Ainsworth Lumber Co. Ltd.

Ainsworth Lumber Co. Ltd.

March 03, 2005 21:15 ET

Ainsworth Revises 2004 Earnings Upwards




MARCH 3, 2005 - 21:15 ET

Ainsworth Revises 2004 Earnings Upwards

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 3, 2005) - Ainsworth
Lumber Co. Ltd. (TSX:ANS) today announced that, as a result of
discussions with its auditors concerning the accounting treatment for a
US $9.1 million payment owed to the vendor of the OSB facility in
Barwick, Ontario acquired by Ainsworth in May, 2004, Ainsworth will be
restating its recently announced 2004 earnings. As a result of the
restatement, the Company's net income for the 12 months ended December
31, 2004 will increase from $165.4 million (or $11.32 per share) to
$175.1 million (or $11.98 per share). This adjustment will have no
material impact on the Company's financial position or cash flow.

Robert Allen, the Chief Financial Officer for Ainsworth, said that "Our
auditors require restatement of third and fourth quarter earnings
indicating that the accrued contingent consideration relating to the
Barwick facility, which entitles the vendor to an additional one-time
payment based on OSB prices, should be capitalized as goodwill rather
than treated as an expense. This adjustment will result in an increase
in goodwill, income before income taxes and income tax expense for the
third quarter, fourth quarter and annual financial statements. As a
result of this change, Ainsworth will be filing a restated financial
statement and Management Discussion and Analysis for the third quarter
ended September 30, 2004. The company's press release issued on Monday,
February 28, 2005 is revised and restated as follows:

($ millions, except Three months ended Twelve months ended
per share data) December 31 December 31
2004 2003 2004 2003
Sales 253.0 173.6 909.9 543.0
Operating earnings 27.5 67.4 326.0 155.3
Unrealized foreign
exchange gain on
long term debt 46.1 12.8 73.8 76.9
Net income 52.4 41.0 175.1 123.7
Earnings per share 3.59 2.82 11.98 8.49
EBITDA(1) 55.5 89.2 377.3 201.5
Cash flow from
operations(2) 58.1 77.8 364.4 133.6
(1) EBITDA, a non-GAAP financial measure, is defined as operating
earnings before amortization and write-down of capital assets,
plus interest and other income.
(2) Cash provided by operations after changes in non-cash working

During the quarter, operating earnings declined to $27.5 million on
sales of $253.0 million compared to $67.4 million on sales of $173.6 in
the same period of 2003. This decrease was principally driven by lower
average OSB prices, higher raw material prices and higher selling and
administration expenses. The 45.7% increase in sales is attributed to
significantly higher OSB shipments arising from the company's
acquisition of an additional four OSB manufacturing facilities during
the second and third quarters of 2004. EBITDA, defined as operating
earnings before amortization and write-down of capital assets, plus
interest and other income, in the three-month period declined to $55.5
million from $89.2 million in the same period of 2003 due to the lower
average OSB margins and the unfavourable impact of the significant
appreciation in the Canadian dollar. The increase in net income is
mainly attributable to a $33.3 million increase in the unrealized
foreign exchange gain on U.S.-dollar denominated debt and a $15.8
million decrease in income tax expense being partly offset by the lower
average OSB margins. Cash provided by operations (after changes in
non-cash working capital) was $58.1 million compared to $77.8 million in
the same period of 2003.

For the twelve months ended December 31, 2004, net income was a record
high $175.1 million or $11.98 per share compared to $123.7 million or
$8.49 per share for the same period of 2003. This higher net income is
largely explained by a $170.7 million improvement in operating earnings
that was partly offset by a $106.2 million one-time expense related to
refinancing long-term debt in early 2004. A 51.8% increase in OSB
shipments and a 17.3% increase in OSB prices were the principal reasons
for higher operating earnings compared to 2003. For the year EBITDA was
$377.3 million on sales of $909.9 million compared to $201.5 million on
sales of $543.0 million in 2003. Cash provided by operations (after
changes in non-cash working capital) totalled $364.4 million in 2004
compared to $133.6 million in the prior year.

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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