Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for Fourth Quarter and Full Year 2002
Jan 23, 2003
SEATTLE--(BUSINESS WIRE)--Jan. 23, 2003--Plum Creek TimberCompany, Inc. (NYSE: PCL) today announced fourth quarter earnings of$54 million, or $0.29 per diluted share, on revenues of $281 million.
Earnings for the full year 2002 were $233 million, or $1.26 perdiluted share, on revenues of $1.1 billion.
Plum Creek merged with The Timber Company on October 6, 2001. Foraccounting purposes, The Timber Company is considered the survivingentity because of the structure of the merger. Therefore, reportedfinancial results for periods prior to the merger reflect thefinancial results of The Timber Company. Full-year results for 2002reflect the performance of the combined companies and are notcomparable to the full-year results reported for 2001.
Fourth quarter earnings in 2001 were $226 million, or $1.25 perdiluted share including $183 million, or $1.01 per diluted share, ofmerger related earnings. Excluding the merger related earnings,pro-forma fourth quarter 2001 earnings were $43 million, or $0.24 perdiluted share. These adjustments to 2001 earnings are detailed in anaccompanying reconciliation.
Funds from operations were $85 million for the fourth quarter of2002 and $366 million for the full year. Funds from operations isdefined as net income plus depreciation, depletion, amortization andbasis in real estate sold. The calculation of funds from operations isdetailed in an accompanying reconciliation to reported net income. TheCompany ended the year with $246 million in cash and cash equivalents.
"Plum Creek's ability to perform well even in these difficultmarkets results from the geographic and business diversity of ourassets and the strategies that we've implemented over the last severalyears," said Rick Holley, President and CEO. "Our ability to adjustharvest levels to respond to local market conditions yields very realbenefits for our shareholders. Moreover, all of our businesses --timber, real estate, wood product manufacturing and natural resourceswere positive contributors to earnings and cash flow over the pastyear and are well positioned for the future."
Review of Operations
Operating profit in the Northern Resources segment was $26 millionin the fourth quarter compared to $23 million for the previousquarter. Harvesting activity was modestly higher in the fourth quarterdue, in part, to the easing of fire danger harvest restrictions inOregon. The Company's Northern timber prices were relatively flatcompared to those in the third quarter with a 6% increase in hardwoodsawlog prices offsetting a 2% reduction in softwood sawlog prices.Pulpwood prices were flat during the quarter. Seasonal reductions inroad maintenance expense improved operating profit approximately $1million when compared to the third quarter.
Operating profit in the Southern Resources segment was $51million, down $6 million from the third quarter's $57 million. Overallharvesting activity was flat compared to the third quarter with alower proportion of sawtimber harvested during the fourth quarter ascompared to the third quarter. Prices for sawtimber fell approximately8% in the South as poor lumber markets and extended holiday downtimeat lumber mills reduced log demand throughout the region. Pulpwoodprices in the South remained flat.
Real Estate segment revenue was $19 million, as expected, but lessthan the $38 million reported in the third quarter.
The Company's Manufacturing segment reported a $5 million loss, adecline of $8 million from the third quarter's $3 million profit.Lumber prices fell approximately 10% during the quarter due to amplesupplies of lumber in both the pine board and stud lumber markets.Medium density fiberboard (MDF) sales volumes declined and prices fellas demand slowed during the winter months.
Recent Financing Activity
On January 22, 2003 Plum Creek completed a $300 million privatedebt placement. The average maturity of the notes is 8.3 yearscarrying a weighted average interest rate of 5.6%. Proceeds from theprivate placement will be used to pay down Plum Creek's existing lineof credit.
Outlook
Timber markets in 2003 are expected to be every bit as challengingas they were in the past year. There are no convincing signs of asustained upturn nor are there indications that market conditions aredeteriorating. Despite consistent demand, persistently oversuppliedlumber markets have kept log prices from advancing. As a result, theCompany expects to reduce its Southern harvest as much as 500,000tons. The reductions will come in the first quarter of the year.
There is increasing interest on both sides of the border to movetoward a negotiated agreement in the ongoing lumber dispute withCanada. Ultimately an agreement should have a positive effect on U.S.log markets. However, the extent and timing of any influence isimpossible to determine at this time.
A weaker U.S. dollar appears to have improved U.S. pulp and paperproducers' competitive position in world markets. This is good newsfor many pulpwood customers. However, worldwide demand growth for pulpand paper products has been lackluster and many pulpwood customersremain cautious. Recent wet weather in some Southern markets hasreduced access to pulpwood stands resulting in higher spot prices forpulpwood. Overall, the Company expects supply and demand in pulpwoodmarkets to remain largely in balance with some opportunity for modestprice improvement as the year progresses and world economies improve.
The Company continues to receive strong interest in its realestate properties from conservation buyers, individuals, anddevelopers and continues to execute its strategy of evaluating realestate holdings to determine which properties should be positioned forsale or exchange rather than for continued use as timberlands.Anticipated real estate revenue for 2003 is expected to be between $80and $100 million.
The Company expects manufacturing results to improve somewhat asthe year progresses. Prices and volumes for each product shouldimprove in the latter part of the first quarter as customers begin topurchase for the spring and summer building season.
The Company expects 2003 earnings to be between $1.00 and $1.25per share with the first quarter contributing between $0.12 and $0.17per share.
"Looking ahead in 2003, we are planning conservatively and do notexpect meaningful near-term improvement in the economy or in ourtimber markets. Our approach in 2003 will be to further capitalize onour ability to exercise business flexibility. We have a sound balancesheet and are responding appropriately to market conditions, ready tomove quickly when markets show improvement. Our asset diversification,financial capability and strategic focus have Plum Creek wellpositioned to benefit from the opportunities that lie ahead,"concluded Rick Holley, President and CEO.
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, January 23, at 5:00PM EST (2:00 PM 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 800/572-9852 atleast 10 minutes prior to the start, referencing Plum Creek'searnings. Those wishing to access the call from outside UnitedStates/Canada should dial 706/645-9676, also referencing Plum Creek'searnings. Replay of the call will be available for 48 hours aftercompletion of the live call and can be accessed at 800/642-1687 or706/645-9291 (international calls), using the code 7450384.
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 landowners in the nation, withnearly 8.1 million acres of timberlands in every region of the UnitedStates and ten wood product manufacturing facilities in the Northwest.
More information on Plum Creek Timber Co. may be accessed at:http://www.businesswire.com/cnn/pcl.shtml.
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,and various regulatory constraints. These risks, uncertainties andassumptions are detailed from time to time in our filings with theSecurities and Exchange Commission under the Securities Exchange Actof 1934, as amended, and the Securities Act of 1933, as amended. It islikely that if one or more of the risks materializes, or if one ormore assumptions proves to be incorrect, the current expectations ofPlum Creek and its management will not be realized. Forward-lookingstatements speak only as of the date made, and neither Plum Creek norits management undertakes any obligation to update or revise anyforward-looking statements.
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Quarter Ended ---------------------------- December 31, December 31, 2002 2001 ------------ ------------- (In Millions, Except Per Share)Revenues: Timber $ 168 $ 126 Real Estate 19 27 Manufacturing 90 86 Other 4 1 ------------ ------------- Total Revenues 281 240Costs and Expenses: Cost of Goods Sold: Timber 86 77 Real Estate 5 12 Manufacturing 92 83 Other 1 - ------------ ------------- Total Cost of Goods Sold 184 172 Selling, General and Administrative 22 28 ------------ ------------- Total Costs and Expenses 206 200 ------------ -------------Operating Income 75 40Interest Expense, net 26 24 ------------ -------------Income before Income Taxes 49 16Benefit for Income Taxes 5 210 ------------ -------------Net Income $ 54 $ 226 ============ =============Net Income per Share - Basic $ 0.29 $ 1.26 ============ =============Net Income per Share - Diluted $ 0.29 $ 1.25 ============ =============Weighted average number of Shares outstanding - Basic 184.8 179.3 ------------ -------------Weighted average number of Shares outstanding - Diluted 185.3 180.6 ------------ ------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Year Ended ---------------------------- December 31, December 31, 2002 2001 ------------ ------------- (In Millions, Except Per Share)Revenues: Timber $ 649 $ 423 Real Estate 98 80 Manufacturing 381 86 Other 9 9 ------------ ------------- Total Revenues 1,137 598Costs and Expenses: Cost of Goods Sold: Timber 318 188 Real Estate 34 20 Manufacturing 370 83 Other 2 1 ------------ ------------- Total Cost of Goods Sold 724 292 Selling, General and Administrative 75 56 ------------ ------------- Total Costs and Expenses 799 348 ------------ -------------Operating Income 338 250Interest Expense, net 103 54 ------------ -------------Income before Income Taxes 235 196(Provision) Benefit for Income Taxes (2) 142 ------------ -------------Net Income $ 233 $ 338 ============ =============Net Income per Share - Basic $ 1.26 $ 2.61 ============ =============Net Income per Share - Diluted $ 1.26 $ 2.58 ============ =============Weighted average number of Shares outstanding - Basic 184.7 129.5 ------------ -------------Weighted average number of Shares outstanding - Diluted 185.4 130.7 ------------ ------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) December 31, December 31, 2002 2001 ------------- ------------- (In Millions, Except Share Data) ASSETSCurrent Assets: Cash and Cash Equivalents $ 246 $ 193 Restricted Advance from Customer 4 - Accounts Receivable 33 31 Inventories 58 56 Investment in Grantor Trust 10 12 Deferred Tax Asset 11 2 Other Current Assets 16 12 ------------- ------------- 378 306Timber and Timberlands - Net 3,599 3,480Property, Plant and Equipment - Net 307 316Other Assets 5 20 ------------- ------------- Total Assets $ 4,289 $ 4,122 ============= ============= LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 33 $ 34 Accounts Payable 25 27 Interest Payable 21 21 Wages Payable 23 21 Taxes Payable 11 9 Deferred Revenue 18 14 Liabilities Associated with Grantor Trust 10 11 Other Current Liabilities 14 12 ------------- ------------- 155 149Long-Term Debt 1,170 1,178Line of Credit 669 469Deferred Tax Liability 44 38Other Liabilities 29 41 ------------- ------------- Total Liabilities 2,067 1,875 ------------- -------------Commitments and Contingencies STOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value, authorized shares - 75 million, outstanding - none - -Common Stock, $0.01 par value, authorized shares - 300 million, outstanding - 184,861,615 at December 31, 2002 and 183,825,407 at December 31, 2001 2 2Additional Paid-In Capital 2,197 2,227Retained Earnings 23 17Other Equity - 1 ------------- ------------- Total Stockholders' Equity 2,222 2,247 ------------- ------------- Total Liabilities and Stockholders' Equity $ 4,289 $ 4,122 ============= ============= Plum Creek Timber Company, Inc. (unaudited) Funds From Operations Fourth Year Quarter Ended (In millions) 2002 2002 ----------- -----------Net Income $54 $233Plus: Depreciation, Depletion & Amortization 27 105 Basis of Real Estate Sold 4 28 ----------- -----------Funds From Operations $85 $366 =========== =========== Plum Creek Timber Company, Inc. Pro Forma Net Income Fourth Quarter 2001(unaudited) $ MillionsReported Fourth Quarter Income $226 GAAP basis earningsTax Adjustment (216) One time elimination of The Timber Company ("TTC") deferred taxes as a result of converting from a C-corp to a REITTTC Employee Costs 9 Primarily severance costsExcess Profit in Inventory Elimination 8 Non-cash charge created by the merger transactionG-P Timber Deed Income 16 Income from 4th Qtr. 2001 harvest on former TTC lands that was accelerated to prior periods in 2001 due to the merger transaction ---------------Pro Forma Net Income $43 ===============Pro Forma Basic EPS $0.24Pro Forma Diluted EPS $0.24Click Here for 4th Quarter 2002 Financial Supplements (in Excel)
CONTACT:
Plum Creek Timber Company, Inc.
John Hobbs, 206/467-3600 or 800/858-5347
www.plumcreek.com