Ainsworth Lumber Co. Ltd.
TSX : ANS
TSX : ANS.WT

Ainsworth Lumber Co. Ltd.

May 13, 2009 17:40 ET

Ainsworth Financial Results and Conference Call Notification For the First Quarter of 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 13, 2009) - Ainsworth Lumber Co. Ltd. (TSX:ANS)(TSX:ANS.WT) today reported its unaudited financial results for the quarter ended March 31, 2009.

The U.S., Ainsworth's most important geographic market for structural panels, is in a severe recession. U.S. housing demand faces many challenges, such as mortgage market contraction, an excess supply of new and existing homes, rising foreclosures, and home price deflation. As a result, we expect U.S. market conditions will not improve in the near term. Canadian housing market conditions also weakened in 2008 and the outlook is uncertain for 2009 and beyond.

After a strategic review, we decided to permanently close the Grand Rapids OSB mill in August 2008 and the other two Minnesota-based OSB mills in January 2009. For financial accounting purposes, the U.S. OSB operations met the criteria to qualify for discontinued operations, and the results of the Minnesota mills have been excluded from sales, operating loss and adjusted EBITDA for both 2009 and 2008.



Selected Financial Information
In millions of Canadian dollars, except per share amounts
(Unaudited) Three months ended
March 31
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2009 2008
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Sales $ 81.0 $ 73.8
Operating loss (11.0) (25.9)
Foreign exchange loss on long-term debt (21.7) (36.1)
Net loss from continuing operations (34.8) (77.7)
Net loss (54.2) (88.2)

Adjusted EBITDA (1) (2.3) (18.0)

Adjusted working capital (2) 211.7 226.8

Net loss from continuing operations per share (0.35) (5.30)
Net loss per share (0.54) (6.02)
Weighted average common shares
outstanding (in millions) (3) 100.0 14.6

(1) Adjusted EBITDA, a non-GAAP financial measure, is defined as net loss
before amortization, gain on disposal of capital assets, finance
expense, realized currency translation adjustments, foreign exchange
loss on long-term debt, other foreign exchange gain, income tax
recovery and other non-recurring items. See our Management's Discussion
and Analysis for the quarter ended March 31, 2009 for a reconciliation
of non-GAAP measures.

(2) Adjusted working capital, a non-GAAP financial measure, is defined as
current assets less restricted cash, current portion of future income
tax assets and current liabilities plus current portion of future
income tax liabilities.

(3) 89,905,712 common shares and 10,094,288 noteholder warrants were
outstanding on March 31, 2009 bringing total common shares and
noteholder warrants outstanding to 100,000,000.


Net loss from continuing operations for the quarter was $34.8 million on sales of $81.0 million compared to net loss from continuing operations of $77.7 million on sales of $73.8 million for the first quarter of 2008. The main factors in the decreased loss from continuing operations were improvements in operating earnings, a decrease in foreign exchange losses and a reduction in finance expense.

Adjusted EBITDA was negative $2.3 million in the first quarter of 2009 compared with negative $18.0 million in the same period of 2008. The improvement was the result of higher realized prices and a decline in cost of goods sold, which increased our gross profit (sales less cost of products sold (exclusive of amortization)). The weaker Canadian dollar, which was an average of 19 cents lower in the first quarter of 2009 compared with the first quarter of 2008, also contributed to improving gross profit. The foreign exchange impact on adjusted EBITDA was an estimated $7.5 million improvement compared with the first quarter of 2008.

The average of the market prices reported by Random Lengths during the first quarter of 2009 was U.S.$154 per msf (North Central region, on a 7/16th-inch basis) compared to U.S.$137 per msf in the first quarter of 2008.

OSB shipments from our continuing operations of 363,282 msf in the first quarter of 2009 were 16% higher than in the same period of 2008. Our Grande Prairie, Alberta and 100 Mile, British Columbia OSB facilities took temporary shutdowns totalling 38 days and 14.5 days of production time, respectively, during the first quarter of 2008.

On July 29, 2008 we completed a recapitalization plan which resulted in a realignment of equity and non-equity interests. The outcome of the recapitalization was a significant de-leveraging of our balance sheet. Our total debt and cash interest expense was reduced, and we are in a significantly better position to meet future market challenges. Details regarding the financial recapitalization are included in Note 1 of the consolidated financial statements for the period ended December 31, 2008, which are available on SEDAR and the Company's website.

Until North American market conditions improve, we have frozen all discretionary capital expenditures. In the meantime, based on current and forecasted pricing, we believe that we have sufficient working capital to fund any shortfall from operations, interest payments, debt repayments and essential capital expenditures. During the fourth quarter of 2008 and the first quarter of 2009, as a result of the global economic crisis, the terms and availability of debt and equity capital have been materially restricted. As a result, should such conditions continue through to maturity of our senior unsecured notes in 2015 and should the Company require debt or equity financing, debt capital may not be available on acceptable terms, which may require management to explore strategic alternatives to improve its capital structure, enhance liquidity, refinance debt, sell non-core assets and reduce costs and expenditures. Adjusted working capital as at March 31, 2009 was $211.7 million compared to $226.8 million at December 31, 2008.

The Company will hold a conference call on Tuesday, May 19, 2009 at 8:00 a.m. PDT (11:00 am EDT) to discuss the first quarter 2009 results. The dial-in phone number is 1-800-954-0692, Reservation #21424714. To access the post-view line, dial 1-800-558-5253, or 1-416-626-4100, Reservation #21424714. This recording will be available until the end of the day on May 26, 2009.

Excerpts from the company's financial statements for the period ended December 31, 2008 are attached. To view the complete financial statements, including the notes to the financial statements, click on the following link: http://media3.marketwire.com/docs/2009Q1Report.pdf

Forward-looking information provided in this news release relating to the Company's expectations regarding OSB demand and pricing and the Company's future prospects are forward-looking information pursuant to National Instrument 51-102 promulgated by the Canadian Securities Administrators. The Company believes that expectations reflected in such information are reasonable, but no assurance is given that such expectations will be correct. Forward-looking information is based on the Company's beliefs and assumptions based on information available at the time the assumption was made and on management's experience and perception of historical trends, current conditions and expected further developments as well as other factors deemed appropriate in the circumstances. Investors are cautioned that there are risks and uncertainties related to such forward-looking information and actual results may vary. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking information include, without limitation, factors detailed from time to time in the Company's periodic reports filed with the Canadian Securities Administrators and other regulatory authorities. The forward-looking information is made as of the date of this news release and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as explicitly required by securities laws.



Interim Consolidated Balance Sheets
(In thousands of Canadian dollars)
(Unaudited)
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March 31 December 31
2009 2008
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ASSETS
Current Assets
Cash and cash equivalents $ 156,433 $ 192,584
Short-term investments 1,601 1,586
Accounts receivable 21,369 19,916
Inventories 66,939 53,251
Prepaid expenses 5,196 5,681
Restricted cash 4,423 5,344
Assets held for disposal 5,224 5,337
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261,185 283,699
Capital Assets, Net 643,730 652,448
Other Assets 14,673 14,512
Assets Held for Disposal 18,476 33,019
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$ 938,064 $ 983,678
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 28,283 $ 27,539
Income taxes payable 2,196 2,764
Current portion of future income tax liabilities 4,997 8,492
Current portion of long-term debt 12,706 12,366
Liabilities related to assets held for sale 1,957 8,933
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50,139 60,094
Accrued Pension Benefit Liability 4,278 4,278
Other Liabilities 3,254 3,512
Long-term Debt 652,143 627,115
Future Income Tax Liabilities 53,885 60,160
Liabilities Related to Assets Held
for Disposal 2,451 2,368
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766,150 757,527

SHAREHOLDERS' EQUITY
Capital Stock 409,613 409,613
Deficit (235,221) (180,984)
Accumulated Other Comprehensive Loss (2,478) (2,478)
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171,914 226,151
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$ 938,064 $ 983,678
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Interim Consolidated Statements of Operations
For the three months ended March 31
(In thousands of Canadian dollars, except share data) The The
(Unaudited) Company Predecessor
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2009 2008
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Sales $ 80,995 $ 73,764
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Costs and Expenses
Costs of products sold (exclusive of
amortization) 76,849 86,113
Selling and administration 7,093 6,655
Amortization of capital assets 8,587 8,699
Gain on disposal of capital assets (535) (2,750)
Write-off of capital assets - 837
Cost of class action lawsuit - 146
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91,994 99,700
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Operating Loss (10,999) (25,936)

Finance Expense
Interest 14,513 17,619
Transaction costs - 3,454
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14,513 21,073

Other Income 614 1,115
Foreign Exchange Loss on Long-term Debt (21,727) (36,081)
Other Foreign Exchange Gain 2,148 609
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Loss Before Income Taxes (44,477) (81,366)
Income Tax Recovery (9,695) (3,655)
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Net Loss from Continuing Operations (34,782) (77,711)
Net Loss from Discontinued Operations (19,455) (10,472)
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Net Loss $ (54,237) $ (88,183)
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Basic and diluted net loss per common share:
Continuing operations $ (0.35) $ (5.30)
Discontinued operations (0.19) (0.72)
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Basic and diluted loss per common share $ (0.54) $ (6.02)
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Weighted average number of common
shares outstanding 100,000,000 14,649,140
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Interim Consolidated Statements of Cash Flows
For the three months ended March 31
(In thousands of Canadian dollars) The The
(Unaudited) Company Predecessor
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2009 2008
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (54,237) $ (88,183)
Items not affecting cash
Amortization of capital assets 8,587 11,221
Non-cash portion of interest expense 5,450 334
Foreign exchange loss on long-term debt 21,727 36,081
Gain on disposal of capital assets (180) (2,750)
Impairment of capital assets of
discontinued operations 14,303 -
Write-off of capital assets - 837
Change in non-current reforestation obligation (258) (70)
Future income taxes (9,770) (3,832)
Unrealized foreign exchange (764) -
Realized currency translation adjustments - 1,465
Change in non-cash operating working capital (20,052) 4,427
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Cash used in operating activities (35,194) (40,470)
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CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt (1,708) (2,047)
Repayment of capital lease obligations (100) (75)
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Cash used in financing activities (1,808) (2,122)
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CASH FLOWS FROM INVESTING ACTIVITIES
Short-term investments (15) (45)
Restricted cash 921 (640)
Additions to capital assets (1,273) (3,206)
Decrease in other assets 81 371
Proceeds on disposal of capital assets 289 3,392
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Cash provided by (used in) investing activities 3 (128)
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Effect of foreign exchange rate changes on
cash and cash equivalents 848 (8)
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NET CASH OUTFLOW (36,151) (42,728)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 192,584 69,627
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 156,433 $ 26,899
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Components of cash and cash equivalents:
Cash balances with banks $ 156,433 $ 26,899
Investments with original maturities
of three months or less - -
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$ 156,433 $ 26,899
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SUPPLEMENTAL INFORMATION
Taxes paid $ 6 $ 60
Interest paid 2,004 8,226
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