Ainsworth Lumber Co. Ltd.
TSX : ANS

Ainsworth Lumber Co. Ltd.

August 15, 2005 17:15 ET

Ainsworth Reports Financial Results for the Second Quarter of 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 15, 2005) - Ainsworth Lumber Co. Ltd. (TSX:ANS) -



($ millions, except Three months ended Six months ended
per share data) June 30 June 30
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2005 2004 2005 2004
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Sales 329.9 241.1 675.5 431.7
Operating earnings 77.6 120.2 186.4 211.1
Foreign exchange loss on
long-term debt 12.6 0.1 18.5 5.8
Net Income 31.3 71.4 86.5 51.6
Earnings: $ per share 2.14 4.87 5.90 3.52
EBITDA (1) 104.9 133.0 238.4 237.4
Cash flow from operations (2) 73.1 149.6 88.2 194.6
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(1) EBITDA, a non-GAAP financial measure, represents operating
earnings before amortization of capital assets plus other income.
(2) Cash provided by operations after changes in non-cash working
capital.


Ainsworth Lumber Co. Ltd. (TSX:ANS) today reported its financial results for the quarter ended June 30, 2005.

The company generated net income of $31.3 million or $2.14 per share for the second quarter of 2005, compared to $71.4 million or $4.87 for the same period in 2004. The decline in profitability during the quarter is a combined result of a $42.6 million decrease in operating earnings, a $12.8 million increase in finance expense due to increase in the average outstanding debt compared to 2004, a $12.5 million increase in foreign exchange loss on long-term debt, and a $27.9 million decrease in income tax expense.

Operating earnings for the second quarter were $77.6 million compared to $120.2 million for the same period in 2004, representing a 35.4% decline. Second quarter sales of $329.9 million were $88.8 million or 36.8% higher than the second quarter sales in 2004. As a result of the acquisition of four oriented strand board (OSB) production facilities during 2004, OSB shipment volumes increased by 112.9% compared to the second quarter of 2004. At the same time, Ainsworth's per unit cost of sales increased by 15.9% as a direct result of increases in wood fibre costs and resin and wax prices.

EBITDA, defined as operating earnings before amortization of capital assets plus other income, was $104.9 million compared to $133.0 million in the same period last year. While OSB production capacity and shipments increased significantly compared to the same period in 2004, operating earnings decreased with the decline in OSB prices and the overall increase in OSB production costs compared to 2004. EBITDA for the six months ended June 30, 2005, was $238.4 million compared to $237.4 million in the same period last year.

Cash provided by operations (after changes in non-cash working capital) during the quarter was $73.1 million compared to $149.6 million in the second quarter of 2004. The decline in cash provided by operations is attributable to lower margins and to increases in non-cash working capital.

Net cash flows used in financing activities for the current quarter were $45.8 million compared to cash provided by financing activities of $131.6 million in 2004. During the current quarter the Company repurchased U.S. $24.5 million in long term debt, while in the second quarter of 2004 the Company issued U.S. $110 million 6.75% senior unsecured notes. In addition, in the second quarter of 2005 the Company paid a dividend of $14.6 million to shareholders of record on June 7, 2005.

During the second quarter of 2005 the Company invested $10.1 million in capital and other assets, such as upgrades to its operating facilities, timber rights purchases, and wood deposits in the Minnesota operations.

At June 30, 2005 Ainsworth had a cash balance of $194.8 million compared to $212.6 million at December 31, 2004 and $177.6 million at March 31, 2005. At June 30, 2004 the cash balance was $100.0 million.

"While the price for OSB has declined from the record levels experienced in 2004, demand for engineered wood products remains strong. Given our commitment and expertise in the manufacturing and marketing of engineered wood products, and the continued strength of the residential construction industry, we are well positioned to address the influences of the market. The construction of a second line at our Grande Prairie OSB facility demonstrates our commitment to meeting increased customer demand for engineered wood products. The Company will continue to explore business opportunities to enhance our ability to service the needs of the market and our customers", 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 Tuesday, August 16, 2005 to discuss the company's second quarter results. The dial-in phone number is 1-800-470-5906, Reservation #21257447. To access the post-view line, dial 1-800-558-5253 or 1-416-626-100, Reservation #21257447. This recording will be available until August 22, 2005.

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 costs, 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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