Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for Fourth Quarter and Full Year 2003
Jan 22, 2004
SEATTLE--(BUSINESS WIRE)--Jan. 22, 2004--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced fourth quarter earnings of$56 million, or $0.30 per diluted share, on revenues of $315 million.These results include a $5 million asset impairment related to theexpected sale of certain non-strategic timberlands. Earnings for thefourth quarter of 2002 were $54 million, or $0.29 per diluted share,on revenues of $281 million. Cash provided by operating activities inthe fourth quarter totaled $70 million, an increase of $8 million,compared to $62 million for the same period of 2002.
Earnings for the full year 2003 were $192 million, or $1.04 perdiluted share, on revenues of $1.2 billion. Full year 2003 resultsinclude the effect of $4 million of fire losses and $14 million ofasset impairments related to the sale of non-strategic timberlands.The fire losses and $9 million of the asset impairments were reportedin prior quarters. Earnings for 2002 were $233 million, or $1.26 perdiluted share, on revenues of $1.1 billion. Cash provided by operatingactivities during 2003 totaled $369 million compared to $368 millionreported for 2002. The Company ended 2003 with $260 million in cashand cash equivalents.
"We are pleased with our strong finish in 2003 with increasedfourth quarter earnings, revenues and cash flow reflectingstrengthening markets and the execution of our strategies," said RickHolley, president and chief executive officer. "Cash from operationswas stable for the year despite challenging markets and the worst fireseason in Company history. Throughout the year we worked to realizethe full value of all our assets. Real estate sales captured value forassets significantly in excess of timberland values. Our forestryprofessionals did an excellent job of merchandising logs, capturingthe full value of our harvest. This execution, coupled with ourgeographic and business diversity, enabled the Company to performwell."
Review of Operations
Operating profit in the Northern Resources segment was $30 millionduring the fourth quarter, up $4 million (15 percent) compared to theprior year. Harvests in the segment were 6 percent higher than fourthquarter 2002, primarily the result of additional harvest volume fromWisconsin timberlands acquired in December 2002. Sawlog prices wereunchanged compared to the same period of 2002. Strong demand frompulpwood customers, such as paper mills and oriented strand boardplants, led to a 10 percent improvement in pulpwood prices compared tothose in the fourth quarter of 2002.
Operating profit in the Southern Resources segment was $62million, up $11 million (22 percent) compared to $51 million for thefourth quarter of 2002. Higher sawlog harvest volumes and higherprices for both sawlogs and pulpwood drove the increase in operatingprofits when compared to the same period of 2002. Average salesrealizations from softwood sawtimber were up modestly over the prioryear, as lumber and plywood markets improved in the second half of2003. Strong lumber and structural panel demand encouraged customersto begin to rebuild log inventories during the fourth quarter. Theweakening U.S. dollar has improved domestic pulp and papermanufacturers' competitive position in the world market. As a result,pulpwood prices improved nearly 18 percent when compared to the fourthquarter of 2002.
The Real Estate segment reported revenue of $16 million comparedto $19 million in the fourth quarter of 2002. The difference reflectsthe transaction driven nature of this segment. Full year 2003 revenuesincreased 27 percent to $124 million when compared to 2002. Full year2003 revenues include $13 million from the sale of non-strategictimberland. Fourth quarter sales were primarily comprised of higherand better use and recreation properties. Demand for conservation,development and recreational land remains strong.
The Company's Manufacturing segment reported a $6 million profitfor the fourth quarter, up $11 million from a $5 million loss reportedfor 2002's fourth quarter. Prices for all of the Company's majorproducts showed improvement over the fourth quarter of 2002. Plywoodprices were 32 percent higher as the result of strong housing demandand recovering industrial demand for structural panels. Lumber priceswere up nearly 13 percent from depressed levels experienced during thefourth quarter of 2002. Medium density fiberboard (MDF) salesrealizations were up 9 percent due to a higher valued product mixduring fourth quarter 2003 when compared to the same period of 2002.
Outlook
Demand for sawlogs and pulpwood in the Northern Resources segmentis strong and many mills in the Northeast and Northwest have low loginventories. In some regions customers are struggling to replenish logdecks as the result of bad weather and limited availability of loggingcontractors. Customers are optimistic about the first half of 2004,and that, combined with the low log decks, is resulting in modestprice increases in many regions of the Northern Resources segment.During the first quarter, the Northern Resources segment's pulpwoodand sawlog prices are expected to increase slightly from fourthquarter levels.
Southern timber markets are also showing continued signs ofimprovement. In general, sawlog customers expect strong demand andplan to operate their mills at higher levels in 2004. Many are workingto build and maintain full log decks in anticipation of a good startto the 2004 building season. This has resulted in good demand forsawlogs in the region and some upward price movement. Pulpwood demandremains steady and pulpwood prices are expected to remain firm.
First quarter harvest volumes are expected to approximate firstquarter 2003 levels in both the Northern and Southern Resourcessegments.
The Company expects Real Estate segment sales for the year,excluding the sale of large, non-strategic lands, to be between $140and $160 million. First quarter Real Estate segment sales are expectedto approach $60 million.
First quarter profits for the Manufacturing segment are expectedto moderate somewhat as plywood prices recede from the very highlevels experienced during the fourth quarter.
The Company expects first quarter earnings to be between $0.30 and$0.35 per share with full year earnings expected to be between $1.10and $1.30 per share. These earnings expectations do not include anyimpact from the sale of large, non-strategic timberlands that theCompany may execute in 2004.
Sale of Non-strategic Timberlands
The Company is pursuing the sale of approximately 700,000 acres oflarge tracts of non-strategic timberlands over the next two years.Currently the Company has signed sales agreements coveringapproximately 170,000 acres valued at approximately $77 million. Thesetransactions are subject to customary closing contingencies and areexpected to close during the first quarter
"The Company is focused on realizing the maximum value of all ofits assets," said Rick Holley. "Following the completion of acomprehensive asset analysis, we understand the value of all our landsand have begun to implement a plan to capture their full value. Thiseffort will generate a significant amount of capital over the comingyears.
"Disciplined capital allocation is job one at Plum Creek. Ourreinvestment efforts will continue to focus on growing the per sharevalue of the Company. We expect to reinvest a significant portion ofland sale proceeds in quality timberlands that improve our current andfuture cash flow by improving our current and future harvests. Ourhigh quality assets, strategic direction, focus and people position usto benefit further as business conditions improve."
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, January 22, at 5:00p.m. EST (2:00 p.m. PST). A live webcast of the conference call may beaccessed through Plum Creek's Internet site at www.plumcreek.com byclicking on the "Investors" link.
Investors without Internet access should dial 1-800-572-9852 atleast 10 minutes prior to the start of the call, referencing PlumCreek's earnings. Those wishing to access the call from outside theUnited States and Canada should dial 1-706-645-9676, also referencingPlum Creek's earnings. Replay of the call will be available for 48hours after completion of the live call and can be accessed at1-800-642-1687 or 1-706-645-9291 (international calls), using the code4766952.
Supplemental financial information for Plum Creek operations,including statistical data, is available in the investors informationsection of Plum Creek's website at www.plumcreek.com.
Plum Creek is one of the largest land and timber owners in thenation, with over eight million acres of timberlands in major timberproducing regions of the United States and 10 wood productsmanufacturing facilities in the Northwest.
Forward-Looking Statements
This press release contains forward-looking statements within themeaning of the Private Litigation Reform Act of 1995 as amended. Someof these forward-looking statements can be identified by the use offorward-looking words such as "believes," "expects," "may," "will,""should," "seek," "approximately," "intends," "plans," "estimates," or"anticipates," or the negative of those words or other comparableterminology. The accuracy of such statements is subject to a number ofrisks, uncertainties and assumptions including, but not limited to,the cyclical nature of the forest products industry, our ability toharvest our timber, our ability to execute our acquisition strategy,the market for and our ability to sell or exchange non-strategictimberlands and timberland properties that have higher and betteruses, and various regulatory constraints. These and other risks,uncertainties and assumptions are detailed from time to time in ourfilings with the Securities and Exchange Commission under theSecurities Exchange Act of 1934, as amended, and the Securities Act of1933, as amended. It is likely that if one or more of the risksmaterializes, or if one or more assumptions prove to be incorrect, thecurrent expectations of Plum Creek and its management will not berealized. Forward-looking statements are not guarantees ofperformance, and speak only as of the date made, and neither PlumCreek nor its management undertakes any obligation to update or reviseany forward-looking statements.
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Year Ended -------------------------------- December 31, December 31, 2003 2002 ------------- -------------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 664 $ 649 Real Estate 124 98 Manufacturing 397 381 Other 11 9 ------------- -------------- Total Revenues 1,196 1,137 ------------- --------------Costs and Expenses: Cost of Goods Sold: Timber 345 318 Real Estate 77 34 Manufacturing 390 370 Other 4 2 ------------- -------------- Total Cost of Goods Sold 816 724 Selling, General and Administrative 77 75 ------------- -------------- Total Costs and Expenses 893 799 ------------- --------------Operating Income 303 338Interest Expense, net 117 103 ------------- --------------Income before Income Taxes 186 235Benefit (Provision) for Income Taxes 6 (2) ------------- --------------Net Income $ 192 $ 233 ============= ==============Net Income per Share - Basic $ 1.05 $ 1.26 ============= ==============Net Income per Share - Diluted $ 1.04 $ 1.26 ============= ==============Weighted average number of Shares outstanding - Basic 183.3 184.7 ------------- --------------Weighted average number of Shares outstanding - Diluted 183.9 185.4 ------------- -------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended ----------------------------- December 31, December 31, 2003 2002 ------------- ------------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 191 $ 168 Real Estate 16 19 Manufacturing 105 90 Other 3 4 ------------- ------------- Total Revenues 315 281 ------------- -------------Costs and Expenses: Cost of Goods Sold: Timber 97 86 Real Estate 12 5 Manufacturing 96 92 Other 1 1 ------------- ------------- Total Cost of Goods Sold 206 184 Selling, General and Administrative 21 22 ------------- ------------- Total Costs and Expenses 227 206 ------------- -------------Operating Income 88 75Interest Expense, net 31 26 ------------- -------------Income before Income Taxes 57 49Benefit (Provision) for Income Taxes (1) 5 ------------- -------------Net Income $ 56 $ 54 ============= =============Net Income per Share - Basic $ 0.31 $ 0.29 ============= =============Net Income per Share - Diluted $ 0.30 $ 0.29 ============= =============Weighted average number of Shares outstanding - Basic 183.0 184.8 ------------- -------------Weighted average number of Shares outstanding - Diluted 183.7 185.3 ------------- ------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31, December 31, 2003 2002 ------------ ------------ (In Millions) ASSETSCurrent Assets: Cash and Cash Equivalents $ 260 $ 246 Restricted Advance from Customer 3 4 Accounts Receivable 34 33 Inventories 54 58 Investment in Grantor Trust 13 10 Deferred Tax Asset 11 11 Other Current Assets 30 16 ------------ ------------ 405 378Timber and Timberlands - Net 3,674 3,599Property, Plant and Equipment - Net 303 307Other Assets 5 5 ------------ ------------ Total Assets $ 4,387 $ 4,289 ============ ============ LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 33 $ 33 Accounts Payable 27 25 Interest Payable 28 21 Wages Payable 23 23 Taxes Payable 15 11 Deferred Revenue 16 18 Liabilities Associated with Grantor Trust 13 10 Other Current Liabilities 13 12 ------------ ------------ 168 153Long-Term Debt 1,437 1,170Lines of Credit 594 669Deferred Tax Liability 37 44Other Liabilities 32 31 ------------ ------------ Total Liabilities 2,268 2,067 ------------ ------------Commitments and Contingencies STOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value, authorized shares - 75.0, outstanding - none - -Common Stock, $0.01 par value, authorized shares - 300.0, issued (including Treasury Stock) - 185.1 at December 31, 2003 and 184.9 at December 31, 2002 2 2Additional Paid-In Capital 2,151 2,197Retained Earnings 9 23Treasury Stock, at cost, Common shares - 2.0 at December 31, 2003 (43) - ------------ ------------ Total Stockholders' Equity 2,119 2,222 ------------ ------------ Total Liabilities and Stockholders' Equity $ 4,387 $ 4,289 ============ ============ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Year Ended -------------------------- December 31, December 31, 2003 2002 ------------ ------------ (In Millions)Cash Flows From Operating Activities:Net Income $ 192 $ 233Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Including $4 Loss Related to Forest Fires) 107 105 Basis of Real Estate Sold (Including $14 Impairment Losses) 66 28 Deferred Income Taxes (7) 1 Working Capital Changes 2 (5) Other 9 6 ------------ ------------Net Cash Provided By Operating Activities 369 368 ------------ ------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (84) (91) Timberlands Acquired (Including Tax- Deferred Exchange Proceeds, Net) (162) (158) ------------ ------------Net Cash Used In Investing Activities (246) (249) ------------ ------------Cash Flows From Financing Activities: Dividends (257) (275) Borrowings of Long-term Debt and Lines of Credit 2,222 1,733 Repayments of Long-term Debt and Lines of Credit (2,032) (1,542) Proceeds from Stock Option Exercises 1 18 Acquisition of Treasury Stock (43) - ------------ ------------Net Cash Used In Financing Activities (109) (66) ------------ ------------Increase In Cash and Cash Equivalents 14 53Cash and Cash Equivalents: Beginning of Period 246 193 ------------ ------------ End of Period $ 260 $ 246 ============ ============ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Quarter Ended ----------------------------- December 31, December 31, 2003 2002 ------------- -------------- (In Millions)Cash Flows From Operating Activities:Net Income $ 56 $ 54Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 28 27 Basis of Real Estate Sold (Including $5 Impairment Loss) 9 4 Deferred Income Taxes 1 (5) Working Capital Changes (29) (16) Other 5 (2) ------------- --------------Net Cash Provided By Operating Activities 70 62 ------------- --------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (24) (30) Timberlands Acquired (Including Tax- Deferred Exchange Proceeds, Net) (103) (133) ------------- --------------Net Cash Used In Investing Activities (127) (163) ------------- --------------Cash Flows From Financing Activities: Dividends (64) (64) Borrowings of Long-term Debt and Lines of Credit 558 582 Repayments of Long-term Debt and Lines of Credit (458) (442) Proceeds from Stock Option Exercises - 1 ------------- --------------Net Cash Provided By Financing Activities 36 77 ------------- --------------Decrease In Cash and Cash Equivalents (21) (24)Cash and Cash Equivalents: Beginning of Period 281 270 ------------- -------------- End of Period $ 260 $ 246 ============= ==============
Click Here for 4th Quarter 2003 Financial Supplements (in PDF)
CONTACT: Plum Creek Timber Company, Inc.
John Hobbs, 800-858-5347 (Investors)
Kathy Budinick, 206-467-3620 (Media)
SOURCE: Plum Creek Timber Company, Inc.