Free Order on Motion for Reconsideration - District Court of Federal Claims - federal

Case 1:98-cv-00720-GWM

Document 458-4

Filed 03/13/2008

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EXHIBIT 3

Case 1:98-cv-00720-GWM

Document 458-4

Filed 03/13/2008

Page 2 of 3

Table: Underlying Calculations For Figures in First and Second Columns of Appendix A (Timber Harvested From Breached Contracts and Volume Milled from Breached Contracts)

April 1996 is divided into two equal parts to account for the fact that the first half of the month is in the off-season whereas the second half is in the harvesting season. "Shortfall," as used in the header of the seventh column above and text below, refers to the difference between total mill capacity and the actual production of lumber in log scale. To calculate the monthly harvesting shortfall, the Court took the anticipated mill production (in Mbf (LT)) and subtracted the actual mill production (also in Mbf (LT)). The Court then divided the difference by the overrun factor (1.25) to convert to Mbf (LS).

Case 1:98-cv-00720-GWM

Document 458-4

Filed 03/13/2008

Page 3 of 3

* This amount [916 Mbf (LS)] equals the total shortfall for the harvesting off-season in 1996 (891+661+1461+651) divided by the number of months in the 1995 decking season (4).

** The Court has found that Precision Pine would typically maintain a three-week supply of decked logs between the months of April and September. See Precision Pine, slip op. at 34 (Sept. 14, 2007) (citing testimony of John Smith). To calculate a three-week supply of logs, the Court started with the total mill capacity (2950 Mbf (LT)), converted to log scale (2360 Mbf (LS)), then multiplied by 3/4, resulting in 1770 Mbf (LS). The Court found that Precision Pine would have needed approximately three weeks to build up a three-week supply of decked logs1 and that Precision Pine would typically deck enough timber during the decking season to feed its mills throughout the harvesting off-season. See Precision Pine, slip op. at 35, 41-43. The threeweek inventory (1770 Mbf (LS)) to be harvested and decked during a three-week period was apportioned between the months of April and May 1996. The first 16/21 of this three-week period fell in April (1770 x 16/21 = 1348.6). The remaining 5/21 of this three-week period fell in May (1770 x 5/21 = 421.4). *** This amount [2572 Mbf (LS)] equals the total shortfall for the harvesting off-season in 1996­97 (1829+1533+1598+1941+ 816) divided by the number of months in the 1996 decking season (3). This amount [559 Mbf (LS)] equals 5/31 of the May 1996 total shortfall for the harvesting offseason (5/31 x 851 = 137.3) plus 421.4. This amount [3257 Mbf (LS)] equals 23/31 of the July 1996 total shortfall for the harvesting off-season (23/31 x 2004 = 1487) plus 1770.

Because the decking season and the off-season are in most years roughly equivalent in length, and the testimony of Mr. Smith indicated that Precision Pine could harvest enough during the decking season to mill at capacity during both that time period and the off-season, the Court assumed for purposes of its Alternative Harvesting and Milling Schedule that Precision Pine could harvest at twice its rate of milling. To use a simplified example, assume a decking season of four months and an off-season of four months. If a timber company has the capacity to mill 100 logs per month, or 800 in the course of eight months, then the company must harvest 800 logs in the four months that occur during the decking season in order to run at full capacity for the entire eight months, including those months that occur in the off-season when there is no harvesting. In other words, the harvesting rate must be twice the milling rate (800 logs harvested in four months versus 400 milled in four months), and it takes four months to deck a four-month inventory of logs. Here, applying the same logic, the Court found that Precision Pine would have needed approximately three weeks during the decking season to build up the three-week inventory of decked logs to which Mr. Smith referred. Table - 2

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