6-K 1 riverside6k_feb14-05.txt REPORT OF FOREIGN ISSUER UNDER '34 ACT FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a - 16 or 15d - 16 of The Securities Exchange Act of 1934 For the month of February 2005 Commission File Number: 333-116770 Riverside Forest Products Limited ---------------------------------------------------------- (Registrant's Name) 3203 - 30th Avenue, Vernon, British Columbia, V1T 6M1 ---------------------------------------------------------- (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F X Form 40-F ------ ----- Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X ----- ------ If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-__ DOCUMENT INDEX Document 1. First Quarter Report for three months ended December 31, 2004 2. FORM 52-109FT2 - Certification of Interim Filing - CEO 3. FORM 52-109FT2 - Certification of Interim Filing - CFO Document No. 1 Riverside Forest Products Limited First Quarter Report For the three months ended December 31, 2004 [Graphic showing stylized images of forestry industry workers] Riverside Forest Products Limited December 31, 2004 - First Quarter Report OPERATING RESULTS The Company ("Riverside") experienced a net loss for the first quarter of fiscal 2005 in the amount of $0.4 million or $0.04 per share compared to net earnings of $12.0 million or $1.36 per share for the December 31, 2003 quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA - see note 1 below) was $18.7 million for the quarter ended December 31, 2004, compared to $22.4 million for the quarter ended December 31, 2003. During the 2004 fiscal year Riverside acquired Lignum Limited ("Lignum"), refinanced long-term debt and became subject to a takeover bid. On October 26, 2004 Riverside was acquired by Tolko Industries Ltd. ("Tolko"), which resulted in takeover costs of $26.7 million, of which $19.8 million was incurred during the quarter (see note 3 to the attached financial statements). The impact on Riverside's earnings and earnings per share (EPS) of the costs related to these transactions and the foreign currency revaluation of debt are as follows:

1) EBITDA represents net earnings (loss) before income taxes (recovery), unrealized foreign exchange loss (gain) on long-term debt, interest on long-term debt, amortization of deferred financing costs, depreciation and amortization, net operating interest expense (income), prepayment penalties on the early repayment of long-term debt and takeover costs. We have presented EBITDA as we believe that, in addition to net earnings (loss), EBITDA provides investors with a basis to evaluate our operating performance and ability to incur and service debt and to fund capital expenditures. 2) Cash provided by operations before changes in non-cash working capital. MANAGEMENT'S DISCUSSION AND ANALYSIS February 14, 2005 Management's Discussion and Analysis supplements, but does not form part of, the unaudited interim consolidated financial statements of the Company and the notes thereto for the first quarter of fiscal 2005. This discussion and analysis provides an overview of significant developments in the quarter ended December 31, 2004 and also: o Compares the December 31, 2004 quarterly results to those achieved in the September 30, 2004 quarter. o Compares the December 31, 2004 quarterly results to those achieved in the December 31, 2003 quarter. o Compares the financial position at December 31, 2004 to September 30, 2004. Factors that could affect future operations are also discussed. These factors may be affected by known and unknown risks and uncertainties that may cause the actual future results of the Company to be materially different from those expressed or implied in this discussion. These risks and uncertainties are discussed herein and in the Management's Discussion and Analysis contained in the Company's 2003 Annual Information Form. RIVERSIDE OVERVIEW Riverside manages its business as a single operating segment: solid wood. Its operating results are primarily influenced by the following factors: (i) commodity prices for lumber, plywood and woodchips, (ii) production volumes, (iii) fibre costs, (iv) human resources, (v) US-Canadian dollar exchange rates, and, more recently, (vi) duties imposed by the US government on Canadian softwood lumber imports. Commodity Prices Riverside's operating results are significantly affected by the prevailing market prices for its products. The markets for lumber and plywood products and woodchips are highly cyclical and affected by such factors as global economic conditions, residential and commercial construction activity in North America and Asia, changes in industry production capacity and inventory levels. Production Volumes Lumber and plywood production volume levels have a direct impact on Riverside's operating results. In addition to adding capacity through a number of acquisitions, the Company has achieved incremental increases in the production capacity of its facilities through on-going operating improvements and capital expenditures. Fibre Costs The availability of a cost-effective fibre supply is one of the most important factors affecting the profitability of forest products companies. Riverside supplies it's manufacturing operations primarily from fibre resources held under long-term agreements with the British Columbia government, providing a secure supply of fibre on a sustainable basis. Approximately 70% of the fibre requirements for the Company's facilities are supplied by its provincial timber tenures. The balance of its fibre requirements are purchased on the open market. Human Resources Riverside's employment base is relatively stable, employing approximately 1,800 hourly and 430 salaried employees, with only slight variations due to seasonal demands. All of the hourly employees, with the exception of the 11 employed at our Ashcroft facility, are members of the United Steelworkers of America. Contracts with the union have been ratified at all operations. The main agreement will expire on June 30, 2009 and contemplates wage increases of 2% on July 1 of each year from 2005 through 2007 and 3% on July 1, 2008. Exchange Rates Riverside's operating results are sensitive to fluctuations in the exchange rate of the Canadian dollar to the US dollar, since prices for a majority of its products are denominated in US dollars or linked to prices quoted in US dollars and it has incurred substantially all of its debt in US dollars. For the quarter ended December 31, 2004, approximately 58% of its sales were denominated in US dollars, while most of its operating costs were incurred in Canadian dollars. In order to mitigate the impact of foreign exchange volatility on its operating results, Riverside enters into foreign exchange forward contracts to reduce a portion of its exposure to fluctuations in the exchange of its US-dollar sales to Canadian dollars. Incurring US dollar-denominated indebtedness further minimizes our exposure to exchange rate movements associated with our US dollar sales. Canada-US Softwood Lumber Dispute The largest impact on Riverside's results for the past three years relates to the as-yet-unresolved dispute between the Canadian and United States governments with respect to Canadian access to the US softwood lumber market. Approximately 70% of Riverside's lumber is sold into the United States. From May 22, 2002 to December 20, 2004 and from December 21, 2004 on Riverside has recorded combined anti-dumping and countervailing duties at rates of 27.22% and 20.96% on all softwood lumber exports to the United States. Riverside charged $142.8 million for the period from May 22, 2002 to December 31, 2004, representing combined final countervailing and anti-dumping duties deposited with the US Government. Of this charge, $11.5 million related to the quarter ended December 31, 2004, while $76.5 million, $42.9 million and $11.9 million related to fiscal years ended September 30, 2004, 2003 and 2002 respectively. On a quarterly basis, Riverside accrued a charge against sales on shipments of softwood lumber to the United States as follows:

(1) At a December 31, 2004 exchange rate of US$1 = CDN$1.2020 the duty charged, translated to Canadian dollars, would be $126.3 million. The final amount and effective date of any countervailing and anti-dumping duties that may be assessed on Canadian softwood lumber exports to the United States cannot be determined at this time and will depend on appeals of the final determinations to any reviewing courts, North American Free Trade Agreement or World Trade Organization panels. Any future adjustments resulting from a change in the duty rates will be made prospectively. EARNINGS SENSITIVITIES Riverside's sales are subject to changes in market supply and demand dynamics and certain other factors that affect the prices it receives for its products. With the exception of stumpage fees payable to the British Columbia government, Riverside's costs of production are not as sensitive to these dynamics or factors. As a result, Riverside's earnings are significantly affected by market fluctuations in the commodity prices for lumber and plywood. Riverside's export sales of lumber and plywood are principally denominated in US dollars and, accordingly, a significant change in the exchange rate for the Canadian dollar against the US dollar has a significant effect on the Canadian dollar amounts realized. The Canadian dollar was at the following levels as of Riverside's past five fiscal year-ends and as of December 31, 2004 quarter end:

(1) Canadian dollar appreciation measured against the end of the prior period, based on the inverse of the above rates. The effect on Riverside's EBITDA and net earnings of changes in the price of lumber, plywood, veneer and woodchips, changes in log costs, and changes in United States currency exchange rates is illustrated in the following table, based on sales volumes for the quarter ended December 31, 2004 and a 40% income tax rate:

CRITICAL ACCOUNTING ESTIMATES VALUATION OF ACCOUNTS RECEIVABLE Riverside records an allowance for the doubtful collection of accounts receivable based on its best estimate of any potential uncollectible amounts. Such estimates consider past experience with Riverside's customer base and a review of current economic conditions and specific customer issues. Although Riverside has not had significant bad debt expenses in prior periods, deteriorating economic conditions could result in financial difficulties in its customer base that could lead to bad debts. In addition, accounts receivable balances with particular customers can be material at any given time. VALUATION OF INVENTORY Riverside values its finished product inventory at the lower of cost or net realizable value. Net realizable value is determined by reviewing the actual average net sales per unit of transactions occurring in the periods immediately before and after the reporting date. When the net realizable value is below the average cost of inventory, a write-down is charged to earnings in the period. The determination of net realizable value is both objective and verifiable; however, downward movement in commodity prices could result in a material write-down of inventories in any given period. RECOVERABILITY OF PROPERTY, PLANT AND EQUIPMENT AND OTHER LONG-LIVED ASSETS Riverside assesses the recoverability of its property, plant and equipment and other long-lived assets by projecting the future cash flows to be generated by its facilities. These projections require estimates to be made regarding, among other things, future commodity prices, foreign currency exchange rates, sales volumes, operating costs and renewal of licenses and permits. There is a high degree of uncertainty in estimating future cash flows, primarily as a result of the uncertainty regarding future prices for commodities. The application of different assumptions for commodity prices could result in a conclusion that Riverside would not recover the carrying amount of its property, plant and equipment and other long-lived assets, which could result in material changes to earnings. REFORESTATION OBLIGATION Riverside accrues its reforestation obligations based on estimates of future costs at the time the timber is harvested. The estimate of future reforestation costs is based on comprehensive analyses for all areas that have been logged, the treatments required for each specific area, the number and size of seedlings to be planted and the expected timing and success rate of the planned activities. Riverside employs forestry experts who have the specialized knowledge required to make such analyses. Unfavorable weather patterns, forest fires, or the failure to estimate future reforestation costs accurately could result in material revisions to Riverside's estimates of future costs. PENSION BENEFITS Riverside has defined benefit pension plans for certain of its employees. It retains independent actuarial consultants to perform actuarial valuations of its plan obligations and asset values, and to advise on the amounts to be recorded in its financial statements. Actuarial valuations include assumptions that directly affect the fair value of the assets and obligations and expenses recorded in Riverside's financial statements. These assumptions include the discount rate used to determine the net present value of obligations, the return on plan assets used to estimate the increase in the plan assets available to fund obligations and the increase in future compensation amounts used to estimate obligations. Actual experience can vary materially from the estimates, and could affect the cost of Riverside's pension plans and future cash flow requirements. SOFTWOOD LUMBER DUTIES Softwood lumber duties represent contingent liabilities that require a cash deposit to be paid to US Customs in order to ship softwood lumber products into the US. Riverside has recorded an expense based on the softwood lumber duty deposit amounts paid and charged to US Customs. The actual amount of the duties for softwood lumber products shipped will depend on the outcome of various challenges and appeals made to NAFTA panels, WTO panels and reviewing courts or on a negotiated settlement. In addition, the actual duty amounts will likely be based on rates established by an administrative review process completed by the US Department of Commerce (USDOC). On December 14, 2004, the USDOC announced the results of its first administrative review, which included a decrease in the combined countervailing and anti-dumping duties from 27.22% to 20.96%. The difference between the deposit rate paid and the rate established on administrative review may be refunded to or paid by Riverside, plus interest. The actual amount paid in the future for softwood lumber duties on shipments made in current periods could be materially different from the amounts paid and expensed. RESULTS OF OPERATIONS Comparison of the December 31, 2004 quarterly results to the September 30, 2004 quarterly results The price and volume variances between the results for the quarter ended December 31, 2004 and September 30, 2004 can be classified as follows:

(1) Price variance for sales and cost of products sold reflects changes in selling prices and production costs that are not affected by volumes sold or produced. Price variance for all remaining items reflects changes in period costs, which do not vary with volumes sold or produced. Sales and EBITDA were $101.2 million higher and $3.7 million lower, respectively, in the quarter ended December 31, 2004 versus the quarter ended December 31, 2003 primarily due to: the inclusion of Lignum operations, increases in most commodity prices and volumes and, in the case of EBITDA, increased stumpage fees and higher conversion costs. In the December 2004 quarter, sales prices for lumber and panel increased 19% and decreased 11% respectively, while woodchips price increased 13% compared to the December 2003 quarter. The net impact of all price movements was an increase in sales of $6.1 million for the December 2004 quarter relative to the December 2003 quarter. For the December 2004 quarter, sales volumes were 83% higher for lumber, 15% higher for panel products and 50% higher for woodchips, compared to the December 2003 quarter. These increases in sales volumes are primarily attributed to the inclusion of Lignum with Riverside operations. The net impact of all volume variances increased sales by $95.1 million in the December 2004 quarter versus the December 2003 quarter. The net impact of all sales price and volume variances resulted in Riverside reporting sales of $246.3 million in the December 2004 quarter, $101.2 million or 69.7% greater than the $145.1 million reported in the December 2003 quarter. Cost of products sold, excluding the impact of higher volumes, for the December 2004 quarter was $8.0 million higher due to the net impact of the increases in stumpage costs of $5.4 million, a $3.1 million increase in conversion unit costs offset by improved recovery costs of $0.5 million. Conversion costs increased mainly as a result of accruing for hourly compensation awards in 2004, as well as curtailed maintenance spending in the December 2003 quarter. Higher volumes resulted in a $77.8 million increase in cost of products sold for the December 2004 quarter versus the December 2003 quarter. Freight costs increased by $5.1 million over the December 2003 quarter, mainly due to increased volume shipped and normal destination variations. Duties increased this quarter over last year by $6.5 million due to increased lumber sales volume and higher US lumber realizations. Selling and administration costs in the December 2004 quarter increased by $3.3 million compared to the December 2003 quarter, due primarily to the inclusion of Lignum operations in the current quarter. Interest on long-term debt was $2.6 million higher mainly as a result of the issue of new long-term debt, which increased the outstanding long-term debt from $34.9 million as December 31, 2003 to $180.3 million as of December 30, 2004. Unrealized foreign exchange gain on long-term debt increased $7.1 million as a result of the Canadian dollar strengthening compared to the US dollar, combined with the issue of additional debt. During the December 2004 quarter $19.8 million in takeover costs were incurred as a result of the Company's ownership structure change involving Tolko. Income taxes, including the current and future provisions, as a percentage of earnings (loss) before income taxes differed from the previous quarter as a result of the taxation of the gain on debt revaluation and the effect of fixed taxes upon the smaller income before taxes. As a result of all of the above, Riverside's net loss for the December 2004 quarter was $0.4 million, compared to $12.0 million net earnings for the December 2003 quarter. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2004 and for the quarter then ended In the quarter ended December 31, 2004, Riverside generated $4.2 million in cash from operations, before changes to non-cash operating working capital, compared to $26.3 million for the quarter ended September 30, 2004. Log inventories increased by 174 thousand m3, lumber inventory increased by 5.3 mmfbm and panel inventories decreased by 1.0 mmsf. Total inventories increased by $17.4 million during the quarter ended December 31, 2004. Accounts receivable decreased by $18.3 million due to decreasing sales volumes, while payables decreased by $59.8 million, due primarily to takeover costs and income taxes paid during the quarter. Offsetting this was an increase in harvesting activity. The increases in accounts receivable, inventories and accounts payable resulted in a $116.5 million decrease to non-cash working capital. Riverside spent $13.1 million on capital additions during the quarter. Investments and advances have remained relatively unchanged. $60 million was advanced to an affiliated company under a cash management arrangement. As a result of the above, Riverside's cash on hand decreased by $120.5 million from September 30, 2004 to December 31, 2004. Cash on hand at December 31, 2004 was $69.2 million, compared to $189.7 million at September 30, 2004. As of December 31, 2004 Riverside had an undrawn operating line of credit of CAD $60.0 million. Working capital of $204.4 million as of December 31, 2004 was $7.1 million lower than working capital as of September 30, 2004. The percentage of long-term debt to long-term debt plus equity at December 31, 2004 was 41%, compared to 42% at September 30, 2004. The percentage of total long-term debt net of cash to total long-term debt net of cash plus equity was 30% at December 31, 2004. As at December 31, 2004, shareholder's equity amounts to $260.8 million or $27.64 per share compared to $261.1 million or $27.68 per share at September 30, 2004. The following table shows, as of December 31, 2004, Riverside's contractual obligations due within the periods indicated.

Return on Capital Employed The forest product industry is cyclical in nature. Return on capital employed (ROCE), defined as net earnings (loss) plus after-tax interest expense divided by year-end capital employed, for the last five years: Five Year Period ROCE Average -------------------- ------------------ Year ended September 30, 2004 16.44% 5.97% Year ended September 30, 2003 0.85% 6.17% Year ended September 30, 2002 5.64% 5.98% Year ended September 30, 2001 4.17% 5.06% Year ended September 30, 2000 2.75% 4.22% MARKET RISKS AND UNCERTAINTIES Commodity Prices The markets for lumber and plywood are highly cyclical and affected by such factors as global economic conditions, residential and commercial construction and industrial activity in North America, Asia and Europe, changes in industry production capacity and inventory levels. In addition, Canadian lumber markets and our operating results have been significantly affected by the softwood lumber dispute. These factors all have a significant impact on selling prices and our profitability. Riverside manages its exposure to lumber price risk to a limited degree through the use of lumber futures. Foreign Exchange Riverside sells the majority of its products outside of Canada in US dollars. Consequently, the value of the Canadian dollar compared to the US dollar has a major impact on net revenue and profitability. From time to time, Riverside enters into arrangements to minimize the effect of fluctuations in currency rates on our US dollar-denominated receivables. At December 31, 2004, Riverside had forward foreign exchange contracts outstanding of US $23 million (2003 - US $18 million). Riverside is also exposed to currency risk on its US dollar-denominated debt, but considers its US dollar-denominated receivables as a natural hedge against that exposure. The Company has no plans to use foreign currency derivative financial instruments for speculative purposes. Interest Rates The interest rate on the US unsecured notes is fixed. The interest rate on amounts borrowed under our revolving credit facility will be affected by changes in market interest rates. We do not currently use any derivative instruments to manage our exposure to changes in market interest rates. We also do not use any instruments to manage our exposure to changes in foreign currency rates with respect to our US dollar-denominated debt, nor do we intend to with respect to the notes. NEW ACCOUNTING AND POLICIES AND ACCOUNTING POLICY CHANGES Since September 30, 2003, Riverside has adopted a number of accounting policies and accounting policy changes resulting from various new recommendations and accounting guidelines made by the Canadian Institute of Chartered Accountants ("CICA"). In the December 2003 quarter, the Company changed its accounting policy for expensing woodlands production costs in its interim quarterly financial statements from a units of production basis to an incurred cost basis. This change did not impact prior annual financial statements. Riverside has presented freight and other distribution costs and countervailing and anti-dumping duties as part of costs and expenses in the statement of earnings. Previously, these expenses were presented as a reduction of gross sales to determine net sales in accordance with industry practice. The prior periods have been restated to reflect this treatment. NORMAL COURSE ISSUER BID The Company announced on June 2, 2004 that it has filed with the Toronto Stock Exchange a notice of intention to make a normal course issuer bid for certain of its common shares. Under this notice, subject to regulatory approval, the Company is entitled to purchase, through the facilities of the Toronto Stock Exchange, up to 440,199 common shares during the one-year period commencing June 11, 2004 and expiring on June 10, 2005. The Company has 9,434,987 common shares outstanding. On December 3, 2004, the common shares of Riverside were de-listed from the Toronto Stock Exchange as a result of the acquisition by Tolko of more than 99% of the outstanding common shares. The normal course issuer bid ceased to be of any further effect on that date. DIVIDENDS No dividends have been declared in the quarter. OFFICERS AND DIRECTORS On October 29, 2004, all of the previous directors resigned and were replaced by the following nominees of Tolko Industries Ltd.: J.A. (Allan) Thorlakson, J.E. (John) Thorlakson, J.B. (Brad) Thorlakson, P.J. (Peter) Powell, M.B. (Michael) Percy and R.F. (Robert) Chase. During the quarter, the existing officers were replaced. New officers were appointed as follows: J.A. (Allan) Thorlakson, President and Chief Executive Officer; J.E. (John) Thorlakson, Vice-President; J.B. (Brad) Thorlakson, Vice-President; T.W. (Trevor) Jahnig, Chief Financial Officer; C.A. (Conrad) Pinette, Executive Vice-President; and J.A. (John) Thomas, Vice-President and General Manager of Marketing. On December 22, 2004, Riverside entered into a "Management Agreement" with Tolko under which Tolko agreed to provide the services of certain senior officers of Riverside for the ensuing fiscal year, renewable automatically for successive one-year periods unless terminated by either party on 30 days notice. OUTLOOK Effective on January 24, 2005, Tolko acquired all the remaining outstanding common shares of Riverside to hold 100% of the common shares. Management expects to realize significant synergies as a result of Tolko's acquisition that will benefit the enterprise going forward. The demand for our products remains strong, although the market values have dropped due to seasonal factors. We are looking forward to a profitable quarter. ADDITIONAL INFORMATION Riverside ceased to be a reporting issuer in Canada on February 1, 2005 pursuant to an order of the provincial securities commissions in Canada. Accordingly, additional information relating to Riverside is available on SEDAR at www.sedar.com up to February 1, 2005 but not thereafter. J.A. (Allan) Thorlakson President and Chief Executive Officer Vernon, B.C. February 4, 2005 Additional information related to our Company may be found on our website at www.riverside.bc.ca Riverside Forest Products Limited Consolidated Statements of Operations and Retained Earnings (in thousands of dollars) unaudited

Riverside Forest Products Limited Consolidated Statements of Cash Flow (in thousands of dollars) unaudited ----------------------------------------------------------------------------------------------------------------

Riverside Forest Products Limited Consolidated Balance Sheets (in thousands of dollars) Unaudited

Subsequent Event (note 12) On behalf of the Board J.A. (Allan) Thorlakson J.E. (John) Thorlakson President and Chief Executive Officer Vice-President NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Business of Riverside Riverside operates in the solid wood business, which includes the production and sale of lumber, plywood, veneer and woodchips, as well as the operating of a related wholesale wood products brokerage business. The production of these products includes logging operations, which are carried out by independent contractors on behalf of Riverside. Logging operations are seasonal due to a number of factors including weather, ground and fire season conditions. As a result of the timing of logging operations, Riverside normally experiences substantial increases in log inventories during the first and second quarters. Lumber and plywood inventories are less seasonal but are subject to market demands. Effective October 1, 2004 Riverside Forest Products Limited, Riverside Forest Products (Marketing) Limited (formerly Lignum Limited) and RFP Power Ltd. were amalgamated. 2. Basis of Presentation and Significant Accounting Policies These interim consolidated financial statements are unaudited; however, they reflect all adjustments, consisting of normal recurring adjustments including the adjustment set out below necessary for a fair presentation of the results of the periods presented. These interim consolidated financial statements do not include all disclosures required by Canadian generally accepted accounting principles (GAAP) for annual financial statements and accordingly should be read in conjunction with the September 30, 2003 audited consolidated financial statements and notes below. These interim consolidated financial statements have been prepared in accordance with the same accounting policies and methods of computation as the annual financial statements as at September 30, 2003 with the following changes: i) Asset retirement obligations: The Accounting Standards Board of the Canadian Institute of Chartered Accountants ("CICA") issued Section 3110 of the CICA Handbook, Asset Retirement Obligations ("Section 3110"). Effective October 1, 2002, the Company retroactively adopted Section 3110. The new standard requires that the estimated future cash outflows underlying the Company's reforestation obligation be discounted to present value. In conjunction with the adoption of the new standard, the Company also changed its reforestation accounting policy by modifying its methodology for accounting for legislative changes affecting future reforestation costs. The retroactive adoption of these new accounting policies did not result in any change to previously recorded results. ii) Shipping and Handling Costs: Effective January 1, 2004, the CICA introduced new recommendations for the application of GAAP which, among other things, provides guidance on alternate sources to consult with when an issue is not specifically addressed by Canadian GAAP. Prior to January 1, 2004, Riverside, along with certain other companies in the forest industry, presented sales net of shipping and handling costs. As a result of applying this new standard, effective October 1, 2003, Riverside has presented shipping and handling costs in accordance with the US EITF 00-10 Accounting for Shipping and Handling Fees and Costs. EITF 00-10 specifies that shipping and handling costs recovered from customers should be included in sales, while shipping and handling costs incurred should be included in cost of sales. Countervailing and anti-dumping duties, which previously were presented as a deduction to gross sales, have also been reclassified to cost of sales in accordance with the new GAAP standard. The prior periods have been reclassified for comparability. iii) Accounting Guideline 13, Hedging Relationships, and the Emerging Issues Committee's ("EIC") Consensus, EIC-128, Accounting for Trading, Speculative, or Non-hedging Derivative Financial Instruments: The new standards implement requirements related to the identification, designation, documentation and effectiveness of hedging relationships. The new standards have been applied on a prospective basis to all instruments existing on, or entered into after, January 1, 2004. Under the new guidance, hedge accounting is optional for derivative transactions that are effective in offsetting financial statement risks. Derivative financial instruments that are not subject to hedge accounting are recorded on the balance sheet at fair value. Upon adoption, the Company discontinued hedge accounting for certain derivative instruments which were either no longer eligible for hedge accounting under the new guideline or which the Company elected not to formally document as hedges. 3. Acquisition by Tolko Industries Ltd. On October 4, 2004, the Company announced that it had signed an agreement with International Forest Products Limited ("Interfor") pursuant to which Interfor indicated an intent to make an offer to acquire Riverside for $39 per share in cash and Interfor Class A shares, or $35 per share in cash and Interfor Class A shares plus a Contingent Value Right (CVR) to receive any US softwood duty refunds received by Riverside. The agreement was unanimously approved by the Special Committee of independent directors, as well as by the full boards of both companies. On October 15, 2004, Tolko Industries Ltd. ("Tolko"), which had formerly offered to purchase all shares of Riverside not already owned by it or its affiliates for $29 per share, increased the consideration payable under its offer to $40 per share and postponed the expiry time of its offer to October 26, 2004. On October 18, 2004, upon reviewing Tolko's improved offer, Riverside's Board of Directors determined that it was a "superior proposal" as defined in the pre-acquisition agreement dated October 3, 2004 between Riverside and Interfor. That determination triggered a right for Interfor to match or exceed Tolko's offer by October 22, 2004. The Company also announced on October 18, 2004 that the Board had concluded that Riverside's shareholders rights plan dated October 5, 2004 had served its purpose in giving Riverside time to maximize value for its shareholders, and so had resolved to terminate it, effective immediately. On October 22, 2004, Interfor advised Riverside that it had concluded that increasing its offer or significantly revising the form of consideration it would offer to Riverside's shareholders would be inconsistent with its own financial discipline, and so confirmed that it would not exercise its right to match Tolko's improved offer. On that basis, Riverside's Board of Directors resolved to recommend that Riverside shareholders accept and tender into Tolko's all-cash offer to purchase all outstanding Riverside shares not already owned by it or its affiliates for $40 per share. The Riverside Board's revised recommendation was communicated to shareholders in a news release on October 22. The Board's decision to recommend that shareholders accept Tolko's improved offer triggered a right of Interfor to terminate its pre-acquisition agreement with Riverside and to be paid the agreed break fee of $11 million. The break fee was paid by Riverside and the pre-acquisition agreement and the lock-up agreements between certain Riverside shareholders and Interfor were terminated on October 22, 2004. On October 26, 2004, Tolko announced that it owned 7,591,573 common shares or 80.46% of the Company's outstanding common shares. A change in control and ownership occurred at this date. On November 9, 2004, Tolko announced that it now owned 9,410,257 common shares of the Company or 99.74% of the total outstanding as a result of purchasing an additional 1,818,684 common shares. On January 24, 2005, Tolko completed the acquisition of all the remaining outstanding common shares of Riverside and now holds 100% of the outstanding common shares. The Company had accrued costs relating to the takeover of $6.9 million as at September 30, 2004. Conditions arising subsequent to September 30, 2004 created a final aggregate cost of $26.7 million, which included legal fees, financial consultants, pension liability, share appreciation rights and Interfor's break-fee. The costs in excess of the accrued amount, which amounted to $19.8 million, were recorded in October and November 2004, the periods in which the actual determination of the liability was made. 4. Due from Affiliated Company The Company has entered into a cash management arrangement with its parent company, Tolko, and its affiliates for the purpose of optimizing cash balances and minimizing interest expense within the Tolko group of companies, including Riverside. Under this arrangement, Riverside has made loans to Tolko Forest Products Ltd., an affiliate of Tolko, in order to increase the return Riverside is earning on its cash balances. The loans aggregate CAD $60 million, are due on demand and bear interest at market rates. All transactions under the cash management arrangement are subject to the approval of the independent directors of the Company.

6. Operating Line of Credit and Long-Term Debt a) Operating Line of Credit The Company has an available operating line of credit totaling CAD $60 million, which was unused at December 31, 2004. The line of credit bears interest on a sliding scale dependent on certain financial indicators. The debt is secured by General Security Agreements. The term of the facility expires on March 31, 2007. b. Long-Term Debt Long-term debt consists of US $150 million in unsecured senior notes that bear interest at 7 7/8%, payable in arrears on March 1 and September 1. The entire principal of the senior notes is repayable on March 1, 2014 (see also note 12). The notes contain covenants that, based on certain financial ratios, may place limitations upon the incurrence of additional debt and on the application of proceeds from the disposition of assets.

7. Share Capital

8. Segmented Information The Company manages its business as a single operating segment: solid wood. The Company harvests logs, which are sorted by species, size and quality and then manufactured into solid wood products at the Company's facilities. All operations are located in British Columbia, Canada.

9. Contingencies a) Income Tax Canada Revenue Agency is in the process of reassessing the Company for its 2000 and 2001 taxation years. The Company intends to file notice of objection in respect of these reassessments, once received. The Company has not recorded any change to the current year's provision for income taxes with respect to the proposed reassessments. The potential additional current taxes payable are approximately $560,000, which would be offset by a future tax reduction of approximately $560,000. If the Company is not successful in its appeal, any adjustments will be reflected in the period in which they became determinable. b) The Forestry Revitalization Plan In March 2003, the Government of B.C. ("Crown") introduced the Forestry Revitalization Plan (the "Plan") that provides for significant changes to Crown forest policy and to the existing allocation of Crown timber tenures to licensees. The changes prescribed in the Plan include; the elimination of minimum cut control regulations, the elimination of existing timber processing regulations, and the elimination of restrictions limiting the transfer and subdivision of existing licenses. As well, through legislation, licensees, including Riverside, will be required to return 20% of their replaceable tenure to the Crown. The Plan states that approximately half of this volume will be redistributed to open up opportunities for woodlots, community forests and First Nations and the other half will be available for public auction. The Crown has acknowledged that licensees will be fairly compensated for the return of tenure and related costs such as roads and bridges. The effect of the timber take-back is expected to result in a reduction of approximately 431,000 m3 of the company's existing annual allowable cut on their replaceable tenures. The effect of the Plan on Riverside's financial position and results of operations cannot be determined at this time. Riverside will record the effects of the Plan at the time the amounts to be recorded are determined. c) Softwood lumber dispute On March 21, 2002 and further adjusted on April 25, 2002, the US Department of Commerce (USDOC) issued its final determination in the countervailing and anti-dumping investigations. The USDOC's final determination in the countervailing investigation resulted in a duty rate of 18.79%. The USDOC's final determination in the anti-dumping investigation resulted in Company specific duty rates ranging from 2.18% to 12.44% on the six companies investigated and an all other rate of 8.43% for all other companies including the Company. On May 16, 2002, the US International Trade Commission (USITC) published its final written determination on injury and stated that Canadian softwood lumber threatens material injury to the US industry. As a result, effective May 22, 2002, cash deposits were required for shipments at the rates determined by the USDOC. All prior bonds or cash deposits prior to May 22, 2002 and since inception of this dispute on April 2, 2001 were refunded. Effective December 20, 2004, the USDOC implemented new deposit rates for shipments made after this date. The USDOC reduced the countervailing duty deposit rate to 17.18% from 18.79% and the all others anti-dumping deposit rate to 3.78% from 8.43%. These new deposit rates are based on the USDOC's final rate determinations for the first Administrative review period (May 22, 2002 to March 31, 2003 for the countervailing duty case and May 22, 2002 to April 30, 2003 for the anti-dumping duty case). The Company has expensed $11.5 million (2004 - $76.5 million) in duties for the 2005 fiscal year representing the combined final countervailing and antidumping duties of 27.22% for the period from May 22, 2002 to December 20, 2004 and 20.96% from December 20, 2004. The Company has paid US $105.1 million in cash deposits since May 22, 2002. The Company and other Canadian forest product companies, the Federal Government and Canadian provincial governments ("Canadian Interests") categorically deny the US allegations and strongly disagree with the final countervailing and antidumping determinations made by the USITC and USDOC. Canadian Interests continue to pursue appeals of the final countervailing and dumping determinations with the appropriate courts, NAFTA panels and the WTO. NAFTA and WTO panels have issued several rulings with respect to the countervailing and anti-dumping investigations. The USDOC has responded to these rulings and modified its methodology and calculations in evaluating and calculating subsidy and dumping rates. However, primarily in the countervailing case, with each response to NAFTA panel rulings, the USDOC's methodology changes have resulted in substantive changes to the duty rates, both up and down, making it difficult to accurately estimate the final rates after all appeals will be complete. As a result, the Company has not recorded any receivable for prior periods as a result of the change in the cash deposit rate applicable to the new shipments. A NAFTA Panel, in reviewing the "threat of injury" determination made by the USITC, has ruled that the USITC has not been able to provide the NAFTA Panel with substantive evidence to support the USITC ruling of "threat of injury". The NAFTA Panel requested that the USITC reverse its ruling on "threat of injury". The NAFTA Panel requested that the USITC reverse its ruling on "threat of injury" with which the USITC reluctantly complied. US interests are appealing this ruling to an Extraordinary Challenge Committee ("ECC") Panel. If the ECC Panel upholds this finding by the NAFTA Panel, the Company would expect that all prior duties paid would be refunded with interest. However, there can be no certainty that the USDOC would comply with this ruling and US interests have indicated that they may even challenge the constitutional validity of NAFTA in US courts. The final amount of countervailing and antidumping duties that may be assessed on the Company's Canadian softwood lumber exports to the US cannot be determined at this time and will depend on appeals of the final determinations to any reviewing courts, NAFTA or WTO panels. Notwithstanding the final rates established in the investigations, the final liability for the assessment of countervailing and antidumping duties will not be determined until each annual administrative review process is complete, including appeals. d) Human Resources Subsequent to Tolko's acquisition of the Company, employment levels at Riverside have been reduced. This will result in future severance obligations. As at the date of financial statement preparation, the timing and amount of these costs cannot be reasonably estimated. Severance and related costs will be recorded in the periods in which the actual determination of the obligations is made. 10. EBITDA EBITDA represents net earnings (loss) before income taxes (recovery), unrealized foreign exchange loss (gain) on long-term debt, interest on long-term debt, depreciation and amortization, net operating interest expense (income) and prepayment penalties on the early repayment of long-term debt and takeover costs. Riverside considers EBITDA a key indicator of operating performance. Management uses EBITDA as an internal measure of performance and in its evaluation of potential acquisitions. As EBITDA is a non-GAAP measure, it may not be comparable to EBITDA as calculated by others. In addition, as EBITDA is not a substitute for other GAAP measures such as net earnings, readers should consider those GAAP measures in evaluating Riverside's performance. A reconciliation of EBITDA to net earnings (loss) is as follows:

11. Employee Future Benefits The net benefit cost relating to the Company's defined benefit and defined contribution plans for the 3 months ended December 31, 2004 was $5.7 M. 12. Subsequent Event On February 17, 2005 the Company will be redeeming 35% of the aggregate principal amount of the 7-7/8% Senior Notes due 2014 (the "Notes") in the amount of US $52.5 million. This optional redemption is pursuant to Section 3.07(a) of the Indenture dated as of February 25, 2004 (the "Indenture") between Riverside and Wells Fargo Bank, National Association as Trustee. In accordance with the Indenture, the redemption price will be 107.875% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest to the date of redemption. Riverside Forest Products Limited CORPORATE DATA BOARD OF DIRECTORS J.A. (Allan) Thorlakson - Vernon, B.C. J.E. (John) Thorlakson - Vernon, B.C. J.B. (Brad) Thorlakson - Vernon, B.C. P.J. (Peter) Powell - Surrey, B.C. M.B. (Michael) Percy - Edmonton, Alberta R.F. (Robert) Chase - Vancouver, B.C. OFFICERS J.A. (Allan) Thorlakson President and Chief Executive Officer J.E. (John) Thorlakson Vice-President J.B. (Brad) Thorlakson Vice-President T.W. (Trevor) Jahnig Chief Financial Officer C.A. (Conrad) Pinette Executive Vice President J.A. (John) Thomas Vice-President and General Manager, Marketing HEAD OFFICE 820 Guy Street, Kelowna, B.C., V1Y 7R5 (250) 762-3411 INVESTOR RELATIONS investorrelations@riverside.bc.ca WEBSITE www.riverside.bc.ca Document No. 2 Riverside forest products limited FORM 52-109FT2 CERTIFICATION OF INTERIM FILINGS DURING TRANSITION PERIOD February 4, 2005 I, J. Allan Thorlakson, President and Chief Executive Officer of Riverside Forest Products Limited, certify that: 1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of Riverside Forest Products Limited, (the issuer) for the interim period ending December 31, 2004; 2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; and, 3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings. Date: February 4, 2005 RIVERSIDE FOREST PRODUCTS LIMITED By: (Signed) J. Allan Thorlakson ----------------------------------- Name: J. Allan Thorlakson Title: President & Chief Executive Officer Document No. 3 Riverside forest products limited FORM 52-109FT2 CERTIFICATION OF INTERIM FILINGS DURING TRANSITION PERIOD February 4, 2005 I, Trevor W. Jahnig, Chief Financial Officer of Riverside Forest Products Limited, certify that: 1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of Riverside Forest Products Limited, (the issuer) for the interim period ending December 31, 2004; 2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; and, 3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings. Date: February 4, 2005 RIVERSIDE FOREST PRODUCTS LIMITED By: (signed) Trevor W. Jahnig ------------------------------- Name: Trevor W. Jahnig Title: Chief Financial Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RIVERSIDE FOREST PRODUCTS LIMITED Date: February 14, 2005 By: /s/ John Thorlakson ------------------------------------------- Name: John Thorlakson Title: Vice President By: /s/ Trevor W. Jahnig ------------------------------------------ Name: Trevor W. Jahnig Title: Chief Financial Officer

RIVERSIDE FOREST PRODUCTS LTD 6-K