|:---|:---|:---|
| As at | **Note** | **December 31, 2022** | **December 31, 2021** |
| Trade accounts |  | $359 | $411 |
| Accruals on capital spending |  | 45 | 52 |
| Customer rebates accruals |  | 27 | 51 |
| Equity-based compensation | 15 | 45 | 69 |
| Compensation |  | 152 | 172 |
| Export duties | 26 | 4 | 11 |
| Dividends |  | 25 | 21 |
| Interest |  | 5 | 4 |
| Current portion of lease obligations |  | 11 | 11 |
| Accrued sales and city taxes |  | 19 | 26 |
| Other |  | 30 | 20 |
|  |  | $722 | $848 |

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**11. Other liabilities**

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| | | | |
|:---|:---|:---|:---|
| As at | **Note** | **December 31, 2022** | **December 31, 2021** |
| Retirement liabilities | 13 | $77 | $168 |
| Long-term portion of reforestation |  | 55 | 59 |
| Long-term portion of decommissioning  |  | 15 | 25 |
| Long-term portion of lease obligations |  | 26 | 18 |
| Export duties | 26 | 73 | 69 |
| Electricity swaps | 23 | 4 |  |
| Interest rate swap contracts | 12 |  | 1 |
| Other |  | 18 | 20 |
|  |  | $268 | $360 |

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**Reforestation and decommissioning obligations**

Reforestation and decommissioning obligations relate to our responsibility for reforestation under various timber licences and our obligations related to landfill closure and other site remediation costs.

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**Accounting policies**

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 accreted over time through charges to finance expense and reduced by silviculture expenditures. Changes to estimates are credited or charged to earnings.

We record a liability for decommissioning obligations in the period a reasonable estimate can be made. The liability is determined using estimated closure and/or remediation costs and discounted using an appropriate discount rate. On initial recognition, the carrying value of the liability is added to the carrying amount of the associated asset and amortized over its useful life or expensed when there is no related asset. The liability is accreted over time through charges to finance expense and reduced by actual costs of settlement. 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.

**Supporting information**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Reforestation** | **Reforestation** | **Decommissioning** | **Decommissioning** |
| | **Note** | **2022** | **2021** | **2022** | **2021** |
| Beginning of year |  | $97 | $88 | $33 | $28 |
| Norbord Acquisition | 3 |  | 5 |  |  |
| Liabilities recognized |  | 51 | 53 | 5 | 5 |
| Liabilities settled |  | (49) | (49) | (1) | (1) |
| Foreign exchange |  | (6) |  | (2) | 1 |
| End of year |  | 93 | 97 | 35 | 33 |
| Less: current portion |  | (38) | (38) | (20) | (8) |
|  |  | $55 | $59 | $15 | $25 |

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The total undiscounted amount of the estimated cash flows required to satisfy these obligations is $159 million (December 31, 2021 - $133 million). The cash flows have been discounted using interest rates ranging from 3.27% to 5.51% (2021 - 0.95% to 1.25%).

The timing of the reforestation payments is based on the estimated period required to ensure the associated areas are well established and attain free to grow status, 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 50 years.

**12. Operating loans and long-term debt**

**Accounting policies**

Transaction costs related to debt financing or refinancing are deferred and amortized over the life of the associated debt. When our operating loan is undrawn, the related deferred financing costs are recorded in other assets.

**Supporting information**

***Operating loans***

As at December 31, 2022, our credit facilities consisted of a $1 billion committed revolving credit facility which matures July 2026, $35 million of uncommitted revolving credit facilities available to our U.S. subsidiaries, a $18 million (£15 million) credit facility dedicated to our European operations, and a $10 million (CAD$13 million) demand line of credit dedicated to our jointly-owned newsprint operation.

As at December 31, 2022, our revolving credit facilities were undrawn (December 31, 2021 - undrawn) and the associated deferred financing costs of $1 million (December 31, 2021 - $1 million) were recorded in other assets. Interest on the facilities is payable at floating rates based on Prime, Base Rate Advances, Bankers' Acceptances, or London Inter-Bank

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Offered Rate ("LIBOR") Advances at our option. Our $1 billion committed revolving credit facility contains transition provisions relating to the elimination of LIBOR whereby Secured Overnight Financing Rate ("SOFR") can be elected by mutual consent with the lenders.

In addition, we have credit facilities totalling $131 million (December 31, 2021 - $137 million) dedicated to letters of credit. Letters of credit in the amount of $61 million (December 31, 2021 - $65 million) were supported by these facilities.

All debt is unsecured except the $10 million (CAD$13 million) jointly-owned newsprint operation demand line of credit, which is secured by that joint operation's current assets.

As at December 31, 2022, we were in compliance with the requirements of our credit facilities.

***Long-term debt***

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| | | |
|:---|:---|:---|
| As at | **December 31, 2022** | **December 31, 2021** |
| Senior notes due October 2024; interest at 4.35% | $300 | $300 |
| Term loan due August 2024; floating interest rate | 200 | 200 |
| Notes payable |  | 1 |
|  | 500 | 501 |
| Less: deferred financing costs | (1) | (2) |
| Less: current portion |  |  |
|  | $499 | $499 |

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As part of the Norbord Acquisition, we assumed Norbord's $315 million senior notes due April 2023 (the "2023 Notes"), bearing interest at 6.25% and $350 million senior notes due July 2027 (the "2027 Notes"), bearing interest at 5.75%. The purchase price fair value adjustment resulted in an increase of $55 million for these notes. On March 2, 2021, we made a mandatory change of control offer for 2023 Notes and 2027 Notes, which expired on April 1, 2021. As a result of the change of control offer, $1 million of the 2023 Notes and $1 million of the 2027 Notes were redeemed and were repaid in the second quarter of 2021. On April 6, 2021, we elected to redeem the remaining 2027 Notes, which redemption occurred on May 6, 2021. On May 6, 2021, we elected to redeem the remaining 2023 Notes, which redemption occurred on June 7, 2021. After the completion of the redemptions of the 2023 Notes and the 2027 Notes, the principal value of long-term debt was reduced by $665 million from the date of the Norbord Acquisition. An additional make-whole premium of $60 million was paid on redemption resulting in a $5 million loss on settlement of the debt recorded within finance expense as the carrying value of $720 million was derecognized.

Required principal repayments are disclosed in note 23.

***Interest rate swap contracts***

At December 31, 2022, we had interest rate swap contracts to pay fixed interest rates (weighted average interest rate of 1.14%) and receive variable interest rates equal to 3-month LIBOR on $200 million notional principal amount of indebtedness. These interest rate swap agreements fix the interest rate on the $200 million term loan disclosed in the long-term debt table above. These agreements mature in August 2024.

The interest rate swap contracts are accounted for as a derivative, with the related changes in the fair value included in Other on the consolidated statement of earnings. For the year ended December 31, 2022, a gain of $13 million (year ended December 31, 2021 - gain of $6 million) was recognized in relation to the interest rate swap contracts. The fair value of the interest rate swap contracts at December 31, 2022 was an asset of $12 million (December 31, 2021 - liability of $1 million).

**13. Retirement benefits**

We maintain defined benefit and defined contribution pension plans covering most 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

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commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.

The defined benefit pension plans are operated in Canada, the U.S., and Europe under broadly similar regulatory frameworks. The majority are funded arrangements where benefit payments are made from plan assets that are held in trust. Responsibility for the governance of certain of the plans, including investment and contribution decisions, resides with our Retirement Committees, Human Resources & Compensation Committee of the Board of Directors, and 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.

Starting January 1, 2022, defined benefit pension plans for certain employee groups were closed to new entrants and were replaced by defined contribution plans.

**Accounting policies**

We record a 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 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 through 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 retirement balances is classified as finance expense.

A gain or loss on settlement is recognized in earnings, calculated as the difference between the present value of the defined benefit obligation being settled, as determined on the date of settlement, and the settlement amount.

For defined contribution plans, pension expense is the amount of contributions we are required to make in respect of services rendered by employees.

**Supporting information**

The actual return on plan assets for 2022 was a loss of $138 million (2021 - gain of $132 million). The total pension expense for the defined benefit pension plans was $71 million (2021 - $89 million). In 2022, we made contributions to our defined benefit pension plans of $39 million (2021 - $46 million). We expect to make cash contributions of approximately $36 million to our defined benefit pension plans during 2023 based on the most recent valuation report for each pension plan. We also provide group life insurance, medical and extended health benefits to certain employee groups, for which we contributed $1 million in 2022 (2021 - $1 million).

In 2022, we entered into buy-out annuity purchase agreements to settle $82 million (2021 - $215 million) of our defined benefit obligations by purchasing annuities using our plan assets. These agreements transferred the pension obligations of retired employees under certain pension plans to financial institutions. The difference between the cost of the annuity purchase and the liabilities held for these pension plans was reflected as a settlement cost in other income (expense).

In 2022, as part of the process related to the annuitization of our U.K. defined benefit pension plan, we entered into a $15 million (£13 million) investment contract with an insurer. Future cash inflows from the investment contract will match the cash flows of the outgoing benefit payments made by the pension plan, substantially mitigating the exposure to future volatility in the related pension obligations. We plan to complete the buy-out of the defined benefit obligations upon completion of certain normal-course administrative processes.

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

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Defined benefit <br>pension plans** | **Defined benefit <br>pension plans** | **Other retirement <br>benefit plans** | **Other retirement <br>benefit plans** |
|  | **2022** | **2021** | **2022** | **2021** |
| **Accrued benefit obligations** |  |  |  |  |
| Benefit obligations - opening | $1355 | $1443 | $23 | $28 |
| Norbord Acquisition (note 3) |  | 165 |  | 1 |
| Service cost | 59 | 68 |  |  |
| Finance cost on obligation | 41 | 43 | 1 | 1 |
| Benefits paid | (56) | (54) | (1) | (1) |
| Actuarial (gain) loss due to change in financial assumptions | (408) | (101) | (4) | (2) |
| Actuarial (gain) loss due to demography/experience | 3 | (2) |  | (4) |
| Settlement  | (82) | (215) |  |  |
| Foreign exchange<sup>1</sup> | (74) | 8 | (1) |  |
| Benefit obligations - ending | $838 | $1355 | $18 | $23 |
| **Plan assets** |  |  |  |  |
| Plan assets - opening | $1239 | $1181 | $— | $— |
| Norbord Acquisition (note 3) |  | 155 |  |  |
| Finance income on plan assets | 36 | 36 |  |  |
| Actual return on plan assets, net of finance income  | (174) | 96 |  |  |
| Employer contributions | 39 | 46 | 1 | 1 |
| Benefits paid | (56) | (54) | (1) | (1) |
| Settlement  | (87) | (227) |  |  |
| Other | (2) | (3) |  |  |
| Foreign exchange<sup>1</sup> | (68) | 9 |  |  |
| Plan assets - ending | $927 | $1239 | $— | $— |
| **Funded status**<sup>2</sup> |  |  |  |  |
| Retirement assets | $148 | $29 | $— | $— |
| Impact of asset ceiling adjustments<sup>3</sup> | (16) | (2) |  |  |
| Retirement assets (note 9) | $132 | $27 | $— | $— |
| Retirement liabilities (note 11) | (59) | (145) | (18) | (23) |
|  | $73 | $(118) | $(18) | $(23) |

---

1. Foreign currency translation relates to the foreign exchange impact of translating assets and liabilities of certain plans to U.S. dollars.

2. Plans in a surplus position are presented as assets and plans in a deficit position are presented as liabilities on the consolidated balance sheets. Other retirement benefit plans continue to be unfunded.

3. Certain 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.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Defined benefit <br>pension plans** | **Defined benefit <br>pension plans** | **Other retirement <br>benefit plans** | **Other retirement <br>benefit plans** |
|  | **2022** | **2021** | **2022** | **2021** |
| **Expense** |  |  |  |  |
| Service cost | $59 | $68 | $— | $— |
| Administration fees | 3 | 2 |  |  |
| Settlement | 5 | 12 |  |  |
| Net finance expense | 4 | 7 | 1 | 1 |
|  | $71 | $89 | $1 | $1 |

---

------

***Assumptions and sensitivities***

At December 31, 2022, the weighted average duration of the defined benefit pension obligations is 17 years (December 31, 2021 - 20 years). The projected future benefit payments for the defined benefit pension plans at December 31, 2022 are as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2023** | **2024** | **2025 to 2027** | **Thereafter** | **Total** |
| Defined benefit pension plans | $37 | $33 | $111 | $1878 | $2059 |

---

Key assumptions used in determining defined benefit pension and other retirement pension benefit obligations include assumed rates of increase for future employee compensation and discount rates. These estimates are determined with the assistance of independent actuarial specialists.

The significant actuarial assumptions used to determine our balance sheet date retirement assets and liabilities and our retirement benefit plan expenses are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Defined benefit <br>pension plans** | **Defined benefit <br>pension plans** | **Other retirement <br>benefit plans** | **Other retirement <br>benefit plans** |
|  | **2022** | **2021** | **2022** | **2021** |
| Benefit obligations: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Discount rate | 5.17% | 3.03% | 5.10% | 3.08% |
| &nbsp;&nbsp;&nbsp;Future compensation rate increase | 3.53% | 3.60% | n/a | n/a |
| Benefit expense: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Discount rate - beginning of year | 3.03% | 2.69% | 3.08% | 2.70% |
| &nbsp;&nbsp;&nbsp;Future compensation rate increase | 3.60% | 3.65% | n/a | n/a |

---

Health-care benefit costs, shown under other retirement benefit plans, are funded on a pay-as-you-go basis.

The impact of a change in these assumptions on our retirement obligations as at December 31, 2022 is as follows:

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| | | |
|:---|:---|:---|
| | **Increase** | **Decrease** |
| Discount rate - 0.50% change | $(72) | $72 |
| Compensation rate - 0.50% change | $19 | $(19) |

---

The sensitivities have 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 determine the retirement assets and liabilities.

***Plan Assets***

The assets of the defined benefit pension plans are invested predominantly in a diversified range of equities, pooled funds and bonds. The weighted average asset allocations of the defined benefit plans at December 31, by asset category, are as follows:

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| | | | |
|:---|:---|:---|:---|
| | **Target range** | **2022** | **2021** |
| Canadian equities | 2% - 30% | 26% | 16% |
| Foreign equities | 15% - 57% | 30% | 39% |
| Fixed income investments | 20% - 55% | 30% | 33% |
| Other investments | 0% - 34% | 14% | 12% |
|  |  | 100% | 100% |

---

------

***Risk management practices***

We are exposed to various risks related to our defined benefit pension and other retirement benefit plans:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Uncertainty in benefit payments: The value of the liability for retirement benefits will ultimately depend on the amount of benefits paid and this in turn will depend on the level of future compensation increase and life expectancy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Volatility in asset value: We are exposed to changes in the market value of pension plan investments which are required to fund future benefit payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Uncertainty in cash funding: Movement in the value of the assets and obligations may result in increased levels of cash funding, although changes in the level of cash funding required can be spread over several years. We are also exposed to changes in pension regulation and legislation.

Our Retirement Committees manage these risks in accordance with a Statement of Investment Policies and Procedures for each pension plan or group of plans administered under master trust agreements. The following are some specific risk management practices employed:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Retaining and monitoring professional advisors including an outsourced chief investment officer ("OCIO").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Monitoring our OCIO's adherence to asset allocation guidelines and permitted categories of investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Monitoring investment decisions and performance of the OCIO and asset performance against benchmarks.

***Defined contribution plans***

The total pension expense and funding contributions for the defined contribution pension plans for 2022 was $36 million (2021 - $29 million).

**14. Share capital**

**Authorized**

400,000,000 Common shares, without par value

20,000,000 Class B Common shares, without par value

10,000,000 Preferred shares, issuable in series, without par value

**Issued**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
| | **Number** | **Amount** | **Number** | **Amount** |
| Common | 81273936 | $2667 | 103647256 | $3402 |
| Class B Common | 2281478 |  | 2281478 |  |
| Total Common | 83555414 | $2667 | 105928734 | $3402 |

---

For the year ended December 31, 2022, we issued no Common shares under our share option plans (2021 - 131,452 Common shares) and no Common shares under our employee share purchase plan (2021 - 2,946 Common shares).

**Rights and restrictions of Common shares**

The Common shares and Class B Common shares are equal in all respects, including the right to dividends, rights upon dissolution or winding up and the right to vote, except that each Class B Common share may at any time be exchanged for one Common share. Our Common shares are listed for trading on the TSX and NYSE under the symbol WFG, 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.

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**Share repurchases**

*Normal Course Issuer Bid*

On February 23, 2022, we renewed our normal course issuer bid ("NCIB") allowing us to acquire up to 10,194,000 Common shares for cancellation until the expiry of the bid on February 22, 2023. As of December 31, 2022, we had repurchased and cancelled all 10,194,000 Common shares available under the 2022 NCIB.

For the year ended December 31, 2022, we repurchased 10,475,115 Common shares at an average price of $82.01 per share under our NCIB programs (year ended December 31, 2021 - 7,059,196 Common shares at an average price of $74.60).

*2022 Substantial Issuer Bid*

On June 7, 2022, we completed a substantial issuer bid ("2022 SIB") pursuant to which we purchased for cancellation a total of 11,898,205 Common shares at a price of $95.00 per share for an aggregate purchase price of $1.13 billion.

*2021 Substantial Issuer Bid*

On August 20, 2021, we completed a substantial issuer bid ("2021 SIB") pursuant to which we purchased for cancellation a total of 10,309,278 Common shares at a price of CAD$97.00 (US$76.84) per Common share for an aggregate purchase price of CAD$1.0 billion.

**15. Equity-based compensation**

We have share option, phantom share unit ("PSU") and directors' deferred share unit ("DSU") plans. The equity-based compensation expense included in the consolidated statement of earnings for the year ended December 31, 2022 was $5 million (2021 - $40 million).

**Accounting policies**

We estimate the fair value of outstanding share options using the Black-Scholes option-pricing model and the fair value of our PSU plan and directors' DSU plan using an intrinsic valuation model at each balance sheet date. We record the resulting expense or recovery, over the related vesting period, through a charge or recovery to earnings.

Equity derivative contracts are sometimes used to provide a partial offset to our exposure to fluctuations in equity-based compensation from our stock option, PSU and DSU plans. These derivatives are fair valued at each balance sheet date using an intrinsic valuation model and the resulting expense or recovery is offset against the related equity-based compensation.

If a share option holder elects to acquire Common shares, both the exercise price and the accrued liability are credited to shareholders' equity.

**Supporting information**

***Share option plan***

Under our share option plan, officers and employees may be granted options to purchase up to 8,295,940 Common shares, of which 910,424 remain available for issuance.

Our share option plans include equity-based plans assumed from Norbord as part of the Norbord Acquisition. The assumed Norbord share purchase option plans ("Assumed Option Plans") were fair valued at the Norbord Acquisition date. From February 1 to April 20, 2021, the Assumed Option Plans were accounted for as equity-settled plans. On April 20, 2021, our Board of Directors approved a change to allow the Assumed Option Plans holders the right to elect to receive a cash payment in lieu of exercising an option to purchase Common shares. The change required us to fair value the Assumed Option Plan on April 20, 2021 and convert from equity-settled accounting to cash-settled accounting for the Assumed Option Plans. Cash-settled accounting is consistent with the West Fraser option plan. Any changes in fair value from April 20, 2021 onwards resulted in an expense or recovery over the vesting period in the same manner as the rest of

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our option plans. This change to the Assumed Option Plans did not in any way affect the value of the instruments to the holders. No additional options may be offered under the Assumed Option Plans.

The exercise price of a share option is determined in accordance with the plan and is generally the closing price of a Common share on the trading day immediately preceding the grant date. Our share option plans give the share option holders the right to elect to receive a cash payment in lieu of exercising an option to purchase Common shares. Options vest at 20% per year from the grant date and expire after 10 years.

In 2022, we have recorded a recovery of $4 million (2021 – expense of $47 million) related to the share option plans. The liability associated with the share option plan is tracked in Canadian dollars and is based on prices published by the TSX. A summary of the activity in the share option plans based on Canadian dollar prices is presented below:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2022** | **2022** | **2021** | **2021** |
|  | **Number** | **Weighted average price** | **Number** | **Weighted average price** |
| | | (CAD$) | | (CAD$) |
| Outstanding - beginning of year | 1077840 | $66.64 | 1316994 | $53.64 |
| Assumed in Norbord Acquisition (note 3) |  |  | 887961 | 51.85 |
| Granted | 124566 | 123.63 | 171975 | 92.79 |
| Exercised | (351448) | 62.83 | (1284284) | 46.43 |
| Expired / Cancelled | (9653) | 108.40 | (14806) | 92.79 |
| Outstanding - end of year | 841305 | $76.19 | 1077840 | $66.64 |
| Exercisable - end of year | 408115 | $62.71 | 563102 | $61.50 |

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The following table summarizes information about the share options outstanding and exercisable at December 31, 2022 in Canadian dollars:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exercise price range** | **Number of outstanding options** | **Weighted average remaining contractual life** | **Weighted average exercise price** | **Number of exercisable options** | **Weighted average exercise price** |
| (CAD$) | (number) | (years) | (CAD$) | (number) | (CAD$) |
| $38.95 - $56.00 | 243412 | 4.4 | $49.59 | 190087 | $48.00 |
| $64.50 - $73.99 | 284745 | 6.0 | 68.40 | 149270 | 69.71 |
| $85.40 - $92.79 | 193467 | 7.3 | 90.70 | 68758 | 88.16 |
| $123.63 | 119681 | 9.1 | 123.63 |  | n/a |
|  | 841305 | 6.3 | $76.19 | 408115 | $62.71 |

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The weighted average share price at the date of exercise for share options exercised during the year was CAD$120.95 per share (2021 - CAD$100.85 per share).

The accrued liability related to the share option plan based on the Black-Scholes option-pricing model was $23 million at December 31, 2022 (December 31, 2021 - $44 million). The weighted average fair value of the options used in the calculation was CAD$35.59 per option at December 31, 2022 (December 31, 2021 - CAD$52.29 per option).

The inputs to the option model are as follows:

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Weighted-average share price on balance sheet date | CAD$98.20 | CAD$120.68 |
| Weighted average exercise price | CAD$76.19 | CAD$66.64 |
| Expected dividend | CAD$1.63 | CAD$1.01 |
| Expected volatility | 45.15% | 42.94% |
| Weighted average interest rate | 3.77% | 1.11% |
| Weighted average expected remaining life in years | 4.14 | 6.44 |

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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 plans at December 31, 2022 was CAD$14 million (December 31, 2021 - CAD$33 million). The intrinsic value is determined based on the difference between the weighted-average share price on the last business day of the month and the exercise price, multiplied by the sum of the related vested options.

***Phantom share unit plan***

Our PSU plan is intended to supplement, in whole or in part, or 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 volume weighted average price per Common share on the trading day 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 our 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 have recorded an expense of $10 million (2021 - expense of $11 million) related to the PSU plan. The number of units outstanding as at December 31, 2022 was 184,207 (December 31, 2021 – 169,385), including performance share units totalling 167,156 (December 31, 2021 – 90,813).

***Directors' deferred share unit plans***

We have DSU plans which provides a structure for directors, who are not employees of the Company, to accumulate an equity-like holding in West Fraser. The DSU plans allow directors to participate in the growth of West Fraser by providing a deferred payment based on market pricing of our Common shares at the time of redemption. Each director receives deferred share units in payment of an annual equity retainer until a minimum equity holding is reached and may elect to receive units in payment of up to 100% of other fees earned. After a minimum equity holding is reached, directors may elect to receive the equity retainer in units or cash. The units are issued based on the market price of our Common shares 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 market price of our Common shares at the date of redemption. A holder of units may elect to redeem units in cash or receive Common shares having an equivalent value.

We have recorded a recovery of $1 million (2021 - expense of $5 million) related to the DSU plan. The number of units outstanding as at December 31, 2022 was 97,884 (December 31, 2021 - 92,120).

***Equity-based compensation hedge***

In 2021, we were party to an equity derivative contract providing an offset for 1,000,000 Common share equivalents against our exposure to fluctuations in equity-based compensation expense from our stock option, PSU and DSU plans. The equity derivative contract matured in December 2021 and was closed out. A recovery of $23 million was included in equity-based compensation expense related to our equity derivative contract for the year ended December 31, 2021.

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**16. Restructuring and impairment charges**

During the quarter ended March 31, 2022, management approved a plan to permanently reduce the capacity at our pulp mill in Hinton, Alberta. One of Hinton pulp mill's two production lines has shut, and the remaining line produces Unbleached Kraft Pulp rather than Northern Bleached Softwood Kraft Pulp. As a result, we recorded impairment charges of $13 million relating to equipment that was decommissioned permanently as part of the transition to Unbleached Kraft Pulp.

During the quarter ended December 31, 2022, we identified an impairment indicator for our Perry sawmill as a result of high fibre costs and softening lumber markets. We recorded associated restructuring and impairment charges of $31 million, of which $29 million related to asset impairment of manufacturing plant, equipment and machinery. On January 10, 2023, we announced the indefinite curtailment of our Perry sawmill.

During the quarter ended December 31, 2022, we identified an impairment indicator for our South Molton, England location due to a decline in demand from a key customer for our kitchen cabinet products. We recorded associated restructuring and impairment charges of $15 million, of which $9 million related to asset impairment of manufacturing plant, equipment and machinery and related spares.

We recorded restructuring and impairment charges of $60 million for the year ended December 31, 2022 as follows:

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Severance | $7 | $— |
| Other | 2 |  |
| Restructuring charges | $9 | $— |
| Asset impairment related to Hinton pulp mill | $13 | $— |
| Asset impairment related to Perry lumber mill | $29 | $— |
| Asset impairment related to South Molton mill | $9 | $— |
| Total restructuring and impairment charges | $60 | $— |

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**17. Finance expense, net**

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Interest expense | $(24) | $(48) |
| Interest income on cash equivalents | 18 | 2 |
| Net interest income on export duty deposits | 9 | 9 |
| Finance expense on employee future benefits | (6) | (8) |
|  | $(3) | $(45) |

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**18. Other**

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Foreign exchange gain (loss) | $28 | $(5) |
| Settlement loss on defined benefit pension plan annuity purchase | (5) | (12) |
| Gain on interest rate swap contracts | 13 | 6 |
| Other  | 1 | 9 |
|  | $37 | $(2) |

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**19. Tax provision**

**Accounting policies**

Tax expense for the year is comprised of current and deferred tax. Tax expense is recognized in the consolidated 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.

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.

**Supporting information**

The major components of income tax included in comprehensive earnings are as follows:

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| **Earnings:** |  |  |
| Current tax | $(581) | $(977) |
| Deferred tax (provision) recovery | (37) | 26 |
| Tax provision on earnings | $(618) | $(951) |
| **Other comprehensive earnings:** |  |  |
| Deferred tax provision on retirement benefit actuarial gain | $(56) | $(52) |
| **Tax provision on comprehensive earnings** | $(674) | $(1003) |

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

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Income tax expense at statutory rate of 27% | $(700) | $(1052) |
| Non-taxable amounts | 81 | (4) |
| Rate differentials between jurisdictions and on specified activities | 10 | 116 |
| Other | (9) | (11) |
| **Tax provision** | $(618) | $(951) |

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Deferred income tax liabilities (assets) are made up of the following components:

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Property, plant, equipment and intangibles | $783 | $781 |
| Reforestation and decommissioning obligations | (30) | (30) |
| Employee benefits | (12) | (64) |
| Export duty deposits | 72 | 44 |
| Tax loss carry-forwards<sup>1</sup> | (11) | (10) |
| Other | (11) | (17) |
|  | $791 | $704 |
| *Represented by:* |  |  |
| Deferred income tax assets | $(4) | $(8) |
| Deferred income tax liabilities | 795 | 712 |
|  | $791 | $704 |

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1. Includes $61 million for net operating loss carry-forwards in various jurisdictions (December 31, 2021 - $68 million) and $345 million for U.S. state net operating loss carry-forwards (December 31, 2021 - $409 million). A portion of these losses expire over various periods starting in 2023. The net operating losses that have not been recognized as of December 31, 2022 are $35 million in various jurisdictions (December 31, 2021 - $53 million) and $272 million for U.S. states (December 31, 2021 - $287 million).

**20. Employee compensation**

Our employee compensation expense includes salaries and wages, employee future benefits, bonuses and termination costs, but excludes restructuring charges. Total compensation expense is $1,133 million (2021 - $1,070 million).

Key management includes directors and officers, and their compensation expense and balance sheet date payables are as follows:

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| **Expense** |  |  |
| Salary and short-term employee benefits | $13 | $17 |
| Retirement benefits | 2 | 2 |
| Equity-based compensation<sup>1</sup> | 4 | 36 |
|  | $19 | $55 |

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1. Amounts do not necessarily represent the actual value which will ultimately be paid.

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| **Payables and accrued liabilities** |  |  |
| Compensation | $6 | $7 |
| Equity-based compensation<sup>1</sup> | 35 | 46 |
|  | $41 | $53 |

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1. Amounts do not necessarily represent the actual value which will ultimately be paid.

**21. 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.

Certain of our equity-based compensation plans may be settled in cash or Common shares at the holder's option and for the purposes of calculating diluted earnings per share, the more dilutive of the cash-settled and equity-settled method is used, regardless of how the plan is accounted for. Plans that are accounted for using the cash-settled method will require adjustments to the numerator and denominator if the equity-settled method is determined to have a dilutive effect as compared to the cash-settled method.

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The numerator under the equity-settled method is calculated based on earnings available to Common shareholders adjusted to remove the cash-settled equity-based compensation expense (recovery) charged to earnings and deducting a notional charge using the equity-settled method, as set out below. Adjustments to earnings are tax-effected as applicable. The denominator under the equity-settled method is calculated using the treasury stock method. Share options under the equity-settled method are considered dilutive when the average market price of our Common shares for the period exceeds the exercise price of the share option.

The equity-settled method was more dilutive for the year ended December 31, 2022 and an adjustment was required for both the numerator and denominator. The cash-settled method was more dilutive for the year ended December 31, 2021.

A reconciliation of the numerator and denominator used for the purposes of calculating diluted earnings per share is as follows:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Earnings** |  |  |
| &nbsp;&nbsp;&nbsp;Numerator for basic EPS | $1975 | $2947 |
| &nbsp;&nbsp;&nbsp;Cash-settled recovery included in earnings | (5) |  |
| &nbsp;&nbsp;&nbsp;Equity-settled expense adjustment | (5) |  |
| &nbsp;&nbsp;&nbsp;Numerator for diluted EPS | $1965 | $2947 |
| **Weighted average number of shares** (thousands) |  |  |
| &nbsp;&nbsp;&nbsp;Denominator for basic EPS | 93760 | 109021 |
| &nbsp;&nbsp;&nbsp;Effect of dilutive equity-based compensation | 413 |  |
| &nbsp;&nbsp;&nbsp;Denominator for diluted EPS | 94173 | 109021 |
| **Earnings per share** (dollars) |  |  |
| &nbsp;&nbsp;&nbsp;Basic  | $21.06 | $27.03 |
| &nbsp;&nbsp;&nbsp;Diluted | $20.86 | $27.03 |

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**22. Government assistance**

**Accounting policies**

Government 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. Government assistance is recognized when there is reasonable assurance that the amount will be collected and that all the conditions will be complied with.

**Supporting information**

Government assistance of nil (2021 - $5 million) was recorded as a reduction to property, plant and equipment and $9 million (2021 - $8 million) was recorded as a reduction to cost of products sold. The government assistance related primarily to research and development, apprenticeship tax credits, and renewable heat incentives.

**23. Financial instruments**

**Accounting policies**

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 profit or loss ("FVTPL").

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**Supporting information**

The following tables provide the carrying values and fair values of our financial instruments by category, as well as the associated fair value hierarchy levels as defined in note 2 under "Fair value measurements". The carrying value is a reasonable approximation of fair value for cash and cash equivalents, receivables, and payables and accrued liabilities due to their short-term nature. The carrying values of long-term debt include any current portions and exclude deferred financing costs.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2022** | **Level** | **Financial assets at amortized cost** | **Financial assets or financial liabilities at FVTPL** | **Financial liabilities at amortized cost** | **Carrying value** | **Fair value** |
| **Financial assets** | | | | | | |
| Cash and cash equivalents | 2 | $1162 | $— | $— | $1162 | $1162 |
| Receivables | 3 | 350 |  |  | 350 | 350 |
| Interest rate swaps (note 9 & 12)<sup>2</sup> | 2 | $— | $12 | $— | $12 | $12 |
|  |  | $1512 | $12 | $— | $1524 | $1524 |
| **Financial liabilities** |  |  |  |  |  |  |
| Payables and accrued liabilities | 3 | $— | $— | $722 | $722 | $722 |
| Long-term debt (note 12)<sup>1</sup> | 2 |  |  | 500 | 500 | 491 |
| Electricity swaps (note 11) | 3 |  | 4 |  | 4 | 4 |
|  |  | $— | $4 | $1222 | $1226 | $1217 |

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1. The fair value of long-term debt is based on rates available to us at December 31, 2022 for long-term debt with similar terms and remaining maturities.

2. The interest rate swap contracts are included in other assets in our consolidated balance sheets.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2021** | **Level** | **Financial assets at amortized cost** | **Financial assets or financial liabilities at FVTPL** | **Financial liabilities at amortized cost** | **Carrying value** | **Fair value** |
| **Financial assets** | | | | | | |
| Cash and cash equivalents | 2 | $1568 | $— | $— | $1568 | $1568 |
| Receivables | 3 | 508 |  |  | 508 | 508 |
|  |  | $2076 | $— | $— | $2076 | $2076 |
| **Financial liabilities** |  |  |  |  |  |  |
| Payables and accrued liabilities | 3 | $— | $— | $848 | $848 | $848 |
| Long-term debt (note 12)1 | 2 |  |  | 501 | 501 | 513 |
| Interest rate swaps (note 9 & 12)<sup>2</sup> | 2 |  | 1 |  | 1 | 1 |
|  |  | $— | $1 | $1349 | $1350 | $1362 |

---

1. The fair value of long-term debt is based on rates available to us at December 31, 2021 for long-term debt with similar terms and remaining maturities.

2. The interest rate swap contracts are included in other liabilities in our consolidated balance sheets.

***Financial risk management***

Our activities result in exposure to a variety of financial risks, and the main objectives of our risk management process are to ensure risks are properly identified and analyzed and establish appropriate risk limits and controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and our activities. We are exposed to credit risk, liquidity risk and market risk. A description of these risks and policies for managing these risks are summarized below.

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The sensitivities provided in this section give the effect of possible changes in the relevant prices and rates on earnings. The sensitivities are hypothetical and should not be considered to be predictive of future performance or earnings. Changes in fair values or cash flows based on market variable fluctuations cannot be extrapolated since the relationship between the change in the market variable and the change in fair value or cash flows may not be linear.

***Credit risk***

Credit risk is the risk of financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. We are exposed to credit risk with respect to cash and cash equivalents and accounts receivable from our customers. The carrying amounts of these accounts represent the maximum credit exposure. We manage credit risk by holding cash and cash equivalents with major banks of high creditworthiness. Credit risk for trade and other receivables is managed through established credit monitoring activities such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Establishing and monitoring customer credit limits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Performing ongoing evaluations of the financial conditions of key customers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** In certain market areas, undertaking additional measures to reduce credit risk including credit insurance, letters of credit and prepayments. At December 31, 2022, approximately 45% of trade accounts receivable was covered by at least some of these additional measures (December 31, 2021 - 35%).

Given our credit monitoring activities, the low percentage of overdue accounts and our history of minimal customer defaults, we consider the credit quality of the trade accounts receivable at December 31, 2022 to be high and have recorded nominal expected credit losses on our trade accounts receivable. The aging analysis of trade accounts receivable is presented below:

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| | | |
|:---|:---|:---|
| As at | **December 31, 2022** | **December 31, 2021** |
| Trade accounts receivable |  |  |
| &nbsp;&nbsp;&nbsp;Current | $256 | $403 |
| &nbsp;&nbsp;&nbsp;Past due 1 to 30 days | 19 | 30 |
| &nbsp;&nbsp;&nbsp;Past due 31 to 60 days | 9 | 3 |
| &nbsp;&nbsp;&nbsp;Past due over 60 days | 2 | 5 |
| Trade accounts receivable | $286 | $441 |
| Insurance receivable | 3 | 6 |
| Government assistance |  | 1 |
| Sales taxes receivable | 22 | 28 |
| Other | 39 | 32 |
| Receivables | $350 | $508 |

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***Liquidity risk***

Liquidity risk is the risk we will encounter difficulty in meeting obligations associated with financial liabilities. We manage liquidity risk by maintaining adequate cash and cash equivalents balances and having lines of credit available. In addition, we regularly monitor forecasted and actual cash flows. Refinancing risks are managed by extending maturities through regular renewals and refinancing when market conditions are supportive.

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The following table summarizes the maturity profile of our financial liabilities based on contractual undiscounted payments:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2022** | **Carrying value** | **Total** | **2023** | **2024** | **2025** | **2026** | **Thereafter** |
| Long-term debt | $499 | $500 | $— | $500 | $— | $— | $— |
| Interest on long-term debt<sup>1</sup> |  | 33 | 19 | 14 |  |  |  |
| Lease obligations | 37 | 42 | 12 | 8 | 7 | 3 | 12 |
| Payables and accrued liabilities | 722 | 722 | 722 |  |  |  |  |
| Electricity swaps | 4 | $7 | $(1) | $(2) | $(1) | $1 | $10 |
| Total | $1262 | $1304 | $752 | $520 | $6 | $4 | $22 |

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1. Assumes debt remains at December 31, 2022 levels and includes the impact of interest rate swaps terminating August 2024.

In addition, we have contractual commitments for the acquisition of of property, plant and equipment in the amount of $278 million in 2023.

***Market risk***

Market risk is the risk of loss that might arise from changes in market factors such as interest rates, foreign exchange rates, commodity, and energy prices. We aim to manage market risk within acceptable parameters and may, from time to time, use derivatives to manage market risk.

*Interest rates*

Interest rate risk relates mainly to floating interest rate debt. By maintaining a mix of fixed and floating rate debt along with interest rate swap contracts, we mitigate the exposure to interest rate changes.

As at December 31, 2022, we had the following floating rate financial instruments:

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| | |
|:---|:---|
| **Financial instrument** | **Carrying <br>value** |
| Financial liability: Term loan | $200 |
| Financial asset: Interest rate swap contracts | $12 |

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We maintain a $200 million five-year term loan due August 2024 where the interest is payable at floating rates based on Prime, Base Rate Advances, Bankers' Acceptances or LIBOR Advances at our option.

We have interest rate swap agreements terminating August 2024 to pay fixed interest rates and receive variable interest rates equal to 3-month LIBOR on $200 million notional principal amount of indebtedness. These swap agreements fix the interest rate on the $200 million five-year term loan floating rate debt.

In addition, interest on certain of our credit facilities is payable at floating rates including LIBOR at our option.

At December 31, 2022, the impact of a 100-basis point change in interest rate affecting our floating rate debt would not result in a change in annual interest expense (December 31, 2021 - no change).

We adopted *Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)* ("The Phase 2 Amendments") effective January 1, 2021. The Phase 2 Amendments provide practical relief from certain requirements in IFRS Standards relating to the modification of financial instruments, lease contracts, or hedging relationships triggered by a replacement of a benchmark interest rate in a contract with a new alternative benchmark rate.

At December 31, 2022, these amendments did not affect our financial statements as we have not yet transitioned any agreements that are exposed to LIBOR or to an alternative benchmark interest rate.

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The above financial instruments are based on LIBOR settings that are currently scheduled to cease publication after June 30, 2023. We are working with the lenders associated with the term loan and the counterparties associated with the interest rate swap to assess the potential alternatives to the use of LIBOR. We will continue to monitor developments on alternative benchmark interest rates and expect to transition to alternative rates as widespread market practice is established.

*Energy*

We are party to arrangements with renewable power generators to purchase environmental attributes and receive settlements by reference to generation volumes and the spot price for power and pay settlements by reference to generation volumes and a fixed contractual price. These agreements act as a partial hedge against future electricity price increases in Alberta power rates and will provide us with access to renewable energy credits that we may surrender to achieve a reduction in our greenhouse gas emissions. While these arrangements economically hedge the risk of changes in cash flows due to fluctuations in Alberta power rates, hedge accounting has not been applied to these instruments.

A contract to receive renewable energy credits and the associated floating-for-fixed electricity swap are distinct units of account. We have selected this method as we believe the receipt of the renewable energy credits is an executory contract and the electricity swap meets the definition of an embedded derivative.

The electricity swaps are valued based on a discounted cash flow model, with the related changes in fair value included in other income (expense) on the consolidated statement of earnings. The valuation requires management to make certain assumptions about the model inputs, including future electricity prices, discount rates and expected generation volumes associated with the contracts.

For the year ended December 31, 2022, a nominal gain was recognized in relation to the electricity swaps. The fair value of the electricity swaps at December 31, 2022 was a liability of $4 million.

***Currency risk***

We are exposed to foreign currency risk because our Canadian operations incur a portion of their operating expenses in Canadian dollars. Therefore, an increase in the value of the CAD relative to the USD increases the value of expenses in USD terms incurred by our Canadian operations, which reduces operating margin and the cash flow available to fund operations.

In addition, foreign currency exposure arises from our net investment in our European operations, which have British pound sterling and Euro functional currencies, and our Canadian newsprint operation, which has a Canadian dollar functional currency. The risk arises from the fluctuation in spot rates between these currencies and the U.S. dollar, which causes the amount of the net investment to vary with the resulting translation gains or losses being reported in other comprehensive earnings.

A $0.01 strengthening (weakening) of the USD against the CAD would increase (decrease) earnings by approximately $1 million. A $0.01 strengthening (weakening) of the USD against the CAD, British pound and Euro would result in an approximate $6 million translation loss (gain) on operations with different functional currencies included in other comprehensive earnings. These sensitivities assume that all other variables remain constant and ignores any impact of forecast sales and purchases.

**24. Capital disclosures**

Our 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. dollars. Our objective in managing capital is to ensure adequate liquidity and financial flexibility at all times, particularly at the bottom of the business cycle.

Our main policy relating to capital management is to maintain a strong balance sheet and otherwise meet financial tests that rating agencies commonly apply for investment-grade issuers of public debt. Our debt is currently rated as investment-grade by three major rating agencies.

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We monitor and assess our financial performance to ensure that debt levels are prudent, taking into account the anticipated direction of the business cycle. When financing acquisitions, we combine cash on hand, debt, and equity financing in a proportion that is intended to maintain an investment-grade rating for debt throughout the cycle. Debt repayments are arranged, where possible, on a staggered basis that takes into account the uneven nature of anticipated cash flows. We have established committed revolving lines of credit that provide liquidity and flexibility when capital markets are restricted.

A strong balance sheet and liquidity profile, along with our investment-grade debt rating, are key elements of our goal to maintain a balanced capital allocation strategy. Priorities within this strategy include reinvesting in our operations across all market cycles to strategically enhance productivity, product mix, and capacity; maintaining a leading cost position; maintaining financial flexibility to capitalize on growth opportunities, including the pursuit of acquisitions and larger-scale strategic growth initiatives; and returning capital to shareholders through dividends and share repurchases.

Two key measurements used to monitor our capital position are total debt to total capital and net debt to total capital, calculated as follows:

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| | | |
|:---|:---|:---|
| As at | **December 31, 2022** | **December 31, 2021** |
| Debt |  |  |
| &nbsp;&nbsp;&nbsp;Current and long-term lease obligation | $37 | $28 |
| &nbsp;&nbsp;&nbsp;Long-term debt, excluding deferred financing costs | 500 | 501 |
| &nbsp;&nbsp;&nbsp;Interest rate swaps<sup>1</sup> |  | 1 |
| &nbsp;&nbsp;&nbsp;Open letters of credit<sup>1</sup> | 61 | 65 |
| Total debt | 598 | 595 |
| Shareholders' equity | 7619 | 7656 |
| Total capital | 8217 | 8251 |
| Total debt to total capital | 7% | 7% |
| Total debt | 598 | 595 |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | (1162) | (1568) |
| &nbsp;&nbsp;&nbsp;Open letters of credit<sup>1</sup> | (61) | (65) |
| &nbsp;&nbsp;&nbsp;Interest rate swaps<sup>1</sup> |  | (1) |
| Net debt | $(625) | $(1039) |
| Shareholders' equity | $7619 | $7656 |
| Total capital, net of cash | 6994 | 6617 |
| Net debt to total capital | (9%) | (16%) |

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1. Letters of credit facilities and the fair value of interest rate swaps are part of our bank covenants' total debt calculation.

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**25. Segment and geographical information**

The segmentation of manufacturing operations into lumber, NA EWP, pulp and paper and Europe EWP is based on a number of factors, including similarities in products, production processes and economic characteristics. The EWP segments have been separated due to differences in the operating region, customer base, profit margins and sales volumes. Transactions between segments are at market prices and on standard business terms. The segments follow the accounting policies described in these consolidated financial statement notes, where applicable, and earnings before tax has been identified as the measure of segment profit and loss.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| **Year ended December 31, 2022** | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| Sales |  |  |  |  |  |  |
| &nbsp;&nbsp;To external customers | $4381 | $3780 | $802 | $738 | $— | $9701 |
| &nbsp;&nbsp;To other segments | 84 | 9 | 5 |  | (98) |  |
|  | $4465 | $3789 | $807 | $738 | $(98) | $9701 |
| Cost of products sold | (2489) | (1677) | (596) | (479) | 98 | (5142) |
| Freight and other distribution costs | (435) | (329) | (153) | (46) |  | (963) |
| Export duties, net | (18) |  |  |  |  | (18) |
| Amortization | (186) | (306) | (35) | (53) | (9) | (589) |
| Selling, general and administration | (194) | (106) | (32) | (28) | (5) | (365) |
| Equity-based compensation |  |  |  |  | (5) | (5) |
| Restructuring and impairment charges | (31) |  | (13) | (15) |  | (60) |
| Operating earnings | $1111 | $1371 | $(22) | $117 | $(18) | $2559 |
| Finance income (expense), net | 1 | (4) | (2) |  | 2 | (3) |
| Other income | 5 | 16 | 1 |  | 14 | 37 |
| Earnings before tax | $1117 | $1383 | $(23) | $118 | $(2) | $2593 |
| Total assets | $3685 | $4637 | $456 | $730 | $465 | $9973 |
| Total liabilities | $553 | $622 | $90 | $170 | $919 | $2354 |
| Capital expenditures | $184 | $235 | $29 | $20 | $9 | $477 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| **Year ended December 31, 2021** | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| Sales |  |  |  |  |  |  |
| &nbsp;&nbsp;To external customers | $4804 | $4264 | $727 | $723 | $— | $10518 |
| &nbsp;&nbsp;To other segments | 106 | 9 |  |  | (115) |  |
|  | $4910 | $4273 | $727 | $723 | $(115) | $10518 |
| Cost of products sold | (2241) | (1521) | (541) | (457) | 115 | (4645) |
| Freight and other distribution costs | (404) | (262) | (137) | (43) |  | (846) |
| Export duties, net | (146) |  |  |  |  | (146) |
| Amortization | (164) | (289) | (34) | (88) | (9) | (584) |
| Selling, general and administration | (146) | (76) | (34) | (22) | (34) | (312) |
| Equity-based compensation |  |  |  |  | (40) | (40) |
| Operating earnings | $1809 | $2125 | $(19) | $113 | $(83) | $3945 |
| Finance expense, net | (17) | (3) | (5) | (1) | (19) | (45) |
| Other income (expense) | 2 | (1) | 2 |  | (5) | (2) |
| Earnings before tax | $1794 | $2121 | $(22) | $112 | $(107) | $3898 |
| Total assets | $3557 | $4154 | $448 | $953 | $1321 | $10433 |
| Total liabilities | $668 | $552 | $99 | $223 | $1235 | $2777 |
| Capital expenditures | $146 | $424 | $35 | $28 | $2 | $635 |

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1. NA EWP capital expenditures for the year ended December 31, 2021 includes $276 million relating to the asset acquisition of the idled OSB mill near Allendale, South Carolina.

The geographic distribution of non-current assets and external sales based on the location of product delivery is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Non-current assets** | **Non-current assets** | **Sales by geographic area** | **Sales by geographic area** |
| | **2022** | **2021** | **2022** | **2021** |
| United States | $2625 | $2838 | $6659 | $7286 |
| Canada | 4139 | 3825 | 1531 | 1682 |
| U.K and Europe | 460 | 553 | 733 | 737 |
| Asia |  |  | 767 | 806 |
| Other |  |  | 11 | 7 |
|  | $7224 | $7216 | $9701 | $10518 |

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**26. Countervailing ("CVD") and antidumping ("ADD") duty dispute**

On November 25, 2016, a coalition of U.S. lumber producers petitioned the U.S. Department of Commerce ("USDOC") and the U.S. International Trade Commission ("USITC") to investigate alleged subsidies to Canadian softwood lumber producers and levy CVD and ADD duties against Canadian softwood lumber imports. The USDOC chose us as a "mandatory respondent" to both the countervailing and antidumping investigations, and as a result, we have received unique company-specific rates.

**Accounting policy** 

The CVD and ADD rates apply retroactively for each period of investigation ("POI"). We record CVD as export duty expense at the cash deposit rate until an Administrative Review ("AR") finalizes a new applicable rate for each POI. We record ADD as export duty expense by estimating the rate to be applied for each POI by using our actual results and a similar calculation methodology as the USDOC and adjust when an AR finalizes a new applicable rate for each POI. The

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difference between the cumulative cash deposits paid and cumulative export duty expense recognized for each POI is recorded on our balance sheet as export duty deposits receivable or payable.

The difference between the cash deposit amount and the amount that would have been due based on the final AR rate will incur interest based on the U.S. federally published interest rate. We record interest income on our duty deposits receivable, net of any interest expense on our duty deposits payable, based on this rate.

***Developments in CVD and ADD rates***

We began paying CVD and ADD duties in 2017 based on the determination of duties payable by the USDOC. The CVD and ADD cash deposit rates are updated based on the USDOC's AR for each POI, as summarized in the tables below.

On March 9, 2022, the USDOC initiated AR4 POI covering the 2021 calendar year. West Fraser was selected as a mandatory respondent, which will result in West Fraser continuing to be subject to a company-specific rate.

On August 4, 2022, the USDOC finalized the duty rate for AR3, resulting in the recording of an export duty recovery of $81 million and interest income in earnings and an increase in export duty deposits receivable.

On January 24, 2023, the USDOC released the preliminary results from AR4 POI covering the 2021 calendar year, which indicated a rate of 2.48% for CVD and 6.90% for ADD for West Fraser. The duty rates are subject to an appeal process, and we will record an adjustment once the rates are finalized. If the AR4 rates were to be confirmed, it would result in a recovery of $62 million before the impact of interest for the POI covered by AR4. This adjustment would be in addition to the amounts already recorded on our balance sheet. If these rates were finalized, our combined cash deposit rate would be 9.38%.

The respective Cash Deposit Rates, the AR POI Final Rate, and the West Fraser Estimated ADD Rate for each period are as follows:

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| | | |
|:---|:---|:---|
| **Effective dates for CVD** | **Cash Deposit <br>Rate** | **AR POI Final Rate** |
| **AR1 POI**<sup>1,2</sup> | | |
| &nbsp;&nbsp;&nbsp;April 28, 2017 - August 24, 2017 | 24.12% | 6.76% |
| &nbsp;&nbsp;&nbsp;August 25, 2017 - December 27, 2017 | —% | —% |
| &nbsp;&nbsp;&nbsp;December 28, 2017 - December 31, 2017<sup>3</sup> | 17.99% | 6.76% |
| &nbsp;&nbsp;&nbsp;January 1, 2018 - December 31, 2018 | 17.99% | 7.57% |
| **AR2 POI**<sup>4</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2019 - December 31, 2019 | 17.99% | 5.08% |
| **AR3 POI**<sup>5</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2020 - November 30, 2020 | 17.99% | 3.62% |
| &nbsp;&nbsp;&nbsp;December 1, 2020 - December 31, 2020<sup>6</sup> | 7.57% | 3.62% |
| **AR4 POI**<sup>7</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2021 - December 1, 2021 | 7.57% | n/a |
| &nbsp;&nbsp;&nbsp;December 2, 2021 - December 31, 2021<sup>8</sup> | 5.06% | n/a |
| **AR5 POI**<sup>9</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2022 – January 9, 2022 | 5.06% | n/a |
| &nbsp;&nbsp;&nbsp;January 10, 2022 – August 8, 2022<sup>10</sup> | 5.08% | n/a |
| &nbsp;&nbsp;&nbsp;August 9, 2022 - December 31, 2022<sup>11</sup> | 3.62% | n/a |

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1. On April 24, 2017, the USDOC issued its preliminary rate in the CVD investigation. The requirement that we make cash deposits for CVD was suspended on August 24, 2017, until the USDOC published the revised rate.

2. On November 24, 2020, the USDOC issued the final CVD rate for the AR1 POI.

3. On December 4, 2017, the USDOC revised our CVD Cash Deposit Rate effective December 28, 2017.

4. On November 24, 2021, the USDOC issued the final CVD rate for the AR2 POI. On January 10, 2022, the USDOC amended the final CVD rate for the AR2 POI from 5.06% to 5.08% for ministerial errors. This table only reflects the final rate.

5. On August 4, 2022, the USDOC issued the final CVD rate for the AR3 POI.

6. On November 24, 2020, the USDOC revised our CVD Cash Deposit Rate effective December 1, 2020.

7. The CVD rate for the AR4 POI will be adjusted when AR4 is complete and the USDOC finalizes the rate, which is not expected until 2023.

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8. On November 24, 2021, the USDOC revised our CVD Cash Deposit Rate effective December 2, 2021.

9. The CVD rate for the AR5 POI will be adjusted when AR5 is complete and the USDOC finalizes the rate, which is not expected until 2024.

10. On January 6, 2022, the USDOC revised our CVD Cash Deposit Rate effective January 10, 2022.

11. On August 4, 2022, the USDOC revised our CVD Cash Deposit Rate effective August 9, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Effective dates for ADD** | **Cash Deposit <br>Rate** | **AR POI Final <br>Rate** | **West Fraser <br>Estimated <br>Rate** |
| **AR1 POI**<sup>1,2</sup> | | | |
| &nbsp;&nbsp;&nbsp;June 30, 2017 - December 3, 2017 | 6.76% | 1.40% | 1.46% |
| &nbsp;&nbsp;&nbsp;December 4, 2017 - December 31, 2017<sup>3</sup> | 5.57% | 1.40% | 1.46% |
| &nbsp;&nbsp;&nbsp;January 1, 2018 - December 31, 2018 | 5.57% | 1.40% | 1.46% |
| **AR2 POI**<sup>4</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2019 - December 31, 2019 | 5.57% | 6.06% | 4.65% |
| **AR3 POI**<sup>5</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2020 - November 29, 2020 | 5.57% | 4.63% | 3.40% |
| &nbsp;&nbsp;&nbsp;November 30, 2020 - December 31, 2020<sup>6</sup> | 1.40% | 4.63% | 3.40% |
| **AR4 POI**<sup>7</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2021 - December 1, 2021 | 1.40% | n/a | 6.80% |
| &nbsp;&nbsp;&nbsp;December 2, 2021 - December 31, 2021<sup>8</sup> | 6.06% | n/a | 6.80% |
| **AR5 POI**<sup>9</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2022 - August 8, 2022 | 6.06% | n/a | 4.52% |
| &nbsp;&nbsp;&nbsp;August 9, 2022 - December 31, 2022<sup>10</sup> | 4.63% | n/a | 4.52% |

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1. On June 26, 2017, the USDOC issued its preliminary rate in the ADD investigation effective June 30, 2017.

2. On November 24, 2020, the USDOC issued the final ADD rate for the AR1 POI.

3. On December 4, 2017, the USDOC revised our ADD Cash Deposit Rate effective December 4, 2017.

4. On November 24, 2021, the USDOC issued the final ADD rate for the AR2 POI.

5. On August 4, 2022, the USDOC issued the final ADD rate for the AR3 POI.

6. On November 24, 2020, the USDOC revised our ADD Cash Deposit Rate effective November 30, 2020.

7. The ADD rate for the AR4 POI will be adjusted when AR4 is complete and the USDOC finalizes the rate, which is not expected until 2023.

8. On November 24, 2021, the USDOC revised our ADD Cash Deposit Rate effective December 2, 2021.

9. The ADD rate for the AR5 POI will be adjusted when AR5 is complete and the USDOC finalizes the rate, which is not expected until 2024.

10. On August 4, 2022, the USDOC revised our ADD Cash Deposit Rate effective August 9, 2022.

***Impact on results***

The following table reconciles our cash deposits paid during the year to the amount recorded in our statements of earnings:

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| | | |
|:---|:---|:---|
| ($ millions) | **2022** | **2021** |
| Cash deposits paid<sup>1</sup> | $(117) | $(132) |
| Adjust to West Fraser Estimated ADD rate<sup>2</sup> | 18 | (69) |
| Effective duty expense for period<sup>3</sup> | (99) | (201) |
| Duty recovery attributable to AR2<sup>4</sup> |  | 55 |
| Duty recovery attributable to AR3<sup>5</sup> | 81 |  |
| Net duty expense | (18) | (146) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income on duty deposits receivable | $9 | $9 |

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1. Represents combined CVD and ADD cash deposit rate of 8.97% for January 1, 2021 to December 1, 2021, 11.12% from December 2, 2021 to January 9, 2022, 11.14% from January 10, 2022 to August 8, 2022, and 8.25% from August 9, 2022 to December 31, 2022.

2. Represents adjustment to West Fraser Estimated ADD rate of 4.52% for 2022 and 6.80% for 2021.

3. The total represents the combined CVD cash deposit rate and West Fraser Estimated ADD rate of 14.37% for January 1, 2021 to December 1, 2021, 11.86% for December 2, 2021 to December 31, 2021, 9.58% for January 1, 2022 to January 9, 2022, 9.60% from January 10, 2022 to August 8, 2022, and 8.14% from August 9, 2022 to December 31, 2022.

4.$55 million represents the duty recovery attributable to the finalization of AR2 duty rates for the 2019 POI.

5.$81 million represents the duty recovery attributable to the finalization of AR3 duty rates for the 2020 POI.

As of December 31, 2022, export duties paid and payable on deposit with the USDOC were $784 million (December 31, 2021 - $662 million).

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***Impact on balance sheet***

Each POI is subject to independent administrative review by the USDOC, and the results of each POI may not be offset.

Export duty deposits receivable is represented by:

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| | | |
|:---|:---|:---|
| **Export duty deposits receivable** | **2022** | **2021** |
| Beginning of year | $242 | $178 |
| Export duties recognized as duty deposits receivable | 97 | 55 |
| Interest recognized on duty deposits receivable | 15 | 9 |
| End of year | $354 | $242 |

---

Export duties payable is represented by:

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| | | |
|:---|:---|:---|
| **Export duties payable** | **2022** | **2021** |
| Beginning of year | $(69) | $— |
| Export duties payable related to AR4 | 2 | (69) |
| Interest recognized on the export duties payable | (6) |  |
| End of year | $(73) | $(69) |

---

**Appeals**

On May 22, 2020, the North American Free Trade Agreement ("NAFTA") panel issued its final decision on "Injury". The NAFTA panel rejected the Canadian parties' arguments and upheld the USITC remand determination in its entirety.

On August 28, 2020, the World Trade Organization's ("WTO") dispute-resolution panel ruled unanimously that U.S. countervailing duties against Canadian softwood lumber are inconsistent with the WTO obligations of the United States. The decision confirmed that Canada does not subsidize its softwood lumber industry. On September 28, 2020, the U.S. announced that it would appeal the WTO panel's decision.

The softwood lumber case will continue to be subject to NAFTA or the new Canada-United States-Mexico Agreement ("CUSMA"), WTO dispute resolution processes, and litigation in the U.S. In the past, long periods of litigation have led to negotiated settlements and duty deposit refunds. In the interim, duties remain subject to the USDOC AR process, which results in an annual adjustment of duty deposit rates.

Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administrative review process is complete and related appeal processes are concluded.

**27. Contingencies**

We are subject to various investigations, claims and legal, regulatory and tax proceedings covering matters that arise in the ordinary course of business activities, including civil claims and lawsuits, regulatory examinations, investigations, audits and requests for information by governmental regulatory agencies and law enforcement authorities in various jurisdictions. Each of these matters is subject to uncertainties and it is possible that some of these matters may be resolved unfavourably. Certain conditions may exist as of the date the financial statements are issued, which may result in an additional loss. In the opinion of management none of these matters are expected to have a material effect on our results of operations or financial condition.

## Exhibit 99.3

Exhibit 99.3

![image_1a.jpg](image_1a.jpg)

**MANAGEMENT'S DISCUSSION & ANALYSIS**

**INTRODUCTION**

This discussion and analysis by management ("MD&A") of West Fraser Timber Co. Ltd.'s ("West Fraser", the "Company", "we", "us", or "our") financial performance for the year and three months ended December 31, 2022 should be read in conjunction with our annual audited consolidated financial statements and accompanying notes for the year ended December 31, 2022 (the "Annual Financial Statements").

Unless otherwise indicated, the financial information contained in this MD&A is derived from our Annual Financial Statements, which have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). This MD&A uses various Non-GAAP and other specified financial measures, including "Adjusted EBITDA", "Adjusted EBITDA by segment", "available liquidity", "total debt to capital ratio", "net debt to capital ratio", and "expected capital expenditures". An explanation with respect to the use of these Non-GAAP and other specified financial measures is set out in the section titled "Non-GAAP and Other Specified Financial Measures".

This MD&A includes statements and information that constitute "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of United States securities laws (collectively, "forward-looking statements"). Please refer to the cautionary note entitled "Forward-Looking Statements" below for a discussion of these forward-looking statements and the risks that impact these forward-looking statements.

Dollar amounts are expressed in the United States ("U.S.") currency unless otherwise indicated and reflect the change in our functional and reporting currency from the Canadian dollar to the U.S. dollar effective February 1, 2021. This MD&A uses capitalized terms, abbreviations and acronyms that are defined under "Glossary of Key Terms". The information in this MD&A is as at February 14, 2023 unless otherwise indicated.

**OUR BUSINESS AND STRATEGY**

West Fraser is a diversified wood products company with facilities in Canada, the U.S., the U.K. and Europe, manufacturing, selling, marketing and distributing lumber, engineered wood products (OSB, LVL, MDF, plywood, particleboard), pulp, newsprint, wood chips and other residuals and renewable energy. Our business is comprised of 34 lumber mills, 15 OSB facilities, 6 renewable energy facilities, 5 pulp and paper mills, 3 plywood facilities, 3 MDF facilities, 2 particleboard facilities, 1 LVL facility, 1 treated wood facility, and 1 veneer facility.

Our goal at West Fraser is to generate strong financial results through the business cycle, relying on our committed workforce, the quality of our assets and our well-established people and culture. This culture emphasizes cost control in all aspects of the business and operating in a responsible, sustainable, financially conservative and prudent manner.

The North American wood products industry is cyclical and periodically faces difficult market conditions. Our earnings are sensitive to changes in world economic conditions, primarily those in North America, Asia and Europe and particularly to the U.S. housing market for new construction and repair and renovation spending. Most of our revenues are from sales of commodities for which prices are sensitive to variations in supply and demand. As many of our costs are denominated in Canadian dollars, British pounds sterling and Euros, exchange rate fluctuations of the Canadian dollar, British pound sterling and Euro against the United States dollar can and are anticipated to be a significant source of earnings volatility for us.

West Fraser strives to make sustainability a central principle upon which our people operate, and we believe the Company's renewable building materials that sequester carbon are a truly natural solution in the fight against climate change. There are numerous government initiatives and proposals globally to address climate-related issues. Within the jurisdictions of West Fraser's operations, some of these initiatives would regulate, and do regulate and/or tax the

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production of carbon dioxide and other greenhouse gases to facilitate the reduction of carbon emissions, providing incentives to produce and use cleaner energy. In the first quarter of 2022, we joined the Science Based Targets Initiative ("SBTi") demonstrating the Company's commitment to sustainability leadership and contribution to global climate action, including setting specific science-based targets to achieve near-term greenhouse gas reductions across all of our operations located in Canada, the U.S., the U.K. and Europe.

We believe that maintaining a strong balance sheet and liquidity profile, along with our investment-grade debt rating, enables us to execute a balanced capital allocation strategy. Our goal is to reinvest in our operations across all market cycles to strategically enhance productivity, product mix, and capacity and to maintain a leading cost position. We believe that a strong balance sheet also provides the financial flexibility to capitalize on growth opportunities, including the pursuit of opportunistic acquisitions and larger-scale strategic growth initiatives, and is a key tool in managing our business over the long term including returning capital to shareholders.

**RECENT DEVELOPMENTS**

**Markets**

In North America, changes in new home construction activity in the U.S. are a significant driver of lumber and OSB demand. According to the U.S. Census Bureau, the seasonally adjusted annualized rate of U.S. housing starts averaged 1.38 million units in December 2022, with permits issued averaging 1.33 million units. U.S. housing starts were 1.55 million units for the full year, down 3% from 1.60 million units in 2021. While there are near-term headwinds to new home construction, owing in large part to the recent upward reset in interest rates and the impact on housing affordability, low supply of existing homes for sale, the backlog of new homes under construction caused by lagging completions and changes in home ownership trends stemming from the COVID-19 pandemic provide offsetting factors that are expected to support longer-term core demand for home construction activity. However, should interest rates continue to rise or housing prices remain elevated, housing affordability may be impacted, which could reduce near-term demand for new home construction and thus near-term demand for our wood building products.

Relative to new home construction markets, demand for our products used in repair and remodelling applications remained robust in the fourth quarter. While there is risk of relatively high inflation tempering consumer spending and growth in near-term repair and remodelling demand, over the medium term an aging housing stock and the apparent entrenchment of greater work-from-home flexibility are expected to continue to drive renovation and repair spending that supports lumber, plywood and OSB demand.

**Indefinite Curtailment of Perry Sawmill**

On January 10, 2023, we announced the indefinite curtailment of our Perry sawmill in Florida as a result of high fibre costs and softening lumber markets. The indefinite curtailment will decrease our annual U.S. lumber production by 100 million board feet. In Q4-22 we recorded restructuring and impairment charges of $31 million relating to the indefinite curtailment.

**Curtailment of Cariboo Pulp & Paper**

On February 7, 2023, we announced the planned curtailment of operations at Cariboo Pulp & Paper located in Quesnel, British Columbia, beginning in mid-April for a month and then for another month in the third quarter, due to a decline in the availability of sawmill residuals. Downtime at Cariboo Pulp & Paper will help better align our production capacity this year with the available fibre supply. These plans may be adjusted should fibre forecasts change.

**CVD and ADD Duty Rates**

On January 24, 2023, the USDOC released the preliminary results from AR4 POI covering the 2021 calendar year, which indicated a rate of 2.48% for CVD and 6.90% for ADD for West Fraser. The duty rates are subject to an appeal process, and we will record an adjustment once the rates are finalized. If the AR4 rates were to be confirmed, it would result in a recovery of $62 million before the impact of interest for the POI covered by AR4. This adjustment would be in addition to the amounts already recorded on our balance sheet. If these rates were finalized, our combined cash deposit rate would be 9.38%.

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**ANNUAL RESULTS**

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| | | | |
|:---|:---|:---|:---|
| **Summary Annual Results**<br>($ millions, except as otherwise indicated) | **2022** | **2021** | **2020** |
| **Earnings** |  |  |  |
| Sales | $9701 | $10518 | $4373 |
| Cost of products sold | (5142) | (4645) | (2559) |
| Freight and other distribution costs | (963) | (846) | (529) |
| Export duties, net | (18) | (146) | (57) |
| Amortization | (589) | (584) | (203) |
| Selling, general and administration | (365) | (312) | (185) |
| Equity-based compensation | (5) | (40) | (9) |
| Restructuring and impairment charges | (60) |  |  |
| Operating earnings | 2559 | 3945 | 831 |
| Finance expense, net | (3) | (45) | (27) |
| Other | 37 | (2) | (14) |
| Tax provision | (618) | (951) | (202) |
| Earnings | $1975 | $2947 | $588 |
| **Adjusted EBITDA**<sup>1</sup> | $3212 | $4569 | $1043 |
| **Basic earnings per share** ($) | 21.06 | 27.03 | 8.56 |
| **Diluted earnings per share** ($) | 20.86 | 27.03 | 8.56 |
| **Cash dividends declared per share**<sup>2</sup> ($) | 1.15 | 0.76 | 0.59 |
| **Total assets** | 9973 | 10433 | 4178 |
| **Long-term debt, non-current** | 499 | 499 | 500 |
| **Long-term debt, total** | 499 | 499 | 507 |

---

1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

2. Cash dividends of CAD$0.80 per share were&nbsp;&nbsp;&nbsp;&nbsp;declared during the year ended December 31, 2020. Cash dividends declared during the year ended December 31, 2021 were comprised of CAD$0.70 per share in aggregate for the first three quarters and USD$0.20 per share for the fourth quarter. The CAD amounts have been translated to USD for presentation purposes using the average exchange rate during the quarter that the dividends were declared.

In 2022, our revenues were $9,701 million and we generated earnings of $1,975 million, or $20.86 of diluted earnings per share. This compares with revenues of $10,518 million and earnings of $2,947 million, or $27.03 of diluted earnings per share, in 2021, and revenues of $4,373 million and earnings of $588 million, or $8.56 of diluted earnings per share, in 2020. Our 2022 results were impacted primarily by decreases in lumber and OSB pricing, cost inflation across a number of our inputs, and restructuring and impairment charges compared to 2021. The acquisition of Norbord and increased pricing and demand for our products driven by increased home construction and repair and remodelling activity in North America increased our revenues and earnings in 2021 compared to 2020.

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**Discussion & Analysis of Annual Results by Product Segment**

**Lumber Segment**

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| | | |
|:---|:---|:---|
| **Lumber Segment Earnings**<br>($ millions unless otherwise indicated) | **2022** | **2021** |
| Sales |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lumber | $4077 | $4520 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood chips and other residuals | 309 | 289 |
| &nbsp;&nbsp;&nbsp;&nbsp;Logs and other | 79 | 101 |
|  | 4465 | 4910 |
| Cost of products sold | (2489) | (2241) |
| Freight and other distribution costs | (435) | (404) |
| Export duties, net | (18) | (146) |
| Amortization | (186) | (164) |
| Selling, general and administration | (194) | (146) |
| Restructuring and impairment charges | (31) |  |
| Operating earnings | 1111 | 1809 |
| Finance income (expense), net | 1 | (17) |
| Other income | 5 | 2 |
| Earnings before tax | $1117 | $1794 |
| **Adjusted EBITDA**<sup>1</sup> | $1328 | $1973 |
| **Capital expenditures** | $184 | $146 |
| **SPF** (MMfbm) |  |  |
| &nbsp;&nbsp;Production | 2635 | 3182 |
| &nbsp;&nbsp;Shipments | 2705 | 3176 |
| **SYP** (MMfbm) |  |  |
| &nbsp;&nbsp;Production | 3018 | 2675 |
| &nbsp;&nbsp;Shipments | 3036 | 2649 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure. 2021 Adjusted EBITDA was decreased by a one-time charge of $2 million related to inventory purchase price accounting on the Angelina Acquisition.

**Sales and Shipments**

Lumber sales were lower compared to 2021 due to lower product pricing and, to a lesser extent, lower shipments.

Lumber pricing decreased in the second half of 2022 as demand weakened. The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $352 million compared to 2021.

SPF shipment volumes decreased compared to 2021 due primarily to transportation constraints in early 2022 and weakened demand in the second half of 2022. The first quarter of 2022 was impacted by disruptions to rail and truck services resulting from severe weather and flooding in B.C. in the fourth quarter of 2021.

SYP shipment volumes increased compared to 2021 due primarily to the acquisition of the Angelina lumber mill in the fourth quarter of 2021 and ramp-up of production at our lumber mill in Dudley, Georgia. Shipment volumes in 2021 were also negatively impacted by a period of extreme weather conditions in the U.S. South.

The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $33 million compared to 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
| **SPF Sales by Destination** | **2022** | **2022** | **2021** | **2021** |
| **SPF Sales by Destination** | **MMfbm** | **%** | **MMfbm** | **%** |
| U.S. | 1755 | 65% | 2098 | 66% |
| Canada | 837 | 31% | 753 | 24% |
| China | 35 | 1% | 189 | 6% |
| Other | 78 | 3% | 136 | 4% |
|  | 2705 |  | 3176 |  |

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We ship SPF to several export markets, while our SYP sales are almost entirely within the U.S. The relative proportion of SPF shipments to China decreased compared to 2021 due primarily to reduced demand from the construction industry as pandemic-related lockdowns in the country slowed economic activity and the strengthening of the USD against the Chinese renminbi reduced purchasing power for Chinese buyers. Additional restrictions implemented on Chinese ports and ongoing container shortages have also been contributing factors to the decrease in SPF shipments to China year over year.

Wood chip and other residual sales increased compared to 2021 due primarily to the acquisition of the Angelina lumber mill and higher pricing, offset in part by decreases in chip production at our Western Canada locations. Chip production decreased in line with lumber production year over year. Logs and other sales decreased compared to 2021 due to the impacts of constrained fibre availability.

**Costs and Production**

SPF production volumes were lower compared to 2021 due primarily to reductions in operating schedules at our Western Canada locations to manage inventory levels and align operating capacity with constrained transportation and timber availability. The impact of the previously announced permanent curtailment of one shift at our Fraser Lake and Williams Lake sawmills was also a contributing factor.

SYP production volumes increased compared to 2021 due primarily to the acquisition of the Angelina lumber mill and ramp-up of production at our lumber mill in Dudley, Georgia, which began producing during Q2-21. 2021 production volumes at certain of our locations were also negatively impacted by extreme winter conditions in the U.S. South.

We have experienced significant cost inflation across a number of our inputs including supplies and materials, energy, employee costs, and transportation.

Costs of products sold were higher compared to 2021 due primarily to higher log costs and higher manufacturing costs in both our Canadian and U.S. operations, offset in part by lower shipment volumes. Adjustments to write-down inventory to its net realizable value were $51 million higher in 2022, which contributed to the unfavourable variance year over year.

Most of our SPF log requirements are harvested from crown lands owned by the provinces of B.C. or Alberta. B.C.'s stumpage system is tied to reported lumber prices, with a time lag, and publicly auctioned timber harvesting rights. Alberta's stumpage system is correlated to published lumber prices with a shorter time lag.

SPF log costs in 2022 were higher compared to 2021 due to higher purchased log costs and increases in logging and fuel costs in both B.C. and Alberta. Stumpage decreased year over year, driven primarily by a decrease in stumpage rates in B.C.

SPF unit manufacturing costs increased versus 2021 due primarily to lower production and higher energy and supplies and materials costs.

SYP log costs were higher compared to 2021 due to increased competition for logs. SYP unit manufacturing costs increased compared to 2021 due to higher supplies and materials, energy, and employee costs, offset in part by increased production.

Freight and other distribution costs increased compared to 2021 due to higher fuel costs and higher rates for trucking and rail services, offset in part by lower shipment volumes.

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Export duty expense decreased compared to 2021. Export duties in 2022 included a recovery of $81 million related to the USDOC finalization of AR3 duty rates whereas export duties in 2021 included a recovery of $55 million related to the USDOC finalization of AR2 duty rates. As disclosed in the table below, the effective duty expense for 2022 decreased compared to 2021 due primarily to a lower CVD cash deposit rate and estimated ADD rate, lower volumes of softwood lumber shipped to the U.S., and lower pricing.

The following table reconciles our cash deposits paid during the year to the amount recorded in our statements of earnings:

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| | | |
|:---|:---|:---|
| **Duty impact on earnings** ($ millions) | **2022** | **2021** |
| Cash deposits paid<sup>1</sup> | (117) | (132) |
| Adjust to West Fraser Estimated ADD rate<sup>2</sup> | 18 | (69) |
| Effective duty expense for period<sup>3</sup> | (99) | (201) |
| Duty recovery attributable to AR2<sup>4</sup> |  | 55 |
| Duty recovery attributable to AR3<sup>5</sup> | 81 |  |
| Export duty expense | (18) | (146) |
| Net interest income on duty deposits receivable | 9 | 9 |

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1. Represents combined CVD and ADD cash deposit rate of 8.97% for January 1, 2021 to December 1, 2021, 11.12% from December 2, 2021 to January 9, 2022, 11.14% from January 10, 2022 to August 8, 2022, and 8.25% from August 9, 2022 to December 31, 2022.

2. Represents adjustment to West Fraser Estimated ADD rate of 4.52% for 2022 and 6.80% for 2021.

3. The total represents the combined CVD cash deposit rate and West Fraser Estimated ADD rate of 14.37% for January 1, 2021 to December 1, 2021, 11.86% for December 2, 2021 to December 31, 2021, 9.58% for January 1, 2022 to January 9, 2022, 9.60% from January 10, 2022 to August 8, 2022, and 8.14% from August 9, 2022 to December 31, 2022.

4.$55 million represents the duty recovery attributable to the finalization of AR2 duty rates for the 2019 POI.

5.$81 million represents the duty recovery attributable to the finalization of AR3 duty rates for the 2020 POI.

Amortization expense was higher compared to 2021 due primarily to incremental amortization relating to the acquired Angelina lumber mill.

Selling, general and administration costs were higher compared to 2021 due primarily to higher salaries and benefits, increased travel following easing of COVID restrictions, and increased levels of community investment. Updates in the allocation methodology for corporate overhead costs was also a contributing factor to the increase year over year.

In 2022 we recorded restructuring and impairment charges of $31 million relating to the indefinite curtailment of operations at our Perry sawmill.

Finance income, net in 2022 includes $9 million of interest income on export duties related primarily to the finalization of our AR3 duty rates. Finance expense, net in 2021 similarly includes $9 million of interest income related to the finalization of our AR2 duty rates. Finance expense excluding this amount decreased compared to 2021 due to a lower allocation of consolidated finance expense.

Other income relates primarily to foreign exchange revaluations on the Canadian dollar monetary assets and liabilities held by our Canadian operations.

Earnings before tax for the Lumber Segment decreased by $677 million compared to 2021 for the reasons explained above.

Adjusted EBITDA for the Lumber Segment decreased by $645 million compared to 2021. The following table shows the Adjusted EBITDA variance for the period.

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| | |
|:---|:---|
| **Adjusted EBITDA** ($ millions) | **2021 to 2022** |
| Adjusted EBITDA - comparative period | $1973 |
| Price | (352) |
| Volume | (33) |
| Changes in export duties | 127 |
| Changes in costs | (307) |
| Impact of inventory write-downs | (51) |
| Other | (29) |
| Adjusted EBITDA - current period | $1328 |

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**Softwood Lumber Dispute**

On November 25, 2016, a coalition of U.S. lumber producers petitioned the USDOC and the USITC to investigate alleged subsidies to Canadian softwood lumber producers and levy CVD and ADD duties against Canadian softwood lumber imports. The USDOC has and continues to choose us as a "mandatory respondent" to both the countervailing and antidumping investigations, and as a result, we have received unique company-specific rates.

<u>Developments in CVD and ADD rates</u>

We began paying CVD and ADD duties in 2017 based on the determination of duties payable by the USDOC. The CVD and ADD cash deposit rates are updated based on the USDOC's AR for each POI, as summarized in the tables below.

On March 9, 2022, the USDOC initiated AR4 POI covering the 2021 calendar year. West Fraser was selected as a mandatory respondent, which will result in West Fraser continuing to be subject to a company-specific rate.

The respective Cash Deposit Rates, the AR POI Final Rate, and the West Fraser Estimated ADD Rate for each period are as follows:

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| | | |
|:---|:---|:---|
| **Effective dates for CVD** | **Cash Deposit <br>Rate** | **AR POI Final Rate** |
| **AR1 POI**<sup>1,2</sup> | | |
| &nbsp;&nbsp;&nbsp;April 28, 2017 - August 24, 2017 | 24.12% | 6.76% |
| &nbsp;&nbsp;&nbsp;August 25, 2017 - December 27, 2017 | —% | —% |
| &nbsp;&nbsp;&nbsp;December 28, 2017 - December 31, 2017<sup>3</sup> | 17.99% | 6.76% |
| &nbsp;&nbsp;&nbsp;January 1, 2018 - December 31, 2018 | 17.99% | 7.57% |
| **AR2 POI**<sup>4</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2019 - December 31, 2019 | 17.99% | 5.08% |
| **AR3 POI**<sup>5</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2020 - November 30, 2020 | 17.99% | 3.62% |
| &nbsp;&nbsp;&nbsp;December 1, 2020 - December 31, 2020<sup>6</sup> | 7.57% | 3.62% |
| **AR4 POI**<sup>7</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2021 - December 1, 2021 | 7.57% | n/a |
| &nbsp;&nbsp;&nbsp;December 2, 2021 - December 31, 2021<sup>8</sup> | 5.06% | n/a |
| **AR5 POI**<sup>9</sup> |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2022 – January 9, 2022 | 5.06% | n/a |
| &nbsp;&nbsp;&nbsp;January 10, 2022 – August 8, 2022<sup>10</sup> | 5.08% | n/a |
| &nbsp;&nbsp;&nbsp;August 9, 2022 - December 31, 2022<sup>11</sup> | 3.62% | n/a |

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1. On April 24, 2017, the USDOC issued its preliminary rate in the CVD investigation. The requirement that we make cash deposits for CVD was suspended on August 24, 2017, until the USDOC published the revised rate.

2. On November 24, 2020, the USDOC issued the final CVD rate for the AR1 POI.

3. On December 4, 2017, the USDOC revised our CVD Cash Deposit Rate effective December 28, 2017.

4. On November 24, 2021, the USDOC issued the final CVD rate for the AR2 POI. On January 10, 2022, the USDOC amended the final CVD rate for the AR2 POI from 5.06% to 5.08% for ministerial errors. This table only reflects the final rate.

5. On August 4, 2022, the USDOC issued the final CVD rate for the AR3 POI.

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6. On November 24, 2020, the USDOC revised our CVD Cash Deposit Rate effective December 1, 2020.

7. The CVD rate for the AR4 POI will be adjusted when AR4 is complete and the USDOC finalizes the rate, which is not expected until 2023.

8. On November 24, 2021, the USDOC revised our CVD Cash Deposit Rate effective December 2, 2021.

9. The CVD rate for the AR5 POI will be adjusted when AR5 is complete and the USDOC finalizes the rate, which is not expected until 2024.

10. On January 6, 2022, the USDOC revised our CVD Cash Deposit Rate effective January 10, 2022.

11. On August 4, 2022, the USDOC revised our CVD Cash Deposit Rate effective August 9, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Effective dates for ADD** | **Cash Deposit <br>Rate** | **AR POI Final <br>Rate** | **West Fraser <br>Estimated <br>Rate** |
| **AR1 POI**<sup>1,2</sup> | | | |
| &nbsp;&nbsp;&nbsp;June 30, 2017 - December 3, 2017 | 6.76% | 1.40% | 1.46% |
| &nbsp;&nbsp;&nbsp;December 4, 2017 - December 31, 2017<sup>3</sup> | 5.57% | 1.40% | 1.46% |
| &nbsp;&nbsp;&nbsp;January 1, 2018 - December 31, 2018 | 5.57% | 1.40% | 1.46% |
| **AR2 POI**<sup>4</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2019 - December 31, 2019 | 5.57% | 6.06% | 4.65% |
| **AR3 POI**<sup>5</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2020 - November 29, 2020 | 5.57% | 4.63% | 3.40% |
| &nbsp;&nbsp;&nbsp;November 30, 2020 - December 31, 2020<sup>6</sup> | 1.40% | 4.63% | 3.40% |
| **AR4 POI**<sup>7</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2021 - December 1, 2021 | 1.40% | n/a | 6.80% |
| &nbsp;&nbsp;&nbsp;December 2, 2021 - December 31, 2021<sup>8</sup> | 6.06% | n/a | 6.80% |
| **AR5 POI**<sup>9</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;January 1, 2022 - August 8, 2022 | 6.06% | n/a | 4.52% |
| &nbsp;&nbsp;&nbsp;August 9, 2022 - December 31, 2022<sup>10</sup> | 4.63% | n/a | 4.52% |

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1. On June 26, 2017, the USDOC issued its preliminary rate in the ADD investigation effective June 30, 2017.

2. On November 24, 2020, the USDOC issued the final ADD rate for the AR1 POI.

3. On December 4, 2017, the USDOC revised our ADD Cash Deposit Rate effective December 4, 2017.

4. On November 24, 2021, the USDOC issued the final ADD rate for the AR2 POI.

5. On August 4, 2022, the USDOC issued the final ADD rate for the AR3 POI.

6. On November 24, 2020, the USDOC revised our ADD Cash Deposit Rate effective November 30, 2020.

7. The ADD rate for the AR4 POI will be adjusted when AR4 is complete and the USDOC finalizes the rate, which is not expected until 2023.

8. On November 24, 2021, the USDOC revised our ADD Cash Deposit Rate effective December 2, 2021.

9. The ADD rate for the AR5 POI will be adjusted when AR5 is complete and the USDOC finalizes the rate, which is not expected until 2024.

10. On August 4, 2022, the USDOC revised our ADD Cash Deposit Rate effective August 9, 2022.

<u>Accounting policy for duties</u>

The CVD and ADD rates apply retroactively for each POI. We record CVD as export duty expense at the cash deposit rate until an AR finalizes a new applicable rate for each POI. We record ADD as export duty expense by estimating the rate to be applied for each POI by using our actual results and a similar calculation methodology as the USDOC and adjust when an AR finalizes a new applicable rate for each POI. The difference between the cumulative cash deposits paid and cumulative export duty expense recognized for each POI is recorded on our balance sheet as export duty deposits receivable or payable.

The difference between the cash deposit amount and the amount that would have been due based on the final AR rate will incur interest based on the U.S. federally published interest rate. We record interest income on our duty deposits receivable, net of any interest expense on our duty deposits payable, based on this rate.

<u>Appeals</u>

On May 22, 2020, the North American Free Trade Agreement ("NAFTA") panel issued its final decision on "Injury". The NAFTA panel rejected the Canadian parties' arguments and upheld the USITC's remand determination in its entirety.

On August 28, 2020, the World Trade Organization's ("WTO") dispute-resolution panel ruled unanimously that U.S. countervailing duties against Canadian softwood lumber are inconsistent with the WTO obligations of the United States. The decision confirmed that Canada does not subsidize its softwood lumber industry. On September 28, 2020, the U.S. announced that it would appeal the WTO panel's decision.

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The softwood lumber case will continue to be subject to NAFTA or the new Canada-United States-Mexico Agreement ("CUSMA"), WTO dispute resolution processes, and litigation in the U.S. In the past, long periods of litigation have led to negotiated settlements and duty deposit refunds. In the interim, duties remain subject to the USDOC AR process, which results in an annual adjustment of duty deposit rates.

Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administrative review process is complete and related appeal processes are concluded.

<u>Softwood Lumber - Sunset Review</u>

The USDOC issued antidumping and countervailing duty orders on certain softwood products from Canada on January 3, 2018. U.S. trade law requires that the USDOC and USITC conduct a so-called "sunset review" five years after the publication of an antidumping and countervailing duty order. Accordingly, in late 2022 the USDOC and USITC indicated they will conduct separate, but related, sunset reviews of the duty orders in 2023.

The purpose of the USDOC review is to contemplate the effect of a revocation of duties and assess the duty margins that would prevail. The purpose of the USITC review is to determine whether revocation of a duty order would lead to a "continuation or recurrence of material injury" of the U.S. industry. Neither process is expected to change the duty regime currently in place and is subject to annual Administrative Reviews.

**North America Engineered Wood Products Segment** 

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| | | |
|:---|:---|:---|
| **NA EWP Segment Earnings**<br>($ millions unless otherwise indicated) | **2022** | **2021** |
| Sales |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OSB | $3004 | $3450 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plywood, LVL and MDF | 759 | 796 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wood chips, logs and other | 26 | 27 |
|  | 3789 | 4273 |
| Cost of products sold | (1677) | (1521) |
| Freight and other distribution costs | (329) | (262) |
| Amortization | (306) | (289) |
| Selling, general and administration | (106) | (76) |
| Operating earnings | 1371 | 2125 |
| Finance expense, net | (4) | (3) |
| Other income (expense) | 16 | (1) |
| Earnings before tax | $1383 | $2121 |
| **Adjusted EBITDA**<sup>1</sup> | $1677 | $2414 |
| **Capital expenditures**<sup>2</sup> | $235 | $424 |
| **OSB** (MMsf 3/8" basis) |  |  |
| &nbsp;&nbsp;Production | 6109 | 5654 |
| &nbsp;&nbsp;Shipments | 6006 | 5674 |
| **Plywood** (MMsf 3/8" basis) |  |  |
| &nbsp;&nbsp;Production | 716 | 763 |
| &nbsp;&nbsp;Shipments | 707 | 756 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure. 2021 Adjusted EBITDA was decreased by a one-time charge of $86 million related to inventory purchase price accounting.

2.2021 capital expenditures include $276 million relating to the acquisition of the idled OSB mill near Allendale, South Carolina.

Our NA EWP segment includes our North American OSB, plywood, MDF, and LVL operations. Our financial results up to February 1, 2021 only reflect activities associated with our plywood, MDF, and LVL operations. Subsequent to February 1,

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2021, our operations and financial results reflect the consolidated activities and operations of West Fraser and Norbord, including incorporating the North American operations and financial results of Norbord into our NA EWP segment.

**Sales and Shipments**

Sales decreased compared to 2021 due primarily to lower OSB and plywood pricing, offset by increased OSB shipments and higher MDF and LVL pricing.

The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $671 million compared to 2021.

OSB shipment volumes increased compared to 2021 due primarily to the inclusion of an additional month of OSB shipments and ramp-up of our Chambord OSB mill. The impacts of constrained railcar availability in the first quarter of the year and weakening demand in the fourth quarter of the year partially offset the aforementioned increases.

Plywood shipment volumes decreased compared to 2021 due primarily to weakening demand and reductions in production volumes, discussed further in the section below.

The volume variance resulted in an increase in earnings before tax and Adjusted EBITDA of $115 million compared to 2021.

**Costs and Production**

OSB production volumes increased versus 2021 due primarily to the inclusion of an additional month of production in 2022 and incremental production from the ramp-up of our Chambord mill, offset by the impacts of production curtailments taken to manage inventory levels and align operating capacity with constrained transportation availability.

Plywood production volumes decreased compared to 2021 due to the impact of the previously announced permanent curtailment of one shift at our Quesnel Plywood mill and incremental production curtailments taken in 2022 to manage inventory levels and align operating capacity with constrained transportation and fibre availability.

Our costs of products sold increased compared to 2021 due primarily to higher resin, energy and fibre costs and the inclusion of an additional month of OSB shipments. These factors were offset in part by the impact of a one-time charge of $86 million related to inventory purchase price accounting in 2021 and lower plywood shipment volumes.

Freight and other distribution costs increased compared to 2021 in part due to the substitution of trucking services for rail services and the inclusion of an additional month of OSB shipments in 2022. Higher fuel costs and overall inflationary pressures were also contributing factors.

Amortization expense increased compared to 2021 due to the inclusion of an additional month of OSB results and amortization in relation to the idled OSB mill near Allendale, South Carolina, offset in part by decreases as certain assets reached the end of their estimated useful lives.

Selling, general and administration costs were higher than 2021 due primarily to higher salaries and wages, increased travel following easing of COVID restrictions, and updates in the allocation methodology for corporate overhead costs. The inclusion of an additional month of OSB results was also a contributing factor to the increase compared to 2021.

Finance expense was comparable to 2021. Fluctuations in Other relates primarily to intercompany transactions that eliminate upon consolidation through an offsetting balance in the Corporate & Other segment.

Earnings before tax for the NA EWP Segment decreased $738 million compared to 2021 due to the reasons explained above.

Adjusted EBITDA for the NA EWP Segment decreased by $737 million from 2021. The following table shows the Adjusted EBITDA variance for the period. Our Adjusted EBITDA analysis includes OSB, plywood, LVL and MDF, as the OSB results were included in both years.

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| | |
|:---|:---|
| **Adjusted EBITDA** ($ millions) | **2021 to 2022** |
| Adjusted EBITDA - comparative period | $2414 |
| Price | (671) |
| Volume | 115 |
| Changes in costs | (185) |
| Other | 4 |
| Adjusted EBITDA - current period | $1677 |

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**Pulp & Paper Segment**

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| | | |
|:---|:---|:---|
| **Pulp & Paper Segment Earnings**<br>($ millions unless otherwise indicated) | **2022** | **2021** |
| Sales | $807 | $727 |
| Cost of products sold | (596) | (541) |
| Freight and other distribution costs | (153) | (137) |
| Amortization | (35) | (34) |
| Selling, general and administration | (32) | (34) |
| Restructuring and impairment charges | (13) |  |
| Operating loss | (22) | (19) |
| Finance expense | (2) | (5) |
| Other income (expense) | 1 | 2 |
| Loss before tax | $(23) | $(22) |
| **Adjusted EBITDA**<sup>1</sup> | $26 | $15 |
| **Capital expenditures** | $29 | $35 |
| **Pulp** (Mtonnes) |  |  |
| &nbsp;&nbsp;Production | 940 | 1051 |
| &nbsp;&nbsp;Shipments | 968 | 1033 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

**Sales and Shipments**

Sales increased compared to 2021 due primarily to increases in pulp pricing, offset in part by lower shipment volumes. The price variance resulted in an increase in earnings before tax and Adjusted EBITDA of $123 million compared to 2021.

Pulp shipments decreased compared to 2021 due to reductions in production volumes, discussed further in the section below. The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $8 million compared to 2021.

**Costs and Production**

Pulp production decreased compared to 2021 due primarily to reductions in operating schedules in the first half of the year to manage inventory levels as a result of transportation disruptions, the transition of the Hinton pulp mill to single-line production of UKP, and lower overall uptime.

Costs of products sold increased compared to 2021 due primarily to higher fibre, energy, maintenance, and chemical costs. Lower shipment volumes provided an offsetting factor.

Freight and other distribution costs increased compared to 2021 due to the substitution of trucking services for rail services as well as higher fuel and ocean freight costs. Lower shipment volumes compared to 2021 provided an offsetting effect.

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Amortization, selling, general, and administration costs, finance expense, and other were similar to 2021.

A $13 million impairment charge was recorded in 2022 relating to equipment that was permanently decommissioned as part of the transition of the Hinton pulp mill to single-line production of UKP.

Loss before tax for the Pulp & Paper Segment increased by $1 million compared to 2021 due to the reasons explained above.

Adjusted EBITDA for the Pulp & Paper Segment increased by $11 million compared to 2021. The following table shows the Adjusted EBITDA variance for the period.

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| | |
|:---|:---|
| **Adjusted EBITDA** ($ millions) | **2021 to 2022** |
| Adjusted EBITDA - comparative period | $15 |
| Price | 123 |
| Volume | (8) |
| Changes in costs | (90) |
| Other | (14) |
| Adjusted EBITDA - current period | $26 |

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**Europe Engineered Wood Products Segment** 

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| | | |
|:---|:---|:---|
| **Europe EWP Segment Earnings**<br>($ millions unless otherwise indicated) | **2022** | **2021** |
| Sales | $738 | $723 |
| Cost of products sold | (479) | (457) |
| Freight and other distribution costs | (46) | (43) |
| Amortization | (53) | (88) |
| Selling, general and administration | (28) | (22) |
| Restructuring and impairment charges | (15) |  |
| Operating earnings | 117 | 113 |
| Finance expense |  | (1) |
| Other income (expense) |  |  |
| Earnings before tax | $118 | $112 |
| **Adjusted EBITDA**<sup>1</sup> | $186 | $201 |
| **Capital expenditures** | $20 | $28 |
| **OSB** (MMsf 3/8" basis) |  |  |
| &nbsp;&nbsp;Production | 954 | 1035 |
| &nbsp;&nbsp;Shipments | 977 | 1010 |
| **USD - GBP exchange rate** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Closing rate | 0.8298 | 0.7400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Average rate | 0.8083 | 0.7268 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure. 2021 Adjusted EBITDA was decreased by a one-time charge of $7 million related to inventory purchase price accounting.

Our Europe EWP segment includes our U.K. and Belgium OSB, MDF, and particleboard operations effective February 1, 2021. Revenues and expenses of our European operations, which have British pound sterling and Euro functional currencies, are translated at the average rate of exchange prevailing during the period.

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**Sales and Shipments**

Sales increased compared to 2021 due to higher product pricing in local currency terms, offset in part by lower shipment volumes and the strengthening of the USD against the GBP.

The price variance resulted in an increase in earnings before tax and Adjusted EBITDA of $136 million compared to 2021. The price variance represents the impact of changes in product pricing in local currency terms, with any associated foreign exchange impact from the strengthening or weakening of the GBP against USD presented under Other in the Adjusted EBITDA variance table.

Shipment volumes decreased versus 2021 due to reductions in operating schedules to balance inventory as demand weakened in the second half of the year. The inclusion of an additional month of shipments provided a partial offsetting impact compared to 2021. The volume variance resulted in a decrease of $37 million compared to 2021.

**Costs and Production**

Production volumes decreased compared to 2021 due to the impacts of reductions in operating schedules described above. The inclusion of an additional month of production in 2022 provided a partial offsetting impact.

Costs of products sold increased compared to 2021 due primarily to higher input costs, offset in part by lower shipment volumes. Energy and resin costs accounted for the most significant components of input cost increases year over year, driven by constraints on availability and increasing natural gas costs. Fibre costs also increased compared to 2021. The impact of a one-time charge of $7 million related to inventory purchase price accounting in 2021 and sales of carbon allowances provided a partial offsetting impact in the year over year comparison.

Freight and other distribution costs increased compared to 2021 due primarily to the impact of higher fuel prices.

Amortization decreased compared to 2021 as certain assets reached the end of their estimated useful lives. The inclusion of an additional month of results provided an offsetting impact compared to 2021.

Selling, general and administration costs increased compared to 2021 due primarily to the inclusion of an additional month of results.

Restructuring and impairment charges of $15 million were recorded in 2022 relating to our South Molton, England location, driven by a decline in demand from a key customer for our kitchen cabinet products.

Finance expense and Other were comparable to prior periods.

Earnings before tax for the Europe EWP Segment increased by $6 million compared to 2021 due to the reasons explained above.

Adjusted EBITDA for the Europe EWP Segment decreased by $15 million from 2021. The following table shows the Adjusted EBITDA variance for the period. The variances presented represent the impact of changes in price, volume and cost in local currency terms, with any associated foreign exchange impact from the strengthening or weakening of the GBP against USD presented under Other. The impact of the sale of carbon allowances during 2022 is also included under Other.

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| | |
|:---|:---|
| **Adjusted EBITDA** ($ millions) | **2021 to 2022** |
| Adjusted EBITDA - comparative period | $201 |
| Price | 136 |
| Volume | (37) |
| Changes in costs | (125) |
| Other | 11 |
| Adjusted EBITDA - current period | $186 |

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**Discussion & Analysis of Specific Items**

**Selling, general and administration**

Selling, general and administration costs for 2022 were $365 million (2021 - $312 million).

Selling, general and administration costs increased compared to 2021 due to higher salaries and wages, increased travel, higher professional fees relating to ongoing integration activities, and the inclusion of an additional month of operating expenses relating to our OSB team. Selling, general and administration costs in 2021 included professional fees incurred for the Norbord Acquisition, which partially offset the aforementioned increases.

Selling, general and administration expense related to our operating segments are also discussed under "Discussion & Analysis of Annual Results by Product Segment".

**Equity-based compensation**

Our equity-based compensation includes our share purchase option, phantom share unit, and deferred share unit plans (collectively, the "Plans"), all of which had been partially hedged by an equity derivative contract during 2021. The equity derivative matured in December 2021 and was closed out. Our Plans are fair valued at each period-end, and the resulting expense or recovery is recorded over the vesting period.

The Plans include those equity-based plans assumed from Norbord as part of the Norbord Acquisition. The assumed Norbord share purchase option plans ("Assumed Option Plans") were fair valued at the Norbord Acquisition date. From February 1 to April 20, 2021, the Assumed Option Plans were accounted for as equity-settled plans. On April 20, 2021, our board of directors approved a change to allow the Assumed Option Plans holders the right to elect to receive a cash payment in lieu of exercising an option to purchase Common shares. The change required us to fair value the Assumed Option Plan on April 20, 2021 and convert from equity-based accounting to cash-settled accounting for the Assumed Option Plans. Cash-settled accounting is consistent with the West Fraser option plan. Any changes in fair value from April 20, 2021 onwards will result in an expense or recovery over the vesting period in the same manner as the rest of our Plans. This change to the Assumed Option Plans did not in any way affect the value of the instruments to the holders.

Our valuation models consider various factors, with the most significant being the change in the market value of our shares from the beginning to the end of the relevant period. The expense or recovery does not necessarily represent the value that the holders of options and units will ultimately receive.

We recorded an expense of $5 million during 2022 (2021 - expense of $40 million). The expense for 2022 was influenced by changes in the price of our Common shares, vesting of granted units, and changes in the expected payout multiple on our performance share units. The expense for 2021 reflects the impacts of the Assumed Option Plans and an increase in the price of our Common shares traded on the TSX during the year, offset in part by a recovery relating to our equity derivative contract.

**Finance expense, net**

Finance expense, net includes interest earned on short-term investments and interest income recognized on our duty deposits as discussed under "Discussion & Analysis of Annual Results by Product Segment - Lumber Segment - Softwood Lumber Dispute". The paragraph below discusses finance expense, net on a consolidated basis.

Finance expense, net decreased compared to 2021 due primarily to additional interest incurred on the Norbord senior notes for the two months following the Norbord Acquisition prior to their redemption in Q2-21 and the write-off of deferred financing costs related to prior credit facilities that were extinguished upon the execution of our $1 billion revolving credit facility in Q3-21. Higher interest income on our short-term investments in 2022 was also a contributing factor.

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**Other**

Other income of $37 million was recorded in 2022 (2021 - other expense of $2 million). Other income in 2022 relates primarily to foreign exchange gains recorded on our CAD-denominated monetary assets and liabilities and mark-to-market gains on our interest rate swap contracts.

Other income of $14 million was recorded for our Corporate & Other segment in 2022 (2021 - other expense of $5 million).

Other income for our Corporate & Other segment in 2022 relates primarily to mark-to-market gains on our interest rate swap contracts and foreign exchange gains recorded on certain of our CAD-denominated monetary assets and liabilities held within the Corporate & Other segment, offset in part by consolidation eliminations for intercompany transactions relating to our NA EWP segment.

Other related to our operating segments are discussed under "Discussion & Analysis of Annual Results by Product Segment".

**Income tax**

We recorded an income tax expense in 2022 of $618 million compared to $951 million in 2021. The effective tax rate was 24% in 2022 compared to 24% in 2021. Note 19 to the Annual Financial Statements provides a reconciliation of income taxes calculated at the statutory rate to the income tax expense.

**Other comprehensive earnings – translation of operations with different functional currencies**

Our European operations have British pound sterling and Euro functional currencies and our jointly-owned newsprint operation has a Canadian dollar functional currency. Assets and liabilities of these entities are translated at the rate of exchange prevailing at the reporting date, and revenues and expenses at average rates during the period. Gains or losses on translation are included as a component of shareholders' equity in accumulated other comprehensive loss.

We recorded a translation loss of $83 million during 2022 (2021 - translation loss of $9 million).

In general, a strengthening (weakening) of the USD against the Canadian dollar, British pound sterling or Euro results in a translation loss (gain). The translation loss in the current year reflects a strengthening of the USD against the CAD, British pound sterling and Euro for our European and jointly-owned newsprint operations.

**Other comprehensive earnings – actuarial gains/losses on retirement benefits**

The funded position of our defined benefit pension plans and other retirement benefit plans is estimated at the end of each period. The funded position, as shown in note 13 to the Annual Financial Statements, is determined by subtracting the value of the plan assets from the plan obligations.

We recorded an after-tax actuarial gain of $164 million during 2022 (2021 - after-tax actuarial gain of $153 million). The actuarial gain in 2022 reflects an increase in the discount rate used to calculate plan liabilities offset in part by lower returns on plan assets.

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**FOURTH QUARTER RESULTS**<br>

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| | | | |
|:---|:---|:---|:---|
| **Summary Fourth Quarter Results**<br>($ millions) | **Q4-22** | **Q3-22** | **Q4-21** |
| **Earnings** | | | |
| Sales | $1615 | $2088 | $2038 |
| Cost of products sold | (1209) | (1371) | (1158) |
| Freight and other distribution costs | (209) | (260) | (207) |
| Export duties, net | (29) | 53 | 30 |
| Amortization | (148) | (140) | (153) |
| Selling, general and administration | (98) | (84) | (88) |
| Equity-based compensation | (6) | (5) | (12) |
| Restructuring and impairment charges | (47) |  |  |
| Operating earnings (loss) | (130) | 281 | 450 |
| Finance income (expense), net | 3 | 3 | (1) |
| Other | 2 | 12 | (11) |
| Tax recovery (provision) | 31 | (80) | (104) |
| Earnings (loss) | $(94) | $216 | $334 |
| **Adjusted EBITDA**<sup>1</sup> | $70 | $426 | $615 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Selected Quarterly Amounts**<br>($ millions, unless otherwise indicated) | **Q4-22** | **Q3-22** | **Q2-22** | **Q1-22** | **Q4-21** | **Q3-21** | **Q2-21** | **Q1-21** |
| Sales | $1615 | $2088 | $2887 | $3110 | $2038 | $2358 | $3779 | $2343 |
| Earnings (loss) | (94) | 216 | 762 | 1090 | 334 | 460 | 1488 | 665 |
| Basic EPS (dollars) | (1.12) | 2.50 | 7.66 | 10.35 | 3.13 | 4.20 | 12.32 | 6.96 |
| Diluted EPS (dollars) | (1.13) | 2.50 | 7.59 | 10.25 | 3.13 | 4.20 | 12.32 | 6.96 |

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The Norbord Acquisition led to the incorporation of additional sales and earnings from our North American OSB and European EWP operations, which are reflected in our results from February 1, 2021 onwards. Pricing for our products reached record highs in Q2-21 before moderating in Q3-21. Pricing improved through Q4-21 and Q1-22, although these pricing gains were offset in part by lower shipments as a result of constraints on transportation availability. Subsequent decreases in sales and earnings through Q4-22 were driven primarily by decreases in lumber and OSB pricing, inventory write-downs, and restructuring and impairment charges. The cost inflation that impacted our results through Q3-22 moderated in Q4-22.

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**Discussion & Analysis of Fourth Quarter Results by Product Segment**

**Lumber Segment**

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| | | | |
|:---|:---|:---|:---|
| **Lumber Segment Earnings**<br>($ millions unless otherwise indicated) | **Q4-22** | **Q3-22** | **Q4-21** |
| Sales |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lumber | $611 | $831 | $796 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood chips and other residuals | 73 | 84 | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;Logs and other | 17 | 20 | 22 |
|  | 701 | 935 | 888 |
| Cost of products sold | (607) | (665) | (546) |
| Freight and other distribution costs | (92) | (118) | (93) |
| Export duties, net | (29) | 53 | 30 |
| Amortization | (51) | (45) | (45) |
| Selling, general and administration | (51) | (45) | (39) |
| Restructuring and impairment charges | (31) |  |  |
| Operating earnings (loss) | (160) | 115 | 195 |
| Finance income, net | 2 | 5 | 1 |
| Other income (expense) | (2) | 7 | (2) |
| Earnings (loss) before tax | $(161) | $127 | $194 |
| **Adjusted EBITDA**<sup>1</sup> | $(77) | $160 | $240 |
| **SPF** (MMfbm) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Production | 594 | 649 | 720 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shipments | 582 | 714 | 673 |
| **SYP** (MMfbm) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Production | 707 | 765 | 659 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shipments | 713 | 764 | 632 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure. Q4-21 Adjusted EBITDA was decreased by a one-time charge of $2 million related to inventory purchase price accounting.

**Sales and Shipments**

Lumber sales were lower compared to Q3-22 due to lower product pricing and lower shipments. Q4-22 lumber sales were lower compared to Q4-21 due primarily to lower product pricing.

The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $132 million compared to Q3-22, and a decrease of $176 million compared to Q4-21.

SPF shipment volumes decreased 18% compared to Q3-22 due to weakening demand and reductions in production volumes, and decreased 14% compared to Q4-21, a quarter that saw shipments under significant downward pressure due to severe weather and flooding in B.C., which disrupted rail and truck services.

SYP shipment volumes decreased compared to Q3-22 due primarily to weakening demand and reductions in operating schedules to manage inventory. SYP shipment volumes increased compared to Q4-21 due primarily to the acquisition of the Angelina lumber mill on December 1, 2021 and ramp-up of production at our lumber mill in Dudley, Georgia, which began producing in the second quarter of 2021.

The volume variance resulted in a change in earnings before tax and Adjusted EBITDA of nil compared to Q3-22 and an increase of $3 million compared to Q4-21.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **SPF Sales by Destination** | **Q4-22** | **Q4-22** | **Q3-22** | **Q3-22** | **Q4-21** | **Q4-21** |
| **SPF Sales by Destination** | **MMfbm** | **%** | **MMfbm** | **%** | **MMfbm** | **%** |
| U.S. | 347 | 60% | 481 | 67% | 461 | 68% |
| Canada | 213 | 37% | 213 | 30% | 128 | 19% |
| China | 5 | 1% |  | —% | 60 | 9% |
| Other | 17 | 2% | 20 | 3% | 24 | 4% |
|  | 582 |  | 714 |  | 673 |  |

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We ship SPF to several export markets, while our SYP sales are almost entirely within the U.S. The relative proportion of shipments of SPF to China was comparable to Q3-22 as demand from the construction industry remained muted as pandemic-related lockdowns in the country slowed economic activity. This, along with the strengthening of the USD against the Chinese renminbi, additional restrictions implemented on Chinese ports, and ongoing container shortages have driven the decrease in SPF shipments to China compared to Q4-21.

Wood chip, log, and other residual sales remained broadly consistent to comparative periods.

**Costs and Production**

SPF production volumes were lower versus comparative periods due primarily to the impact of the previously announced permanent curtailment of one shift at our Fraser Lake and Williams Lake sawmills and reductions in operating schedules to manage inventory levels.

SYP production volumes decreased compared to Q3-22 due primarily to reductions in operating schedules to manage inventory levels. SYP production volumes increased compared to Q4-21 due primarily to the acquisition of the Angelina lumber mill and ramp-up of production at our lumber mill in Dudley, Georgia.

Costs of products sold were lower compared to Q3-22 due primarily to lower shipment volumes and lower per unit log costs, offset in part by higher manufacturing costs in both our Canadian and U.S. operations and $32 million of incremental inventory write-downs recorded in Q4-22. We recorded significant inventory valuation reserves in Q4-22 due to low product pricing at period-end.

Costs of products sold were higher compared to Q4-21 due primarily to higher SPF log costs, higher manufacturing costs in both our Canadian and U.S. operations, and $47 million of incremental inventory write-downs recorded in Q4-22.

Most of our SPF log requirements are harvested from crown lands owned by the provinces of B.C. or Alberta. B.C.'s stumpage system is tied to reported lumber prices, with a time lag, and publicly auctioned timber harvesting rights. Alberta's stumpage system is correlated to published lumber prices with a shorter time lag.

SPF log costs in Q4-22 decreased compared to Q3-22 due primarily to lower Alberta stumpage rates. SPF log costs increased compared to Q4-21 due primarily to higher purchased log costs in B.C. and increases in logging and fuel costs, offset in part by a decrease in overall stumpage rates.

SPF unit manufacturing costs increased versus comparative periods due primarily to lower production in the current period. We ran our mills in Western Canada at 70% of capacity in Q4-22, down from 76% of capacity in Q3-22 and 85% of capacity in Q4-21. As operating schedules were selectively reduced, a higher proportion of our Q4-22 production related to lower cost mills and this partially offset the aforementioned cost impact. Inflationary pressures on inputs was a contributing factor to the increase versus Q4-21 also.

SYP log costs decreased compared to Q3-22 as competition for logs moderated with weakening market conditions for lumber. SYP log costs were higher compared to Q4-21 due to increased competition for logs year over year. SYP unit manufacturing costs increased compared to Q3-22 due primarily to lower production in the current period. SYP unit manufacturing costs increased compared to Q4-21 due primarily to higher supplies and materials, energy, and employee costs.

Freight and other distribution costs decreased compared to Q3-22 due to decreases in shipment volumes, lower trucking and rail rates, and lower fuel costs. Freight and other distribution costs were comparable to Q4-21.

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We recorded export duty expense in Q4-22, compared to export duty recoveries in the comparative periods, which were attributable to the finalization of AR2 and AR3 in Q4-21 and Q3-22 respectively.

As disclosed in the table below, the effective duty expense for Q4-22 increased versus comparative quarters. In Q4-22, higher antidumping duties incurred during the quarter was offset in part by lower shipment volumes to the U.S. and lower pricing.

The following table reconciles our cash deposits paid during the period to the amount recorded in our statements of earnings:

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| | | | |
|:---|:---|:---|:---|
| **Duty impact on earnings** ($ millions) | **Q4-22** | **Q3-22** | **Q4-21** |
| Cash deposits paid<sup>1</sup> | (12) | (23) | (20) |
| Adjust to West Fraser Estimated ADD rate<sup>2</sup> | (17) | (5) | (5) |
| Effective duty expense for period<sup>3</sup> | (29) | (28) | (25) |
| Duty recovery attributable to AR2<sup>4</sup> |  |  | 55 |
| Duty recovery attributable to AR3<sup>5</sup> |  | 81 |  |
| Export duty (expense) recovery | (29) | 53 | 30 |
| Net interest income on duty deposits receivable | 3 | 7 | 7 |

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1. Represents combined CVD and ADD cash deposit rate of 8.97% for January 1, 2021 to December 1, 2021, 11.12% from December 2, 2021 to January 9, 2022, 11.14% from January 10, 2022 to August 8, 2022, and 8.25% from August 9, 2022 to December 31, 2022.

2. Represents adjustment to the annualized West Fraser Estimated ADD rate of 4.52% for Q4-22, 2.23% for Q3-22, and 6.80% for Q4-21.

3. The total represents the combined CVD cash deposit rate and West Fraser Estimated ADD rate of 14.37% for January 1, 2021 to December 1, 2021, 11.86% for December 2, 2021 to December 31, 2021, 9.58% for January 1, 2022 to January 9, 2022, 9.60% from January 10, 2022 to August 8, 2022, and 8.14% from August 9, 2022 to December 31, 2022.

4.$55 million represents the duty recovery attributable to the finalization of AR2 duty rates for the 2019 POI.

5.$81 million represents the duty recovery attributable to the finalization of AR3 duty rates for the 2020 POI.

The increase in amortization expense versus comparative periods related to continuing capital investments in our U.S. operations. Incremental amortization related to the acquired Angelina lumber mill was also a contributing factor to the increase versus Q4-21.

Selling, general and administration costs increased versus comparative periods. The increase versus Q3-22 related to higher salaries and wages, increased travel, and increased levels of community investment. The increase versus Q4-21 was driven by similar factors as well as updates in the allocation methodology for corporate overhead costs.

Restructuring and impairment charges of $31 million were recorded in Q4-22 relating to the indefinite curtailment of operations at our Perry sawmill.

Q4-22 finance income, net included $3 million of interest income on export duties. We accrued $7 million of interest income in Q3-22 and Q4-21 related primarily to the finalization of our AR3 and AR2 duty rates in those periods. Finance income excluding these amounts was comparable to Q3-22. Finance income excluding these amounts were also impacted by a lower allocation of consolidated finance expense, net compared to Q4-21.

Other relates primarily to foreign exchange revaluations on the Canadian dollar monetary assets and liabilities held by our Canadian operations.

Earnings before tax for the Lumber Segment decreased by $288 million compared to Q3-22 and decreased by $355 million compared to Q4-21 for the reasons explained above.

Adjusted EBITDA for the Lumber Segment decreased by $237 million compared to Q3-22 and decreased by $317 million compared to Q4-21. The following table shows the Adjusted EBITDA variance for the period.

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| | | |
|:---|:---|:---|
| **Adjusted EBITDA** ($ millions) | **Q3-22 to Q4-22** | **Q4-21 to Q4-22** |
| Adjusted EBITDA - comparative period | $160 | $240 |
| Price | (132) | (176) |
| Volume |  | 3 |
| Changes in export duties | (83) | (59) |
| Changes in costs | 20 | (44) |
| Impact of inventory write-downs | (32) | (47) |
| Other | (10) | 6 |
| Adjusted EBITDA - current period | $(77) | $(77) |

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**North America Engineered Wood Products Segment** 

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| | | | |
|:---|:---|:---|:---|
| **NA EWP Segment Earnings**<br>($ millions unless otherwise indicated) | **Q4-22** | **Q3-22** | **Q4-21** |
| Sales |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OSB | $447 | $596 | $666 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plywood, LVL and MDF | 157 | 194 | 162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wood chips, logs and other | 6 | 8 | 6 |
|  | 610 | 798 | 834 |
| Cost of products sold | (397) | (468) | (398) |
| Freight and other distribution costs | (76) | (92) | (72) |
| Amortization | (73) | (71) | (73) |
| Selling, general and administration | (27) | (23) | (21) |
| Operating earnings | 35 | 144 | 270 |
| Finance income (expense), net | 1 | (2) |  |
| Other income (expense) | 3 | 2 | (5) |
| Earnings before tax | $40 | $144 | $265 |
| **Adjusted EBITDA**<sup>1</sup> | $109 | $215 | $343 |
| **OSB** (MMsf 3/8" basis) |  |  |  |
| &nbsp;&nbsp;Production | 1442 | 1560 | 1469 |
| &nbsp;&nbsp;Shipments | 1409 | 1600 | 1543 |
| **Plywood** (MMsf 3/8" basis) |  |  |  |
| &nbsp;&nbsp;Production | 162 | 194 | 175 |
| &nbsp;&nbsp;Shipments | 181 | 193 | 190 |

---

1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

Our NA EWP segment includes our North American OSB, plywood, MDF, and LVL operations.

**Sales and Shipments**

Sales decreased versus both comparative periods due primarily to lower OSB pricing and shipment volumes. Lower sales of MDF and plywood were also contributing factors to the decrease compared to Q3-22, driven primarily by lower shipment volumes. Shipment volumes decreased in Q4-22 due to weakening demand.

The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $100 million compared to Q3-22, and a decrease of $182 million compared to Q4-21.

The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $24 million compared to Q3-22, and a decrease of $19 million compared to Q4-21.

------

**Costs and Production**

OSB production volumes decreased versus both comparative periods due primarily to incremental production curtailments taken to manage inventory levels.

Plywood production volumes decreased versus both comparative periods due primarily to the impact of the previously announced permanent curtailment of one shift at our Quesnel Plywood mill.

Costs of products sold decreased compared to Q3-22 due primarily to lower shipment volumes, recognition of $14 million in insurance recoveries, and decreases in resin and energy costs as cost inflation across our inputs moderated. The recognition of insurance recoveries partially offset repair costs and lost margins charged to earnings in Q4-21 and Q1-22 relating to unscheduled downtime at one of our manufacturing locations. We recorded $3 million of incremental inventory write-downs in Q4-22 compared to Q3-22.

Costs of products sold remained comparable to Q4-21 as the impacts of lower shipment volumes and the insurance recovery proceeds were largely offset by higher resin, energy, and fibre costs. Resin accounted for the most significant component of input cost increases year over year, driven by constraints on availability.

Freight and other distribution costs decreased compared to Q3-22 due primarily to lower shipment volumes. Freight and other distribution costs increased compared to Q4-21 due to higher fuel costs, inflationary pressures, and the substitution of trucking services for rail services. Lower shipment volumes compared to Q4-21 provided a partial offsetting effect.

Amortization expense was comparable to Q3-22 and Q4-21.

Selling, general and administration costs increased compared to Q3-22 due to higher salaries and wages and increased travel. The increase versus Q4-21 was driven by similar factors as well as updates in the allocation methodology for corporate overhead costs.

We recorded finance income in Q4-22 due to the impacts of higher interest income earned on our short-term investments. Fluctuations in Other related primarily to intercompany transactions that eliminate upon consolidation through an offsetting balance in the Corporate & Other segment and foreign exchange movements recorded on CAD-denominated monetary assets and liabilities.

Earnings before tax for the NA EWP Segment decreased by $104 million compared to Q3-22 and decreased by $225 million compared to Q4-21 due to the reasons explained above.

Adjusted EBITDA for the NA EWP Segment decreased by $106 million compared to Q3-22 and decreased by $234 million compared to Q4-21. The following table shows the Adjusted EBITDA variance for the period. The impact of the insurance recovery recorded in Q4-22 is included under Other.

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| | | |
|:---|:---|:---|
| **Adjusted EBITDA** ($ millions) | **Q3-22 to Q4-22** | **Q4-21 to Q4-22** |
| Adjusted EBITDA - comparative period | $215 | $343 |
| Price | (100) | (182) |
| Volume | (24) | (19) |
| Changes in costs | 4 | (49) |
| Other | 14 | 16 |
| Adjusted EBITDA - current period | $109 | $109 |

---

------

**Pulp & Paper Segment**

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| | | | |
|:---|:---|:---|:---|
| **Pulp & Paper Segment Earnings**<br>($ millions unless otherwise indicated) | **Q4-22** | **Q3-22** | **Q4-21** |
| Sales | $190 | $233 | $159 |
| Cost of products sold | (136) | (155) | (132) |
| Freight and other distribution costs | (32) | (41) | (33) |
| Amortization | (9) | (9) | (9) |
| Selling, general and administration | (8) | (8) | (8) |
| Restructuring and impairment charges |  |  |  |
| Operating earnings (loss) | 6 | 20 | (23) |
| Finance expense |  | (1) |  |
| Other income (expense) | (5) | 3 | (2) |
| Earnings (loss) before tax | $1 | $22 | $(25) |
| **Adjusted EBITDA**<sup>1</sup> | $15 | $29 | $(14) |
| **Pulp** (Mtonnes) |  |  |  |
| &nbsp;&nbsp;Production | 221 | 255 | 226 |
| &nbsp;&nbsp;Shipments | 217 | 256 | 231 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

**Sales and Shipments**

Sales decreased compared to Q3-22 due primarily to decreases in shipment volumes and, to a lesser extent, lower product pricing. Sales increased compared to Q4-21 due to higher product pricing, offset in part by decreases in shipment volumes.

The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $14 million compared to Q3-22 and an increase of $40 million compared to Q4-21.

Pulp shipments decreased versus comparative periods due to reductions in production volumes, discussed further in the section below. The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $3 million compared to Q3-22 and a decrease of $2 million compared to Q4-21.

**Costs and Production**

Pulp production decreased compared to Q3-22 due to the transition of the Hinton pulp mill from a double-line NBSK producer to a single-line UKP producer in October 2022, and the previously announced Q4-22 curtailment at Cariboo Pulp & Paper to align operating capacity with the available supply of wood chips. Pulp production was comparable to Q4-21 as the impact of the aforementioned reductions in Q4-22 was similar to the impact of the Q4-21 production curtailments taken in response to severe weather and flooding in B.C.

Costs of products sold decreased compared to Q3-22 due primarily to decreases in shipment volumes. Costs of products sold was comparable to Q4-21 as the impacts of higher fibre and energy costs were largely offset by lower shipment volumes.

Freight and other distribution costs decreased compared to Q3-22 due to lower shipment volumes and lower container and rail rates. Freight and other distribution costs decreased compared to Q4-21 due to lower shipment volumes.

Amortization, selling, general, and administration costs, and finance expense were similar to comparative periods. Other expense in Q4-22 relates to foreign exchange revaluations on Canadian dollar monetary assets and liabilities and settlement costs relating to pension plan annuity purchase agreements for certain retired employees.

------

Earnings before tax for the Pulp & Paper Segment decreased by $21 million compared to Q3-22 and increased by $26 million compared to Q4-21 due to the reasons explained above.

Adjusted EBITDA for the Pulp & Paper Segment decreased by $14 million compared to Q3-22 and increased by $29 million compared to Q4-21. The following table shows the Adjusted EBITDA variance for the period.

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| | | |
|:---|:---|:---|
| **Adjusted EBITDA** ($ millions) | **Q3-22 to Q4-22** | **Q4-21 to Q4-22** |
| Adjusted EBITDA - comparative period | $29 | $(14) |
| Price | (14) | 40 |
| Volume | (3) | (2) |
| Changes in costs | (4) | (14) |
| Other | 7 | 5 |
| Adjusted EBITDA - current period | $15 | $15 |

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**Europe Engineered Wood Products Segment** 

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| | | | |
|:---|:---|:---|:---|
| **Europe EWP Segment Earnings**<br>($ millions unless otherwise indicated) | **Q4-22** | **Q3-22** | **Q4-21** |
| Sales | $142 | $149 | $184 |
| Cost of products sold | (97) | (110) | (109) |
| Freight and other distribution costs | (9) | (9) | (9) |
| Amortization | (12) | (12) | (24) |
| Selling, general and administration | (7) | (6) | (5) |
| Restructuring and impairment charges | (15) |  |  |
| Operating earnings | 3 | 12 | 37 |
| Finance expense |  |  | (1) |
| Other income (expense) | (2) | 1 |  |
| Earnings before tax | $1 | $13 | $36 |
| **Adjusted EBITDA**<sup>1</sup> | $30 | $24 | $61 |
| **OSB** (MMsf 3/8" basis) |  |  |  |
| &nbsp;&nbsp;Production | 184 | 208 | 194 |
| &nbsp;&nbsp;Shipments | 201 | 202 | 178 |
| **USD - GBP exchange rate** |  |  |  |
| &nbsp;&nbsp;Closing rate | 0.8298 | 0.9079 | 0.7400 |
| &nbsp;&nbsp;Average rate | 0.8512 | 0.8506 | 0.7415 |

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1. This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

Our Europe EWP segment includes our U.K. and Belgium OSB, MDF, and particleboard operations. Revenues and expenses of our European operations, which have British pound sterling and Euro functional currencies, are translated at the average rate of exchange prevailing during the period.

**Sales and Shipments**

Sales decreased compared to Q3-22 due primarily to lower shipments of MDF and particleboard. Pricing for our products remained broadly consistent in local currency terms. Sales decreased compared to Q4-21 as a result of lower product pricing and lower shipment volumes of MDF and particleboard, offset in part by higher shipment volumes of OSB. The strengthening of the USD against the GBP also contributed to the decrease in sales compared to Q4-21.

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The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $1 million compared to Q3-22 and a decrease of $9 million compared to Q4-21. The price variance represents the impact of changes in product pricing in local currency terms, with any associated foreign exchange impact from the strengthening or weakening of the GBP against USD presented under Other in the Adjusted EBITDA variance table.

OSB shipment volumes were comparable to Q3-22 and increased compared to Q4-21. Q4-21 volumes were negatively impacted by a more pronounced seasonal slowing of demand for OSB late in the quarter as customers managed-down inventory following very high levels of activity in Q3-21. MDF and particleboard shipment volumes decreased versus both comparative quarters due to reductions in operating schedules taken in Q4-22 to manage inventory as demand weakened.

The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $7 million compared to Q3-22 and a decrease of $8 million compared to Q4-21.

**Costs and Production**

Production volumes decreased versus comparative periods due to the impacts of reductions in operating schedules described above.

Costs of products sold decreased versus comparative periods. The decrease in costs of products sold compared to Q3-22 related to lower shipment volumes, lower energy prices, and the inclusion of a $7 million gain from the sale of carbon allowances during Q4-22 as a recovery in costs of products sold. Energy prices moderated from levels in Q3-22 due to a mild winter and higher gas supplies in Europe.

The decrease in costs of products sold compared to Q4-21 related primarily to lower shipment volumes, sales of carbon allowances in Q4-22, and the strengthening of the USD against the GBP, offset in part by higher energy, resin, and fibre costs.

Freight and other distribution costs generally trended with changes in shipment volumes.

Amortization was comparable to Q3-22. Amortization decreased compared to Q4-21 as certain assets reached the end of their estimated useful lives.

Restructuring and impairment charges of $15 million was recorded in Q4-22 relating to our South Molton, England location, driven by a decline in demand from a key customer for our kitchen cabinet products.

Selling, general and administration costs, finance expense, and Other were consistent with comparable periods.

Earnings before tax for the Europe EWP Segment decreased by $12 million compared to Q3-22 and decreased by $35 million compared to Q4-21 due to the reasons explained above.

Adjusted EBITDA for the Europe EWP Segment increased by $6 million compared to Q3-22, and decreased by $31 million compared to Q4-21. The following table shows the Adjusted EBITDA variance for the period. The variances presented represent the impact of changes in price, volume and cost in local currency terms, with any associated foreign exchange impact from the strengthening or weakening of the GBP against USD presented under Other. The impact of the sale of carbon allowances during Q4-22 is also included under Other.

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| | | |
|:---|:---|:---|
| **Adjusted EBITDA** ($ millions) | **Q3-22 to Q4-22** | **Q4-21 to Q4-22** |
| Adjusted EBITDA - comparative period | $24 | $61 |
| Price | (1) | (9) |
| Volume | (7) | (8) |
| Changes in costs | 8 | (15) |
| Other | 6 | 1 |
| Adjusted EBITDA - current period | $30 | $30 |

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**Discussion & Analysis of Specific Items**

**Selling, general and administration**

Selling, general and administration costs for Q4-22 was $98 million (Q3-22 - $84 million and Q4-21 - $88 million).

Selling, general and administration costs increased compared to Q3-22 due to higher salaries and wages, increased travel, and increased levels of community investment. The increase versus Q4-21 was driven by similar factors.

Selling, general and administration expense related to our operating segments are also discussed under "Discussion & Analysis of Fourth Quarter Results by Product Segment".

**Equity-based compensation**

We recorded an expense of $6 million during Q4-22 (Q3-22 - expense of $5 million; Q4-21 - expense of $12 million). The expense in the current quarter reflects an increase in the expected payout multiple on our performance share units.

**Finance income (expense), net**

Finance income, net includes interest earned on short-term investments and interest income recognized on our duty deposits as discussed under "Discussion & Analysis of Fourth Quarter Results by Product Segment - Lumber Segment". The paragraph below discusses finance income (expense), net on a consolidated basis.

We recorded finance income, net of $3 million in Q4-22 compared to finance income, net of $3 million in Q3-22 and finance expense, net of $1 million in Q4-21. Finance income increased versus comparative periods due to the impacts of higher interest income earned on our short-term investments, offset in part by a reduction in interest income on export duties. We accrued $7 million of interest income in Q3-22 and Q4-21 related primarily to the finalization of our AR3 and AR2 duty rates in those periods.

**Other**

Other income of $2 million was recorded in Q4-22 (Q3-22 - other income of $12 million; Q4-21 - other expense of $11 million).

Other income in Q4-22 relates primarily to foreign exchange gains recorded on our CAD-denominated monetary assets and liabilities, offset in part by settlement costs relating to pension plan annuity purchase agreements for certain retired employees.

Other income of $8 million was recorded for our Corporate & Other segment in Q4-22 (Q3-22 - other expense of $1 million; Q4-21 - other expense of $2 million).

Other income for our Corporate & Other segment in Q4-22 relates primarily to foreign exchange gains recorded on certain of our CAD-denominated monetary assets and liabilities held within the Corporate & Other segment, offset in part by consolidation eliminations for intercompany transactions relating to our NA EWP segment.

Other related to our operating segments are discussed under "Discussion & Analysis of Fourth Quarter Results by Product Segment".

**Income tax**

Q4-22 results include an income tax recovery of $31 million, compared to income tax expense of $80 million in Q3-22 and $104 million in Q4-21, resulting in an effective tax rate of 25% in the current quarter compared to 27% in Q3-22 and 24% in Q4-21.

**Other comprehensive earnings – translation of operations with different functional currencies**

We recorded a translation gain of $50 million during Q4-22 (Q3-22 - translation loss of $62 million; Q4-21 - translation gain of $3 million).

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In general, a strengthening (weakening) of the USD against the Canadian dollar, British pound sterling or Euro results in a translation loss (gain). The translation gain in the current quarter reflects a weakening of the USD against the CAD, British pound sterling and Euro for our European and jointly-owned newsprint operations.

**Other comprehensive earnings – actuarial gains/losses on retirement benefits**

We recorded an after-tax actuarial gain of $15 million during Q4-22 (Q3-22 - after-tax actuarial loss of $14 million; Q4-21 - after-tax actuarial gain of $8 million). The actuarial gain in Q4-22 reflect an increase in the discount rate used to calculate our plan liabilities.

**OUTLOOK AND OPERATIONS**

**Business Outlook**

*Markets*

Several key trends that have served as positive drivers in recent years are expected to continue to support medium and longer-term demand for new home construction in North America.

The most significant uses for our North America lumber, OSB and wood panel products are residential construction, repair and remodelling and industrial applications. Over the medium term, we expect that an aging housing stock, the backlog of homes to be built due to lagging completions of previously started new home construction and greater entrenchment of work-from-home flexibility will help to offset near-term headwinds and spur repair and renovation spending that supports lumber, plywood and OSB demand. Over the longer term, growing market penetration of mass timber in industrial and commercial applications is also expected to become a more significant source of demand growth for wood building products in North America.

The seasonally adjusted annualized rate of U.S. housing starts averaged 1.38 million units in December 2022, with permits issued averaging 1.33 million units, according to the U.S. Census Bureau. Demand for new home construction and our wood building products may decline in the near term should interest rates remain elevated or continue to rise and consequently impact consumer sentiment and housing affordability.

The demand for our European products is expected to remain robust over the longer term as use of OSB as an alternative to plywood grows. Further, an aging housing stock supports long-term repair and renovation spending and additional demand for our wood building products. Near-term challenges, including relatively high and rising interest rates, ongoing geopolitical developments and inflationary pressures, are expected to cause a temporary slowing of demand for our products in Europe, however, we are confident that we will be able to navigate through these periods and respond to opportunities for long-term growth ahead.

Our BCTMP, NBSK and UKP pulp is primarily used in printing and writing paper, boxboard, tissue applications, paper grocery bags and other specialty products. Pulp demand is anticipated to grow over the longer term due to increasing boxboard and tissue production in Asia and greater substitution of single-use plastics that are subject to increasing risk from government restrictions. Recently, there have been industry announcements of both temporary and permanent pulp capacity reductions in Western Canada as a result of constrained access to fibre. We continue to ramp production of UKP at our pulp mill in Hinton, Alberta, which offers environmental benefits such as reduced greenhouse gas emissions, water use, air emissions and waste generation and elimination of chlorine dioxide emissions.

*Softwood lumber dispute*

Canadian softwood lumber exports to the U.S. have been the subject of trade disputes and managed trade arrangements for several decades. Countervailing and antidumping duties have been in place since April 2017, and we are required to make deposits in respect of these duties. Whether and to what extent we can realize a selling price to recover the impact of duties payable will largely depend on the strength of demand for softwood lumber. The USDOC published the final rates for Administrative Review 3 ("AR3") in Q3-22. AR4 commenced in March 2022, with final rates expected in August 2023. Additional details can be found under the section "Discussion & Analysis of Annual Results by Product Segment - Lumber Segment - Softwood Lumber Dispute".

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**Operations**

Anticipated shipment levels assume no significant deterioration from current market demand conditions, sufficient availability of logs within our economic return criteria, and no further temporary, indefinite or permanent curtailments. Our operations and results could be negatively affected by increasing or elevated interest rates, softening demand, the availability of transportation, the availability of labour due to the continuing impacts of COVID-19, disruption to the global economy resulting from the conflict in the Ukraine, inflationary pressures, including increases in energy prices, adverse weather conditions in our operating areas, intense competition for logs, elevated stumpage fees and production disruptions due to other uncontrollable factors.

We expect total lumber shipments in 2023 to be similar to 2022 levels as the transportation challenges that we faced last year are not expected to be as severe in 2023, offset by relative year-over-year softness in new home construction demand, the permanent B.C. mill curtailments announced in August 2022 and the indefinite curtailment of the Perry, Florida sawmill announced in January 2023. As such we expect 2023 SPF shipments to be 2.6 to 2.8 billion board feet, and in the U.S. South, we expect 2023 SYP shipments to be 2.9 to 3.1 billion board feet. On January 1, 2023, stumpage rates decreased in B.C. due to the market-based adjustments related to lumber prices, and given the current commodity price environment, B.C. stumpage rates are expected to decline modestly in Q2-23. In Alberta, stumpage rates are expected to remain low as long as SPF prices remain depressed, as they are closely linked to the price of lumber and respond relatively quickly to changes in lumber prices. We expect log costs to moderate in the U.S. South in 2023.

In our NA EWP segment, we expect 2023 OSB shipments to be similar to 2022 levels and therefore we expect shipments of 5.9 to 6.2 billion square feet (3/8-inch basis) this year. Our modernization capital investment in Allendale is continuing. Given ongoing supply chain delays, the timing for a potential restart has moved to the end of the second quarter. We anticipate a ramp-up period of up to three years to meet targeted production and as such we do not anticipate the Allendale mill contributing materially to shipments in 2023. While there are near-term headwinds to demand, our overall OSB platform is expected to be better and lower cost with a modern Allendale facility operating. As with all our wood products operations, demand is a key input in determining our operating schedules across our manufacturing footprint. Input costs for the NA EWP business are expected to moderate in 2023.

Pulp & Paper segment shipments are not expected to increase from 2022 levels this year.

In our Europe EWP segment, we expect 2023 OSB shipments to be 1.0 to 1.2 billion square feet (3/8-inch basis), moderately above 2022 levels, as demand markets stabilize. Input costs for the Europe EWP business are expected to remain relatively elevated due primarily to higher energy and resin costs.

Across much of our supply chain in Q4-22, we experienced moderation of costs and availability constraints for raw materials such as resins and chemicals, transportation, and energy, though labour availability remained challenging. We expect these trends to persist over the near-term.

We will continue to regularly evaluate the factors above as well as evolving market conditions in making production decisions across the business.

**Cash Flows**

We anticipate levels of operating cash flows and available liquidity will support our capital spending estimate for 2023. Based on our current outlook, assuming no deterioration from current market demand conditions during the year and that there is no additional lengthening of lead times for projects underway or planned, we anticipate we will invest approximately $500 million to $600 million in 2023. Our total capital budget consists of various improvement projects and maintenance expenditures, projects focused on optimization and automation of the manufacturing process, and projects targeted to reduce greenhouse gas emissions. Expected capital expenditures<sup>1</sup> in 2023 include approximately $100 million for the modernization of the Henderson, Texas lumber manufacturing facility.

We expect to maintain our investment grade debt rating and intend to preserve sufficient liquidity to be able to take advantage of strategic growth opportunities that may arise.

Our 2022 NCIB, which expires February 22, 2023, authorized us to purchase up to 10,194,000 Common shares of the Company. As of February 13, 2023, 10,194,000 shares have been repurchased, leaving no shares available to purchase until the February 22, 2023 expiry of the NCIB. An additional 281,115 shares were acquired in 2022 under our 2021 NCIB for a total repurchase of 10,475,115 shares for 2022.

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On June 7, 2022, we completed the 2022 SIB pursuant to which we purchased for cancellation a total of 11,898,205 Common shares at a price of $95.00 per share for an aggregate purchase price of $1.13 billion.

As of February 13, 2023, we have repurchased for cancellation 39,741,794 of the Company's Common shares since the closing of the Norbord Acquisition on February 1, 2021 through the completion of the 2021 SIB, the 2022 SIB and normal course issuer bids, equalling 73% of the shares issued in respect of the Norbord Acquisition.

We have paid a dividend in every quarter since we became a public company in 1986 and expect to continue this practice. At the latest declared quarterly dividend rate of $0.30 per share, the total anticipated cash payment of dividends in 2023 is $100 million based on the number of Common and Class B Common shares outstanding on December 31, 2022.

We will continue to consider share repurchases with excess cash, subject to regulatory approvals, if we are satisfied that this will enhance shareholder value and does not compromise our financial flexibility.

1. This is a supplementary financial measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

**Estimated Earnings Sensitivity to Key Variables** 

(based on 2022 shipment volumes - $ millions)

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| | | |
|:---|:---|:---|
| **Factor** | **Variation** | **Change in pre-tax earnings**<sup>1</sup> |
| Lumber price | $10 (per Mfbm) | $59 |
| NA OSB price | $10 (per Msf) | 58 |
| Europe OSB price | £10 (per Msf) | 9 |
| Canadian - U.S. $ exchange rate<sup>2</sup> | $0.01 (per CAD) | 18 |

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1. Each sensitivity has been calculated on the basis that all other variables remain constant and is based on changes in our realized sales prices.

2. Represents the USD impact of the initial $0.01 change on CAD revenues and expenses. Additional changes are substantially, but not exactly, linear.

**LIQUIDITY AND CAPITAL RESOURCES**

**Capital Management Framework**

Our 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. dollars. Our objective in managing capital is to ensure adequate liquidity and financial flexibility at all times, particularly at the lower points in the business cycle.

Our main policy relating to capital management is to maintain a strong balance sheet and otherwise meet financial tests that rating agencies commonly apply 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 to ensure that debt levels are prudent, taking into account the anticipated direction of the business cycle. When financing acquisitions, we combine cash on hand, debt, and equity financing in a proportion that is intended to maintain an investment-grade rating for debt throughout the cycle. Debt repayments are arranged, where possible, on a staggered basis that takes into account the uneven nature of anticipated cash flows. We have established committed revolving lines of credit that provide liquidity and flexibility when capital markets are restricted.

A strong balance sheet and liquidity profile, along with our investment-grade debt rating, are key elements of our goal to maintain a balanced capital allocation strategy. Priorities within this strategy include reinvesting in our operations across all market cycles to strategically enhance productivity, product mix, and capacity; maintaining a leading cost position; maintaining financial flexibility to capitalize on growth opportunities, including the pursuit of acquisitions and larger-scale strategic growth initiatives; and returning capital to shareholders through dividends and share repurchases.

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**Liquidity and Capital Resource Measures**

Our capital structure consists of Common share equity and long-term debt, and our liquidity includes our operating facilities.

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| | | |
|:---|:---|:---|
| **Summary of Liquidity and Debt Ratios**<br>($ millions, except as otherwise indicated) | **December 31, 2022** | **December 31, 2021** |
| Available liquidity |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $1162 | $1568 |
| &nbsp;&nbsp;&nbsp;Operating lines available (excluding newsprint operation) | 1053 | 1025 |
| Available liquidity | $2215 | $2593 |
| Total debt to total capital<sup>1</sup> | 7% | 7% |
| Net debt to total capital<sup>1</sup> | (9%) | (16%) |

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1. This is a capital management measure. Refer to the "Non-GAAP and Other Specified Financial Measures" section of this document for more information on this measure.

Available liquidity on December 31, 2022 was $2,215 million (2021 - $2,593 million). Available liquidity includes cash and cash equivalents, cheques issued in excess of funds on deposit, and amounts available on our operating loans, excluding the demand line of credit dedicated to our 50% jointly-owned newsprint operation.

Cash and cash equivalents on hand decreased in 2022 due to lower earnings and significant returns of capital to our shareholders through share buybacks and dividend payments during the year. Available liquidity decreased and net debt to total capital increased compared to last year, but we remain well positioned with a strong balance sheet and liquidity profile. Total debt to total capital remained comparable to prior year.

**Credit Facilities**

As at December 31, 2022, our credit facilities consisted of a $1 billion committed revolving credit facility which matures July 2026, $35 million of uncommitted revolving credit facilities available to our U.S. subsidiaries, a $18 million (£15 million) credit facility dedicated to our European operations, and a $10 million (CAD$13 million) demand line of credit dedicated to our jointly-owned newsprint operation.

As at December 31, 2022, our revolving credit facilities were undrawn (December 31, 2021 - undrawn) and the associated deferred financing costs of $1 million (December 31, 2021 - $1 million) were recorded in other assets. Interest on the facilities is payable at floating rates based on Prime, Base Rate Advances, Bankers' Acceptances, or London Inter-Bank Offered Rate ("LIBOR") Advances at our option. Our $1 billion committed revolving credit facility contains transition provisions relating to the elimination of LIBOR whereby Secured Overnight Financing Rate ("SOFR") can be elected by mutual consent with the lenders.

In addition, we have credit facilities totalling $131 million (December 31, 2021 - $137 million) dedicated to letters of credit. Letters of credit in the amount of $61 million (December 31, 2021 - $65 million) were supported by these facilities.

All debt is unsecured except the $10 million (CAD$13 million) jointly-owned newsprint operation demand line of credit, which is secured by that joint operation's current assets.

As at December 31, 2022, we were in compliance with the requirements of our credit facilities.

**Long-Term Debt**

In October 2014, we issued $300 million of fixed-rate senior unsecured notes, bearing interest at 4.35% and due October 2024, pursuant to a private placement in the U.S. The notes are redeemable, in whole or in part, at our option at any time as provided in the indenture governing the notes.

In August 2017, we were advanced a $200 million 5-year term loan that, with the July 2019 extension, matures on August 25, 2024. Interest is payable at floating rates based on Base Rate Advances or LIBOR Advances at our option. This

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loan is repayable at any time, in whole or in part, at our option and without penalty but cannot be redrawn after payment.

On March 15, 2019, we entered into an interest rate swap agreement, maturing in August 2022, with a $100 million notional amount to limit our exposure to fluctuations in interest rates and fix interest rates on a portion of our 5-year term loan. On March 9, 2020, we extended the duration of our $100 million notional interest rate swap from August 2022 to August 2024, resulting in a change to the fixed interest rate on the swap from 2.47% to 1.78% through August 2024. On April 15, 2020, we entered into additional interest rate swaps for another notional amount of $100 million, resulting in a fixed interest rate of 0.51% through August 2024. These swap agreements fix the interest rate on the $200 million 5-year term loan discussed above.

**Debt Ratings**

We are considered investment grade by three leading rating agencies. The ratings in the table below are as at February 13, 2023.

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| | | |
|:---|:---|:---|
| **Agency** | **Rating** | **Outlook** |
| DBRS | BBB | Stable |
| Moody's | Baa3 | Stable |
| Standard & Poor's | BBB- | Stable |

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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.

**Shareholder's Equity**

Our outstanding Common share equity consists of 81,273,936 Common shares and 2,281,478 Class B Common shares for a total of 83,555,414 shares issued and outstanding as at February 13, 2023.

The Common shares and Class B Common shares are equal in all respects, including the right to dividends, rights upon dissolution or winding up and the right to vote, except that each Class B Common share may at any time be exchanged for one Common share. Our Common shares are listed for trading on the TSX and NYSE under the symbol WFG, 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.

**Share Repurchases**

*Normal Course Issuer Bid*

On February 23, 2022, we renewed our normal course issuer bid ("NCIB") allowing us to acquire up to 10,194,000 Common shares for cancellation until the expiry of the bid on February 22, 2023. As of December 31, 2022, we had repurchased and cancelled all 10,194,000 Common shares available under the 2022 NCIB.

For the year ended December 31, 2022, we repurchased 10,475,115 Common shares at an average price of $82.01 per share under our 2021 and 2022 NCIB programs.

*2022 Substantial Issuer Bid*

On June 7, 2022, we completed a substantial issuer bid pursuant to which we purchased for cancellation a total of 11,898,205 Common shares at a price of $95.00 per share for an aggregate purchase price of $1.13 billion.

*2021 Substantial Issuer Bid*

On August 20, 2021, we completed a substantial issuer bid pursuant to which we purchased for cancellation a total of 10,309,278 Common shares at a price of CAD$97.00 (US$76.84) per Common share for an aggregate purchase price of CAD$1.0 billion.

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The following table shows our purchases under our NCIB and SIB programs in 2021 and 2022:

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| | | | |
|:---|:---|:---|:---|
| **Share repurchases**<br>(number of common shares and price per share) | **Share repurchases**<br>(number of common shares and price per share) | **Common Shares** | **Average Price<br>in USD** |
| **NCIB:** | January 1, 2021 to December 31, 2021 | 7059196 | $74.60 |
| **2021 SIB:** | August 20, 2021 | 10309278 | $76.84 |
| **NCIB:** | January 1, 2022 December 31, 2022 | 10475115 | $82.01 |
| **2022 SIB:** | June 7, 2022 | 11898205 | $95.00 |

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**Share Options**

As at February 13, 2023, there were 837,425 share purchase options outstanding with exercise prices ranging from CAD$40.82 to CAD$123.63 per Common share.

**Cash Flow**

Our cash is deployed primarily for operating purposes, interest payments, repayment of debt, investments in property, plant, equipment, acquisitions, share repurchases, and dividends. In normal business cycles and in years without a major acquisition or debt repayment, cash on hand and cash provided by operations have typically been sufficient to meet these uses.

We are exposed to commodity price changes. To manage our liquidity risk, we maintain adequate cash and cash equivalents balances and appropriate lines of credit. In addition, we regularly monitor and review both actual and forecasted cash flows. Refinancing risks are managed by extending maturities through regular renewals and refinancing when market conditions are supportive.

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| | | |
|:---|:---|:---|
| **Cash Flow Statement**<br>($ millions - cash provided by (used in)) | **2022** | **2021** |
| **Cash provided by operating activities** |  |  |
| Earnings | $1975 | $2947 |
| Adjustments |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization | 589 | 584 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and impairment charges | 60 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance expense, net | 3 | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange (gain) loss | (28) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Export duty | (99) | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retirement benefit expense | 103 | 111 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contributions to retirement benefit plans | (76) | (77) |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax provision | 618 | 951 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid | (982) | (946) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | (11) | (13) |
| Changes in non-cash working capital |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables | 140 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 20 | (139) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | (6) | (14) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payables and accrued liabilities | (99) | 79 |
|  | 2207 | 3552 |
| **Cash used for financing activities** |  |  |
| Repayment of long-term debt |  | (667) |
| Repayment of lease obligations | (14) | (9) |
| Make-whole premium paid |  | (60) |
| Finance expense paid | (23) | (37) |
| Financing fees paid |  | (4) |
| Repurchase of Common shares for cancellation | (1990) | (1319) |
| Issuance of Common shares |  | 7 |
| Dividends paid | (99) | (75) |
|  | (2126) | (2164) |
| **Cash used for investing activities** |  |  |
| Acquired cash and cash equivalents from Norbord Acquisition<sup>1</sup> |  | 642 |
| Angelina Acquisition, net of cash acquired |  | (302) |
| Additions to capital assets | (477) | (635) |
| Interest received | 17 | 2 |
| Other | 1 | 7 |
|  | $(459) | $(286) |
| **Change in cash and cash equivalents** | $(378) | $1102 |

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1. The Norbord Acquisition was a non-cash share consideration transaction and therefore only the acquired cash is included in the cash flow statement. Changes in Norbord's cash position subsequent to February 1, 2021 are incorporated into the cash flow statement.

**Operating Activities**

The table above shows the main components of cash flows provided by operating activities for each year. The significant factor contributing to the decrease compared to 2021 was lower earnings, driven primarily by lower product pricing and higher input costs. Changes in working capital provided a partial offsetting factor.

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Income tax payments were higher in 2022 due primarily to a higher prior year top-up payment, as discussed below, and changes in installment levels. Canadian income tax installments are based on the lower of prior year installments and estimated taxable earnings, with the final or top-up payment due in February of the following year. U.S. income tax installments are based on estimated taxable earnings. Of the $982 million in income tax payments (net of refunds) paid in 2022, $328 million was the final income tax payment for 2021 earnings. Of the $946 million income tax payments (net of refunds) paid in 2021, $216 million was the final income tax payment for 2020 earnings.

Working capital decreased in 2022 due primarily to decreases in accounts receivable, offset in part by decreases in payables and accrued liabilities. Accounts receivable decreased due to lower product pricing and shipment activity. Accounts payable and accrued liabilities decreased due primarily to decreases in stumpage, trade accounts, and equity-based compensation and compensation accruals.

The decrease in inventory is driven primarily by inventory write-downs on log and lumber inventory, reductions in volumes of SPF and SYP lumber finished goods at year-end, and reductions in volumes of pulp raw materials and finished goods related to the transition of Hinton pulp mill to single-line production of UKP. Partially offsetting these reductions were increases in OSB finished goods and supplies inventory driven by increases in input costs and a lower comparative balance for OSB finished goods at 2021 year-end.

**Financing Activities**

Cash used in financing activities in 2022 was comparable to 2021 as lower repayments of long-term debt were largely offset by higher share repurchases and dividend payments. We completed the early redemption of Norbord's 2023 and 2027 Notes in 2021 whereas no repayments of long-term debt took place in the current year.

We returned a total of $1,990 million during 2022 to our shareholders through Common shares repurchased under our NCIB and SIB programs, as compared to $1,319 million during 2021. 2022 share repurchases were higher compared to 2021 as we repurchased more shares at a higher average price per share in the current year.

We also returned a total of $99 million during 2022 to our shareholders through dividend payments (2021 - $75 million). The increase versus 2021 related to increases in the dividend amount per share, offset by a decrease in the number of shares outstanding.

**Investing Activities**

The Norbord Acquisition was a non-cash share consideration transaction and therefore only the acquired cash was included in investing activities in 2021. Cash payment of $302 million, representing the cash consideration transferred net of acquired cash, was made in relation to the Angelina Acquisition during 2021.

Interest received increased compared to 2021 due to higher interest income earned on our short-term investments.

Capital expenditures of $477 million in 2022 (2021 - $635 million) reflect our philosophy of continued reinvestment in our mills. Additions to capital assets in 2021 included $276 million relating to the asset acquisition of the idled OSB mill near Allendale, South Carolina. We increased profit improvement and maintenance capital expenditures in the North America EWP and U.S. lumber segments in 2022.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Capital Expenditures by Segment**<br>($ millions) | **Profit Improvement** | **Maintenance of Business**<sup>1</sup> | **Safety** | **Total** |
| Lumber | 102 | 62 | 20 | 184 |
| North America EWP | 135 | 82 | 18 | 235 |
| Pulp & Paper | 2 | 26 | 1 | 29 |
| Europe EWP | 7 | 10 | 3 | 20 |
| Corporate |  | 9 |  | 9 |
| Total | 246 | 189 | 42 | 477 |

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1. Maintenance of business includes expenditures for roads, bridges, mobile equipment and major maintenance shutdowns.

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**Contractual Obligations**

The estimated cash payments due in respect of contractual and legal obligations as at December 31, 2022, including debt and interest payments and major capital improvements, are summarized as follows. Contractual obligations do not include energy purchases under various agreements, defined contribution pension plans, equity-based compensation, or contingent amounts payable.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Contractual Obligations**<br>(at December 31, 2022, in $ millions) | **Total** | **2023** | **2024** | **2025** | **2026** | **Thereafter** |
| Long-term debt | $500 | $— | $500 | $— | $— | $— |
| Interest on long-term debt<sup>1</sup> | 33 | 19 | 14 |  |  |  |
| Lease obligations | 42 | 12 | 8 | 7 | 3 | 12 |
| Contributions to defined benefit pension plans<sup>2</sup> | 120 | 36 | 43 | 41 |  |  |
| Payables and accrued liabilities | 722 | 722 |  |  |  |  |
| Purchase commitments | 278 | 278 |  |  |  |  |
| Reforestation and decommissioning obligations | 159 | 60 | 15 | 10 | 6 | 68 |
| Electricity swaps | 7 | (1) | (2) | (1) | 1 | 10 |
| Total | $1861 | $1126 | $578 | $57 | $10 | $90 |

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1. Assumes debt remains at December 31, 2022 levels and includes the impact of interest rate swaps terminating August 2024.

2. Contributions to the defined benefit pension plans are based on the most recent actuarial valuation. Future contributions will be determined at the next actuarial valuation date.

**Financial Instruments**

Our financial instruments, their accounting classification, and associated risks are described in Note 23 to the Annual Financial Statements.

**ACCOUNTING MATTERS**

**Critical Accounting Estimates and Judgments**

The preparation of financial statements in conformity with IFRS requires management to make estimates, assumptions, and judgments that affect the amounts reported. Our significant accounting policies are disclosed in our Annual Financial Statements.

In determining our critical accounting estimates, we consider trends, commitments, events or uncertainties that we reasonably expect to materially affect our methodology or assumptions. Our statements in this MD&A regarding such considerations are made subject to the "Forward-Looking Statements" section.

We have outlined below information about judgments, assumptions, and other sources of estimation uncertainty as at December 31, 2022 that have the most significant impact on the amounts recognized in our financial statements. The discussion of each critical accounting estimate does not differ between our reportable segments unless explicitly noted.

**Recoverability of Goodwill**

Goodwill is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination from which it arose. Goodwill exists in relation to our Lumber, North America EWP, and Europe EWP reporting segments.

Goodwill is tested annually for impairment, or more frequently if an indicator of impairment is identified.

Recoverability of goodwill is assessed by comparing the carrying value of the CGU or group of CGUs associated with the goodwill balance to its estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal and its value in use.

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We determined the value in use of CGU groups using discounted cash flow models. Key assumptions used in estimating recoverable amount were based on industry sources as well as management estimates. Key assumptions included production volume, product pricing, raw material input cost, production cost, terminal multiple, and discount rate.

An impairment write-down is recorded if the carrying value exceeds the estimated recoverable amount.

We assessed the recoverability of goodwill as at December 31, 2022 and December 31, 2021 and concluded there were no impairment losses.

The estimates and assumptions regarding expected cash flows and the appropriate discount rates require considerable judgment and are based upon historical experience, approved financial forecasts and industry trends and conditions.

There is a material degree of uncertainty with respect to the estimates of the recoverable amounts of the CGU groups, given the necessity of making key economic and operating assumptions about the future. If the future were to differ adversely from our best estimate and associated cash flows were to materially decrease, we could potentially experience future impairment charges in respect of our goodwill balances.

**Recoverability of Capital Assets**

We assess property, plant and equipment, timber licences, and other definite-lived intangible assets for indicators of impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We conduct a review of external and internal sources of information to assess for any impairment indicators. Examples of such triggering events related to our long-lived assets include, but are not limited to: a significant adverse change in the extent or manner in which the asset is being used or in its physical condition; a change in management's intention or strategy for the asset, including a plan to dispose of the asset or idle the asset for a significant period of time; a significant adverse change in our long-term price assumption or in the price or availability of inputs required for manufacturing; a significant adverse change in legal factors or in the business climate that could affect the asset's value; and a current period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the asset's use.

When a triggering event is identified, recoverability of long-lived assets is assessed by comparing the carrying value of an asset or cash-generating unit to its estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal and its value in use.

We determined the value in use of assets and cash-generating units using discounted cash flow models. Key assumptions used in estimating recoverable amount were based on industry sources as well as management estimates. Key assumptions included production volume, product pricing, raw material input cost, production cost, and discount rate.

An impairment write-down is recorded if the carrying value exceeds the estimated recoverable amount.

We recorded $51 million of impairment charges during the year ended December 31, 2022 relating to our Hinton, Alberta pulp mill (Pulp & Paper segment), Perry, Florida lumber mill (Lumber segment), and South Molton, England mill (Europe Engineered Wood Products segment). No impairments were recorded for 2021. The assessment of impairment indicators requires the exercise of judgment given the necessity of making key economic and operating assumptions about the future. If the future were to differ adversely from our best estimate and associated cash flows were to materially decrease, we could potentially experience future impairment charges in respect of our capital assets.

**Defined Benefit Pension Plan Assumptions**

We maintain defined benefit pension plans for many of our employees. We use independent actuarial specialists to perform actuarial valuations of our defined benefit pension plans.

Key assumptions used in determining defined benefit pension expense and accrued benefit obligations included assumed rates of increase for employee compensation and discount rate. Note 13 to the Annual Financial Statements provides the sensitivity of our accrued benefit obligations to changes in these key assumptions.

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If the future were to adversely differ from our best estimate of assumptions used in determining our accrued benefit obligations, we could experience future increased defined benefit pension expense, financing costs and charges to other comprehensive earnings.

**CVD and ADD Duty Rates** 

On November 25, 2016, a coalition of U.S. lumber producers petitioned the USDOC and the USITC to investigate alleged subsidies to Canadian softwood lumber producers and levy CVD and ADD against Canadian softwood lumber imports. The USDOC chose us as a "mandatory respondent" to both the countervailing and antidumping investigations, and as a result, we have received unique company-specific rates. Details can be found under the section "Discussion & Analysis of Annual Results by Product Segment - Lumber - Softwood Lumber Dispute."

The CVD and ADD rates are subject to adjustment by the USDOC through an AR of POI. The CVD and ADD rates apply retroactively for each POI. We record CVD as export duty expense at the cash deposit rate until an AR finalizes a new applicable rate for each POI. We record ADD as export duty expense by estimating the rate to be applied for each POI by using our actual results and a similar calculation methodology as the USDOC and adjust when an AR finalizes a new applicable rate for each POI. The difference between the cumulative cash deposits paid and cumulative export duty expense recognized for each POI is recorded on our balance sheet as export duty deposits receivable or payable.

The softwood lumber case will continue to be subject to NAFTA or the new CUSMA and WTO dispute resolution processes and litigation in the U.S. In the past, long periods of litigation have led to negotiated settlements and duty deposit refunds.

In the interim, duties remain subject to the USDOC AR process, which results in an annual adjustment of duty deposit rates. Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administrative review process is complete and related appeal processes are concluded.

If the future were to adversely differ from our best estimate of the duty deposit rate, we could experience material adjustments to duty expense and such adjustments could result in an increase of cash outflows.

**Reforestation and Decommissioning Obligations**

We recognize provisions for various statutory, contractual or legal obligations. In 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, discounted at an appropriate rate. The liability is accreted over time through charges to finance expense and reduced by silviculture expenditures.

We record the best estimate of the expenditure to be incurred to settle decommissioning obligations, such as landfill closures. This liability is determined using estimated closure and/or remediation costs discounted using an appropriate discount rate. On initial recognition, the carrying value of the liability is added to the carrying amount of the associated asset and amortized over its useful life or expensed when there is no related asset. The liability is accreted over time through charges to finance expense and reduced by actual costs of settlement.

Key assumptions underlying the reforestation and decommissioning obligations included the timing and the amount of forecasted expenditures and discount rate.

Material changes in financial position can arise as the actual costs incurred at the time of silviculture activities or decommissioning may differ from the estimates used in determining the liability. If the provisions for the reforestation and decommissioning obligations were to be inadequate, we could experience an increase to expenses in the future. A charge for an inadequate reforestation and decommissioning obligation provision would result in an increase of cash outflows proximate to the time that the obligation is satisfied.

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**Accounting Policy Developments**

Note 2 to the Annual Financial Statements contains a description of current and future changes in accounting policies, including: (1) initial application of standards, interpretations and amendments to standards and interpretations in the reporting period and (2) standards, interpretations and amendments to standards and interpretations issued but not yet effective.

**RISKS AND UNCERTAINTIES**

Our business is subject to a number of risks and uncertainties that can significantly affect our operations, financial condition and future performance. We have a comprehensive process to identify, manage, and mitigate risk, wherever possible. The risks and uncertainties described below are not necessarily the only risks we face. Additional risks and uncertainties that are presently unknown to us or deemed immaterial by us may adversely affect our business.

**Product Demand and Price Fluctuations**

Our revenues and 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, plywood, OSB, particleboard, MDF, LVL, pulp, newsprint, wood chips and other wood products are highly volatile and are affected by factors such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• global economic conditions including the strength of the U.S., Canadian, Chinese, Japanese, European and other international economies, particularly U.S. and Canadian housing markets and their mix of single and multifamily construction, repair, renovation and remodelling spending and industrial application;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• alternative products to lumber or panels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• construction and home building disruptor technologies that may reduce the use of lumber or panels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in industry production capacity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in global inventory levels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased competition from other consumers of logs and producers of lumber or panels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory regimes setting a price on carbon that would increase the price of energy or fuel affecting the manufacturing cost of our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• elevated and continued rising of, interest rates, ongoing geo-political developments, including disruptions to the global economy resulting from the conflict in the Ukraine;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inflationary pressures, including increases in energy prices; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other factors beyond our control.

In addition, unemployment levels, interest rates, the availability of mortgage credit 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. Declines in demand, and corresponding reductions in prices, for our products may adversely affect our financial condition and results of operations.

Our business is highly exposed to fluctuations in demand for and pricing of our wood products. Our sensitivity to commodity product pricing may result in a high degree of sales and earnings volatility. In the past, we have been negatively affected by declines in product pricing and have taken production downtime or indefinite curtailments to manage working capital and minimize cash losses. Severe and prolonged weakness in the markets for our wood products could seriously harm our financial position, operating results and cash flows.

We cannot predict with any reasonable accuracy 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. Future demand could also be impacted by the perceived sustainability of our wood products in contrast with competing alternatives.

**Competition**

We compete with global producers, some of which may have greater financial resources and lower production costs than we do. Currency devaluations can have the effect of reducing our competitors' costs and making our products less competitive in certain markets. In addition, European lumber producers and South American panel producers may enter the North American market during periods of peak prices. Markets 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

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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. Some of our products are also particularly sensitive to other factors including innovation, quality and service, with varying emphasis on these factors depending on the product. To the extent that one or more of our competitors become more successful with respect to any key competitive factor, our ability to attract and retain customers could be materially adversely affected. If we are unable to compete effectively, such failure could have a material adverse effect on our business, financial condition and results of operations.

Our products may compete with non-fibre based alternatives or with alternative products in certain market segments. For example, steel, engineered wood products, plastic, wood/plastic or composite materials may be used by builders as alternatives to the products produced by our wood products businesses such as lumber, plywood, OSB, LVL, particleboard and MDF products. Changes in prices for oil, chemicals and wood-based fibre can change the competitive position of our products relative to available alternatives and could increase substitution of those products for our products. In addition, our customers or potential customers may factor in environmental and sustainability factors in assessing whether to purchase our wood products. As the use of these alternatives grows, demand for our products may further decline.

Because commodity products have few distinguishing properties from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand and competition from substitute products. Prices for our products are affected by many factors outside of our control, and we have no influence over the timing and extent of price changes, which often are volatile. Accordingly, our revenues may be negatively affected by pricing decisions made by our competitors and by decisions of our customers to purchase products from our competitors.

In addition, continued consolidation in the retail and construction industries could expose us to increased concentration of customer dependence and increase customers' ability to exert pricing pressure on us and our products. In addition, concentration of our business with fewer customers as a result of consolidation could expose us to risks associated with the loss of key customers. For example, the loss of a significant customer, any significant customer order cancellations or bad debts could negatively affect our sales and earnings.

**Availability of Fibre**

***Canada***

A significant majority of our Canadian log requirements are harvested from lands owned by a provincial government. Provincial governments control the volumes that can be harvested under provincially-granted tenures and otherwise regulate the availability of Crown timber for harvest. Determinations by provincial governments to (i) reduce the volume of timber, to issue or not issue operating permits to harvest timber; (ii) to limit the areas that may be harvested under timber tenures; (iii) to restrict the transfer or acquisition of timber tenures; (iv) to regulate the processing of timber or use of harvesting contractors, including to protect the environment or endangered species, species at risk and critical habitat or as a result of forest fires, mountain pine beetle infestations, harvest and caribou conservation plans; (v) in response to jurisprudence or government policies respecting Indigenous rights and title or reconciliation efforts, land use management and planning processes, including those agreements between the B.C. provincial government and the Blueberry River First Nations or potential reallocation of harvesting rights to Indigenous Nations or communities; or (vi) to restrict log processing to local or appurtenant sawmills or to mandate amounts of work to be provided or rates to be paid to harvesting contractors; or (vii) change the methodology or rates for stumpage, may reduce our ability to secure log or residual fibre supply, may increase our log purchase and residual fibre costs, may adversely impact lumber grade and recovery and may impact our operations, including require us to reduce operating rates.

In addition, our timber supply in B.C. may also be negatively impacted by the announced intention of the Government of B.C. to defer logging in 2.6 million hectares of forests described as "old growth" forests. While the scope of the actions to be taken by the Government of B.C. under these amended forestry statutes and "old growth" deferral proposals cannot be determined at this time, these actions could have a material impact on both the amount of our AAC forest tenures and the amount of timber that we are able to harvest from these tenures.

We rely on third party independent contractors to harvest timber in areas over which we hold timber tenures. Increases in rates charged by these independent contractors or the limited availability of these independent contractors or new regulations on the work to be provided and rates to be paid to these contractors may increase our timber harvesting costs.

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We also rely on the purchase of logs through open market purchases and private supply agreements and log exchange agreements and increased competition for logs, or shortages of logs may result in increases in our log purchase costs.

***United States***

We rely on log supply agreements in the U.S. which are subject to log availability and based on market prices. The majority of the aggregate log requirements for our U.S. mills is purchased on the open market. Open market purchases come from timber real estate investment trusts, timberland investment management organizations and private land owners. Changes in the log markets in which we operate may reduce the supply of logs available to us and may increase the costs of log purchases, each of which could adversely affect our results. In addition, changes in the market for residuals may reduce the demand and selling price for the residuals produced by our operations and increase the disposal costs, which could adversely affect our results. We may experience higher competition for sustainable log supply sourcing as supply is limited by alternative demand for forests in carbon sequestration and through the increase in conversion to forest plantations or non-forest use where there is significant regional forest area decline.

***Europe***

Wood fibre for our European OSB, particleboard and MDF operations is purchased from government and private landowners. Changes in the log markets in which we operate may reduce the supply of logs available to us and may increase the costs of log purchases, each of which could adversely affect our results.

**Additional Risks to Availability of Fibre**

When timber, wood chips, other residual fibre and wood recycled materials are purchased on the open market, we are in competition with other uses of such resources, where prices and the availability of supply are influenced by factors beyond our control. Fibre supply can also be influenced by natural events, such as forest fires, severe weather conditions, insect epidemics and other natural disasters, which may increase wood fibre costs, restrict access to wood fibre or force production curtailments.

**Transportation Requirements**

Our business depends on our ability to transport a high volume of products and raw materials to and from our production facilities and onto both domestic and international markets. We rely primarily on third-party transportation providers for both the delivery of raw materials to our production facilities and the transportation of our products to market. These third-party transportation providers include truckers, bulk and container shippers and railways. Our ability to obtain transportation services from these transportation service providers is subject to risks which include, without limitation, availability of equipment and operators, disruptions due to weather, natural disasters and labour disputes. To the extent that climate change results in more frequent severe weather occurrences, we may experience increased frequency of transportation disruptions in future years which may again result in a disruption of our ability to ship lumber and other products that we manufacture, including significant transportation disruptions from severe flooding, hurricanes, and other natural disasters. In addition, the potential of increased frequency of severe weather events may ultimately result in increased transportation costs as transportation providers, including railways, undertake capital expenditures to improve the ability of the transportation infrastructure to withstand severe weather events or to repair damage from severe weather events in order to maintain services.

Transportation services may also be impacted by seasonal factors, which could impact the timely delivery of raw materials and distribution of products to customers. As a result of rail and truck capacity constraints, access to adequate transportation capacity has at times been strained and could affect our ability to transport our products to markets and could result in increased product inventories. Any failure of third-party transportation providers to deliver finished goods or raw materials in a timely manner, including failure caused by adverse weather conditions or work stoppages, could harm our reputation, negatively affect customer relationships or disrupt production at our mills. Transportation costs are also subject to risks that include, without limitation, increased rates due to competition, increased fuel costs and increased capital expenditures related to repair, maintenance and upgrading of transportation infrastructure. Increases in transportation costs will increase our operating costs and adversely impact our profitability. If we are unable to obtain transportation services or if our transportation costs increase, our revenues may decrease due to our inability to deliver products to market and our operating expenses may increase, each of which would adversely affect our results of operations.

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**Costs and Availability of Materials and Energy**

We rely heavily on certain raw materials, including logs, wood chips and other fibre sources, chemicals, and energy sources, including natural gas and electricity, in our manufacturing processes. Competition from our industry and other industries, as well as supply disruptions may result in increased demand and costs for these raw materials and energy sources. We have experienced significant cost inflation across a number of our inputs including supplies and materials and energy. Increases in the costs of these raw materials and energy sources will increase our operating costs and will reduce our operating margins. There is no assurance that we will be able to fully offset the effects of higher raw material or energy costs through hedging arrangements, price increases, productivity improvements or cost-reduction programs.

Our operations depend on an uninterrupted supply of resins and chemicals, production inputs, and other supplies and resources such as skilled personnel. Supply may be interrupted due to a shortage or the scarce nature of inputs, especially with regard to chemicals. Supply might also be interrupted due to transportation and logistics associated with the remote location of some of our operations, and government restrictions or regulations which delay importation of necessary items. COVID-19 has had a significant impact on global supply chains, which has impacted our ability to source supplies required for our operations and has increased the costs of those supplies. Any interruptions to the procurement and supply of resins, chemicals, production inputs and other supplies, or the availability of skilled personnel, as well as increasing rates of inflation, could have an adverse impact on our future cash flows, earnings, results of operations, and financial condition.

**Operational Curtailments**

From time to time, we suspend or curtail operations at one or more of our facilities in response to market conditions, environmental risks, or other operational issues, including, but not limited to scheduled and unscheduled maintenance, temporary periods of high electricity prices, power failures, equipment breakdowns, adverse weather conditions, labour disruptions, transportation disruptions, unavailability of staff, fire hazards, and the availability or cost of raw materials including logs, wood chips, resins and chemicals. In addition, the potential increased frequency of extreme weather events associated with climate change may result in operational curtailments becoming more frequent than we have experienced historically.

In addition, our ability to operate at full capacity may be affected by ongoing capital projects. As a result, our facilities may from time to time operate at less than full capacity. These operational suspensions could have a material adverse effect on our financial condition as a result of decreased revenues and lower operating margins.

In Canada, a substantial portion of the wood chip requirements of our Canadian pulp and paper operations are provided by our Canadian sawmills and plywood and LVL plants. If wood chip production is reduced because of production curtailments, improved manufacturing efficiencies or any other reason, our 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 our sawmills and panel mills to find other ways to dispose of residual wood fibre and may result in curtailment or suspension of lumber, plywood or LVL production and increased costs.

**Labour and Services**

Our operations rely on experienced local and regional management and both skilled and unskilled workers as well as third party services such as logging and transportation and services for our capital projects. Because our operations are generally located away from major urban centers, we often face strong competition from our industry and others such as oil and gas production, mining and manufacturing for labour and services, particularly skilled trades. Shortages of key services or shortages of management leaders or skilled or unskilled workers, including those caused by a failure to attract and retain a sufficient number of qualified employees and other personnel or high employee turnover could impair our operations by reducing production or increasing costs or impacting the ability to execute on our capital projects including timing and 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, supply constraints and litigation that could have a material adverse effect on our business. In addition, disputes with the unions that represent our employees may lead to litigation, the result of which may adversely impact cash flow and profitability of certain of our operations. 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.

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Approximately 34% of our employees are covered by collective agreements. There were no expired collective agreements remaining as at December 31, 2022, other than the collective agreement with respect to our Barwick OSB operations in Ontario, Canada. All of our U.K. and Belgian union contracts are evergreen. Union agreements representing approximately 36% and 12% of our unionized employees expire in 2023 and 2024, respectively. In the event that we are unable to renew these collective agreements upon their expiry or the Barwick collective agreement in the near term, we could experience strikes or labour stoppages at the impacted facilities which could result in lost production and sales, higher costs and/or supply constraints.

**Trade Restrictions**

A 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, quotas and other trade barriers that restrict or prevent access represent a continuing risk to us. Canadian softwood lumber exports to the U.S. have been the subject of trade disputes and managed trade arrangements for the last several decades. During the period from October 2006 through October 2015 these exports were subject to a trade agreement between the U.S. and Canada and on the expiry of that agreement, a one-year moratorium on trade sanctions by the U.S. came into place. That moratorium has expired and in November 2016 a group of U.S. lumber producers petitioned the USDOC and the USITC to impose trade sanctions against Canadian softwood lumber exports to the U.S. In 2017 duties were imposed on Canadian softwood lumber exports to the U.S. The current duties are likely to remain in place until and unless some form of trade agreement can be reached between the U.S. and Canada (which trade agreement could include other tariffs or duties or quotas that restrict lumber exports) or a final, binding determination is made as a result of litigation. Unless the additional costs imposed by duties can be passed along to lumber consumers, the duties will increase costs for Canadian producers and, in certain cases, could result in some Canadian production becoming unprofitable. Whether and to what extent duties can be passed along to consumers will largely depend on the strength of demand for softwood lumber, which is significantly influenced by the levels of new residential construction in the U.S. If duties can be passed through to consumers in whole or in part the price of Canadian softwood lumber will increase (although the increase will not necessarily be for the benefit of Canadian producers) which in turn could cause the price of SYP lumber, which would not be subject to the duty, to increase as well.

While the USDOC has issued its final duty rates for 2017 through 2020, the duty rates for the 2021 POI has not been finalized, and there is no assurance that the final rates for antidumping duty and countervailing duty will not differ materially from the cash deposit rates in place for those years.

The application of U.S. trade laws could, in certain circumstances, create significant burdens on us. We are a mandatory respondent in current investigations being conducted by the USDOC into alleged subsidies and dumping of Canadian softwood lumber. In addition, the current trade dispute between the U.S. and China could negatively impact either or both the U.S. and Chinese economies which could have an adverse effect on the demand for our products and could adversely affect our financial results. Further, the current diplomatic and trade issues between Canada and China could result in tariffs and other trade barriers that restrict access to the market in China for our products.

The future performance of our business is dependent upon international trade and, in particular, cross border trade between Canada and the U.S. and between the U.K. and European Union. Access to markets in the U.S., the European Union, China and other countries may be affected from time to time by various trade-related events. The financial condition and results of operations of our business could be materially adversely affected by trade rulings, the failure to reach or adopt trade agreements, the imposition of customs duties or other tariffs, or an increase in trade restrictions in the future.

**Environment**

We are subject to regulation by federal, provincial, state, municipal and local environmental authorities, including, among other matters, environmental regulations relating to air emissions and pollutants, wastewater (effluent) discharges, solid and hazardous waste, landfill operations, forestry practices, permitting obligations, site remediation and the protection of threatened or endangered species and critical habitat. Concerns over climate change, carbon emissions, water and land-use practices and the protection of threatened or endangered species and critical habitat could also lead governments to enact additional or more stringent environmental laws and regulations that may require us to incur significant capital expenditures, pay higher taxes or fees, including carbon related taxes or otherwise could adversely affect our operations or financial conditions.

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We have incurred, and will continue to incur, capital expenditures and operating costs to comply with environmental laws and regulations, including the U.S. Environmental Protection Agency's Boiler MACT (maximum achievable control technology) regulations. These regulations include environmental laws and regulations relating to air emissions, wastewater discharges, solid and hazardous waste management, plant and wildlife protection and site remediation, as well as workplace safety. In addition, changes in the regulatory environment respecting climate change have and may lead governments and regulatory bodies to enact additional or more stringent laws and regulations and impose operational restrictions or incremental levies and taxes applicable to our Company which could require us to incur increased capital expenditures or result in increased operating expenses. In addition, we anticipate incurring additional capital expenditures in connection with capital projects that we plan to undertake in order to achieve our targeted greenhouse gas emission objectives. These capital expenditures may be greater than initially projected, and changes in environmental laws could impose more stringent requirements than our targeted objectives and result in increased capital expenditures or acceleration of the time for completion of the capital projects.

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. Failure to comply with applicable laws and regulations could result in fines, penalties or other enforcement actions that could impact our production capacity or increase our production costs. In addition, laws and regulations could become more stringent or subject to different interpretation in the future.

We may discover currently unknown environmental problems, contamination, or conditions relating to our past or present operations. This or any failure to comply with environmental laws and regulations may require site or other remediation costs or result in governmental or private claims for damage to person, property, natural resources or the environmental or governmental sanctions, including fines or the curtailment or suspension of our operations, which could have a material adverse effect on our business, financial condition and operational results.

We are currently involved in investigation and remediation activities and maintain accruals for certain environmental matters or obligations, as set out in the notes to the Annual Financial Statements. Changing weather patterns and climatic conditions due to natural and man-made causes, including temperature shifts and changes to seasonal norms for winter and summer, can adversely impact our ability to meet our reforestation obligations and the expected cost to settle these liabilities. There can be no assurance that any costs associated with such obligations or other environmental matters will not exceed our accruals.

Our Canadian woodland operations, and the harvesting operations of our many key U.S. log and European wood fibre suppliers, in addition to being subject to various environmental protection laws, are subject to third-party certification as to compliance with internationally recognized, sustainable forest management standards. Demand for our products may be reduced if we are unable to achieve compliance or are perceived by the public as failing to comply, with these applicable environmental protection laws and sustainable forest management standards, or if our customers require compliance with alternate forest management standards for which our operations are not certified. In addition, changes in sustainable forest management standards or our determination to seek certification for compliance with alternate sustainable forest management standards may increase our costs of wood fibre and operations.

**Climate Change, Environmental and Social Risks** 

We face direct risks associated with climate change and the environment, as well as indirect risks resulting from the growing international concern regarding climate change, environmental and social matters. Specifically, there has been a significant increase in focus on the timing and ability of organizations to transition to a lower-carbon economy and to demonstrate a commitment to environmental, social and governance issues. Governments, financial institutions, insurance companies, environmental and governance organizations, institutional investors, social and environmental activists, and individuals are increasingly seeking to implement, among other things, regulatory developments, policy changes and investment patterns, which, individually and collectively may have financial implications for both us and our stakeholders (i.e., customers, suppliers, shareholders).

Our business operations face risks associated with climate change and the environment, as identified and discussed in this Risk and Uncertainties section of this MD&A. In addition, climate change and its associated impacts may increase our exposure to, and magnitude of, other risks identified in this Risk and Uncertainties section of this MD&A.

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Overall, we are not able to estimate at this time the degree to which climate change related regulatory, climatic conditions, and climate-related transition risks could impact our financial and operating results. Our business, financial condition, results of operations, cash flows, reputation, access to capital, access to insurance, cost of borrowing, access to liquidity, ability to fund dividend payments and/or business plans may, in particular, without limitation, be adversely impacted as a result of climate change and its associated impacts. We have initiated a formal climate change scenario analysis, informed by the Task Force on Climate-related Disclosures (TCFD) recommendations, to understand the potential impacts of climate-related risks and opportunities using different scenarios to help enhance our corporate strategy, supply planning and risk management and create awareness with our stakeholders, and build business resiliency.

We also face potential strategic, reputational, business, legal and regulatory risks relating to our actual or perceived actions, or inaction, in relation to climate change and other environmental and social risk issues, progress against our environmental or social commitments, or our disclosures on these matters. Investors and stakeholders increasingly compare companies based on climate-related performance and a perception among financial institutions and investors that our ESG initiatives, including the forestry industry's sustainability initiatives, are insufficient, could adversely affect our reputation and ability to attract investors and capital.

In 2022, we joined the Science-Based Targets Initiative, which included setting specific science-based targets to achieve GHG emissions reduction across all our operations by 2030, as part of our overall sustainability and ESG initiatives. There is a risk that we will not meet our GHG emissions reduction targets, that some or all of the expected benefits and opportunities of achieving our various GHG and sustainability targets may fail to materialize, and that achieving the targets may cost more to achieve than projected or may not occur within anticipated time periods. Our failure to achieve our GHG or our sustainability targets, or a perception by key stakeholders, including our customers and our investors, that our GHG targets or other ESG initiatives are insufficient, could adversely affect our reputation and our ability to attract investors, capital and insurance coverage. Further, actions taken by us to meet our GHG targets and achieve our sustainability objectives may ultimately increase our projected capital expenditures and our costs of operations. In addition, our ability to access capital or the costs of available capital may be adversely affected in the event that financial institutions, investors, rating agencies and/or lenders adopt more restrictive sustainability policies than we have committed to.

**Indigenous Groups**

Issues relating to Indigenous groups, including Indigenous Nations, Métis and others, have the potential for an impact on resource companies operating in Canada including West Fraser. Risks include potential delays or effects of governmental decisions relating to Canadian Crown timber harvesting rights (including their grant, renewal or transfer or authorization to harvest) in light of the government's duty to consult and accommodate Indigenous groups in respect of Aboriginal rights or treaty rights, agreements governments may choose to enter into with Indigenous groups or steps governments may take in favour of Indigenous groups even if not required by law, related terms and conditions of authorizations and potential findings of Aboriginal title over land.

We participate, as requested by the government, in the consultation process in support of the government fulfilling its duty to consult. We also seek to develop and maintain good relationships and, where possible, agreements with Aboriginal groups that may be affected by our business activities. However, as the jurisprudence and government policies respecting Indigenous rights and title and the consultation process continue to evolve, as treaty and non-treaty negotiations continue, and as governments continue to announce and implement further policy and legislative changes to Indigenous interests (including, but not limited to the British Columbia *Declaration of the Rights of Indigenous Peoples Act*) and the federal *United Nations Declaration on the Rights of Indigenous Peoples Act*, we cannot assure that Indigenous 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.

In addition, if the Government of British Columbia implements its plan to defer logging in "old growth" forest areas, our ability to secure timber supply from affected areas may be impacted by our ability to foster and maintain good relations with Indigenous Nations in the impacted areas, and their willingness to approve or consent to logging of portions of our forest licences that are considered "old growth" forests. The unwillingness of Indigenous Nations to approve or consent to logging in areas impacted by the deferral could reduce the amount of timber supply available to us.

Further, the Government of British Columbia recently reached agreement with the Blueberry First Nations which commits the province to a pathway to restoring the land through new co-management processes, funding and a variety of

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protection measures, including protecting new areas, significantly reducing harvest areas and developing a new land use planning process. The land use planning process is expected to reduce the availability of and increase the timeline for, receipt of cutting permits and restrict volume available for harvest.

**Contagious Disease**

Pandemics, epidemics and other outbreaks of contagious diseases, including COVID-19 and future COVID-19 variants, could cause interruptions to our business and operations and otherwise have an adverse effect on our business, financial condition and/or results of operations including as a result of the effects on: (i) global economic activity, (ii) the business, operations, financial condition, and solvency of our customers caused by operating shutdowns or disruptions or financial or liquidity issues, (iii) the demand for and price of our products, (iv) the health of our employees and the impact on their ability to work or travel, (v) our ability to operate our manufacturing facilities, (vi) our supply chain and the ability of third party suppliers, service providers and/or transportation carriers to supply goods or services on which we rely on to transport our products to market, and (vii) our revenues, cash flow, liquidity and ability to maintain compliance with the covenants in our credit agreements. In addition, our future business may be impacted by the local, regional, national or international outbreak or escalation of other contagious diseases, viruses or other illnesses, including the resurgence of COVID-19 and any future variants, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu or any other similar illness, or fear of the foregoing,

Demand and prices for our products may be adversely affected by contagious diseases that affect levels of economic activity, and we are unable to predict or estimate the timing or extent of the impact of such pandemics, epidemics, and other outbreaks. Governmental measures or restrictions, including those requiring the closures of businesses, restrictions on travel, country, provincial or state and city-wide isolation orders, and physical distancing requirements, may directly affect our operations and employees and those of our customers, suppliers and service providers, and the demand for and pricing of our products. The spread of such contagious diseases among our employees or those of our suppliers or service providers could result in lower production and sales, higher costs, and supply and transportation constraints. Accordingly, our production, costs, and sales may be negatively affected, which could have a material adverse effect on our business, financial condition and/or results of operation.

Given the ongoing nature of the COVID-19 outbreak, it is challenging to predict the impact on the Company's business. The extent of such impact will depend on future developments, which are uncertain, including the resurgence of COVID-19 and any variants, new information that may emerge concerning the spread and severity, and actions taken to address its impact, among others. It is difficult to predict how this virus may affect our business in the future, including its effect (positive or negative; long or short term) on the demand and price for our products. It is possible that the resurgence of COVID-19, including any future variants, particularly if it has a prolonged duration, could have a material adverse effect on our supply chain, market pricing and customer demand, and distribution networks and may result in our inability to fully staff our manufacturing facilities, with the result that we may be forced to temporarily close facilities or reduce production rates during periods. These factors may further impact our operating plans, business, financial condition, liquidity, the valuation of long-lived assets, and operating results.

**Regulatory**

Our operations are subject to extensive general and industry-specific federal, provincial, state, municipal and other local laws and regulations and other requirements, including those governing forestry, exports, taxes (including, but not limited to, income, sales and carbon 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 require advance consultation with potentially affected stakeholders including Indigenous groups and impose conditions that must be complied with. If we are unable to obtain, maintain, extend or renew, or are delayed in extending or renewing, a material approval, permit or license, our operations or financial condition could be adversely affected. There is no assurance that these laws, regulations or government requirements, 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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**Natural and Man-Made Disasters and Climate Change Adaptation**

Our operations are subject to adverse natural or man-made events such as forest fires, flooding, hurricanes and other severe weather conditions, climate change, timber diseases and insect infestations including those that may be associated with warmer climate conditions, and earthquake activity. Over the past several years, changing weather patterns and climatic conditions due to natural and man-made causes, including temperature shifts and changes to seasonal norms for winter and summer, have added to the unpredictability and frequency of natural events such as severe weather, hurricanes, flooding, hailstorms, wildfires, mudslides, road washouts, snow, ice storms, and the spread of disease and insect infestations. Trends towards heavier precipitation patterns, changes to water quality and water storage on the land base can result in the overall degradation of water quality and reduced water supply levels. These events could damage or destroy or adversely affect the operations at our physical facilities or the cost, availability, and quality of 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 as a result of the reduced availability of timber, decreased production output, increased operating costs or the reduced availability of transportation. Although we believe we have reasonable insurance arrangements in place to cover certain of such incidents related to damage or destruction, 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.

In addition, government action to address climate change, carbon emissions, water and land use and the protection of threatened or endangered species and critical habitat may result in the enactment of additional or more stringent laws and regulations that may require us to incur significant capital expenditures, pay higher taxes or fees, including carbon related taxes, or otherwise could adversely affect our operations or financial conditions.

**Information Technology and Cyber Security**

We are reliant on our information and operations technology systems to operate our manufacturing facilities, access fibre, communicate internally and with suppliers and customers, to sell our products and to process payments and payroll as well as for other corporate purposes and financial reporting. An interruption or failure or unsuccessful implementation and integration of our information and operations technology systems could result in a material adverse effect on our operations, business, financial condition and results of operations.

In order to optimize performance, we regularly implement business process improvement initiatives and invest capital to upgrade our information technology infrastructure. These initiatives may involve risks to the operations and we may experience difficulties during the transition to these new or upgraded systems and processes. Difficulties in implementing new or upgraded information systems or significant system failures could disrupt operations and have a material adverse effect on the business.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, proprietary business and confidential financial information and identifiable personal information of our employees. We rely on industry accepted security measures and technology to protect our information systems and confidential and proprietary information.

However, our information and operations technology systems, including process control systems, are still subject to cyber security risks and are vulnerable to natural disasters, fires, power outages, vandalism, attacks by hackers or others or breaches due to employee error or other disruptions. Any such attack on or breach of our systems including through exposure to potential computer viruses or malware could compromise our systems and stored information may be accessed, publicly disclosed, lost or compromised, which could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruptions to our operations, decreased performance and production, increased costs, and damage to our reputation, which could have a material adverse effect on our business, financial condition and results of operations. As cyber security threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities. However, our exposure to these risks cannot be fully mitigated due to the nature of these threats. Further, disruptions resulting from cyber security breaches could expose us to potential liability or other proceedings by affected individuals, business partners and/or regulators. As a result, we could face increased costs if any future claims exceed our insurance coverage.

In addition to risks we face from cyber security incidents directed at our systems, we also face risks from cyber security incidents impacting third parties, including but not limited to contractors, consultants and suppliers, directly or indirectly

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involved in our business and operations. We are vulnerable to damage and interruptions from incidents involving these third parties, and may be exposed to consequences that could have a material adverse effect on our financial condition, operations, production, sales and business.

**Legal Proceedings** 

The Company is subject to various investigations, claims and legal, regulatory and tax proceedings covering a wide range of matters that arise in the ordinary course of business activities, including civil claims and lawsuits, regulatory examinations, investigations, audits and requests for information by various governmental regulatory agencies and law enforcement authorities in various jurisdictions. Each of these matters is subject to various uncertainties and it is possible that some of these matters may be resolved unfavourably. We establish provisions for matters that are probable and can be reasonably estimated in accordance with our accounting policies, however there is no assurance that our estimates will be accurate. We also carry liability insurance coverage, however such insurance does not cover all risks to which we might be exposed and in other cases, may only partially cover losses incurred by us. In addition, we may be involved in disputes with other parties in the future that may result in litigation, which may result in a material adverse effect on our financial position, cash flow and results of operations.

We produce a variety of wood-based panels that are used in new home construction, repair and remodelling of existing homes, furniture and fixtures, and industrial applications. In the normal course of business, the end users of our products have made, and could in the future make, claims with respect to the fitness for use of its products or claims related to product quality or performance issues.

In addition, we have been and may in the future be, involved in legal proceedings related to antitrust, negligence, personal injury, property damage, environmental matters, and labour and other claims against us or our predecessors.

**Capital Intensity**

Our business and the production of wood-based products is capital intensive. There can be no assurance that key manufacturing facilities and pieces of equipment will not need to be updated, modernized, repaired or replaced, or that operation of our manufacturing facilities could not otherwise be disrupted unexpectedly, for example by adverse weather, labour disputes, information technology disruptions, power outages, fire, explosion or other hazards including combustible wood dust. In certain circumstances, the costs of repairing or replacing equipment, and the associated downtime of the affected production line, may not be insurable.

We are required to review our long-lived assets for indicators that their carrying values are not recoverable. Indicators could include high raw material costs, high energy costs, changes in demand for our products, declines in product pricing, changes in technology, prolonged negative results or operational curtailments, and may result in non-cash impairment or accelerated depreciation charges in the future and therefore have a negative impact to earnings in the period when these charges are recorded.

**Tax Exposures** 

In the normal course of business, we take various positions in the filing of our tax returns, and there can be no assurance that tax authorities will not challenge such filing positions. In addition, we are subject to further uncertainties concerning the interpretation and application of tax laws in various operating jurisdictions. We provide for known estimated tax exposures in all jurisdictions. These exposures are settled primarily through the closure of audits with the jurisdictional taxing authorities. However, future settlements could differ materially from our estimated liabilities.

**Potential Future Changes in Tax Laws, including Tax Rates** 

Our corporate structure is based on prevailing taxation law, regulations and practice in the local jurisdictions in which we operate. We are aware that new taxation rules could be enacted or that existing rules could be applied in a manner that subjects our profits to additional taxation or otherwise has a material adverse effect on our profitability, results of operations, deferred tax assets and liabilities, financial condition or the trading price of our securities. Our management is continually monitoring changes in tax policy, tax legislation (including in relation to taxation rates), and the interpretation of tax policy or legislation or practice that could have such an effect. At any given time, we may face tax exposures arising out of changes in tax or transfer pricing laws, tax reassessments or otherwise. Governments around the world are increasingly seeking to regulate multinational companies and their use of differential tax rates between jurisdictions. This

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effort includes a greater emphasis by various nations to coordinate and share information regarding companies and the taxes they pay. Changes in governmental taxation policies and practices could adversely affect us or result in negative media coverage and, depending on the nature of such policies and practices, could have a greater impact on the Company than on other companies.

**Foreign Currency Exchange Rates**

Our Canadian operations sell the majority of their products at prices denominated in U.S. dollars or based on prevailing U.S. dollar prices while a significant portion of their operational costs and expenses are incurred in Canadian dollars. Upon closing of the Norbord Acquisition, we changed the functional currency and presentation currency of our Canadian operations, with the exception of our Canadian newsprint operation, from Canadian dollars to United States dollars. Our U.K. operations sell a portion of their products at prices denominated in Euros while the majority of their costs are incurred in British pounds sterling.

Accordingly, exchange rate fluctuations will result in exchange gains or losses recorded in earnings and other comprehensive earnings. This results in significant earnings sensitivity to changes in the relative value of the United States dollar in comparison to the value of the Canadian dollar, British pound sterling and Euro. These exchange rates are affected by a broad range of factors which makes future rates difficult to accurately predict. Significant fluctuations in relative currency values may also negatively affect the cost competitiveness of our facilities, the value of our foreign investments, the results of our operations and our financial position.

**Long-Lived Assets and Recoverability of Goodwill**

Our long-lived assets and goodwill could become impaired, which could have a material non-cash adverse effect on our results of operations. We review our operations for events and circumstances that could indicate that the carrying value of our long-lived assets and goodwill may not be recoverable. If indicators of impairment are determined to exist, we review the recoverability of the carrying value of long-lived assets by estimating the recoverable amount of the asset, which is the higher of its estimated fair value less costs of disposal and its value in use. We also review our goodwill for impairment annually and when events or changes in circumstances indicate that the carrying value of the CGU or group of CGUs associated with the goodwill balance is not recoverable. We determine the value in use of assets and cash-generating units using discounted cash flow models. Management makes multiple assumptions in estimating future cash flows. Key assumptions include production volume, product pricing, raw material input cost, production cost, trend multiple, and discount rate. There are numerous uncertainties inherent in making these estimates, including many factors beyond our control, that could cause actual results to differ materially from expected financial and operating results. We may be required to recognize material non-cash charges relating to impairments of long-lived assets and/or goodwill in the future if actual results differ materially from management's estimates. If a goodwill impairment charge is incurred, such charges are not reversible at a later date even when the events and circumstances that caused the impairment loss are favourably resolved. As a result of these uncertainties and the significant amount of goodwill ($1,944 million at December 31, 2022), our operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment, and actual results may be less favourable than estimated returns and initial financial outlook. For additional information regarding goodwill, see Note 8 to the Annual Financial Statements. Further, our auditors have identified our goodwill impairment assessments as a "critical audit matter" in their report on their audit of the Annual Financial Statements.

**Financial**

***Capital Plans***

Our capital plans will include, from time to time, expansion, productivity improvement, technology upgrades, operating efficiency optimization and maintenance, repair or replacement of our existing facilities and equipment. In addition, we will from time to time undertake the acquisition of facilities or the rebuilding or modernization of existing facilities, including the rebuilding and modernization of existing and newly acquired facilities. We may also in the future be required to undertake capital projects to (i) address or mitigate the impacts of climate change and extreme weather events at our facilities, (ii) comply with new government regulation directed at reducing the impacts of climate change; (iii) reduce the carbon intensity or footprint of our existing operations by reducing or eliminating fossil fuel usage, or (iv) comply with new government regulation directed at improving environmental protection. If the capital expenditures associated with these capital projects are greater than we have projected or if construction timelines are longer than anticipated, or if we fail to achieve the intended efficiencies, our financial condition, results of operations and cash flows

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may be adversely affected. In addition, our ability to expand production and improve operational efficiencies will be contingent on our ability to execute on our capital plans. Our capital plans and our ability to execute on such plans may be adversely affected by availability of, and competition for, qualified workers and contractors, machinery and equipment lead times, changes in government regulations, unexpected delays and increases in costs of completing capital projects including due to increased materials, machinery and equipment costs resulting from trade disputes and increased tariffs and duties.

***Capital Resources***

We believe our capital resources will be adequate to meet our current projected operating needs, capital expenditures and other cash requirements. Factors that could adversely affect our capital resources include prolonged and sustained declines in the demand and prices for our products, unanticipated significant increases in our operating expenses and unanticipated capital expenditures. If for any reason we are unable to provide for our operating needs, capital expenditures and other cash requirements on commercially reasonable terms, we could experience a material adverse effect to our business, financial condition, results of operations and cash flows.

***Availability of Credit***

We rely on long-term borrowings and access to revolving credit in order to finance our ongoing operations. Our ability to refinance or renew such facilities will be dependent upon our financial condition, profitability and credit ratings and prevailing financial market conditions. Any change in availability of credit in the market, as could happen during an economic downturn, could affect our ability to access credit markets on commercially reasonable terms. In the future we may need to access public or private debt markets to issue new debt. Deteriorations or volatility in the credit markets could also adversely affect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to secure financing to proceed with capital expenditures for the repair, replacement or expansion of our existing facilities and equipment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to comply with covenants under our existing credit or debt agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability of our customers to purchase our products; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to take advantage of growth, expansion or acquisition opportunities.

In addition, deteriorations or volatility in the credit market could result in increases in the interest rates that we pay on our outstanding non-fixed rate debt, which would increase our costs of borrowing and adversely affect our results.

We have notes maturing in 2024 and a term loan maturing in 2024. There is no assurance that financing will be available to us when required or available to us on commercially favourable or otherwise satisfactory terms in the future to re-finance these borrowings when they become due.

***Credit Ratings***

Credit rating agencies rate our debt securities based on factors that include our operating results, actions that we take, their view of the general outlook for our industry and their view of the general outlook for the economy. Actions taken by the rating agencies can include maintaining, upgrading or downgrading the current rating or placing us on a watch list for possible future downgrading. Downgrading the credit rating of our debt securities or placing us on a watch list for possible future downgrading could limit our access to the credit markets, increase our cost of financing and have an adverse effect on our financial condition.

**Wood Dust**

Our operations generate wood dust which has been recognized for many years as a potential health and safety hazard and operational issue. 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 and fire damaged logs as the wood dust generated from these logs tends to be drier, lighter and finer than wood dust typically generated. We have adopted a variety of measures to reduce or eliminate the risks and operational challenges 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. Any explosion or similar event at any of our facilities or any third-party facility could result in significant loss, increases in expenses and disruption of operations, each of which would have a material adverse effect on our business.

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**Pension Plan Funding**

We are the sponsor of several defined benefit pension plans which exposes us to market risks related to plan assets and liabilities. 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. We are also subject to regulatory changes regarding these plans which may increase the funding requirements which would in turn reduce the availability of capital for other purposes.

**International Sales**

A portion of our products are exported to customers in China, Japan and in developing markets. International sales present a number of risks and challenges, including but not limited to the effective marketing of our products in foreign countries, collectability of accounts receivable, tariffs and other barriers to trade and recessionary environments in foreign economies.

**Strategic Initiatives** 

Our future success may in part be dependent on the performance of strategic initiatives, which could include growth in certain segments or markets and acquisitions. There can be no assurance that we will be able to successfully implement important strategic initiatives in accordance with our expectations, which may adversely affect our business, financial results and future growth prospects.

**Acquisitions**

We may evaluate and complete potential acquisitions from time to time and have in the past grown through acquisitions. However, there is no assurance that we in the future will be able to successfully identify potential acquisitions or efficiently and cost-effectively integrate any assets or business that we acquire without disrupting existing operations.

Acquisitions are subject to a range of inherent risks, including the assumption of incremental regulatory/compliance, pricing, labour relations, litigation, environmental, tax and other risks. Further, we may not be able to successfully integrate or achieve anticipated synergies from those acquisitions which we do complete and/or such acquisitions may be dilutive in the short to medium term. Any of these adverse outcomes could result in us not achieving the financial benefits of prospective acquisitions and have a material adverse effect on our profitability.

**Return of Capital to Shareholders**

We have returned capital to our shareholders in 2022 through a combination of dividends and share repurchases, both through our normal course issuer bid and our substantial issuer bid. There is no assurance that we will continue to return capital to shareholders in future years, or as to the amount of capital that will be returned. Further, decisions to return capital to shareholders remain at the discretion of our board of directors and shareholders may not agree with the manner and the amounts of capital that are returned to shareholders. The declaration and payment of cash dividends remains 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. There is no assurance that our board of directors will continue to maintain our dividend at the current rate. Our board of directors has the power to declare dividends at its discretion and in any manner and at any time as it may deem necessary or appropriate in the future. For these reasons, as well as others, there can be no assurance that dividends that we pay in the future will be equal or similar to the dividends historically paid by West Fraser or that our board of directors will not decide to suspend or discontinue the payment of cash dividends in the future.

**Risks Associated with the NYSE Listing and Litigation**

The West Fraser Common shares are listed on the NYSE. Our continued listing on the NYSE may expose us to additional regulatory proceedings, litigation (including class actions), mediation, and/or arbitration from time to time, which could adversely affect our business, financial condition and operations. Monitoring and defending against legal actions, with or without merit, can be time-consuming, may divert management's attention and resources and can cause us to incur significant expenses. In addition, legal fees and costs incurred in connection with such activities may be significant and we

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may, in the future, be subject to judgments or enter into settlements of claims for significant monetary damages. While we have insurance that may cover the costs and awards of certain types of litigation, the amount of insurance may not be sufficient to cover any costs or awards. Substantial litigation costs or an adverse result in any litigation may adversely impact our business, financial condition, or operations. Litigation, and any decision resulting therefrom, may also create a negative perception of West Fraser.

**Risk Associated with Internal Controls**

We are required to maintain and evaluate the effectiveness of our internal control over financial reporting under National Instrument 52-109 - *Certification of Disclosure in Issuers' Annual and Interim Filings* in Canada and under the Securities Exchange Act of 1934 in the United States. Effective internal controls are required for us to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with IFRS. Management assesses the effectiveness of our internal control over financial reporting based on the criteria set forth in the *Internal Control – Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also engage an independent registered public accounting firm to

audit and provide an independent opinion on the effectiveness of our internal control over financial reporting.

There is no assurance that we will be able to achieve and maintain the adequacy of our internal control over financial reporting as such standards are modified, supplemented, or amended from time to time, and we may not be able to ensure that we can conclude on an ongoing basis that our internal control over financial reporting are effective. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No evaluation can provide complete assurance that our internal control over financial reporting will prevent or detect misstatements on a timely basis, or detect or uncover all failures of persons employed by us to disclose material information otherwise required to be reported. The effectiveness of our controls and procedures could also be limited by simple errors or faulty judgments. In addition, as we continue to expand, the challenges involved in implementing appropriate internal control over financial reporting will increase and will require that we continue to improve our internal control over financial reporting.

Our failure to satisfy these requirements on a timely basis could result in the loss of investor confidence in the accuracy and reliability of our financial statements, which in turn could harm our business, expose us to legal or regulatory actions and negatively impact the trading price of our Common shares. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. There can be no assurance that we will be able to remediate material weaknesses, if any, identified in future periods, or maintain all of the controls necessary for continued compliance, and there can be no assurance that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies. Future acquisitions of companies may provide us with challenges in implementing the required processes, procedures and controls in our acquired operations. Acquired companies may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required by securities laws currently applicable to us.

***Our Common Shares May be Subject to Trading Volatility***

Our Common shares will be subject to material fluctuations in trading prices and volumes which may increase or decrease in response to a number of events and factors, which will include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the market price of the commodities that we sell and purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• current events affecting the economic situation in North America, Europe and the international markets in which our products are sold;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** trends in the lumber and OSB industries and other industries in which we operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory and/or government actions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in financial estimates and recommendations by securities analysts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future acquisitions and financings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the economics of current and future projects undertaken by us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• variations in our operating results, financial condition or dividend policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the operating and share price performance of other companies, including those that investors may deem comparable to West Fraser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the issuance of additional equity securities by us; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the occurrence of any of the risks and uncertainties described above.

In addition to factors directly affecting West Fraser, our Common shares may also experience volatility that is attributable to the overall state of the stock markets in which wide price swings may occur as a result of a variety of financial, economic and market perception factors. This overall market volatility may adversely affect the price of our Common shares, regardless of our own relative operating performance.

**CONTROLS AND PROCEDURES**

West Fraser is responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting, each as defined in NI 52-109 in Canada and under the Securities Exchange Act of 1934, as amended, in the United States.

**Disclosure Controls and Procedures**

We have designed our disclosure controls and procedures to provide reasonable assurance that information that is required to be disclosed by us in our annual filings, interim filings and other reports that we file or submit under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. These include controls and procedures designed to ensure that information that we are required to disclose under securities legislation is accumulated and communicated to our management, including our President and Chief Executive Officer ("CEO") and the Senior Vice-President, Finance and Chief Financial Officer ("CFO"), as appropriate to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our CEO and CFO, has conducted an evaluation of our disclosure controls and procedures as of December 31, 2022. Based on this evaluation, management, under the supervision of our CEO and CFO, have concluded that our disclosure controls and procedures are effective as of December 31, 2022.

**Management's Report on Internal Control Over Financial Reporting**

Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with IFRS.

Our management, under the supervision of the CEO and CFO, is required under NI 52-109 in Canada and under the Securities Exchange Act of 1934, as amended, in the United States to evaluate the effectiveness of our internal control over financial reporting as of December 31, 2022. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria set forth in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management, including the CEO and CFO, has concluded that our internal control over financial reporting was effective as of December 31, 2022.

The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, in accordance with the standards of the Public Company Accounting Oversight Board (United States). PricewaterhouseCoopers LLP have expressed their opinion in their attestation report included with our annual audited consolidated financial statements and accompanying notes for the year ended December 31, 2022.

There has been no change in our internal control over financial reporting during the year ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Additionally, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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**DEFINITIONS, RECONCILIATIONS, AND OTHER INFORMATION**

**Transactions Between Related Parties**

The Company has entered into executive compensation arrangements with key management personnel, consisting of our directors and officers. These individuals have the authority and responsibility for overseeing, planning, directing, and controlling our activities. Total compensation expense for key management personnel was $19 million in 2022, compared to $55 million in 2021. The decrease in compensation expense was due primarily to lower equity-based compensation, influenced by changes in the price of our Common shares, vesting of granted units, and changes in the expected payout multiple on our performance share units. See Note 20 to the Annual Financial Statements for additional details.

**Non-GAAP and Other Specified Financial Measures**

Throughout this MD&A, we make reference to (i) certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA by segment (our "Non-GAAP Financial Measures"), (ii) certain capital management measures, including available liquidity, total debt to capital ratio, and net debt to capital ratio (our "Capital Management Measures"), and (iii) certain supplementary financial measures, including our expected capital expenditures (our "Supplementary Financial Measures"). We believe that these Non-GAAP Financial Measures, Capital Management Measures, and Supplementary Financial Measures (collectively, our "Non-GAAP and other specified financial measures") are useful performance indicators for investors to understand our operating and financial performance and our financial condition. These Non-GAAP and other specified financial measures are not generally accepted financial measures under IFRS and do not have standardized meanings prescribed by IFRS. Investors are cautioned that none of our Non-GAAP Financial Measures should be considered as an alternative to earnings or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these Non-GAAP and other specified financial 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 Non-GAAP and other specified financial measures may not be directly comparable to similarly titled measures used by other entities. Accordingly, these Non-GAAP and other specified financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The reconciliation of the Non-GAAP measures used and presented by the Company to the most directly comparable IFRS measures is provided in the tables set forth below.

**Adjusted EBITDA and Adjusted EBITDA by Segment**

Adjusted EBITDA is defined as earnings determined in accordance with IFRS adding back the following line items from the consolidated statements of earnings and comprehensive earnings: finance expense, tax provision or recovery, amortization, equity-based compensation, restructuring and impairment charges, and other.

Adjusted EBITDA by segment is defined as earnings before tax determined for each reportable segment adding back the following line items from the consolidated statements of earnings and comprehensive earnings for that reportable segment: finance expense, amortization, equity-based compensation, restructuring and impairment charges, and other.

EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a company's operating performance, ability to incur and service debt, and as a valuation metric. We calculate Adjusted EBITDA and Adjusted EBITDA by segment to exclude items of an unusual nature that do not reflect our ongoing operations and that should not, in our opinion, be considered in a long-term valuation metric or included in an assessment of our ability to service or incur debt.

We believe that disclosing these measures assists readers in measuring performance relative to other entities that operate in similar industries and understanding the ongoing cash generating potential of our business to provide liquidity to fund working capital needs, service outstanding debt, fund future capital expenditures and investment opportunities, and pay dividends. Adjusted EBITDA is used as an additional measure to evaluate the operating and financial performance of our reportable segments.

The following tables reconcile Adjusted EBITDA to the most directly comparable IFRS measure, earnings.

See Note 18 to the Annual Financial Statements for a breakdown of the items making up Other. Other is comprised primarily of foreign exchange revaluations and fair value adjustments on interest rate swap contracts.

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**Annual Adjusted EBITDA**

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| | | | |
|:---|:---|:---|:---|
| ($ millions) |  |  |  |
|  | **2022** | **2021** | **2020** |
| Earnings | $1975 | $2947 | $588 |
| Finance expense, net | 3 | 45 | 27 |
| Tax provision | 618 | 951 | 202 |
| Amortization | 589 | 584 | 203 |
| Equity-based compensation | 5 | 40 | 9 |
| Restructuring and impairment charges | 60 |  |  |
| Other expense (income) | (37) | 2 | 14 |
| Adjusted EBITDA | $3212 | $4569 | $1043 |

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***Quarterly Adjusted EBITDA***

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| | | | |
|:---|:---|:---|:---|
| ($ millions) |  |  |  |
|  | **Q4-22** | **Q3-22** | **Q4-21** |
| Earnings (loss) | $(94) | $216 | $334 |
| Finance (expense) income, net | (3) | (3) | 1 |
| Tax provision (recovery) | (31) | 80 | 104 |
| Amortization | 148 | 140 | 153 |
| Equity-based compensation | 6 | 5 | 12 |
| Restructuring and impairment charges | 47 |  |  |
| Other expense (income) | (2) | (12) | 11 |
| Adjusted EBITDA | $70 | $426 | $615 |

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The following tables reconcile Adjusted EBITDA by segment to the most directly comparable IFRS measures for each of our reportable segments. We consider that earnings before tax is the most directly comparable measure for Adjusted EBITDA by segment, given we do not allocate consolidated tax amounts across our reportable segments.

Please refer to the "Adjusted EBITDA" section above for additional details concerning the composition of this measure and how it provides useful information to readers.

**Annual Adjusted EBITDA by Segment** ($ millions)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **2022** | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| Earnings (loss) before tax | $1117 | $1383 | $(23) | $118 | $(2) | $2593 |
| Finance expense (income), net | (1) | 4 | 2 |  | (2) | 3 |
| Amortization | 186 | 306 | 35 | 53 | 9 | 589 |
| Equity-based compensation |  |  |  |  | 5 | 5 |
| Restructuring and impairment charges | 31 |  | 13 | 15 |  | 60 |
| Other income | (5) | (16) | (1) |  | (14) | (37) |
| Adjusted EBITDA by segment | $1328 | $1677 | $26 | $186 | $(5) | $3212 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **2021** | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| Earnings (loss) before tax | 1794 | 2121 | (22) | 112 | (107) | 3898 |
| Finance expense, net | 17 | 3 | 5 | 1 | 19 | 45 |
| Amortization | 164 | 289 | 34 | 88 | 9 | 584 |
| Equity-based compensation |  |  |  |  | 40 | 40 |
| Other expense (income) | (2) | 1 | (2) |  | 5 | 2 |
| Adjusted EBITDA by segment | $1973 | $2414 | $15 | $201 | $(34) | $4569 |

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**Quarterly Adjusted EBITDA by Segment** ($ millions)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Q4-22** | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| Earnings (loss) before tax | $(161) | $40 | $1 | $1 | $(6) | $(125) |
| Finance (income) expense, net | (2) | (1) |  |  | (1) | (3) |
| Amortization | 51 | 73 | 9 | 12 | 2 | 148 |
| Equity-based compensation |  |  |  |  | 6 | 6 |
| Restructuring and impairment charges | 31 |  |  | 15 |  | 47 |
| Other expense (income) | 2 | (3) | 5 | 2 | (8) | (2) |
| Adjusted EBITDA by segment | $(77) | $109 | $15 | $30 | $(6) | $70 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Q3-22** | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| Earnings (loss) before tax | $127 | $144 | $22 | $13 | $(10) | $296 |
| Finance (income) expense, net | (5) | 2 | 1 |  | (1) | (3) |
| Amortization | 45 | 71 | 9 | 12 | 3 | 140 |
| Equity-based compensation |  |  |  |  | 5 | 5 |
| Other expense (income) | (7) | (2) | (3) | (1) | 1 | (12) |
| Adjusted EBITDA by segment | $160 | $215 | $29 | $24 | $(2) | $426 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Q4-21** | **Lumber** | **NA EWP** | **Pulp & Paper** | **Europe EWP** | **Corporate & Other** | **Total** |
| Earnings (loss) before tax | $194 | $265 | $(25) | $36 | $(32) | $438 |
| Finance expense (income), net | (1) |  |  | 1 | 1 | 1 |
| Amortization | 45 | 73 | 9 | 24 | 2 | 153 |
| Equity-based compensation |  |  |  |  | 12 | 12 |
| Other expense | 2 | 5 | 2 |  | 2 | 11 |
| Adjusted EBITDA by segment | $240 | $343 | $(14) | $61 | $(15) | $615 |

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**Available liquidity**

Available liquidity is the sum of our cash and cash equivalents and funds available under our committed and uncommitted bank credit facilities. We believe disclosing this measure assists readers in understanding our ability to meet uses of cash resulting from contractual obligations and other commitments at a point in time.

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| | | |
|:---|:---|:---|
| **Available Liquidity**<br>($ millions) | **December 31, 2022** | **December 31, 2021** |
| Cash and cash equivalents | $1162 | $1568 |
| Operating lines available (excluding newsprint operation)<sup>1</sup> | 1053 | 1025 |
|  | 2215 | 2593 |
| Cheques issued in excess of funds on deposit |  |  |
| Borrowings on operating lines |  |  |
| Available liquidity | $2215 | $2593 |

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1. Excludes demand line of credit dedicated to our jointly-owned newsprint operation as West Fraser cannot draw on it.

**Total debt to total capital ratio**

Total debt to total capital ratio is total debt divided by total capital, expressed as a percentage. Total capital is defined as the sum of total debt plus total equity. This calculation is defined in certain of our bank covenant agreements. We believe disclosing this measure assists readers in understanding our capital structure, financial solvency, and degree of leverage at a point in time.

The following table outlines the composition of the measure.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Total Debt to Capital**<br>($ millions) | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
| Debt |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating loans | $|  | $|  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current and long-term lease obligation | 37 | 37 | 28 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current and long-term debt | 500 | 500 | 501 | 501 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate swaps<sup>1</sup> |  |  | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Open letters of credit<sup>1</sup> | 61 | 61 | 65 | 65 |
| Total debt | 598 | 598 | 595 | 595 |
| Shareholders' equity | 7619 | 7619 | 7656 | 7656 |
| Total capital | $| 8217 | $| 8251 |
| Total debt to capital | 7% | 7% | 7% | 7% |

---

1. Letters of credit facilities and the fair value of interest rate swaps are part of our bank covenants' total debt calculation.

**Net debt to capital ratio**

Net debt to capital ratio is net debt divided by total capital, expressed as a percentage. Net debt is calculated as total debt less cash and cash equivalents, open letters of credit, and the fair value of any interest rate swap liabilities. Total capital is defined as the sum of net debt plus total equity. We believe disclosing this measure assists readers in understanding our capital structure, financial solvency, and degree of leverage at a point in time. We believe that using net debt in the calculation is helpful because net debt represents the amount of debt obligations that are not covered by available cash and cash equivalents.

------

The following table outlines the composition of the measure.

---

| | | |
|:---|:---|:---|
| **Net Debt to Capital**<br>($ millions) | **December 31, 2022** | **December 31, 2021** |
| Debt |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating loans | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current and long-term lease obligation | 37 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current and long-term debt | 500 | 501 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest rate swaps<sup>1</sup> |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Open letters of credit<sup>1</sup> | 61 | 65 |
| Total debt | 598 | 595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | (1162) | (1568) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Open letters of credit | (61) | (65) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest rate swaps |  | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cheques issued in excess of funds on deposit |  |  |
| Net debt | (625) | (1039) |
| Shareholders' equity | 7619 | 7656 |
| Total capital | $6994 | $6617 |
| Net debt to capital | (9%) | (16%) |

---

1. Letters of credit facilities and the fair value of interest rate swaps are part of our bank covenants' total debt calculation.

**Expected capital expenditures**

This measure represents our best estimate of the amount of cash outflows relating to additions to capital assets for the upcoming year based on our current outlook. This amount is comprised primarily of various improvement projects and maintenance-of-business expenditures, projects focused on optimization and automation of the manufacturing process, and projects targeted to reduce greenhouse gas emissions. This measure assumes no deterioration in market conditions during the year and that we are able to proceed with our plans on time and on budget. This estimate is subject to the risks and uncertainties identified in this MD&A.

**Glossary of Key Terms**

We use the following terms in this MD&A:

---

| | |
|:---|:---|
| **Term** | **Description** |
| AAC | Annual allowable cut |
| ADD | Antidumping duty |
| Angelina | Angelina Forest Products LLC |
| Angelina Acquisition | Acquisition of Angelina Forest Products, LLC on December 1, 2021 |
| AR | Administrative Review by the USDOC |
| B.C. | British Columbia |
| BCTMP | Bleached chemithermomechanical pulp |
| CAD or CAD$ | Canadian dollars |
| CEO | President and Chief Executive Officer |
| CFO | Senior Vice-President, Finance and Chief Financial Officer |
| CGU | Cash generating unit |
| COSO | Committee of Sponsoring Organizations of the Treadway Commission |
| Crown timber | Timber harvested from lands owned by a provincial government |
| CVD | Countervailing duty |
| EDGAR | Electronic Data Gathering, Analysis and Retrieval System |
| ESG | Environmental, Social and Governance |

---

------

---

| | |
|:---|:---|
| EWP | Engineered wood products |
| GHG | Greenhouse gas |
| IFRS | International Financial Reporting Standards as issued by the International Accounting Standards Board |
| LVL | Laminated veneer lumber |
| MDF | Medium-density fibreboard |
| NA | North America |
| NA EWP | North America Engineered Wood Products |
| NBSK | Northern bleached softwood kraft pulp |
| NCIB | Normal course issuer bid |
| 2021 NCIB | Normal course issuer bid - February 17, 2021 to February 16, 2022 |
| 2022 NCIB | Normal course issue bid - February 23, 2022 to February 22, 2023 |
| NI 52-109 | National Instrument 52-109 - *Certification of Disclosure in Issuers' Annual and Interim Filings* |
| Norbord | Norbord Inc. |
| Norbord Acquisition | Acquisition of Norbord completed February 1, 2021 |
| NYSE | New York Stock Exchange |
| OSB | Oriented strand board |
| POI | Period of Investigation in respect of an USDOC administrative review |
| PPE | Property, plant, and equipment |
| Q1-22 or Q1-21 | three months ended March 31, 2022 or 2021 and for balance sheet amounts as at March 31, 2022 or 2021 |
| Q2-22 or Q2-21 | three months ended June 30, 2022 or 2021 and for balance sheet amounts as at June 30, 2022 or 2021 |
| Q3-22 or Q3-21 | three months ended September 30, 2022 or 2021 and for balance sheet amounts as at September 30, 2022 or 2021 |
| Q4-22 or Q4-21 | three months ended December 31, 2022 or 2021 and for balance sheet amounts as at December 31, 2022 or 2021 |
| SEDAR | System for Electronic Document Analysis and Retrieval |
| 2021 SIB | Our substantial issuer bid completed in August 2021 |
| 2022 SIB | Our substantial issuer bid completed in June 2022 |
| SOX | Section 404 of the Sarbanes-Oxley Act |
| SPF | Spruce/pine/balsam fir lumber |
| SYP | Southern yellow pine lumber |
| TSX | Toronto Stock Exchange |
| U.K. | United Kingdom |
| UKP | Unbleached kraft pulp |
| U.S. | United States |
| USD or $ or US$ | United States Dollars |
| USDOC | United States Department of Commerce |
| USITC | United States International Trade Commission |

---

**Forward-Looking Statements**

This MD&A includes statements and information that constitutes "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of United States securities laws (collectively, "forward-looking statements"). Forward-looking statements include statements that are forward-looking or predictive in nature and are dependent upon or refer to future events or conditions. We use words such as "expects," "anticipates," "plans," "believes," "estimates," "seeks," "intends," "targets," "projects," "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may," "will," "should," "would" and "could" to identify these forward-looking statements. These forward-looking statements generally include statements which reflect management's expectations regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of West

------

Fraser and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods.

Forward-looking statements included in this MD&A include references to:

---

| | |
|:---|:---|
| **Discussion** | **Forward-Looking Statements** |
| Corporate Strategy | our corporate strategy and objectives to generate strong financial results, maintain a strong balance sheet and liquidity profile along with an investment-grade debt rating, to maintain a leading cost position and to return capital to shareholders, reinvest in operations, renewable building materials, and achieve science-based targets to achieve near-term greenhouse gas reductions across all our operations |
| Recent Developments – Markets | impact of interest rates, housing demand, housing prices, inflationary pressures on demand for lumber and OSB, and expectations regarding near, medium and longer-term core demand |
| Recent Developments - CVD and ADD Duty Rates | estimates of potential recovery and combined cash deposit rate if preliminary results from the AR4 POI are confirmed |
| Discussion & Analysis of Annual Results by Product Segment - Lumber Segment - Softwood Lumber Dispute | administrative review commencement, adjustment of export duty rates, proceedings related to duty rates, and timing of finalization of duty rates |
| Business Outlook – Markets | market conditions, demand for our products over the near, medium and longer term, impacts of interest rates, Ukraine conflict, inflationary pressures, including increases in energy prices, transportation constraints, final AR4 and AR5 duty rates; and ability to capitalize on long-term opportunities |
| Business Outlook – Operations | production levels, demand expectations, projected SPF and SYP lumber shipments, projected OSB shipments, projected pulp and paper shipments, operating costs, B.C. and Alberta stumpage rates and U.S. South log costs, the impact of inflationary pressures and availability constraints for labour, transportation, raw materials such as resins and chemicals, and energy, expectations as to availability of transportation services, the timing, costs of restart, ramp up period to target production and contribution to shipments of Allendale OSB facility, and the overall OSB platform with modern Allendale facility |
| Business Outlook – Cash Flows | projected cash flows from operations and available liquidity, projected capital expenditures (including with respect to the modernization of the Henderson, Texas lumber manufacturing facility), expected results of capital expenditures, including improvements, maintenance, optimization and automation projects and projects targeted to reduce greenhouse gas emissions, maintenance of our investment grade debt rating, strategic growth opportunities, expected continuity of dividends and share repurchases |
| Liquidity and Capital Resources - Capital Management Framework | capital management framework and objectives |

---

By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts, and other forward-looking statements will not occur. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;• assumptions in connection with the economic and financial conditions in the U.S., Canada, U.K., Europe and globally and consequential demand for our products, including the impact of the conflict in the Ukraine;

&nbsp;&nbsp;&nbsp;&nbsp;• continued increases in interest rates and inflation could impact housing affordability and repair and remodelling demand, which could reduce demand for our products;

&nbsp;&nbsp;&nbsp;&nbsp;• global supply chain issues may result in increases to our costs and may contribute to a reduction in near-term demand for our products;

&nbsp;&nbsp;&nbsp;&nbsp;• risks inherent to product concentration and cyclicality;

&nbsp;&nbsp;&nbsp;&nbsp;• effects of competition for logs and fibre resources and product pricing pressures, including continued access to log supply and fibre resources at competitive prices and the impact of third-party certification standards;

&nbsp;&nbsp;&nbsp;&nbsp;• effects of variations in the price and availability of manufacturing inputs, including energy, employee wages, resin and other input costs, and the impact of inflationary pressures on the costs of these manufacturing costs, including increases in stumpage fees and log costs;

&nbsp;&nbsp;&nbsp;&nbsp;• availability and costs of transportation services, including truck and rail services, and port facilities, the impacts on transportation services of wildfires and severe weather events, and the impact of increased energy prices on the costs of transportation services;

&nbsp;&nbsp;&nbsp;&nbsp;• transportation constraints may negatively impact our ability to meet projected shipment volumes;

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&nbsp;&nbsp;&nbsp;&nbsp;• the timing of our planned capital investments may be delayed, the ultimate costs of these investments may be increased as a result of inflation, and the projected rates of return may not be achieved;

&nbsp;&nbsp;&nbsp;&nbsp;• various events that could disrupt operations, including natural, man-made or catastrophic events including wildfires and any state of emergency and/or evacuation orders issued by governments and ongoing relations with employees;

&nbsp;&nbsp;&nbsp;&nbsp;• risks inherent to customer dependence;

&nbsp;&nbsp;&nbsp;&nbsp;• impact of future cross border trade rulings or agreements;

&nbsp;&nbsp;&nbsp;&nbsp;• implementation of important strategic initiatives and identification, completion and integration of acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;• impact of changes to, or non-compliance with, environmental or other regulations;

&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the COVID-19 pandemic on our operations and on customer demand, supply and distribution and other factors;

&nbsp;&nbsp;&nbsp;&nbsp;• government restrictions, standards or regulations intended to reduce greenhouse gas emissions;

&nbsp;&nbsp;&nbsp;&nbsp;• our inability to achieve our SBTi commitment for the reduction of greenhouse gases as planned;

&nbsp;&nbsp;&nbsp;&nbsp;• continued governmental approvals and authorizations to access timber supply;

&nbsp;&nbsp;&nbsp;&nbsp;• changes in government policy and regulation, including actions taken by the Government of British Columbia pursuant to recent amendments to forestry legislation and initiatives to defer logging of forests deemed "old growth" and the impact of these actions on our timber supply;

&nbsp;&nbsp;&nbsp;&nbsp;• impact of weather and climate change on our operations or the operations or demand of its suppliers and customers;

&nbsp;&nbsp;&nbsp;&nbsp;• ability to implement new or upgraded information technology infrastructure;

&nbsp;&nbsp;&nbsp;&nbsp;• impact of information technology service disruptions or failures;

&nbsp;&nbsp;&nbsp;&nbsp;• impact of any product liability claims in excess of insurance coverage;

&nbsp;&nbsp;&nbsp;&nbsp;• risks inherent to a capital intensive industry;

&nbsp;&nbsp;&nbsp;&nbsp;• impact of future outcomes of tax exposures;

&nbsp;&nbsp;&nbsp;&nbsp;• potential future changes in tax laws, including tax rates;

&nbsp;&nbsp;&nbsp;&nbsp;• investigations, claims and legal, regulatory and tax proceedings covering matters which if resolved unfavourably may result in a loss to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;• effects of currency exposures and exchange rate fluctuations;

&nbsp;&nbsp;&nbsp;&nbsp;• future operating costs;

&nbsp;&nbsp;&nbsp;&nbsp;• availability of financing, bank lines, securitization programs and/or other means of liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;• continued access to timber supply in the traditional territories of Indigenous Nations;

&nbsp;&nbsp;&nbsp;&nbsp;• our ability to continue to maintain effective internal control over financial reporting;

&nbsp;&nbsp;&nbsp;&nbsp;• the risks and uncertainties described in this 2022 Annual MD&A; and

&nbsp;&nbsp;&nbsp;&nbsp;• other risks detailed from time to time in our annual information forms, annual reports, MD&A, quarterly reports and material change reports filed with and furnished to securities regulators.

In addition, 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. This list of important factors affecting forward-looking statements is not exhaustive and reference should be made to the other factors discussed in public filings with securities regulatory authorities. Accordingly, readers should exercise caution in relying upon forward-looking statements and we undertake no obligation to publicly update or revise any forward-looking statements, whether written or oral, to reflect subsequent events or circumstances except as required by applicable securities laws.

**Additional Information**

Additional information on West Fraser, including our Annual Information Form and other publicly filed documents, is available on the Company's website at <u>www.westfraser.com</u>, on SEDAR at <u>www.sedar.com</u> and on the EDGAR section of the SEC website at <u>www.sec.gov/edgar.shtml</u>.

Where this MD&A includes information from third parties, we believe that such information (including information from industry and general publications and surveys) is generally reliable. However, we have not independently verified any such third-party information and cannot assure you of its accuracy or completeness.

## Exhibit 99.4

Exhibit 99.4

**CERTIFICATION**

I, Raymond W. Ferris, certify that:

(1)I have reviewed this Annual Report on Form 40-F of West Fraser Timber Co. Ltd. for the year ended December 31, 2022.

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report.

(4)The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting.

(5)The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date: February 14, 2023

---

| | |
|:---|:---|
| By: | */s/ Raymond W. Ferris* |
| Name: Raymond W. Ferris | Name: Raymond W. Ferris |
| Title: President and Chief Executive Officer | Title: President and Chief Executive Officer |

---

## Exhibit 99.5

Exhibit 99.5

**CERTIFICATION**

I, Christopher A. Virostek, certify that:

(1)I have reviewed this Annual Report on Form 40-F of West Fraser Timber Co. Ltd. for the year ended December 31, 2022.

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report.

(4)The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting.

(5)The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date: February 14, 2023

---

| | |
|:---|:---|
| By: | */s/ Christopher A. Virostek* |
| Name: Christopher A. Virostek | Name: Christopher A. Virostek |
| Title: Senior Vice-President, Finance and Chief Financial Officer | Title: Senior Vice-President, Finance and Chief Financial Officer |

---

## Exhibit 99.6

Exhibit 99.6

**CERTIFICATION PURSUANT TO**

**18 U.S.C. §1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of West Fraser Timber Co. Ltd. (the "**Company**") on Form 40-F for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "**Report**"), I, Raymond W. Ferris, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 14, 2023

---

| | |
|:---|:---|
| By: | */s/ Raymond W. Ferris* |
|  | Raymond W. Ferris<br>President and Chief Executive Officer<br>(Principal Executive Officer) |

---

A signed original of this written statement required by Section 906 has been provided to West Fraser Timber Co. Ltd. and will be retained by West Fraser Timber Co. Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

## Exhibit 99.7

Exhibit 99.7

**CERTIFICATION PURSUANT TO**

**18 U.S.C. §1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of West Fraser Timber Co. Ltd. (the "**Company**") on Form 40-F for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "**Report**"), I, Christopher A. Virostek, Senior Vice-President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 14, 2023

---

| | |
|:---|:---|
| By: | */s/ Christopher A. Virostek* |
|  | Christopher A. Virostek<br>Senior Vice-President, Finance and <br>Chief Financial Officer<br>(Principal Financial Officer) |

---

A signed original of this written statement required by Section 906 has been provided to West Fraser Timber Co. Ltd. and will be retained by West Fraser Timber Co. Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

## Exhibit 99.8

Exhibit 99.8

**Consent of Independent Registered Public Accounting Firm**

We hereby consent to the incorporation by reference in this Annual Report on Form 40-F for the year ended December 31, 2022 of West Fraser Timber Co. Ltd. of our report dated February 14, 2023, relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in Exhibit 99.2 incorporated by reference in this Annual Report on Form 40-F.

We also consent to the incorporation by reference in the Registration Statements on Form F-10/A (No. 333-254828) and Forms S-8 (No.333-252631 and 333-257254) of West Fraser Timber Co. Ltd. of our report dated February 14, 2023 referred to above. We also consent to reference to us under the heading "Interests of Experts" in the Annual Information Form, which is filed as Exhibit 99.1 to this Annual Report on Form 40-F, which is also incorporated by reference in such Registration Statements.

**/s/PricewaterhouseCoopers LLP**

Vancouver, British Columbia

Canada

February 14, 2023

<br>