Ainsworth Reports Financial Results for the Fourth Quarter of 2008

Ainsworth Lumber Co. Ltd. (TSX: ANS)(TSX: ANS.WT) today reported its unaudited financial results for the quarter and the year ended December 31, 2008.

The year 2008 was a period of significant change at Ainsworth. On July 29, 2008 we completed a recapitalization plan 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. The results for the year 2008, as disclosed below, include the period from January 1 to July 29, 2008 before the recapitalization and the period from July 30 to December, 2008 under the recapitalized Company.

After a strategic review, we decided to permanently close the Grand Rapids OSB mill in August 2008 and the other two Minnesota-based OSB mills in January 2009. For financial accounting purposes, the U.S. OSB operations met the criteria to qualify for discontinued operations in December 2008, and the results of the Minnesota mills have been eliminated from sales, operating loss and adjusted EBITDA as disclosed below for both 2008 and 2007.

�

Selected Financial Information
In millions of Canadian dollars, except per share amounts
(Unaudited)

                                    Three months ended          Year ended
                                           December 31         December 31
--------------------------------------------------------------------------
                                        2008      2007      2008      2007
                                    --------  --------  --------  --------
                                                              (1)
Sales                               $   90.4  $   88.6  $  359.3  $  460.9
Operating loss                         (11.0)    (78.4)    (44.9)   (143.5)
Foreign exchange (loss) gain on
 long-term debt                        (79.1)      3.1    (132.0)    161.3
Net loss from continuing operations    (79.9)    (80.5)   (233.5)    (32.0)
Net loss                              (156.7)   (184.5)   (321.8)   (216.5)

Adjusted EBITDA (2)                     (3.2)    (13.3)     (8.3)    (24.4)

Adjusted working capital (3)           226.8     124.7     226.8     124.7

Net loss from continuing operations
 per share                             (0.80)    (5.50)    (4.60)    (2.20)
Net loss per share                     (1.57)   (12.59)    (6.33)   (14.78)
Weighted average common shares
 outstanding (in millions) (4)         100.0      14.6      50.8      14.6

(1) On July 29, 2008 the Company completed a major financial
    recapitalization of its balance sheet. In accordance with Canadian
    Institute of Chartered Accountants Handbook Section 1625 -
    Comprehensive Revaluation of Assets and Liabilities, the Company
    adopted fresh start accounting as at July 29, 2008. Reported sales and
    adjusted EBITDA were relatively unaffected, as the Company's physical
    operations were not impacted by the financial recapitalization. The
    results for the year 2008, as disclosed above, include the period from
    January 1 to July 29, 2008 before the recapitalization and the period
    from July 30 to December, 2008 under 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 will be available on SEDAR and the Company's website at the
    close of business on March 3, 2009.

(2) Adjusted EBITDA, a non-GAAP financial measure, is defined as net (loss)
    income before amortization, (gain) loss on disposal of capital assets,
    finance expense, realized currency translation adjustments, foreign
    exchange (gain) loss on long-term debt, other foreign exchange (gain)
    loss, income tax recovery and other non-recurring items. See our
    Management's Discussion and Analysis for the year ended December 31,
    2008 for a reconciliation of non-GAAP measures.

(3) Adjusted working capital, a non-GAAP financial measure, is defined as
    current assets less restricted cash, current portion of future income
    tax assets and current liabilities plus current portion of future
    income tax liabilities.

(4) 89,905,712 common shares and 10,094,288 noteholder warrants were issued
    on December 31, 2008 bringing total common shares and noteholder
    warrants outstanding to 100,000,000.

The U.S., Ainsworth's most important geographic market for structural panels, is in a severe recession. On January 23, 2009 the U.S. Commerce Department announced that 2008 U.S. housing starts - the key driver of OSB demand - fell to its lowest level in 63 years. U.S. housing demand faces many challenges, such as mortgage market contraction, an excess supply of new and existing homes, rising foreclosures, and home price deflation. As a result, we expect U.S. market conditions will not improve until late 2010, at the earliest, and OSB products will remain oversupplied until at least 2011. Canadian housing market conditions also weakened in 2008 and the outlook is uncertain for 2009 and beyond.

Net loss from continuing operations for the quarter was $79.9 million on sales of $90.4 million compared to net loss from continuing operations of $80.5 million on sales of $88.6 million for the same period in 2007. The main factors in the decreased loss from continuing operations were improvements in operating earnings offset by an increase in foreign exchange losses. For the year, net loss from continuing operations of $233.5 million represented a $201.5 million increase in losses from 2007. The main factor in the increased loss from continuing operations was a $132.0 million unrealized foreign exchange loss on long-term debt in 2008, compared with a $161.3 million gain a year earlier. The decrease in sales is primarily the result of reduced shipment volumes.

Adjusted EBITDA was negative $3.2 million in the fourth quarter of 2008 compared with negative $13.3 million in the same period of 2007. The improvement was the result of a decline in cost of goods sold, which increased our gross profit. For the year 2008, adjusted EBITDA was negative $8.3 million compared with negative a $24.4 million of EBITDA in 2007. This improvement was primarily due to improved gross profit, partially offset by a reduction in other income.

The average of the market prices reported by Random Lengths during the fourth quarter of 2008 was U.S.$173 per msf (North Central region, on a 7/16th-inch basis) compared to U.S.$165 per msf in the fourth quarter of 2007. On an annual basis, the average market price was U.S.$172 per msf in 2008 and U.S.$161 per msf in 2007. The Random Lengths benchmark price was higher in 2008 than in 2007, despite the deterioration in the U.S. housing market, due to a reduction in overall production capacity.

OSB shipments from our continuing operations of 378,376 msf in the fourth quarter of 2008 were not significantly different than in the same period of 2007. For the year, OSB shipments from continuing operations were 17% lower in 2008 compared to 2007. Production at our jointly-owned OSB facility at High Level, Alberta was indefinitely curtailed as of December 20, 2007 and the mill remains closed.

Until North American market conditions improve, we have frozen all discretionary capital expenditures. In the meantime, based on current and forecasted pricing, we believe that we have sufficient working capital to fund any shortfall from operations, interest payments, debt repayments and essential capital expenditures. During the fourth quarter of 2008, as a result of the global economic crisis, the terms and availability of debt and equity capital have been materially restricted. As a result, should such conditions continue through to maturity of our senior unsecured notes in 2015 and should the Company require debt or equity financing, debt capital may not be available on acceptable terms, which may require management to explore strategic alternatives to improve its capital structure, enhance liquidity, refinance debt, sell non-core assets and reduce costs and expenditures. Adjusted working capital as at December 31, 2008 was $226.8 million compared to $124.7 million at December 31, 2007.

The Company will hold a conference call on Wednesday, March 4, 2009 at 9:00 a.m. PST (12:00 pm EST) to discuss the 2008 annual results. The dial-in phone number is 1-888-294-9518, Reservation #21416777. To access the post-view line, dial 1-800-558-5253, or 1-416-626-4100, Reservation #21416777. This recording will be available until the end of the day on March 11, 2009.

Excerpts from the company's financial statements for the period ended December 31, 2008 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/2008_Financial_file.pdf.

�

AINSWORTH LUMBER CO. LTD.
Consolidated Balance Sheets
(In thousands of Canadian dollars)
(Unaudited)                                    The Company The Predecessor
---------------------------------------------------------- ---------------
                                  December 31      July 29     December 31
                                         2008         2008            2007
                                  ----------------------------------------
ASSETS
Current Assets
 Cash and cash equivalents        $   192,584  $   208,827  $       69,627
 Short-term investments                 1,586          887             835
 Accounts receivable                   19,916       28,045          21,355
 Inventories                           53,251       46,848          60,749
 Income taxes receivable                    -        1,916               -
 Prepaid expenses                       5,681        7,545          10,228
 Restricted cash                        5,344        6,997           7,104
 Assets held for disposal               5,337       10,693          14,085
--------------------------------------------------------------------------
                                      283,699      311,758         183,983
Capital Assets, Net                   652,448      599,102         594,755
Other Assets                           14,512       25,370          22,272
Goodwill                                    -            -          51,970
Assets Held for Disposal               33,019       94,447         247,721
--------------------------------------------------------------------------
                                  $   983,678  $ 1,030,677  $    1,100,701
--------------------------------------------------------------------------
--------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
 Accounts payable and
  accrued liabilities             $    27,539  $    47,213  $       33,176
 Income taxes payable                   2,764            -           2,689
 Current portion of future
  income tax liabilities                8,492        8,474          23,682
 Current portion of long-term debt     12,366       10,600          10,122
 Liabilities related to assets
  held for disposal                     8,933        7,029           5,614
--------------------------------------------------------------------------
                                       60,094       73,316          75,283
Accrued Pension Benefit Liability       4,278        5,610               -
Other Liabilities                       3,512        3,383           4,451
Long-term Debt                        627,115      528,350         967,250
Future Income Tax Liabilities          60,160        3,183          34,327
Liabilities Related to Assets
 Held for Disposal                      2,368        7,222           6,651
--------------------------------------------------------------------------
                                      757,527      621,064       1,087,962
SHAREHOLDERS' EQUITY
Capital Stock                         409,613      409,613          55,827
(Deficit) Retained Earnings          (180,984)           -          62,698
Accumulated Other
 Comprehensive Loss                    (2,478)           -        (105,786)
--------------------------------------------------------------------------
                                      226,151      409,613          12,739
--------------------------------------------------------------------------
                                  $   983,678  $ 1,030,677  $    1,100,701
--------------------------------------------------------------------------
--------------------------------------------------------------------------


AINSWORTH LUMBER CO. LTD.
Consolidated Statements of Operations
(In thousands of Canadian dollars, except per share data)
(Unaudited)                                    The Company The Predecessor
---------------------------------------------------------- ---------------
                                  Five months Seven months      Year ended
                               to December 31   to July 29     December 31
                                         2008         2008            2007
                               -------------------------------------------
Sales                          $      156,232  $   203,073  $      460,888
--------------------------------------------------------------------------

Costs and Expenses
 Costs of products sold
  (exclusive of amortization)         146,228      194,919         460,524
 Selling and administration            13,164       16,071          30,798
 Amortization of
  capital assets                       13,834       21,973          46,988
 Gain on disposal of
  capital assets                         (331)      (3,092)            (39)
 Cost of class action lawsuit             273          318          15,114
 Impairment of goodwill                     -            -          51,000
 Write-down of capital assets               -          837               -
--------------------------------------------------------------------------
                                      173,168      231,026         604,385
--------------------------------------------------------------------------

Operating Loss                        (16,936)     (27,953)       (143,497)

Finance Expense
 Interest on long-term debt            22,811       39,536          74,154
 Transaction costs                          -       25,363           2,897
--------------------------------------------------------------------------
                                       22,811       64,899          77,051

Other Income                            2,048          729           5,999
Foreign Exchange (Loss)
 Gain on Long-term Debt               (98,720)     (33,261)        161,315
Loss on Derivative
 Financial Instrument                  (9,857)           -               -
Other Foreign Exchange
 Gain (Loss)                           24,488          383          (9,465)
--------------------------------------------------------------------------
Loss Before Income Taxes             (121,788)    (125,001)        (62,699)

Income Tax (Recovery) Expense         (15,949)       2,623         (30,688)
--------------------------------------------------------------------------
Net Loss from Continuing
 Operations                          (105,839)    (127,624)        (32,011)

Net Loss from Discontinued
 Operations                           (75,145)     (13,176)       (184,444)
--------------------------------------------------------------------------
Net Loss                       $     (180,984) $  (140,800) $     (216,455)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Basic and diluted net loss
 per common share:
 Continuing operations         $        (1.06) $     (8.71) $        (2.19)
 Discontinued operations                (0.75)       (0.90)         (12.59)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Basic and diluted net loss
 per common share              $        (1.81) $     (9.61) $       (14.78)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted average number of
 common shares outstanding        100,000,000   14,649,140      14,649,140
--------------------------------------------------------------------------
--------------------------------------------------------------------------


AINSWORTH LUMBER CO. LTD.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
(Unaudited)                                    The Company The Predecessor
---------------------------------------------------------- ---------------
                                  Five months Seven months      Year ended
                               to December 31   to July 29     December 31
                                         2008         2008            2007
                               -------------------------------------------
CASH FLOWS FROM OPERATING
 ACTIVITIES
 Net loss                      $     (180,984) $  (140,800) $     (216,455)
 Items not affecting cash
  Amortization of capital
   assets                              14,244       27,152          65,859
  Non-cash portion of
   interest expense                     7,899          929           1,457
  Foreign exchange loss (gain)
   on long-term debt                   98,720       33,261        (161,315)
  Impairment of intangible
   assets                                   -            -          12,226
  Impairment of goodwill                    -            -          51,000
  Impairment of capital
   assets                              69,900          837          80,780
  (Gain) loss on disposal of
   capital assets                        (429)      (3,264)            259
  Loss on derivative
   financial instrument                 9,857            -               -
  Change in non-current
   reforestation obligation               129         (405)           (170)
  Future income taxes                  (8,076)      11,146          (9,577)
  Adjustment to net accrued
   pension benefit asset               (4,541)           -           4,433
  Realized currency
   translation loss                         -        1,465          11,180
 Change in non-cash
  operating working capital           (16,118)      23,520          32,980
--------------------------------------------------------------------------
Cash used in operating
 activities                            (9,399)     (46,159)       (127,343)
--------------------------------------------------------------------------
CASH FLOWS FROM FINANCING
 ACTIVITIES
 Proceeds from issue of
  long-term debt                            -            -         109,825
 Repayment of long-term debt           (5,926)      (5,762)         (8,622)
 Repayment of capital
  lease obligations                      (161)        (179)           (283)
--------------------------------------------------------------------------
Cash (used in) provided by
 financing activities                  (6,087)      (5,941)        100,920
--------------------------------------------------------------------------
CASH FLOWS FROM INVESTING
 ACTIVITIES
 Short-term investments                  (699)         (51)         35,029
 Restricted cash                        1,653          107          55,080
 Additions to capital assets           (4,086)      (4,530)        (70,077)
 Decrease (increase) in
  other assets                          1,551         (133)          1,332
 Proceeds on disposal of
  capital assets                          382        6,764           1,226
 Settlement of warranty holdback            -        2,852               -
--------------------------------------------------------------------------
Cash (used in) provided by
 investing activities                  (1,199)       5,009          22,590
--------------------------------------------------------------------------

Effect of foreign exchange rate
 changes on cash and cash
 equivalents                              442           30            (852)
--------------------------------------------------------------------------
NET CASH (OUTFLOW) INFLOW             (16,243)     (47,061)         (4,685)
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                  208,827       69,627          74,312
--------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
 END OF PERIOD                 $      192,584  $    22,566  $       69,627
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Components of cash and
 cash equivalents:
 Cash balances with banks      $      192,584  $    22,566  $       69,627
 Investments with original
  maturities of three months
  or less                                   -            -               -
--------------------------------------------------------------------------
                               $      192,584  $    22,566  $       69,627
--------------------------------------------------------------------------
--------------------------------------------------------------------------

SUPPLEMENTAL INFORMATION
 Net proceeds of
  recapitalization             $            -  $   186,261  $            -
 Taxes paid                             2,377          345           6,702
 Interest paid                         15,448       13,406          73,988
--------------------------------------------------------------------------
--------------------------------------------------------------------------

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.

 
Contacts:
Ainsworth Lumber Co. Ltd.
Robert Allen
Investor Relations Contact
(604) 661-3200
(604) 661-3201 (FAX)
Email: robert.allen@ainsworth.ca
Website: www.ainsworth.ca