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KEY FACTS ABOUT RAYMOND JAMES LTD.

Formerly known as Goepel McDermid Inc., became Raymond James Ltd. in January 2001. Parent company, NYSE-listed Raymond James Financial, Inc (RJF) ranks as the ninth largest full-service brokerage firm in the U.S., with over C$2.6 billion in revenues.

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KEY FACTS ABOUT RAYMOND JAMES LTD.

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  1. Formerly known as Goepel McDermid Inc., became Raymond James Ltd. in January 2001. Parent company, NYSE-listed Raymond James Financial, Inc (RJF) ranks as the ninth largest full-service brokerage firm in the U.S., with over C$2.6 billion in revenues. Raymond James Financial maintains an established network of 4,800 investment professionals in approximately 2,000 offices worldwide with $120 billion (Cdn) in private client assets under administration. Raymond James research has been ranked #1 in the Wall Street Journal’s quarterly performance rankings more than any other firm over the last ten years. The research team includes 46 analysts in the U.S. covering 475 companies, and 17 analysts in Canada, covering 130 companies. The Raymond James forest products corporate finance team is a well recognized financial advisor to the forest industry in Canada, with a track record for innovative transactions. KEY FACTS ABOUT RAYMOND JAMES LTD.

  2. Paper & Forest Industry Update: “The Ugly, the Good, the Bad …” Mark Bishop Equity Research Analyst Paper & Forest Products Raymond James Ltd.

  3. Industry Overview • Commodity Review • B.C. Industry

  4. “The Ugly” • Too much capacity • Easy access to capital • More global fibre looking for a home

  5. Performance during the late 1990’s was not impressive.

  6. Declining “need” to invest in the sector

  7. “The Good” • Capacity closures • Capital spending restraint • Market discipline

  8. Capacity closures …. but how permanent?

  9. Capital spending restraint

  10. Capital spending restraint • Lowest growth rate ever recorded

  11. Market discipline…

  12. … historic low inventories

  13. Recent weaker U.S. currency has helped NA industry

  14. Recent relative performance more encouraging

  15. Consolidation continues …

  16. … and may lead to more stable pricing.

  17. Bigger isn’t necessarily better …

  18. … but customers are also consolidating.

  19. Consolidation will continue • Drivers: • Customer consolidation • Globalization • Buy vs. build Benefits: • Inventory management • Best practices • Product rationalization • Pricing stabilization

  20. “The Bad” • tech meltdown, global geopolitical concerns • & corporate misconduct has significantly reduced • confidence in capital markets • print advertising recovery is not materializing • resolution of the US/Cdn lumber trade dispute remote • supply discipline may be faltering

  21. Commodity Review Typical economic recovery, inventory and supply conditions aside, drives demand in paper and forest products commodities through the following sequence: • Building materials – Lumber & panels • interest rate sensitive, consumer led • Packaging - Containerboard • with initial pickup in industrial economy & manufacturing activity • Communication papers - Uncoated freesheet (UFS) • increasing demand for business papers first e.g., UFS • increasing demand for magazine & advertising follows e.g., coated paper • resulting increase in pulp demand • Publishing papers - Newsprint • largely driven by retail • kicks in with increasing consumer confidence as a result of improved industrial activity – i.e., job growth

  22. Commodity Review

  23. Lumber

  24. Lumber

  25. Lumber • 27% cash duties in place since May 22 • Canadian industry responds with higher operating rates to reduce unit costs • Preliminary WTO “win” for Canada in July • Next key ruling in Feb. 2003 – NAFTA • Curtailments now on the increase

  26. Lumber

  27. Lumber

  28. Market pulp

  29. Market pulp

  30. Newsprint

  31. Newsprint

  32. Newsprint

  33. Summary - Valuation

  34. Summary - Valuation

  35. Canadian P&FP Share Price Performance

  36. Canadian P&FP Share Price Performance

  37. B.C. Industry EPS Forecast

  38. B.C. Industry • government committed to forest policy change • policy change remains tied to trade file • expect policy change will occur on B.C. coast at accelerated pace – Fall 2002 • labour environment appears to be improving • consolidation likely as visibility on U.S. market access improves

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