5. Seasonality of operating results:
Quarterly trends normally reflect the seasonality of the Company's operations. Logging operations are seasonal due to a number of factors including weather, ground conditions and fire season woods closures. Generally, the Company's B.C. Coastal logging divisions experience higher production levels in the latter half of the first quarter, throughout the second and third quarters and in the first half of the fourth quarter. Logging activity in the B.C. Interior is generally higher in the first half of the first quarter, slows during spring thaw and increases in the third and fourth quarters. Sawmill operations are less seasonal than logging operations but are dependent on the availability of logs from logging operations, including those from suppliers. In addition, the market demand for lumber and related products is generally lower in the winter due to reduced construction activity, which increases during the spring, summer and fall.
6. Inventories:
Mar. 31, 2013 Dec. 31, 2012-------------------------------------------------Logs $ 69,864 $ 59,772Lumber 44,945 31,833Other 8,968 6,419------------------------------------------------- $ 123,777 $ 98,024-------------------------------------------------
Inventory expensed in the period includes production costs, amortization of plant and equipment, and depletion and amortization of timber, roads and other. The inventory writedown in order to record inventory at the lower of cost and net realizable value at March 31, 2013 was $4,696,000 (December 31, 2012 - $7,050,000).
7. Cash and borrowings:
---------------------------------------------------------------------------- Revolving Operating TermMarch 31, 2013 Line Line Total----------------------------------------------------------------------------Available line of credit $ 65,000 $ 250,000 $ 315,000Maximum borrowing available 65,000 250,000 315,000Drawings 2,032 211,803 213,835Outstanding letters of credit included in line utilization 5,343 - 5,343Unused portion of line 57,625 38,197 95,822----------------------------------------------------------------------------December 31, 2012----------------------------------------------------------------------------Available line of credit $ 65,000 $ 200,000 $ 265,000Maximum borrowing available 65,000 200,000 265,000Drawings - 135,046 135,046Outstanding letters of credit included in line utilization 5,190 - 5,190Unused portion of line 59,810 69,954 124,764----------------------------------------------------------------------------
(a) Operating Line:
On February 27, 2013, the Company extended the maturity of its existing operating line of credit ("Operating Line") to February 27, 2017. The terms and conditions of this line remain unchanged except for a reduction in pricing.
The Operating Line may be drawn in either CAD$ or US$ advances, and bears interest at bank prime plus a margin or, at the Company's option, at rates for Bankers' Acceptances or LIBOR based loans plus a margin, and in all cases dependent upon a financial ratio of total debt divided by twelve months' trailing EBITDA1. Borrowing levels under the Operating Line are subject to a borrowing base calculation dependent on certain accounts receivable and inventories.
