Sales were primarily made to domestic customers such
as lumber mills, railroads, paper factories and furniture manufacturers.
The balance of sales, approximately 30%, was exported as saw timber,
round logs and lumbers, such as birch and red wood, to the Finnish market.
Production output varied significantly during the year due to uncertainties
related to export duties, corporate taxes, and taxes related to the
cutting of timber. These uncertainties made it very difficult to commit
to pricing over the long term and thus had a negative impact on sales
Cost of production remained constant throughout the year
at 29% of sales. General production expenses were the largest portion
of total operating expenses at 27%. Costs included in this category
were expenses for employees' transportation, office expense, and salary
for office employees. The second largest expense category was transportation
expenses for timber, which equaled 5% of total sales or 18% of operating
expenses. Salary for forestry workers was 17% of production costs and
remained constant throughout the period. Non-production expenses were
comprised of cost of delivery and were 5% of sales for the year. Taxes
on income remained at the statutory 38% during the year and totaled
As of December 31, 1996 ROSH invested over $8,000,000
in this project through MMG Forestry. On the average (in 1994-1996),
the annual revenue generated by the project constituted $3,500,000.