Ainsworth Lumber Co. Ltd.
TSX : ANS

Ainsworth Lumber Co. Ltd.

May 11, 2006 19:56 ET

Ainsworth Reports Financial Results for the First Quarter of 2006

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 11, 2006) - Ainsworth Lumber Co. Ltd. (TSX:ANS) -



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Unaudited Three months ended
($ millions, except per share data) March 31

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2006 2005
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Sales 292.6 345.6
Operating earnings 46.3 108.8
Foreign exchange loss on long-term debt (3.7) (5.9)
Net income 22.7 55.1
Earnings: $ per share 1.55 3.76
Adjusted EBITDA (1) 77.5 133.5
Cash provided by operating activities 19.6 15.1
Number of common shares outstanding 14.6 14.6
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(1) Adjusted EBITDA, a non-GAAP financial measure, represents
operating earnings before amortization of capital assets,
finance expense, tax expense and foreign exchange gain/(loss)
on long-term debt.


Ainsworth Lumber Co. Ltd. today reported its financial results for the quarter ended March 31, 2006.

The Company generated net income of $22.7 million, or $1.55 per share, for the first quarter of 2006, compared to $55.1 million, or $3.76 per share, for the first quarter of 2005. Net income was lower in the first quarter of 2006 as a result of lower sales prices combined with higher production costs. North American OSB market prices were down from year end. Benchmark North Central OSB prices averaged U.S. $285 per msf (7/16" basis) for the quarter compared to a 2005 fourth quarter average price of U.S. $317 per msf.

Company sales prices for OSB in the first quarter of 2006 were 16% lower than those recorded in the first three months of 2005. This reduction, in combination with higher production costs, resulted in a $56.0 million decline in adjusted EBITDA compared to the first quarter of 2005.

During the first quarter of 2006, the Company received some relief from high energy and wood costs. Natural gas prices declined by over 50% from their 2005 peak levels, while an improving wood supply in our Eastern operations helped ease fibre costs. These cost savings more than offset the sales price decline in the quarter and adjusted EBITDA for the first three months of 2006 increased by $8.6 million over the fourth quarter of 2005.

Operating earnings of $46.3 million in 2006 were down $62.5 million compared to the first quarter 2005 but were not significantly different from the fourth quarter of 2005. The decrease from first quarter 2005 levels is a result of lower OSB selling prices combined with higher input costs. Cost of products sold for the first quarter of 2006 was $211.4 million, which was 3% higher than the first quarter of 2005 but an improvement over fourth quarter 2005 costs. Production volumes did not change significantly from either the first or the fourth quarters of 2005. Amortization of capital assets increased 7% over the first quarter of 2005 as a result of our growing asset base and a one time accelerated amortization charge taken on the press that is under repair at our Grand Rapids, Minnesota facility.

Cash from operating activities for the quarter was $4.5 million higher than the 2005 first quarter amount of $15.1 million. Compared to the fourth quarter of 2005, there was a $10.7 million reduction in cash provided by operating activities, which reflects the working capital demand associated with the Company's seasonal build-up of log inventories.

At March 31, 2006, Ainsworth had cash and short term investment balances (excluding restricted cash) of $183.3 million compared to $171.0 million at March 31, 2005 and $209.2 million at December 31, 2005.

"Demand for OSB remains strong and market prices are favourable compared to historical averages. Since relatively little additional OSB supply is expected to come on line during the year, we believe that Ainsworth is well positioned to benefit from these market dynamics," said Brian Ainsworth, Chairman and Chief Executive Officer.

The company will hold a conference call at 8:30 A.M. PST (11:30 A.M. EST) on Friday, May 12, 2006 to discuss the company's first quarter results. The dial-in phone number is 1-800-840-6238, Reservation #21291934. To access the post-view line, dial 1-800-558-5253 or 1-416-626-4100, Reservation #21291934. This recording will be available until May 19, 2006.

Forward-looking statements in this news release relating to the Company's expectations regarding OSB demand and pricing are made pursuant to the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. When used herein, words such as "expect" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions made by and information available to Ainsworth Lumber Co. Ltd. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, without limitation, the future demand for, and sales volumes of, the Company's products, future production volumes, efficiencies and operating cots, increases or decreases in the prices of the Company's products, the Company's future stability and growth prospects, the Company's future profitability and capital needs, including capital expenditures, and the outlook for and other future developments in the Company's affairs or in the industries in which the Company participates and factors detailed from time to time in the Company's periodic reports filed with the United States Securities and Exchange Commission, and other regulatory authorities. The Company has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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