Interfor Corporation — Interim / Quarterly Report 2021

May 7, 2021

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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars except earnings per share)	Three Months		Three Months
	Mar.	31, 2021	Mar.	31, 2020
Sales (note 12)	$	849,307	$	479,646
Costs and expenses:
Production		432,167		423,228
Selling and administration		12,879		9,228
Long term incentive compensation expense (recovery)		7,670		(8,946)
U.S. countervailing and anti-dumping duty deposits (note 14)		12,390		10,600
Depreciation of plant and equipment (note 9)		21,474		20,061
Depletion and amortization of timber,roads and other(note 9)		6,968		10,530
		493,548		464,701
Operating earnings before restructuring costs		355,759		14,945
Restructuringcosts		142		371
Operating earnings		355,617		14,574
Finance costs (note 10)		(4,524)		(4,096)
Other foreign exchange loss		(2,346)		(849)
Other income(expense)		1,996		(115)
		(4,874)		(5,060)
Earnings before income taxes		350,743		9,514
Income tax expense
Current		83,173		329
Deferred		3,083		2,876
		86,256		3,205
**Net earnings **	$	264,487	$	6,309
Net earnings per share
Basic (note 11)	$	4.01	$	0.09
Diluted(note 11)	$	4.00	$	0.09
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three months ended March 31, 2021and 2020 (unaudited)
	Three Months		Three Months
	Mar.	31, 2021	Mar.	31, 2020
Net earnings	$	264,487	$	6,309
Other comprehensive income (loss):
Items that will not be recycled to Net earnings:
Defined benefitplan actuarialgain(loss),net of tax		4,472		(713)
Items that are or may be recycled to Net earnings:
Foreign currency translation differences for foreign operations, net of tax		(8,887)		46,083
Total other comprehensive(loss) income, net of tax		(4,415)		45,370
Comprehensive income	$	260,072	$	51,679

See accompanying notes to consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2021 and 2020 (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars)	Three Months		Three Months
	Mar.	31, 2021	Mar.	31, 2020
Cash provided by (used in):
Operating activities:
Net earnings	$	264,487	$	6,309
Items not involving cash:
Depreciation of plant and equipment (note 9)		21,474		20,061
Depletion and amortization of timber, roads and other (note 9)		6,968		10,530
Deferred income tax expense		3,083		2,876
Current income tax expense		83,173		329
Finance costs (note 10)		4,524		4,096
Other assets		(431)		936
Reforestation liability		496		2,766
Provisions and other liabilities		495		(10,293)
Stock options		196		256
Unrealized foreign exchange loss		3,011		441
Other (income) expense		(1,996)		115
Income taxes(paid) refunded		(7,796)		6
		377,684		38,428
Cash generated from (used in) operating working capital:
Trade accounts receivable and other		(67,859)		(23,413)
Inventories		(24,352)		1,355
Prepayments		(3,348)		(2,113)
Trade accountspayable andprovisions		2,955		5,062
		285,080		19,319
Investing activities:
Additions to property, plant and equipment		(26,331)		(24,872)
Additions to roads and bridges		(2,885)		(2,704)
Acquisitions (note 5)		(73,630)		(56,606)
Proceeds on disposal of property, plant and equipment		5,693		162
Netproceeds from(additions to)deposits and other assets		157		(198)
		(96,996)		(84,218)
Financing activities:
Issuance of share capital, net of expenses (note 8)		1,945		-
Share repurchases (note 8)		(20,303)		-
Interest payments		(4,258)		(3,758)
Lease liability payments		(3,301)		(2,934)
Debt refinancing costs		-		(136)
Operating line net repayments		-		(59)
Additions to longterm debt(note 7)		-		140,770
		(25,917)		133,883
Foreign exchange loss on cash and cash equivalents
held in a foreign currency		(6,343)		(310)
Increase in cash		155,824		68,674
Cash and cash equivalents, beginning ofperiod		457,392		34,900
Cash and cash equivalents, end ofperiod	$	613,216	$	103,574

See accompanying notes to consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION March 31, 2021 and December 31, 2020 (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION March 31, 2021and December 31, 2020 (unaudited)	CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION March 31, 2021and December 31, 2020 (unaudited)
(thousands of Canadian Dollars) Mar. 31, 2021 Dec. 31, 2020
Assets Current assets: Cash and cash equivalents $ 613,216 $ 457,392 Trade accounts receivable and other 182,436 117,371 Income tax receivable 179 169 Inventories (note 5 and 6) 191,169 160,188 Prepayments 21,027 17,970 1,008,027 753,090 Employee future benefits 4,880 106 Deposits and other assets 48,770 48,957 Right of use assets 36,673 35,471 Property, plant and equipment (note 5) 778,831 729,163 Roads and bridges (note 5) 22,640 22,379 Timber licences (note 5) 114,059 114,953 Goodwill and other intangible assets (note 5) 145,128 138,838 Deferred income taxes 684 230
$ 2,159,692 $ 1,843,187
Liabilities and Shareholders’ Equity Current liabilities: Trade accounts payable and provisions $ 148,880 $ 150,509 Current portion of long term debt (notes 7 and 13) 6,811 6,897 Reforestation liability 16,551 16,181 Lease liabilities 12,169 11,745 Income taxespayable 79,115 4,394 263,526 189,726 Reforestation liability 30,281 29,735 Lease liabilities 29,129 28,541 Long term debt (notes 7 and 13) 370,439 375,063 Employee future benefits 9,734 11,137 Provisions and other liabilities 27,320 26,637 Deferred income taxes 107,041 102,036 Equity: Share capital (note 8) 520,151 523,605 Contributed surplus 4,500 5,157 Translation reserve 40,959 49,846 Retained earnings 756,612 501,704 1,322,222 1,080,312
	1,322,222 1,080,312
	$ 2,159,692 $ 1,843,187

U.S. countervailing and anti-dumping duty deposits (note 14).

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board of Directors:

“L. Sauder” Director

“T.V. Milroy” Director

3

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the three months ended March 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars)		Share	Contributed			Translation		Retained
		Capital		Surplus		Reserve		**Earnings **		Total
Balance at December 31, 2020	$	523,605	$	5,157	$	49,846	$	501,704	$	1,080,312
Net earnings:		-		-		-		264,487		264,487
Other comprehensive income (loss):
Foreign currency translation differences
for foreign operations, net of tax		-		-		(8,887)		-		(8,887)
Defined benefit plan actuarial gain, net of tax		-		-		-		4,472		4,472
Contributions and distributions:
Share issuance, net of expenses (note 8)		2,798		(853)		-		-		1,945
Share repurchases (note 8)		(6,252)		-		-		(14,051)		(20,303)
Stock options(note 8)		-		196		-		-		196
Balance at March 31, 2021	$	520,151	$	4,500	$	40,959	$	756,612	**$ **	1,322,222
Balance at December 31, 2019	$	533,685	$	4,471	$	56,759	$	236,067	$	830,982
Net earnings:		-		-		-		6,309		6,309
Other comprehensive income (loss):
Foreign currency translation differences
for foreign operations, net of tax		-		-		46,083		-		46,083
Defined benefit plan actuarial loss, net of tax		-		-		-		(713)		(713)
Contributions:
Stock options(note 8)		-		256		-		-		256
Balance at March 31, 2020	$	533,685	$	4,727	$	102,842	$	241,663	$	882,917

See accompanying notes to consolidated financial statements.

4

INTERFOR CORPORATION

Notes to Unaudited Condensed Consolidated Interim Financial Statements (Tabular amounts expressed in thousands except number of shares and per share amounts) Three months ended March 31, 2021 and 2020 (unaudited)

1. Nature of operations:

Interfor Corporation and its subsidiaries (the “Company” or “Interfor”) produce wood products in British Columbia, the U.S. Northwest and the U.S. South for sale to markets around the world.

Interfor Corporation exists under the Business Corporations Act (British Columbia) with shares listed on the Toronto Stock Exchange. Its head office, principal address and records office are located at 1600 – 4720 Kingsway, Burnaby, British Columbia, Canada, V5H 4N2.

These unaudited condensed consolidated interim financial statements as at and for the three months ended March 31, 2021 and 2020 comprise the accounts of Interfor Corporation and its subsidiaries.

2. Basis of Preparation:

(a) Statement of compliance:

These financial statements, including comparatives, have been prepared in accordance with IAS 34 Interim Financial Reporting using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). These financial statements do not include all the information required for annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2020.

These financial statements were approved by Interfor’s Board of Directors on May 6, 2021.

(b) Basis of measurement:

These financial statements are prepared on the historical cost basis except for the following items in the Statements of Financial Position:

• (i) Liabilities for cash-settled share-based compensation arrangements are measured at fair value at each reporting date;

• (ii) Equity-settled share-based compensation is measured at fair value at the grant date;

• (iii) Employee benefit plan assets and liabilities are recognized as the net of the fair value of the plan assets and the present value of the defined benefit obligations on a plan-by-plan basis; and

• (iv) Reforestation obligations, lease liabilities and certain other provisions are measured at the discounted value of expected future cash flows.

The functional and presentation currency of the parent company is the Canadian Dollar.

(c) Critical accounting estimates:

Potential impacts of the COVID-19 outbreak on the Company’s critical accounting estimates are being monitored on a regular basis. However, there were no significant changes during the quarter ended March 31, 2021. Interfor’s critical accounting estimates are described in its financial statements for the year ended December 31, 2020, filed under the Company’s profile on www.sedar.com.

3. Significant accounting policies:

These financial statements have been prepared using the significant accounting policies and methods of computation consistent with those applied in the Company’s audited December 31, 2020 annual consolidated financial statements, which are available on www.sedar.com.

A number of new standards, and amendments to standards and interpretations, are not yet effective for the quarter ended March 31, 2021, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on future financial statements.

4. Seasonality of operating results:

Quarterly operating results of the Company reflect the seasonality of its operations and markets. Logging operations are seasonal due to several factors including weather, ground conditions and fire season closures. Generally, production from the Company’s B.C. Coastal logging operations is relatively low in the second half of the fourth quarter and the first half of the first quarter due to the impact of winter storms. Logging activity in the B.C. Interior is typically reduced during the annual spring break-up. Sawmill operations are dependent on the availability of logs from our logging operations and our suppliers. In addition, the market demand for lumber and related products is generally lowest in the winter season due to reduced construction and renovation activities.

5

INTERFOR CORPORATION

Notes to Unaudited Condensed Consolidated Interim Financial Statements (Tabular amounts expressed in thousands except number of shares and per share amounts) Three months ended March 31, 2021 and 2020 (unaudited)

5. Acquisitions:

a) Summerville sawmill acquisition:

On March 12, 2021, a wholly-owned subsidiary of Interfor concluded the acquisition of sawmill operations in Summerville, South Carolina from WestRock Company, pursuant to an Asset Purchase Agreement for total consideration of US$58,618,000 ($73,630,000). The cash purchase price was funded by cash on hand.

The acquisition has been accounted for as a business combination and the estimated value of the consideration transferred is allocated on a preliminary basis as follows:

Cashpurchaseprice	$	73,630
Net assets acquired:
Inventory	$	10,174
Property, plant and equipment		55,414
Goodwill		8,137
Liabilities assumed		(95)
	$	73,630

b) Acquisition of B.C. Interior cutting rights:

On March 9, 2020, the Company completed the acquisition of two replaceable timber licences with annual cutting rights of approximately 349,000 cubic metres, an interest in a non-replaceable forest licence and other related forestry assets in the Adams Lake area of the B.C. Interior from Canadian Forest Products Ltd. The Company accounted for this transaction as an asset acquisition and the purchase price was allocated to the assets acquired and liabilities assumed on a relative fair value basis as follows:

Cashpurchaseprice	$	56,606
Net assets acquired:
Timber licenses	$	57,937
Roads		1,707
Other assets		1,139
Liabilities assumed		(4,177)
	$	56,606

6. Inventories:

Inventories:
	Mar.	31,2021	Dec.	31,2020
Lumber	$	102,671	$	80,927
Logs		63,071		54,810
Other		25,427		24,451
	$	191,169	$	160,188

Inventory cost includes production costs, depreciation of plant and equipment, and depletion and amortization of timber, roads and other. The inventory write-down to record inventory at the lower of cost and net realizable value at March 31, 2021 was $3,765,000 (December 31, 2020 - $4,319,000).

7. Borrowings:

Borrowings:
		Revolving		Senior
		Term		Secured
March31,2021		Line		Notes		Total
Available line of credit	$	350,000	$	377,250	$	727,250
Drawings		-		377,250		377,250
Outstandingletters of credit		19,613		-		19,613
Unusedportion of RevolvingTerm Line	$	330,387	$	-	$	330,387
		Revolving		Senior
		Term		Secured
December 31,2020		Line		Notes		Total
Available line of credit	$	350,000	$	381,960	$	731,960
Drawings		-		381,960		381,960
Outstandingletters of credit		19,887		-		19,887
Unusedportion of RevolvingTerm Line	$	330,113	$	-	$	330,113

6

INTERFOR CORPORATION

Notes to Unaudited Condensed Consolidated Interim Financial Statements (Tabular amounts expressed in thousands except number of shares and per share amounts) Three months ended March 31, 2021 and 2020 (unaudited)

7. Borrowings (continued):

Minimum principal amounts due on long term debt are as follows:

Minimumprincipal amounts due on longterm debt are as follows:
Twelve months ending
March 31, 2022	$	6,811
March 31, 2023		6,811
March 31, 2024		48,729
March 31, 2025		41,916
March 31, 2026		41,917
Thereafter		231,066
	$	377,250

Reconciliation of movements in borrowings to cash flows arising from financing activities:

	Three Months	Three Months		Three Months
	Mar. 31, 2021		Mar. 31, 2020
Drawings at opening	$	381,960	$	259,760
Term Line net repayments		-		(59)
Additions to long term debt		-		140,770
Effects of changes in foreign exchange rates		(4,710)		25,139
Drawings at March 31	$	377,250	$	425,610

(a) Revolving Term Line:

The Revolving Term Line (the “Term Line”) may be drawn in either CAD$ or US$ advances, and bears interest at bank prime plus a margin or, at the Company’s option, at rates for Bankers’ Acceptances or LIBOR based loans plus a margin, and in all cases dependent upon a financial ratio of net debt to total capitalization.

The Term Line is secured by a general security agreement and mortgage security on certain of the Company’s Canadian assets and is subject to certain financial covenants including a maximum ratio of net debt to total capitalization.

As at March 31, 2021, the Term Line was drawn by letters of credit of $14,635,000 (December 31, 2020 - $14,811,000) and US$3,959,000 (December 31, 2020 - US$3,987,000), revalued at the quarter-end exchange rate to $4,978,000 (December 31, 2020 - $5,076,000), for total outstanding letters of credit of $19,613,000 (December 31, 2020 - $19,887,000).

(b) Senior Secured Notes:

As at March 31, 2021, the Company’s Senior Secured Notes consisted of the following:

	Mar.	31,2021	Dec.	31,2020
Series A (US$4,450,000) bearing interest at 4.33% with
payments of US$1,483,000 due on June 26, 2021 and
2022 and the balance due on June 26, 2023	$	5,596	$	5,666
Series B (US$11,800,000) bearing interest at 4.02% with
payments of US$3,933,000 due on June 26, 2021 and
2022 and the balance due on June 26, 2023		14,839		15,024
Series C (US$100,000,000) bearing interest at 4.17% with
payments of US$33,333,000 due on March 26, 2024 and
2025 and the balance due on March 26, 2026		125,750		127,320
Series D (US$45,550,000) bearing interest at 4.95% with
payments of US$15,183,000 due on August 14, 2027 and
2028 and the balance due on August 14, 2029		57,279		57,994
Series E (US$38,200,000) bearing interest at 4.82% with
payments of US$12,733,000 due on August 14, 2027 and
2028 and the balance due on August 14, 2029		48,036		48,636
Series F (US$50,000,000) bearing interest at 3.34% with
payments of US$16,666,666 due on March 26, 2028 and
2029 and the balance due on March 26, 2030		62,875		63,660
Series G (US$50,000,000) bearing interest at 3.25% with
payments of US$16,666,666 due on March 26, 2028 and
2029 and the balance due on March 26,2030		62,875		63,660
	$	377,250	$	381,960

On March 26, 2020, the Company issued US$50,000,000 of Series F and US$50,000,000 of Series G Senior Secured Notes with interest rates and payment terms described in the table above.

The Senior Secured Notes have a weighted average fixed interest rate of 4.08% and maturities from June 26, 2021 to March 26, 2030.

The Senior Secured Notes have been designated as a hedge against the Company’s investment in its U.S. operations and unrealized foreign exchange gains of $4,710,000 in the first quarter, 2021 (Quarter 1, 2020 - $25,080,000 losses) arising on their revaluation were recognized in Foreign currency translation differences in Other comprehensive income.

7

INTERFOR CORPORATION

Notes to Unaudited Condensed Consolidated Interim Financial Statements (Tabular amounts expressed in thousands except number of shares and per share amounts) Three months ended March 31, 2021 and 2020 (unaudited)

8. Share capital:

The transactions in share capital are described below:

The transactions in share capital are described below:
						Contributed
	Number		Amount			Surplus
Balance, December 31, 2019	67,259,959	$	533,685		$	4,471
Exercise of stock options	31,614		598			(180)
Repurchase of common shares	(1,327,420)		(10,678)			-
Stock options	-		-			866
Balance, December 31, 2020	65,964,153	$	523,605		$	5,157
Exercise of stock options	116,806		2,798			(853)
Repurchase of common shares	(774,420)		(6,252)			-
Stock options	-		-			196
Balance, March 31, 2021	65,306,539	$	520,151		$	4,500

On November 5, 2020, the Company announced a normal course issuer bid (“NCIB”) commencing on November 11, 2020 and ending on November 10, 2021, for the purchase of up to 5,981,751 common shares.

During the first three months of 2021, Interfor purchased 774,420 common shares at an average price of $26.22 per share for a cost of $20,303,000 with $6,252,000 charged against Share capital, based on the average per share amount for common shares in that account as at the transaction date, and the balance of $14,051,000 to Retained earnings. (Quarter 1, 2020 – No common shares repurchased). 390,850 of these common shares were cancelled as at March 31, 2021, with the remaining 383,570 cancelled in April 2021.

No common shares were purchased in 2020 under the Company’s prior NCIB that expired on March 6, 2020.

9. Depreciation, depletion and amortization:

Depreciation, depletion and amortization by function is as follows:

	Three Months	Three Months
	Mar. 31,2021	Mar. 31,2020
Production	$ 27,968	$ 29,968
Sellingand administration	474	623
	$ 28,442	$ 30,591

10. Finance costs:

Finance costs:
	Three Months		Three Months
	Mar. 31, 2021		Mar. 31, 2020
Interest expense on:
Borrowings	$	4,158	$	3,677
Lease liabilities		411		500
Pension obligations		566		601
Interest revenue from:
Duty deposits and other		(391)		(316)
Pension assets		(355)		(578)
Unwind of discount on provisions		56		134
Amortization of deferred finance costs		79		78
	$	4,524	$	4,096

8

INTERFOR CORPORATION

Notes to Unaudited Condensed Consolidated Interim Financial Statements (Tabular amounts expressed in thousands except number of shares and per share amounts) Three months ended March 31, 2021 and 2020 (unaudited)

11. Net earnings per share:

Net earnings per share is calculated utilizing the treasury stock method for determining the dilutive effect of options issued. The reconciliation of the numerator and denominator is determined as follows:

	Three Months Mar. 31, 2021 Weighted Average Number of Net earnings Shares Per share	Three Months Mar. 31, 2020
		Weighted Average Number of Net earnings Shares Per share
Issued shares at December 31 Effect of shares issued in quarter Effect of shares repurchased	65,964,153 45,559 (82,267)	67,259,959 - -
Basic earnings per share Effect of dilutive securities: Stock options	$ 264,487 65,927,445 $ 4.01 154,287	$ 6,309 67,259,959 $ 0.09 324
Diluted earningsper share	$ 264,487 66,081,732 $ 4.00	$ 6,309 67,260,283 $ 0.09

12. Segmented information:

The Company manages its business as a single operating segment, being solid wood. The Company harvests and purchases logs which are sorted by species, size and quality and then either manufactured into lumber products at the Company’s sawmills or sold. Substantially all operations are located in British Columbia, Canada and the Northwest and South regions of the U.S.

Sales by market are as follows:

Sales bymarket are as follows:
	Three Months		Three Months
	Mar.	31,2021	Mar.	31,2020
United States	$	719,417	$	339,864
Canada		98,439		94,681
Japan		10,825		21,216
China/Taiwan		8,994		11,876
Other export		11,632		12,009
	$	849,307	$	479,646
Sales by product line are as follows:
	Three Months		Three Months
	Mar.31,2021		Mar.31,2020
Lumber	$	762,362	$	379,289
Logs		33,138		55,456
Wood chips and other by products		40,226		42,719
Freight and other		13,581		2,182
	$	849,307	$	479,646

13. Financial instruments:

At March 31, 2021, the fair value of the Company's Long term debt exceeded its carrying value by $26,741,000 (December 31, 2020 - $27,915,000) measured based on the level 2 of the fair value hierarchy.

The fair values of other financial instruments approximate their carrying values due to their short-term nature.

As at March 31, 2021, the Company had no outstanding obligations under derivative financial instruments.

14. U.S. countervailing and anti-dumping duty deposits:

In late 2016, a petition was filed by the U.S. Lumber Coalition and other petitioners seeking countervailing (“CV”) and anti-dumping (“AD”) duties on Canadian softwood lumber imports to the U.S. On January 6, 2017, a preliminary determination was announced by the U.S. International Trade Commission (“ITC”) that there was reasonable indication that the U.S. industry is materially injured by imports of softwood lumber products from Canada and the U.S. Department of Commerce (“DoC”) imposed duties on Canadian shipments of softwood lumber into the U.S.

CV duties were imposed from April 28, 2017 until August 26, 2017 and from December 28, 2017 onwards. AD duties were imposed from June 30, 2017 through December 26, 2017 and from December 28, 2017 onwards.

The CV duties cash deposit rate was initially imposed at 19.88% and subsequently amended to 14.19%. The AD duties cash deposit rate was initially imposed at 6.87% and subsequently amended to 6.04%. During the fourth quarter 2020, the DoC published the final CV and AD duties rates based on the results of its first administrative review of shipments for the years ended December 31, 2017 and 2018. The following table summarizes the cash deposit rates that were in effect and the final revised rates for those periods:

9

INTERFOR CORPORATION

Notes to Unaudited Condensed Consolidated Interim Financial Statements (Tabular amounts expressed in thousands except number of shares and per share amounts) Three months ended March 31, 2021 and 2020 (unaudited)

14. U.S. countervailing and anti-dumping duty deposits (continued):

	Cash deposit	Final
Year ended December 31	rates in effect	revised rates
2017
AD	6.04%	1.57%
CV	14.19%	7.26%
Total	20.23%	8.83%
2018
AD	6.04%	1.57%
CV	14.19%	7.42%
Total	20.23%	8.99%

The final AD and CV duties rates were published November 30, 2020 and December 1, 2020 respectively, and starting on these dates the final 2018 AD and CV duties rates of 1.57% and 7.42% respectively, were applied as the cash deposit rates to new lumber shipments.

The finalization of the rates in the fourth quarter of 2020 indicated an overpayment of duty deposits in 2017 and 2018 of US$32,931,000 of which US$3,187,000 was recorded in a prior year and US$29,744,000 in 2020.

As at March 31, 2021, Interfor has a long term receivable of US$32,931,000 (December 31, 2020 - US$32,931,000) in Deposits and other assets on the Statements of Financial Position, revalued at the quarter-end exchange rate to $41,410,000 (December 31, 2020 - $41,927,000). Interfor has recorded interest on the long term receivable of US$2,276,000 (December 31, 2020 - US$2,224,000) in Deposits and other assets on the Statements of Financial Position, revalued at the quarter-end exchange rate to $2,862,000 (December 31, 2020 - $2,832,000).

Interfor paid duties of US$18,424,000 in 2017, US$42,016,000 in 2018, US$33,765,000 in 2019, US$39,761,000 in 2020 and US$9,100,000 in the first three months of 2021, all of which remain held in trust by U.S. Customs and Border Protection. With the exception of US$32,931,000 (December 31, 2020 – US$32,931,000) recorded as a long term receivable, Interfor has recorded the duty deposits as an expense.

Interfor is of the view that the DoC’s positions are without merit and politically driven. As such, Interfor intends to defend its position through various appeals processes, in conjunction with the B.C. and Canadian Governments. The final amount and effective date of countervailing and anti-dumping duties that may be assessed on Canadian softwood lumber exports to the U.S. cannot be determined at this time and will depend on decisions yet to be made by any reviewing courts, USMCA or WTO panels to which the DoC and ITC determinations may be appealed.

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Interfor Corporation Metrotown II 1600 – 4720 Kingsway Burnaby, B.C. Canada V5H 4N2 Telephone: (604) 422-3400 Fax: (604) 422-3452

Contact: Richard Pozzebon, Senior Vice President and Chief Financial Officer

Web Site: www.interfor.com

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