Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Higher Third Quarter Earnings
Oct 24, 2005
SEATTLE, Oct 24, 2005 (BUSINESS WIRE) -- Plum Creek Timber Company, Inc. (NYSE:PCL) todayannounced third quarter earnings of $96 million, or $0.52 per dilutedshare, on revenues of $427 million. Earnings for the third quarter of2004 were $77 million, or $0.42 per diluted share, on revenues of $363million.
During the third quarter, the company recorded a $2 millionexpense, or $0.01 per diluted share, related to timber destroyed byHurricane Katrina. In addition, the third quarter 2005 earningsinclude a reduction in the company's deferred tax liability resultingin a tax-benefit of approximately $5 million, or $0.03 per dilutedshare. The tax benefit is the result of the company's ability toreduce its estimated built-in gains tax liabilities by reinvestingproceeds from land sales into attractive timberlands.
Earnings for the first nine months of 2005 were $287 million, or$1.56 per diluted share, on revenues of $1.2 billion. Results for thefirst nine months of 2005 include a $20 million after-tax gain on thefirst quarter sale of the company's remaining coal assets. As aresult, income from continuing operations for the first nine months of2005 was $267 million, or $1.45 per fully diluted share. Earnings forthe first nine months of 2004 were $289 million, or $1.57 per dilutedshare, on revenues of $1.2 billion. Results for the first nine monthsof 2004 included $69 million of operating income from the sale of $133million of large, non-strategic timberlands and a pre-tax gain of $5million ($3 million after-tax gain, or $0.02 per diluted share) fromthe sale of a working interest in a coalbed methane project.
Cash provided by operating activities in the third quarter of 2005totaled $199 million, up 59 percent from the $125 million providedfrom operating activities for the same period of 2004. Cash providedby operating activities in the first nine months of 2005 totaled $427million. This compares to $516 million provided during the first ninemonths of 2004, which included approximately $129 million from thesale of large, non-strategic timberlands. The company ended the thirdquarter of 2005 with $409 million in cash and cash equivalents.
"We are pleased with the results for the quarter, especially giventhat our harvest volumes were lower than we originally anticipated,"said Rick Holley, president and chief executive officer. "Timbermarkets remained firm throughout the country and interest inrecreation and other higher and better use properties remainedexcellent. Thankfully, all our employees and contractors in the pathof Hurricane Katrina are safe. Damage to our timberlands in the regionwas limited, highlighting one benefit of our geographic diversity."
Review of Operations
The Northern Resources segment reported third quarter operatingprofit of $26 million, similar to the $27 million reported for thesame period of 2004. Harvest volumes in the Northern segment exceeded1.35 million tons, up nearly six percent from the same period of 2004,but were approximately 150,000 tons lower than planned due toharvesting restrictions during peak fire danger in the West. Logdemand from lumber and plywood manufacturers across the Northernsegment has remained strong. As a result, sawlog prices were similarto the prices experienced during the third quarter of 2004. Pulpwoodprices in the Northeast continued to move up, the result of tightcontractor availability in the region. However, higher fuel prices ledto an increase in logging costs, resulting in flat operating profitswhen compared to the same period of 2004.
Operating profit in the Southern Resources segment was $45 millionfor the third quarter, down from $52 million for the same period of2004. Hurricane Katrina damaged a small portion of the company'stimberlands in Mississippi. As a result, the company recorded a $2million charge in the segment for the timber destroyed. Prices forboth sawlogs and pulpwood were virtually unchanged when compared tothe third quarter of 2004. The third quarter 2005 harvest wasapproximately seven percent, or 260,000 tons, lower than the sameperiod of 2004. Some pay-as-cut customers chose to buy lower-pricedspot market logs from third parties and defer their harvest onhigher-priced pay-as-cut contracts.
The Real Estate segment reported third quarter revenue of $116million compared to $42 million in the third quarter of 2004. Thedifference reflects the transaction-driven nature of this segment. Thesegment operating profit was $51 million for the third quarter of 2005and $26 million for the same period of 2004. The sale of small,non-strategic timberlands accounted for more than 80 percent of theland sold during the quarter, with conservation and recreation landsaccounting for the balance.
The Manufacturing segment reported operating profit of $9 millionfor the third quarter of 2005, down from the near-record quarterlyprofit of $23 million reported for the third quarter of 2004. Althoughdemand for these products remains very good, increases in lumber andstructural panel supply over the past twelve months pushed lumber andplywood prices lower when compared to the third quarter of last year.Average lumber prices were down 17 percent, while average plywoodprices were down approximately 13 percent from the same period of2004. The company's medium density fiberboard (MDF) price realizationsduring the third quarter of 2005 were similar to those experiencedduring the same period of 2004.
Timberland Acquisitions
On October 3, the company announced that it had signed adefinitive agreement to purchase approximately 650,000 acres oftimberland in the Upper Peninsula of Michigan for approximately $345million. The lands consist of well-stocked, professionally managedmixed hardwood and conifer forests in attractive, long-term timbermarkets. The transaction is subject to customary closing conditionsand is expected to close in the fourth quarter of 2005. This cashaccretive acquisition is expected to be funded with a combination of1031 like-kind exchange funds and debt.
Outlook
Sawlog demand in most regions of the country should remain strong,as mills continue to meet the demand from home construction,industrial, and repair and remodel markets. Sawmills have comfortablelog inventories and, as a result, the company expects sawlog prices inmost regions to be steady.
Pulpwood consuming mills have comfortable log inventories in mostregions and, as a result, the company expects pulpwood prices to holdat current levels.
Harvest volumes are expected to be between 4.6 and 4.8 milliontons of timber during the fourth quarter, resulting in an estimated2005 harvest between 18.9 and 19.1 million tons.
The company expects Real Estate segment revenues for the fourthquarter to be between $30 and $40 million, resulting in full-yearrevenues of $250 to $260 million. Real Estate segment results could behigher depending on the extent of large, non-strategic timberlandssold during the remainder of the year.
Profitability in the company's manufacturing segment is expectedto decline moderately from the third quarter levels as the result oftypical seasonal reductions in sales volumes and modestly lower lumberand MDF prices.
Fourth quarter income from continuing operations is expected to bebetween $0.32 and $0.37 per share. These estimates do not include theeffect of any large, non-strategic timberlands sales that the companymay conclude during the quarter.
"Plum Creek continues to execute its strategies designed to growour long-term cash flow while growing the value of our asset base,"continued Holley. "Our pending acquisition of 650,000 acres ofMichigan timberland is an excellent example of the execution of ourstrategy to create long-term shareholder value. We expect these highquality timberlands to add to our future harvests and cash flow. Wewill continue our disciplined approach to capital allocation with thegoal of increasing the long-term value of each shareholder'sinvestment in Plum Creek."
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, October 24, at 5:00p.m. EDT (2:00 p.m. PDT). 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, referencing Plum Creek'searnings. Those wishing to access the call from outside the UnitedStates/Canada should dial 1-706-645-9676, also referencing PlumCreek's earnings. Replay of the call will be available for 48 hoursafter completion of the live call and can be accessed at1-800-642-1687 or 1-706-645-9291 (international calls), using the code3521774.
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 one of the largest private timberland owners in thenation, with approximately 8 million acres of timberlands in majortimber producing 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) Nine Months Ended -------------------- Sept. 30, Sept. 30, 2005 2004 ------- ------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 572 $ 513 Real Estate 220 280 Manufacturing 383 396 Other 10 12 ------- ------- Total Revenues 1,185 1,201 ------- -------Costs and Expenses: Cost of Goods Sold: Timber 308 269 Real Estate 105 140 Manufacturing 349 332 Other 2 3 ------- ------- Total Cost of Goods Sold 764 744 Selling, General and Administrative 68 62 ------- ------- Total Costs and Expenses 832 806Gain on Sale of Other Assets - 5 ------- -------Operating Income 353 400Interest Expense, net 80 84 ------- -------Income before Income Taxes 273 316Provision for Income Taxes 6 27 ------- -------Income from Continuing Operations 267 289Gain on Sale of Properties, net of tax 20 - ------- -------Net Income $ 287 $ 289 ======= =======Income from Continuing Operations per Share - Basic $ 1.45 $ 1.57 - Diluted $ 1.45 $ 1.57Net Income per Share - Basic $ 1.56 $ 1.57 - Diluted $ 1.56 $ 1.57Weighted Average Number of Shares Outstanding - Basic 183.9 183.3 - Diluted 184.6 184.1 PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended --------------------- Sept. 30, Sept. 30, 2005 2004 --------- --------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 180 $ 178 Real Estate 116 42 Manufacturing 126 140 Other 5 3 --------- --------- Total Revenues 427 363 --------- ---------Costs and Expenses: Cost of Goods Sold: Timber 107 96 Real Estate 65 16 Manufacturing 114 114 Other 1 - --------- --------- Total Cost of Goods Sold 287 226 Selling, General and Administrative 23 22 --------- --------- Total Costs and Expenses 310 248 --------- ---------Operating Income 117 115Interest Expense, net 26 28 --------- ---------Income before Income Taxes 91 87Benefit (Provision) for Income Taxes 5 (10) --------- ---------Net Income $ 96 $ 77 ========= =========Net Income per Share - Basic $ 0.52 $ 0.42 - Diluted $ 0.52 $ 0.42Weighted Average Number of Shares Outstanding - Basic 184.0 183.5 - Diluted 184.6 184.2 PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) Sept. 30, Dec. 31, 2005 2004 --------- --------- (In Millions, Except Per Share Amounts) ASSETSCurrent Assets: Cash and Cash Equivalents $ 409 $ 347 Restricted Advance from Customer 38 4 Accounts Receivable 45 40 Like-Kind Exchange Funds Held in Escrow 10 11 Inventories 67 71 Deferred Tax Asset 11 10 Other Current Assets 19 16 --------- --------- 599 499Timber and Timberlands - Net 3,670 3,590Property, Plant and Equipment - Net 242 253Investment in Grantor Trusts 24 29Other Assets 9 7 --------- --------- Total Assets $ 4,544 $ 4,378 ========= ========= LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 31 $ 32 Short-Term Debt 50 - Accounts Payable 44 41 Interest Payable 35 28 Wages Payable 21 25 Taxes Payable 23 22 Deferred Revenue 57 16 Other Current Liabilities 12 20 --------- --------- 273 184Long-Term Debt 1,356 1,405Lines of Credit 501 448Deferred Tax Liability 40 45Other Liabilities 52 56 --------- --------- Total Liabilities 2,222 2,138 --------- ---------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, issued (including Treasury Stock) - 186.0 at September 30, 2005, and 185.7 at December 31, 2004 2 2Additional Paid-In Capital 2,175 2,168Retained Earnings 189 111Treasury Stock, at cost, Common Shares - 2.0 (44) (43)Other Equity - 2 --------- --------- Total Stockholders' Equity 2,322 2,240 --------- --------- Total Liabilities and Stockholders' Equity $ 4,544 $ 4,378 ========= ========= PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended --------------------- Sept. 30, Sept. 30, 2005 2004 --------- --------- (In Millions)Cash Flows From Operating Activities:Net Income $ 287 $ 289Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Includes $2 Loss Related to Hurricane in 2005) 85 78 Basis of Real Estate Sold (Includes Impairment Losses of $20 in 2004) 82 127 Deferred Income Taxes (5) 12 Gain on Sales of Properties and Other Assets (22) (5) Working Capital Changes (1) 15 Other 1 - --------- ---------Net Cash Provided By Operating Activities 427 516 --------- ---------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (53) (49) Timberlands Acquired (Including Tax- Deferred Exchange Proceeds) (183) (45) Proceeds from Sales of Properties and Other Assets (Including Tax-Deferred Exchange Proceeds) 27 27 Other (1) - --------- ---------Net Cash Used In Investing Activities (210) (67) --------- ---------Cash Flows From Financing Activities: Dividends (209) (194) Borrowings under Line of Credit 1,806 1,671 Repayments of Borrowings under Line of Credit (1,753) (1,799) Proceeds from Issuance of Short-Term Debt 50 - Principal Payments and Retirement of Long- Term Debt (51) (34) Proceeds from Stock Option Exercises 4 9 Acquisition of Treasury Stock (1) - Other (1) - --------- ---------Net Cash Used In Financing Activities (155) (347) --------- ---------Increase In Cash and Cash Equivalents 62 102 Cash and Cash Equivalents: Beginning of Period 347 267 --------- --------- End of Period $ 409 $ 369 ========= ========= PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended -------------------- Sept. 30, Sept. 30, 2005 2004 --------- --------- (In Millions)Cash Flows From Operating Activities:Net Income $ 96 $ 77Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Includes $2 Loss Related to Hurricane in 2005) 30 27 Basis of Real Estate Sold (Includes Impairment Losses of $1 in 2005 and 2004) 54 13 Deferred Income Taxes (4) - Gain on Sales of Other Assets (1) - Working Capital Changes 23 5 Other 1 3 --------- ---------Net Cash Provided By Operating Activities 199 125 --------- ---------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (25) (17) Timberlands Acquired (Including Tax-Deferred Exchange Proceeds) (103) (6) Proceeds from Sales of Properties and Other Assets (Including Tax-Deferred Exchange Proceeds) 22 - Other (1) - --------- ---------Net Cash Used In Investing Activities (107) (23) --------- ---------Cash Flows From Financing Activities: Dividends (69) (66) Borrowings under Line of Credit 666 444 Repayments of Borrowings under Line of Credit (660) (444) Principal Payments and Retirement of Long- Term Debt (2) (2) Proceeds from Stock Option Exercises - 6 Acquisition of Treasury Stock (1) - Other (1) - --------- ---------Net Cash Used In Financing Activities (67) (62) --------- ---------Increase In Cash and Cash Equivalents 25 40 Cash and Cash Equivalents: Beginning of Period 384 329 --------- --------- End of Period $ 409 $ 369 ========= =========
Click Here for 3rd Quarter 2005 Financial Supplements (in PDF)
SOURCE: Plum Creek Timber Company, Inc.
Plum Creek Timber Company, Inc.
Investors: John Hobbs, 800-858-5347
Media: Kathy Budinick, 206-467-3620