Plum Creek Legacy News Releases
Plum Creek Reports Results for Fourth Quarter and Full Year 2007
Jan 28, 2008
SEATTLE--(BUSINESS WIRE)--Jan. 28, 2008--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced fourth quarter earnings of$118 million, or $0.68 per diluted share, on revenues of $504 million.Earnings for the fourth quarter of 2006 were $69 million, or $0.39 perdiluted share, on revenues of $379 million.
Earnings for the fourth quarter of 2007 included an after-tax gainof $43 million, or $0.25 per share, from the sale of nearly 100,000acres of Wisconsin timberlands for approximately $70 million. Earningsfor the fourth quarter of 2006 included a $13 million, $0.07 pershare, after-tax gain from the settlement of the softwood lumber tradedispute between the United States and Canada.
Earnings for the full year of 2007 were $282 million, or $1.61 perdiluted share, on revenues of $1.68 billion. Earnings for 2006 were$317 million, or $1.75 per diluted share, on revenues of $1.63billion.
Results for the full year of 2007 included the gains from theWisconsin sale mentioned above; a $2 million, or $0.01 per shareafter-tax gain, on the sale of an industrial mineral asset during thesecond quarter of the year; as well as a $4 million, or $0.02 pershare non-cash expense, related to fire losses during the thirdquarter. Results for 2006 included the gain from the trade disputesettlement as well as a $2 million, or $0.01 per share, after-taxcumulative benefit from accounting changes recorded during the firstquarter of 2006.
"We're pleased with the performance during the fourth quarter,"said Rick Holley, president and chief executive officer. "Results fromour ongoing businesses met our expectations. The Wisconsin timberlandssale allowed us to capture attractive value for this property andhighlights the continued investor interest in timberlands as along-term asset class."
Cash provided by operating activities for 2007 totaled $517million including $69 million of cash proceeds from the Wisconsin landsale and $8 million of cash provided by a reduction in workingcapital. Cash provided by operating activities during 2006 totaled$556 million including approximately $29 million of cash provided byreduction in working capital. The company ended 2007 with $240 millionin cash and cash equivalents.
"The employees and management team of Plum Creek remain focused onlong-term value creation," continued Holley. "It's this commitmentthat drives our strategies and day-to-day operating decisions. It'sthis commitment that has served our long-term shareholders well,delivering annualized total shareholder returns over the past fiveyears of 19.6 percent.
"During the past year, our focus on long-term value led us to makeoperating decisions that temporarily reduced the financialcontribution of our timber operations. We reduced the harvest of ourmost valuable timber assets, sawlogs, to their lowest level in sixyears. We took this action because these assets will continue to grow,and we are confident they will produce better returns for ourshareholders in the future.
"Other areas of our company continued to grow. The contributionfrom our rural land sales efforts continued to grow during 2007.Revenues from the sale of smaller tracts of rural land grew nearly 8percent to $332 million for the full year as the troubles in housingmarkets did not appear to influence the interest in rural land. Inaddition, income from our non-timber resource businesses continued togrow, exceeding $17 million in operating profit during 2007.
"We maintained our focus on value creation through disciplinedcapital allocation. Early in 2007, we increased our dividend by 5percent, and through our share repurchase program, effectively boughtour own timberlands at a significant discount to their intrinsicvalue. Through these repurchases we increased our shareholders'proportionate ownership in the company by nearly 3 percent.
"In addition, while we evaluated well over a million acres ofpotential timberland acquisitions during the year, we identified threeacquisitions that provided attractive returns for our shareholders.Through these acquisitions, we expanded our ownership of high-quality,investment-grade timberlands in Georgia and Oregon, acquiring a totalof 69,000 acres."
Review of Quarterly Operations
The Northern Resources segment reported fourth quarter operatingprofit of $17 million; $7 million lower than the $24 million reportedin the fourth quarter of 2006. Softwood sawlog demand was lower thanthe same period of 2006 as lumber mills curtailed production in theface of continued weak lumber demand and low lumber prices. Averagesawlog prices during the fourth quarter of 2007 were approximately 4percent lower than those in the same period of 2006, while sawlogharvest volumes were approximately 5 percent lower. As planned, thesegment's pulpwood harvest was approximately 11 percent lower, whilepulpwood prices were largely unchanged compared to the same period ofone year ago.
The Southern Resources segment reported fourth quarter operatingprofit of $35 million, down $7 million from the $42 million reportedduring the fourth quarter of 2006. The decline in segment profits wasthe result of weaker sawlog markets when compared to the same periodof 2006. Average sawlog stumpage prices were approximately 9 percentlower than those in the fourth quarter of 2006. Sawlog harvest volumeswere 14 percent lower than the fourth quarter of 2006, as the companyelected to defer its sawlog harvest in some Southern markets. Pulpwoodprices were 22 percent higher than the same period of 2006 as pulp andpaper customers sought wood to replace residual wood chips typicallypurchased from lumber mills. The segment's pulpwood harvest was 13percent lower than the unusually strong harvest volume brought tomarket during the fourth quarter of 2006.
The Real Estate segment reported revenue of $198 million andoperating profit of $121 million in the fourth quarter of 2007. Theseresults include the $70 million of revenue and $43 million ofoperating income from the sale of approximately 100,000 acres ofWisconsin timberlands. The segment reported $66 million of revenue and$35 million of operating profit for the fourth quarter of 2006.
During the fourth quarter of 2007, the company sold approximately16,900 acres of small, non-strategic timberlands at average pricesexceeding $1,500 per acre. These lands are generally small tracts oflower productivity timberlands. The sale of more than 24,500 acres ofconservation properties captured approximately $1,080 per acre, whilenearly 14,200 acres of recreation property were sold at an averageprice exceeding $3,300 per acre. The company also sold approximately3,750 acres of development lands for more than $7,600 per acre.
The Manufacturing segment reported a $1 million loss for thefourth quarter of 2007, compared with a $2 million loss in the fourthquarter of 2006. Improved performance in the lumber and medium densityfiberboard businesses drove the improvement in operating performance.Prices for both lumber and medium density fiberboard were up 6 percentcompared to the same period of 2006 while plywood prices wererelatively steady.
Timberland Acquisition
During the quarter the company acquired approximately 31,000 acresof southeastern Georgia timberlands for approximately $76 million intwo negotiated transactions. These investment-quality timberlandsadjoin and complement existing Plum Creek ownership in the region andshould provide attractive cash-on-cash returns for shareholders.
Outlook
"Sustainable forestry management requires a commitment tolong-term planning and our strategies to create shareholder value arerooted in this commitment. We believe this disciplined approach willcontinue to result in sustainable, long-term value creation for ourshareholders," continued Holley. "Our operating plans for 2008 draw onour positive long-term view of timber and rural land markets, as wellas our experience in more than 40 local markets across the nation."
Over the past year lumber, plywood and oriented strand board (OSB)producers further reduced production in response to continueddeterioration in residential construction activity. With housingstarts off approximately 25 percent from 2006, and commodity lumberprices at multi-year lows, customers continued to reduce production inresponse to poor demand and cash returns. U.S. lumber productiondeclined between 11 and 12 percent depending on the region, while in2007, structural panel production declined approximately 5 percent.During 2008, the company anticipates that residential constructionmarkets will remain weak and stabilize at recent levels with thepotential for recovery in 2009.
While solid wood markets have been weak for the past year,pulpwood markets improved significantly as demand for pulp and paperproducts remained good. Pulp and paper manufacturers sought pulpwoodto replace a dwindling supply of residual chips from lumber mills. Thecompany anticipates that demand for pulpwood will remain strongthroughout 2008.
With these conditions as a backdrop, the company expects tomaintain its 2008 sawlog harvest at the low levels set during 2007. Inlate 2006, the company increased the pace of its forest thinning,particularly in the South, bringing to market previously deferredpulpwood volume in response to attractive pulpwood pricing andincreased pulpwood demand. The company maintained this pace during2007 as demand remained strong and pulpwood prices continued to rise.During 2008, the company plans to moderate the pace of its thinningactivity, and as a result, its pulpwood harvest. Overall harvestsshould be between 18.5 million and 19.5 million tons of timber during2008.
Within the rural real estate area, the company is experiencingstable pricing and buyer interest levels consistent with thoseexperienced during the past year. As a result, the company expectsReal Estate segment sales for the year to be similar to 2007 levels,between $320 million and $340 million. Of this, between $25 millionand $35 million is projected to come from the sale of entitledproperties on a small portion of the company's high-value real estateproperties. First quarter Real Estate segment sales are expected to bebetween $75 million and $85 million.
Reflecting all of these factors, the company expects 2008 earningsto be between $1.15 and $1.40 per share. The company anticipates firstquarter earnings will be between $0.26 and $0.31 per share.
"We're managing the largest and most diversified portfolio ofindustrial timberlands in the nation. This is an asset base withunmatched risk diversification in the industry and enduring long-termvalue. Disciplined capital allocation remains our most important toolfor long-term value preservation and creation.
"As we move into 2008, we will maintain our historic value-focuseddiscipline; evaluating discretionary investment in our forests toincrease their productivity, pursuing financially attractivetimberland acquisitions, and repurchasing our company's stock atattractive values. With our exceptional asset base and continuedstrong cash flow, the company has excellent financial flexibility andwe remain on-track to execute our strategies for long-term shareholdervalue creation in all our business segments," concluded Holley.
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, Jan. 28, 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 conference call. Those wishing to access the callfrom outside the United States and Canada should dial 1-706-645-9676,also referencing Plum Creek's earnings conference call. Replay of thecall will be available for 48 hours after completion of the live calland can be accessed at 1-800-642-1687 or 1-706-645-9291 (internationalcalls), using the code 23088842.
Supplemental financial information for Plum Creek operations,including statistical data, is available in the Investors section ofPlum Creek's website at www.plumcreek.com.
Plum Creek is the largest and most geographically diverse privatelandowner in the nation with more than 8 million acres of timberlandsin major timber producing regions of the United States and 10 woodproducts manufacturing 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 December 31, 31, 2007 2006 -------- -------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 782 $ 807 Real Estate 402 308 Manufacturing 471 493 Other 20 19 -------- -------- Total Revenues 1,675 1,627 -------- --------Costs and Expenses: Cost of Goods Sold: Timber 523 487 Real Estate 144 122 Manufacturing 454 455 Other 3 3 -------- -------- Total Cost of Goods Sold 1,124 1,067 Selling, General and Administrative 127 117 -------- -------- Total Costs and Expenses 1,251 1,184 -------- --------Gain from Canadian Lumber Settlement - 14Other Operating Income (Expense), net - 4 -------- --------Operating Income 424 461Interest Expense, net 147 133 -------- --------Income before Income Taxes 277 328Provision (Benefit) for Income Taxes (3) 13 -------- --------Income From Continuing Operations 280 315Gain on Sale of Properties, net of tax 2 - -------- --------Income Before Cumulative Effect of Accounting Change 282 315Cumulative Effect of Accounting Change, net of tax - 2 -------- --------Net Income $ 282 $ 317 ======== ========Per Share Amounts:Income From Continuing Operations per Share - Basic $ 1.60 $ 1.75 - Diluted $ 1.60 $ 1.74Net Income per Share - Basic $ 1.61 $ 1.76 - Diluted $ 1.61 $ 1.75Weighted Average Number of Shares Outstanding - Basic 174.5 180.5 - Diluted 175.0 180.9
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended ------------------ December December 31, 31, 2007 2006 -------- -------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 193 $ 204 Real Estate 198 66 Manufacturing 108 105 Other 5 4 -------- -------- Total Revenues 504 379 -------- --------Costs and Expenses: Cost of Goods Sold: Timber 132 126 Real Estate 75 29 Manufacturing 105 102 Other 1 1 -------- -------- Total Cost of Goods Sold 313 258 Selling, General and Administrative 36 36 -------- -------- Total Costs and Expenses 349 294 -------- --------Gain from Canadian Lumber Settlement - 14Other Operating Income (Expense), net - 2 -------- --------Operating Income 155 101Interest Expense, net 38 35 -------- --------Income before Income Taxes 117 66Benefit for Income Taxes (1) (3) -------- --------Net Income $ 118 $ 69 ======== ========Per Share Amounts:Net Income per Share - Basic $ 0.68 $ 0.39 - Diluted $ 0.68 $ 0.39Weighted Average Number of Shares Outstanding - Basic 172.3 177.0 - Diluted 172.8 177.4
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) December December 31, 31, 2007 2006 -------- -------- (In Millions, Except Per Share Amounts) ASSETSCurrent Assets: Cash and Cash Equivalents $ 240 $ 273 Restricted Advance from Customer - 4 Accounts Receivable 33 40 Inventories 82 83 Deferred Tax Asset 7 7 Real Estate Development Properties 5 3 Assets Held for Sale 64 82 Other Current Assets 25 21 -------- -------- 456 513Timber and Timberlands, Net 3,949 3,876Property, Plant and Equipment, Net 202 216Investment in Grantor Trusts 27 28Other Assets 30 28 -------- -------- Total Assets $ 4,664 $ 4,661 ======== ======== LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 147 $ 125 Accounts Payable 48 42 Interest Payable 29 30 Wages Payable 25 27 Taxes Payable 23 24 Deferred Revenue 13 17 Other Current Liabilities 18 16 -------- -------- 303 281Long-Term Debt 1,820 1,617Line of Credit 556 581Deferred Tax Liability 20 25Other Liabilities 64 68 -------- -------- Total Liabilities 2,763 2,572 -------- --------Commitments and Contingencies STOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value, authorized shares - 75.0, outstanding - none - -Common Stock, $0.01 par value, authorized shares - 300.6, outstanding (net of Treasury Stock) - 172.3 at December 31, 2007, and 177.1 at December 31, 2006 2 2Additional Paid-In Capital 2,204 2,190Retained Earnings 202 214Treasury Stock, at cost, Common Shares - 14.6 at December 31, 2007, and 9.5 at December 31, 2006 (509) (307)Accumulated Other Comprehensive Income (Loss) 2 (10) -------- -------- Total Stockholders' Equity 1,901 2,089 -------- -------- Total Liabilities and Stockholders' Equity $ 4,664 $ 4,661 ======== ========
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Year Ended ------------------ December December 31, 31, 2007 2006 -------- -------- (In Millions)Cash Flows From Operating Activities:Net Income $ 282 $ 317Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Includes $4 Loss Related to Forest Fires in 2007) 134 128 Basis of Real Estate Sold 108 85 Expenditures for Real Estate Development (19) (6) Deferred Income Taxes (9) 1 Gain on Sales of Properties and Other Assets (2) (1) Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds - 30 Other Working Capital Changes 8 (1) Other 15 3 -------- --------Net Cash Provided By Operating Activities 517 556 -------- --------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland Acquisitions) (93) (86) Timberlands Acquired (174) (111) Proceeds from Sales of Properties and Other Assets 3 2 Other 2 (4) -------- --------Net Cash Used In Investing Activities (262) (199) -------- --------Cash Flows From Financing Activities: Dividends (294) (290) Borrowings on Line of Credit 2,795 3,483 Repayments on Line of Credit (2,820) (3,397) Repayment of Short-Term Debt - (50) Proceeds from Issuance of Long-Term Debt 350 216 Principal Payments and Retirement of Long-Term Debt (125) (159) Proceeds from Stock Option Exercises 8 7 Acquisition of Treasury Stock (202) (263) -------- --------Net Cash Used In Financing Activities (288) (453) -------- --------Decrease In Cash and Cash Equivalents (33) (96) Cash and Cash Equivalents: Beginning of Year 273 369 -------- -------- End of Year $ 240 $ 273 ======== ========
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended ----------------- December December 31, 31, 2007 2006 -------- -------- (In Millions)Cash Flows From Operating Activities:Net Income $ 118 $ 69Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 32 34 Basis of Real Estate Sold 63 19 Expenditures for Real Estate Development (6) (1) Deferred Income Taxes (2) (7) Gain on Sale of Properties and Other Assets - (1) Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds 13 40 Other Working Capital Changes (10) (19) Other 5 2 -------- --------Net Cash Provided By Operating Activities 213 136 -------- --------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland Acquisitions) (34) (26) Timberlands Acquired (78) (89) Proceeds from Sales of Properties and Other Assets - 1 -------- --------Net Cash Used In Investing Activities (112) (114) -------- --------Cash Flows From Financing Activities: Dividends (72) (71) Borrowings on Line of Credit 616 1,316 Repayments on Line of Credit (574) (1,253) Principal Payments and Retirement of Long-Term Debt - (130) Proceeds from Stock Option Exercises 1 1 Acquisition of Treasury Stock - (1) -------- --------Net Cash Used In Financing Activities (29) (138) -------- --------Increase (Decrease) In Cash and Cash Equivalents 72 (116) Cash and Cash Equivalents: Beginning of Period 168 389 -------- -------- End of Period $ 240 $ 273 ======== ========
Click Here for 4th Quarter 2007 Financial Supplements (in PDF)
CONTACT:
Plum Creek Timber Company, Inc.
Investors: John Hobbs, 1-800-858-5347
Media: Robin Keegan, 1-888-467-3751
SOURCE: Plum Creek Timber Company, Inc.