Ainsworth Lumber Co. Ltd. Releases 4th Quarter Earnings.VANCOUVER, B.C.--(BUSINESS WIRE)--Feb. 27, 1997--AINSWORTH LUMBER lumber, term for timber that has been cut into boards for use as a building material. The major steps in producing lumber involve logging (the felling and preparation of timber for shipment to sawmills), sawing the logs into boards, grading the boards according to (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). ;VSE See DOS/VSE. VSE - Virtual Storage Extended ANS (ANS Communications, Inc, Purchase, NY) An ISP, Internet backbone and provider of private data network services, founded in 1990 as Advanced Network & Services, Inc., by IBM, MCI and Merit (consortium of Michigan universities). ) Ainsworth Lumber Co. Ltd. reports a net loss for the three months ended December 31, 1996 of $2.6 million ($0.18 per share) on sales of $73 million. Net earnings during the same three month period in 1995 were $7.8 million ($0.53 per share) on sales of $69 million. For the year ended December 31, 1996, the Company reports a net loss of $6.4 million ($0.44 per share) compared to net earnings of $14.6 million ($1.00 per share) for the year December 31, 1995. Sales for the year ended December 31, 1996 were $300 million versus $258 million for the comparative period in 1995. The Company's financial results for the fourth quarter were negatively affected by a number of factors. In this quarter wood chip prices were dramatically lower than the comparable three month period in 1995. Lumber prices decreased from the third quarter levels but were higher than the comparable period last year. However, lumber prices were more than offset by high log costs caused by increased stumpage stump·age n. 1. Standing timber regarded as a commodity. 2. The value of standing timber. 3. The right to cut standing timber. stumpage 1. charges as well as significantly higher harvesting and road construction costs required to meet standards under the Forest Practices Code. Wood chip prices are not taken into account in setting stumpage levels in BC. Consequently, the stumpage surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. under Forest Renewal BC had a greater impact on fourth quarter earnings as compared to the same three month period in 1995. Fourth quarter production of OSB OSB abbr. Order of Saint Benedict for domestic and export markets reached record levels for the Company; but, these gains were offset by lower prices. During the fourth quarter, cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , before changes in non-cash working capital, was ($0.6) million, or $0.00 per share, as compared with $24.5 million ($1.69 per share) for the same three month period in 1995. Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. during the quarter amounted to $9.5 million. Fourth quarter lumber prices were 4 percent lower than those of the previous quarter and 21 percent higher than those of the comparable three month period in 1995. The decrease in prices over the previous quarter reflected a seasonal downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in lumber prices. Fourth quarter wood chip prices were relatively flat as compared to the previous quarter's levels, but were 69 percent lower than the prices realized in the comparable three month period in 1995. No significant wood chip price improvements are expected in the first quarter due to ongoing weakness in world pulp markets. The Company's fourth quarter OSB prices were 14 percent lower than those of the previous quarter and 32 percent lower than those of the comparable period in 1995. A seasonal downturn and over supply in the market in the fourth quarter has been partially offset by increased shipments to Japan and to industrial customers. Prices are expected to remain low in the first quarter of 1997 with improvements in the second and third quarters. Increasing demand for OSB will continue to be offset by new supply in domestic markets. The Company received its Canada/US Softwood softwood Timber obtained from coniferous trees (mainly of the pine and fir families). With the exception of bald cypress, tamarack, and larch, softwood trees are evergreens. Lumber Agreement producer quota quota In international trade, a government-imposed limit on the quantity of goods and services that may be exported or imported over a specified period of time. Quotas are more effective than tariffs in restricting trade, since they limit the availability of goods rather at the end of October 1996. Over shipments on a quarterly basis had occurred in the first three quarters of the agreement (the Agreement has a March year end). In response production was decreased in December by a Company wide sawmill sawmill, installation or facility in which cut logs are sawed into standard-sized boards and timbers. The saws used in such an installation are generally of three types: the circular saw, which consists of a disk with teeth around its edge; the band saw, which shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down for the last 10 days of the month and decreased shipments to the US during the quarter. The Company intends to balance its sales to its quota in the final quarter of the agreement, given current selling prices. This will be done by production curtailments currently in place and increasing sales in Canadian and export markets. In 1997 management of production and sales for the US market should be more precise. Production at the Grande Prairie Grande Prairie (Fr. gräNd prâ'rē`), city (1991 pop. 28,271), W Alta., Canada, NW of Edmonton. It is the chief business center for the Peace River valley farming area. mill continued to improve during the quarter and into 1997. The OSB facility has an annual capacity of approximately 500 million square feet (3/8 inch basis). This facility, one of the largest in the world, will achieve low production costs due to significant economies of scale. Unit production costs will continue to drop as the mill approaches design capacity. Over the past two months the mill has produced at 75 percent of design capacity. Production at the Company's lumber, veneer veneer (vənēr`), thin leaf of wood applied with glue to a panel or frame of solid wood. The art of veneer developed with early civilization. , specialty plywood plywood, manufactured board composed of an odd number of thin sheets of wood glued together under pressure with grains of the successive layers at right angles. Laminated wood differs from plywood in that the grains of its sheets are parallel. and 100 Mile House OSB production facilities met, or exceeded budgeted levels. During the coming year, the outlook for both veneer and specialty plywood products is favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. . Developing markets in the Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. are growing with a steady customer base in Taiwan and Korea for our specialty plywood and new opportunities for sales of veneer growing in Indonesia, Malaysia and Japan. Ongoing high log costs, low chip prices, and a seasonal downturn in OSB demand are expected to continue impacting earnings in the next quarter. The second and third quarters should see increasing demand for lumber and OSB in domestic markets. Export lumber and OSB markets are forecast to remain strong. Because new OSB production has impacted the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. structural panel market, the Company will continue to target Pacific Rim and specialty OSB markets, which offer premium prices over North American commodity markets. During the fourth quarter, the Company shipped approximately 50 percent of the 100 Mile House OSB plant's production to offshore markets. In addition, we commenced shipments to offshore markets from the Grande Prairie plant. Ainsworth Lumber has operated as a solid wood forest products company in British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography for more than forty years. In addition to its sawmill and OSB plant at 100 Mile House, Ainsworth operates a sawmill near Clinton, a sawmill and veneer plant at Lillooet, a specialty plywood plant at Savona, and a value-added plant at Abbotsford. Ainsworth's recently completed OSB facility in Grande Prairie, Alberta “Grande Prairie” redirects here. For the city in Texas, see Grand Prairie, Texas. Grande Prairie is the main city in the northwestern part of the province of Alberta in Western Canada. , is the Company's first operation outside of British Columbia. -0-
AINSWORTH LUMBER CO. LTD.
Supplemental 3 months ended 12 months ended
Information December 31 December 31
(in thousands of dollars)
unaudited 1996 1995 1996 1995
Sales $73,449 $68,941 $299,626 $258,218
_______ _______ ________ ________
Cost of products sold 66,195 52,089 276,625 213,534
Depreciation and
amortization 8,196 4,899 22,909 16,965
_______ _______ ________ ________
74,391 56,988 299,534 230,499
_______ _______ ________ ________
Earnings from operations (942) 11,953 92 27,719
Other income 2,067 1,514 3,608 3,234
_______ _______ ________ ________
1,125 13,467 3,700 30,953
Interest and
financing expense 3,293 743 12,057 6,386
_______ _______ ________ ________
Earnings before
income taxes (2,168) 12,724 (8,357) 24,567
Income taxes 408 4,890 (2,006) 9,925
_______ _______ ________ ________
Net earnings $(2,576) $7,834 $(6,351) $14,642
_______ _______ ________ ________
_______ _______ ________ ________
Net earnings per common
share (in dollars) $(0.18) $0.53 $(0.44) $1.00
_______ _______ ________ ________
_______ _______ ________ ________
Weighted average common
shares outstanding
(000's) 14,545 14,560 14,545 14,560
_______ _______ ________ ________
_______ _______ ________ ________
Other Information
Cash from (used for)
operations (Note 1) $(587) $24,534 $21,982 $48,508
Additions to capital
assets $9,461 $37,378 $41,370 $138,257
Total assets $404,726 $384,628 $404,726 $384,628
Shareholders' equity $114,624 $121,063 $114,624 $121,063
Product Sales
OSB $30,682 $22,020 $120,906 $77,145
Lumber 26,651 19,622 107,048 85,567
Plywood 10,632 8,926 44,376 41,595
Veneer 2,382 4,243 11,757 14,422
Chips 3,102 14,130 15,539 39,489
_______ _______ ________ ________
$73,449 $68,941 $229,626 $258,218
_______ _______ ________ ________
_______ _______ ________ ________
Product Sales Volume
OSB (msf-3/8") 156,747 76,819 548,685 288,228
Lumber (mfbm) 56,656 50,683 236,130 213,105
Plywood (msf-3/8") 18,696 14,587 75,600 69,333
Veneer (msf-3/8") 12,806 20,494 59,420 67,576
Chips (BDUs) 48,698 70,173 197,434 209,000
Note 1: before changes in non-cash operating working capital
Note: Comparative earnings figures for 1995 have been restated to
reflect the reclassification of preferred share dividends as an
interest expense to conform with the 1996 presentation.
CONTACT: Ainsworth Lumber Co. Ltd. Catherine Ainsworth, 604/661-3200 |
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