Ainsworth Financial Results for the Second Quarter of 2009

• Press Release
• Source: Ainsworth Lumber Co. Ltd.
• On 9:28 pm EDT, Wednesday August 12, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - 08/12/09) - Ainsworth Lumber Co. Ltd. (TSX:ANS - News)(TSX:ANS.WT - News) today reported its unaudited financial results for the quarter ended June 30, 2009.

During the second quarter of 2009, Ainsworth's three active OSB mills, all in Canada, took no demand related downtime. Net income from continuing operations for the second quarter of 2009 was $19.5 million compared to a net loss of $33.5 million for the same period in 2008. The improvement was largely attributable to foreign exchange gains associated with the Company's outstanding debt.

Beginning with the recapitalization of the Company in July 2008, Ainsworth has taken a number of substantive measures to realign its business with the current economic environment. In addition to previously announced mill closures in Minnesota and temporarily curtailing production at three of its six Canadian mills, Ainsworth has implemented a number of cost reduction initiatives, including minimizing all discretionary expenditures. Until market conditions improve, the Company is committed to focusing its resources on its best performing assets.

Over the near term our priorities will continue to be managing our costs and returning our company to EBITDA positive results. Strategically, Ainsworth is focused on diversifying its business geographically, expanding its value-added product offerings, and leveraging the Company's proven track record of operational excellence, innovation and technical product development to become a company that is sustainable and profitable throughout business cycles.

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Selected Financial Information
In millions of Canadian dollars,
 except share and per share data
(Unaudited)                         Three months ended    Six months ended
                                               June 30             June 30
--------------------------------------------------------------------------
                                        2009     2008(1)    2009    2008(1)
                                     ------- ---------- -------- ---------

Sales                                $  81.0  $  97.2    $ 162.0  $  170.9
Operating (loss) earnings              (19.1)     0.9      (30.1)    (25.0)
Foreign exchange gain
 (loss) on long-term debt               50.4      6.8       28.7     (29.3)
Net income (loss) from
 continuing operations                  19.5    (33.5)     (15.2)   (111.2)
Net income (loss)                       24.7    (34.2)     (29.5)   (122.4)

Adjusted EBITDA(2)                      (3.5)    11.6       (3.9)     (5.7)

Basic earnings (loss) per share:
 Net income (loss) from
  continuing operations                 0.20    (2.29)     (0.15)    (7.59)
 Net income (loss)                      0.25    (2.33)     (0.29)    (8.35)
 Weighted average common shares
  outstanding (in millions)(3)         100.0     14.6      100.0      14.6

(1) On July 29, 2008 the Company completed a major financial
    recapitalization of its balance sheet. The results for the three and
    six month periods ended June 30, 2008, as disclosed above, are the
    results of the Predecessor Company while the results for the three and
    six month periods ended June 30, 2009 are the results of the
    recapitalized Company. 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.
(2) Adjusted EBITDA, a non-GAAP financial measure, is defined as net (loss)
    income from continuing operations before amortization, (gain) loss on
    disposal of capital assets, finance expense, foreign exchange (gain)
    loss on long-term debt, other foreign exchange (gain) loss, income tax
    recovery and non-recurring items. See our Management's Discussion and
    Analysis for the quarter ended June 30, 2009 for a reconciliation of
    non-GAAP measures.
(3) 89,905,712 common shares and noteholder warrants exercisable for
    10,094,288 common shares (for no additional consideration) were
    outstanding on June 30, 2009 bringing total common shares and
    noteholder warrants outstanding to 100,000,000.

Adjusted EBITDA was negative $3.5 million in the second quarter of 2009 compared with positive $11.6 million in the same period of 2008. The decline in adjusted EBITDA was primarily the result of lower realized prices and an increase in costs of products sold, which reduced our gross profit (sales less costs of products sold (exclusive of amortization)). Foreign exchange partially offset the decline in gross profit as the Canadian dollar was an average of 13 cents lower in the second quarter of 2009 compared with the second quarter of 2008. The foreign exchange impact on adjusted EBITDA was an estimated $4.9 million improvement compared with the second quarter of 2008. In the first six months of 2009, adjusted EBITDA was negative $3.9 million, which was an improvement of $1.8 million from negative $5.7 million in the first six months of 2008.

The average of the market prices reported by Random Lengths during the second quarter of 2009 was U.S.$147 per msf (North Central region, on a 7/16th-inch basis) compared to U.S.$176 per msf in the second quarter of 2008.

OSB shipments from our continuing operations of 408,944 msf in the second quarter of 2009 were 1.2% higher than in the same period of 2008. Our operating OSB facilities experienced 1.25 days of unplanned maintenance down time during the second quarter of 2009.

On July 29, 2008 we completed a recapitalization 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 minimized all discretionary capital expenditures. In the meantime, we continue to focus on maintaining 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 half of 2009, as a result of the global economic crisis, the terms and availability of debt and equity capital have been materially restricted. As of June 30, 2009, our adjusted working capital was $200.8 million, compared to $226.8 million as at December 31, 2008.

Excerpts from the Company's financial statements for the period ended June 30, 2009 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/Q2ANSfs.pdf

The Company will hold a conference call on Thursday, August 13, 2009 at 1:00 pm PDT (4:00 pm EDT) to discuss the second quarter 2009 results. The dial-in phone number is 1-800-909-4792, Reservation #21434155. To access the post-view line, dial 1-800-558-5253, or 1-416-626-4100, Reservation #21434155. This recording will be available until the end of the day on August 20, 2009.

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.

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AINSWORTH LUMBER CO. LTD.
Interim Consolidated Balance Sheets
(In thousands of Canadian dollars)
(Unaudited)
--------------------------------------------------------------------------
                                                    June 30    December 31
                                                       2009           2008
                                                 -------------------------

ASSETS
Current Assets
 Cash and cash equivalents                       $  154,527     $  192,584
 Short-term investments                               1,576          1,586
 Accounts receivable                                 26,852         19,916
 Inventories                                         43,276         53,251
 Prepaid expenses                                     6,737          5,681
 Restricted cash                                      4,337          5,344
 Assets held for disposal                             4,023          5,337
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                                                    241,328        283,699
Capital Assets, Net                                 635,690        652,448
Other Assets                                         12,638         14,512
Assets Held for Disposal                              8,320         33,019
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                                                 $  897,976     $  983,678
--------------------------------------------------------------------------
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
 Accounts payable and accrued liabilities        $   20,747     $   27,539
 Income taxes payable                                 2,093          2,764
 Current portion of future income tax liabilities     3,621          8,492
 Current portion of long-term debt                   11,832         12,366
 Liabilities related to assets held for disposal      1,469          8,933
--------------------------------------------------------------------------
                                                     39,762         60,094
Accrued Pension Benefit Liability                     4,278          4,278
Other Liabilities                                     2,956          3,512
Long-term Debt                                      604,011        627,115
Future Income Tax Liabilities                        47,129         60,160
Liabilities Related to Assets Held for Disposal       2,260          2,368
--------------------------------------------------------------------------
                                                    700,396        757,527

SHAREHOLDERS' EQUITY
Capital Stock                                       409,613        409,613
Contributed Surplus                                     711              -
Deficit                                            (210,517)      (180,984)
Accumulated Other Comprehensive Loss                 (2,227)        (2,478)
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                                                    197,580        226,151
--------------------------------------------------------------------------

                                                 $  897,976     $  983,678
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AINSWORTH LUMBER CO. LTD.
Interim Consolidated Statements of Operations
(In thousands of Canadian dollars, except share data)
(Unaudited)
--------------------------------------------------------------------------
                                      Three months              Six months
                                     ended June 30           ended June 30
                            ----------------------------------------------
                                  2009        2008        2009        2008
                                   The         The         The         The
                               Company Predecessor     Company Predecessor
--------------------------------------------------------------------------

Sales                       $   80,994  $   97,163  $  161,989  $  170,927
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Costs and Expenses
 Costs of products sold
  (exclusive of amortization)   79,382      79,450     156,231     165,563
 Selling and administration      5,117       6,797      10,182      12,768
 Amortization of
  capital assets                 9,932       9,545      18,519      18,244
 Net gain on disposal of
  capital assets                  (364)       (201)       (899)     (2,114)
 Write-down of capital
  assets held for sale           8,219           -       8,219           -
 Write-down of inventory
  related to assets held
  for sale                       4,262           -       4,262           -
 (Net proceeds) cost of claim   (6,463)        489      (4,435)      1,173
 Cost of class action lawsuit        -         172           -         318
--------------------------------------------------------------------------

                               100,085      96,252     192,079     195,952
--------------------------------------------------------------------------

Operating (Loss) Earnings      (19,091)        911     (30,090)    (25,025)

Finance Expense
 Interest                       13,362      16,247      27,875      33,866
 Transaction costs                   -       9,624           -      13,078
--------------------------------------------------------------------------
                                13,362      25,871      27,875      46,944
Other (Loss) Income                (44)        574         570       1,689
Foreign Exchange Gain (Loss)
 on Long-term Debt              50,448       6,811      28,721     (29,270)
Other Foreign Exchange
 (Loss) Gain                    (3,868)       (363)     (1,720)        246
--------------------------------------------------------------------------
Income (Loss) Before Income
 Taxes                          14,083     (17,938)    (30,394)    (99,304)
Income Tax (Recovery) Expense   (5,452)     15,555     (15,147)     11,900
--------------------------------------------------------------------------
Net Income (Loss) from
 Continuing Operations          19,535     (33,493)    (15,247)   (111,204)
Net Income (Loss) from
 Discontinued Operations         5,169        (709)    (14,286)    (11,181)
--------------------------------------------------------------------------
Net Income (Loss)           $   24,704  $  (34,202) $  (29,533) $ (122,385)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Earnings (loss) per share:
Basic
 Continuing operations      $     0.20  $    (2.29) $    (0.15) $    (7.59)
 Discontinued operations          0.05       (0.04)      (0.14)      (0.76)
--------------------------------------------------------------------------
Net Income (Loss)           $     0.25  $    (2.33) $    (0.29) $    (8.35)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Diluted
 Continuing operations      $     0.20  $    (2.29) $    (0.15) $    (7.59)
 Discontinued operations          0.05       (0.04)      (0.14)      (0.76)
--------------------------------------------------------------------------

Net Income (Loss)           $     0.25  $    (2.33) $    (0.29) $    (8.35)
--------------------------------------------------------------------------
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AINSWORTH LUMBER CO. LTD.
Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
(Unaudited)
--------------------------------------------------------------------------
                                      Three months              Six months
                                     ended June 30           ended June 30
                            ----------------------------------------------
                                  2009        2008        2009        2008
                                   The         The         The         The
                               Company Predecessor     Company Predecessor
--------------------------------------------------------------------------
CASH FLOWS FROM
 OPERATING ACTIVITIES
 Net income (loss)          $   24,704  $  (34,202) $  (29,533) $ (122,385)
 Items not affecting cash
  Amortization of
   capital assets                9,934      11,614      18,521      22,835
  Non-cash portion of
   interest expense              4,850         340      10,300         674
  Non-cash stock
   based compensation              711           -         711           -
  Foreign exchange
   (gain) loss on
   long-term debt              (50,448)     (6,811)    (28,721)     29,270
  Gain on disposal of
   capital assets               (2,114)       (374)     (2,294)     (2,287)
  Impairment of capital
   assets of discontinued
   operations                        -           -      14,303           -
  Write-down of capital
   assets held for sale          8,219           -       8,219           -
  Change in non-current
   reforestation obligation       (298)       (194)       (556)       (264)
  Future income taxes           (8,132)     23,065     (17,902)     19,233
  Unrealized foreign
   exchange loss                 2,536           -       1,772           -
  Realized currency
   translation adjustments           -           -           -       1,465
 Change in non-cash
  operating working capital      8,516       6,931     (11,536)     11,358
--------------------------------------------------------------------------
Cash (used in) provided by
 operating activities           (1,522)        369     (36,716)    (40,101)
--------------------------------------------------------------------------
CASH FLOWS FROM
 FINANCING ACTIVITIES
 Repayment of long-term debt    (3,315)     (3,715)     (5,023)     (5,762)
 Repayment of capital
  lease obligations                (93)        (75)       (193)       (150)
--------------------------------------------------------------------------
Cash used in financing
 activities                     (3,408)     (3,790)     (5,216)     (5,912)
--------------------------------------------------------------------------
CASH FLOWS FROM
 INVESTING ACTIVITIES
 Short-term investments             25          (6)         10         (51)
 Restricted cash                    86         769       1,007         129
 Additions to capital assets      (636)       (868)     (1,909)     (4,074)
 Decrease (increase) in
  other assets                   2,035        (993)      2,116        (622)
 Proceeds on disposal
  of capital assets              4,241       3,151       4,530       6,543
 Settlement of warranty
  holdback                           -       2,852           -       2,852
--------------------------------------------------------------------------
Cash provided by
 investing activities            5,751       4,905       5,754       4,777
--------------------------------------------------------------------------
Effect of foreign exchange
 rate changes on cash and
 cash equivalents               (2,727)          6      (1,879)         (2)
--------------------------------------------------------------------------
NET CASH (OUTFLOW) INFLOW       (1,906)      1,490     (38,057)    (41,238)
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD           156,433      26,899     192,584      69,627
--------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
 END OF PERIOD              $  154,527  $   28,389  $  154,527  $   28,389
--------------------------------------------------------------------------
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SUPPLEMENTAL INFORMATION
 Taxes paid                 $      104  $      105  $      110  $      165
 Interest paid                  14,582       4,626      16,586      12,852
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Contacts:
Ainsworth Lumber Co. Ltd. - Investor Relations Contact
Robert Allen
604-661-3200
604-661-3201 (FAX)
robert.allen@ainsworth.ca
www.ainsworth.ca