Ainsworth Reports Strong Earnings in the First Quarter of 2005.VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , 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 -- Ainsworth Ainsworth redid dictionary manuscript burnt in fire. [Br. Hist.: Brewer Handbook, 752] See : Perseverance 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 Co. Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :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). ) - (All amounts in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents )
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($ millions, except Three months ended March 31
per share data) ---------------------------
2005 2004
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Sales 345.6 190.6
Operating earnings 108.8 91.0
Foreign exchange loss
on long-term debt 5.9 5.7
Net Income (loss) 55.1 (19.8)
Earnings (loss): $ per share 3.76 (1.36)
EBITDA (1) 133.5 104.4
Cash flow from operations (2) 15.1 45.0
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(1) EBITDA, a non-GAAP financial measure, represents operating
earnings before amortization of capital assets plus other income
(expense).
(2) Cash provided by operations after changes in non-cash working
capital.
Ainsworth Lumber Co. Ltd. today reported its financial results for the quarter ended March 31, 2005. The company generated net income of $55.1 million for the first quarter of 2005, compared to a net loss of $19.8 million for the same period in 2004. The increase in profitability is a result of a $17.8 million increase in operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before , a $100.0 million decrease in finance expense due to a one time refinancing Refinancing An extension and/or increase in amount of existing debt. charge of $106.2 million in 2004, a $5.4 million decrease in other income (expense), and a $34.7 million increase in income tax expense. Operating earnings for the first three months were $108.8 million compared to $91.0 million for the same period in 2004, representing a 19.6% increase. First quarter sales of $345.6 million were $155.0 million or 81.3% higher than the first quarter of 2004. As a result of the acquisition of four oriented strand board Oriented strand board, or OSB, or waferboard, or Sterling board (UK), is an engineered wood product formed by layering strands (flakes) of wood in specific orientations. (OSB OSB abbr. Order of Saint Benedict ) production facilities during 2004, OSB shipment volumes increased by 122.8% compared to the first quarter of 2004. Ainsworth's per unit production costs increased by 21.6% as a direct result of increases in natural gas and oil prices and wood fibre costs. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , defined as operating earnings before amortization of capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) plus other income (expense), was $133.5 million compared to $104.4 million in the same period last year. While OSB production capacity and shipments increased significantly compared to the same period in 2004, the growth in operating earnings was dampened by the decline in OSB prices from the record levels experienced in 2004, combined with the overall increase in OSB production costs. Cash provided by operations (after changes in non-cash working capital) during the quarter was $15.1 million compared to cash provided by operations of $45.0 million in the first quarter of 2004. During the quarter, non-cash working capital increased due to the seasonal build up of log inventories, and an increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying due to higher OSB shipment volume. During the quarter the Company made a timber timber: see lumber; wood. licence deposit of $36.2 million pursuant to an application for timber licences in the Prince George Prince George, city (1991 pop. 69,653), central British Columbia, Canada, at the confluence of the Fraser and Nechako rivers. It is a railroad division point and a distribution center for a lumber region. and the Quesnel Quesnel or Quesnell may refer to: Places
adj. 1. Almost exact or correct: the approximate time of the accident. 2. 1.4 million m3 of timber per year over a period of fifteen years. As part of the application for these timber licences, the Company is considering an opportunity to construct an OSB facility in these areas. No commitments to proceed with these plans have been made. At March 31, the Ministry of Forests had not granted the licences to the Company. Ainsworth had a cash balance of $177.6 million at March 31, 2005 compared to $212.6 million at December December: see month. 31, 2004 and $60.6 million at March 31, 2004. Subsequent to March 31, 2005, the Company secured sufficient additional long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. timber tenure tenure, in education tenure, in education, a guarantee of the permanence of a college or university teacher's position, awarded upon successful completion of a probationary period, usually seven years. to permit the expansion of 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. facility. The Company plans to commence construction in the second quarter of 2005. This expansion should provide an additional 600 mmsf (3/8" basis) of OSB production annually to the Company. "We are very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the stable North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. economy will continue to support housing starts and home renovations The creator of this article, or someone who has substantially contributed to it, may have a conflict of interest regarding its subject matter. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. in the near term. Our increased production capacity has positioned us well for benefiting from a larger market share in the future, while developing economies of scale and searching for efficient ways of increasing production at out facilities," said Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. Ainsworth, Chairman and Chief Executive Officer. The company will hold a conference call at 8:30 A.M. PST PST Paroxysmal supraventricular tachycardia, see there (11:30 A.M. EST EST electroshock therapy. EST abbr. electroshock therapy ) on Wednesday Wednesday: see week. , May 11, 2005 to discuss the company's first quarter results. The dial-in phone number is 1-800-346-5998, Reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. #21246780. To access the post-view line, dial 1-800-558-5253, Reservation #21246780. This recording will be available until May 18, 2005. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this news release relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's expectations regarding OSB demand and pricing are made pursuant to the "safe harbour" provisions of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . 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.
AINSWORTH LUMBER CO. LTD.
Interim Consolidated Balance Sheet
(In thousands of dollars)
--------------------------------------------------------------------
March 31 December 31
2005 2004
----------- -----------
Unaudited Audited
ASSETS
Current Assets
Cash and cash equivalents $ 177,567 $ 212,624
Timber licence deposits (Note 3) 36,249 -
Accounts receivable, net of allowance
for doubtful accounts of $313
(2004 - $320) 77,591 55,034
Inventories 125,300 87,582
Income taxes receivable 9,991 -
Prepaid expenses 7,682 8,349
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434,380 363,589
Capital Assets 922,824 926,204
Other Assets 48,881 47,702
Goodwill 102,970 103,516
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$ 1,509,055 $ 1,441,011
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 54,214 $ 42,973
Accrued liabilities 53,606 60,207
Income taxes payable - 41,181
Current portion of long-term debt 231 274
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108,051 144,635
Reforestation Obligation 4,874 4,470
Long-term Debt 923,054 916,625
Future Income Taxes 106,622 74,949
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1,142,601 1,140,679
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SHAREHOLDERS' EQUITY
Capital stock 55,827 55,827
Cumulative translation adjustment (23,235) (34,237)
Retained earnings 333,862 278,742
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366,454 300,332
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$ 1,509,055 $ 1,441,011
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The accompanying Notes to the Interim Consolidated Financial
Statements are an integral part of these statements.
Approved by the Board:
Catherine Ainsworth Allen Ainsworth
DIRECTOR DIRECTOR
AINSWORTH LUMBER CO. LTD.
Interim Consolidated Statements of Operations and Retained Earnings
(In thousands of dollars, except per share data) Unaudited
--------------------------------------------------------------------
Three months ended March 31
----------------------------
2005 2004
--------------------------------------------------------------------
Sales (Note 1b) $ 345,578 $ 190,632
--------------------------------------------------------------------
Costs and Expenses
Costs of products sold (Note 1b) 204,458 86,218
Selling and administration 7,325 5,116
Amortization of capital assets 24,954 8,314
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236,737 99,648
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Operating Earnings 108,841 90,984
Finance Expense
Interest charges (16,250) (10,388)
Amortization of finance charges (1,224) (861)
Loss on repurchase of long-term debt - (106,198)
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(17,474) (117,447)
--------------------------------------------------------------------
Other Income (Expense) (297) 5,058
Foreign Exchange Loss on Long-term Debt (5,893) (5,682)
--------------------------------------------------------------------
Income (Loss) Before Income Taxes 85,177 (27,087)
Income Tax Expense (Recovery) 30,057 (7,291)
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Net Income (Loss) 55,120 (19,796)
Retained Earnings, Beginning of Period 278,742 118,563
--------------------------------------------------------------------
Retained Earnings, End of Period $ 333,862 $ 98,767
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Basic and diluted (loss) earnings
per share $ 3.76 $ (1.36)
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The accompanying Notes to the Interim Consolidated Financial
Statements are an integral part of these statements.
AINSWORTH LUMBER CO. LTD.
Interim Consolidated Statements of Cash Flows
(In thousands of dollars) Unaudited
--------------------------------------------------------------------
Three months ended March 31
----------------------------
2005 2004
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $ 55,120 $ (19,796)
Amounts not requiring an outlay
of cash
Amortization of capital assets 24,954 8,314
Amortization of financing costs 840 472
Amortization of debt discount 380 144
Foreign exchange loss on long-term
debt 5,893 5,682
Amortization of consent and
commitment fees 4 245
Loss on repurchase of long-term debt - 106,198
Non-cash stock-based compensation - 2,640
Gain on disposal of capital assets - (11)
Change in non-current reforestation
obligation 404 410
Future income taxes 31,677 (7,573)
Change in non-cash operating working
capital (104,184) (51,738)
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Cash (used in) provided by operating
activities 15,088 44,987
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of long-term debt - 281,148
Redemption of long-term debt - (451,305)
Financing costs - (5,995)
Decrease in capital lease obligations (43) (68)
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Cash used in financing activities (43) (176,220)
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to capital assets (11,986) (1,765)
Timber licence deposits (36,249) -
Increase in other assets (1,867) (501)
Proceeds on disposal of capital assets - 14
--------------------------------------------------------------------
Cash used in investing activities (50,102) (2,252)
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NET CASH OUTFLOW (35,057) (133,485)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 212,624 194,054
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 177,567 $ 60,569
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The accompanying Notes to the Interim Consolidated Financial
Statements are an integral part of these statements.
AINSWORTH LUMBER CO. LTD.
Notes to the Interim Consolidated Financial Statements
Three month period ended March 31, 2005
(Unaudited)
1. BASIS OF PRESENTATION These interim unaudited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge do not include all disclosures normally provided in annual financial statements and accordingly, should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Company's audited financial statements for the year ended December 31, 2004. The Company's accounting policies are in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . These accounting policies are consistent with those outlined in the annual audited financial statements. In management's opinion, these unaudited interim consolidated financial statements include all adjustments (consisting solely of normal recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. adjustments) necessary to present fairly such information. The results of operations for the interim periods are not necessarily indicative indicative: see mood. of the results to be expected in future periods. a) Consolidation These consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries and partnerships which include Ainsworth Engineered Corp., Ainsworth Engineered (USA), LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , and Ainsworth Engineered Canada LP. b) Change in accounting presentation The Company has presented freight The price or compensation paid for the transportation of goods by a carrier. Freight is also applied to the goods transported by such carriers. The liability of a carrier for freight damaged, lost, or destroyed during shipment is determined by contract, statute, or and other distribution costs distribution costs distribute npl → Vertriebskosten pl as part of costs of products sold in the statement of operations See Income statement. and reclassified prior period's presentation accordingly. Previously these costs were presented as a reduction of sales in accordance with industry practice at the time. This change in accounting presentation was adopted in the second quarter of 2004. The effect of the change was to increase sales and cost of sales by $31.0 million for the three months ended March 31, 2005 (2004 - $15.9 million). 2. AINSWORTH ENGINEERED CANADA LP On January January: see month. 3, 2005 Ainsworth Engineered Canada LP was created under a partnership agreement between Ainsworth Engineered Corp. and Ainsworth Lumber Co. Ltd., to continue the combined Canadian business Canadian Business is the longest-publishing business magazine in Canada. It was founded in 1928 as The Commerce of the Nation, the organ of the Canadian Chamber of Commerce. The magazine was renamed Canadian Business in 1933. activities of these companies. Concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with this agreement, the Company authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: 5,000,000 Series 3 non-voting non-voting adj non-voting shares → azioni fpl senza diritto di voto , redeemable Redeemable Eligible for redemption under the terms of an indenture. , retractable re·tract v. re·tract·ed, re·tract·ing, re·tracts v.tr. 1. To take back; disavow: refused to retract the statement. 2. preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. and issued 100,000 of these preferred shares to its wholly-owned subsidiary Ainsworth Engineered Corp. No other preferred shares are outstanding at March 31, 2005. These transactions do not affect the Company's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: borrowings, financial position or earnings. 3. TIMBER LICENCE DEPOSITS During the period the Company submitted an application for timber licences in the Prince George Timber Supply Area and the Quesnel Timber Supply Area, covering in aggregate approximately 1.4 million m3 of timber per year. Both licences are for a term of 15 years. The Company was the successful bidder in both areas and is currently awaiting government approval of each application. At March 31, 2005 the Ministry of Forests had not granted the licences to the Company. Under the application agreements, until such time as the licences are granted, the $36.2 million in deposits will be held in trust. As part of the applications for the timber licences, the Company is considering an opportunity to construct a timber processing facility in these timber supply areas. No commitments to proceed with these facilities have been made. 4. SEGMENTED INFORMATION The Company operates principally in Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. in one business segment, manufacturing wood panel products.
Sales attributed to countries based on location of customer are as
follows:
Sales
---------------------------
Three Months ended March 31
---------------------------
2005 2004
---------------------------
Canada $ 30,443 $ 28,500
United States 306,642 150,632
Europe 3,320 2,400
Asia 5,173 9,100
---------------------------------------------------------------
Total $ 345,578 $ 190,632
---------------------------------------------------------------
---------------------------------------------------------------
Capital assets attributed to the countries based on location are as
follows:
March 31 December 31
----------- -----------
2005 2004
----------- -----------
Canada $ 426,459 $ 433,424
United States 496,365 492,780
---------------------------------------------------------------
Total $ 922,824 $ 926,204
---------------------------------------------------------------
---------------------------------------------------------------
5. BENEFIT PLANS
The expense for the Company's retirement benefit plans is as follows:
Three Months ended March 31
---------------------------
2005 2004
---------------------------
Defined Benefit Plans $ 687 $ 336
Contribution to Group RRSP Plans 312 325
---------------------------------------------------------------
Pension Expense $ 999 $ 661
---------------------------------------------------------------
---------------------------------------------------------------
6. SUBSEQUENT EVENT Subsequent to March 31, 2005, the Company was successful in securing sufficient additional long-term timber tenure to permit the expansion of the Grande Prairie facility. The Company plans to commence construction of the facility in the second quarter of 2005. This expansion should provide an additional 600 mmsf (3/8" basis) annually of OSB production to the Company.
AINSWORTH LUMBER CO. LTD.
Other Information
------------------------------------------------------------------
March 31, December 31,
2005 2004
----------- -----------
Selected Balance Sheet Items ($000's)
Cash $ 177,567 $ 212,624
Working capital 326,329 218,954
Total assets 1,509,055 1,441,011
Total debt 923,285 916,899
Shareholders' equity 366,454 300,332
Three Months ended March 31
---------------------------
Reconciliation of Net Income
(Loss) to EBITDA ($000's) 2005 2004
----------- -----------
Net Income (Loss) $ 55,120 $ (19,796)
Add: Amortization of capital assets 24,954 8,314
Finance expense 17,474 117,447
Income tax expense (recovery) 30,057 (7,291)
Foreign exchange loss on
long-term debt 5,893 5,682
----------- -----------
EBITDA (Note 1) $ 133,498 $ 104,356
----------- -----------
----------- -----------
Product Sales ($000's)
OSB $ 318,531 $ 164,222
Plywood 23,704 22,805
Veneer 2,351 2,761
Chips 992 844
----------- -----------
$ 345,578 $ 190,632
----------- -----------
----------- -----------
Geographic Sales Distribution ($000's)
Canada $ 30,443 $ 28,500
USA 306,642 150,632
Europe 3,320 2,400
Asia 5,173 9,100
----------- -----------
$ 345,578 $ 190,632
----------- -----------
----------- -----------
Product Shipment Volumes
OSB (msf-3/8") 805,593 361,571
Plywood (msf-3/8") 36,400 34,835
Veneer (msf-3/8") 10,599 10,701
Chips (BDUs) 11,637 9,721
Production Volumes
OSB (msf-3/8") 808,024 346,271
Plywood (msf-3/8") 37,454 37,500
Veneer (msf-3/8")(Note 2) 94,871 50,099
Chips (BDUs) 11,637 9,721
Note 1: EBITDA, a non-GAAP financial measure, is defined as operating
earnings before amortization plus interest and other income
(expense).
Note 2: Includes transfer volumes to Savona (for plywood production)
Ainsworth Lumber Co. Ltd. (TSX:ANS) |
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