Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for Fourth Quarter and Full Year 2004
Jan 31, 2005
SEATTLE--(BUSINESS WIRE)--Jan. 31, 2005--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced fourth quarter earnings of$73 million, or $0.40 per diluted share, on revenues of $327 million.Earnings for the fourth quarter of 2003 were $56 million, or $0.30 perdiluted share, on revenues of $315 million.
The fourth quarter 2004 results include a $23 million after-taxgain on the sale of a portion of the company's coal assets in Virginiaand a $5 million after-tax ($9 million pre-tax) impairment related tothe company's lumber business. The fourth quarter 2003 resultsincluded a $5 million asset impairment related to certainnon-strategic timberlands.
Earnings for the full year 2004 were $362 million, or $1.97 perdiluted share, on revenues of $1.5 billion. Earnings for the full year2003 were $192 million, or $1.04 per diluted share, on revenues of$1.2 billion.
Full year 2004 results include the fourth quarter gains andimpairment referenced above as well as $70 million of gain on the saleof large, non-strategic timberlands and $3 million in after-tax gainsfrom the sale of a coalbed methane operating interest. Full year 2003results include the effect of $4 million of fire losses and $14million of asset impairments related to the sale of non-strategictimberlands that were subsequently sold in 2004.
"The past year was one of the best in Plum Creek's history," saidRick Holley, president and chief executive officer. "Excellentoperating performance in our businesses, execution of our strategicinitiatives, strong markets, and the hard work and dedication of ourpeople all contributed to improved results."
Cash provided by operating activities in the fourth quartertotaled $84 million compared to $76 million for the same period of2003. Cash provided by operating activities during 2004 totaled $600million and included approximately $129 million from the sale oflarge, non-strategic timberlands. Cash provided by operatingactivities for 2003 totaled $372 million and included approximately$13 million from the sale of large, non-strategic timberlands. Thecompany ended 2004 with $347 million in cash and cash equivalents.
"Operating performance improved significantly over the past year,"continued Holley. "The timber resource segments grew operating profitdespite a harvest which was approximately 400,000 tons lower than theprevious year. We also increased our sales of conservation, recreationand small, non-strategic timberland parcels to $170 million. Thesesales captured $75 million of value beyond the underlying timberlandvalue of the assets. In addition to the $170 million, we alsocompleted $133 million in sales of large, non-strategic timberlands atattractive values. In manufacturing, a combination of excellentoperating performance and strong end-product markets resulted inrecord profitability of $58 million, surpassing the previous record of$50 million set in 1999."
Review of Operations
The Northern Resources segment reported fourth quarter operatingprofit of $25 million, compared to $30 million during the prior year.As anticipated, harvest volumes during the quarter were 355,000 tons,or 21 percent, lower than the same period of 2003. During the fourthquarter of 2003, the company increased its harvest in the Northwestregion to rebuild customer log inventories depleted by an unusuallysevere 2003 fire season. The 2004 harvest represents a more typicalharvest level for the segment's fourth quarter. Strong demand during2004 for sawlogs and pulpwood helped drive log prices up across thesegment. Sawlog prices increased 12 percent, while pulpwood priceswere 14 percent higher compared to the fourth quarter of 2003.
Operating profit in the Southern Resources segment was $54 millioncompared to $62 million reported in the fourth quarter of 2003. Asplanned, the fourth quarter harvest volumes were approximately 200,000tons, or 5 percent, lower than those of 2003. Southern sawlog demandduring the fourth quarter of 2004 remained strong and Southern sawlogprices held firm when compared to the fourth quarter of 2003. During2004, hardwood pulpwood prices gradually corrected fromuncharacteristically high prices experienced during the latter half of2003. As a result, average pulpwood prices during the fourth quarterof 2004 were approximately $1 per ton lower than during the sameperiod of 2003.
The Real Estate segment reported revenue of $23 million comparedto $16 million in the fourth quarter of 2003. Gains from these saleswere approximately $12 million and $4 million, respectively. Landsales during 2004 were higher than in 2003 as the company executed itsstrategy of capturing higher values for timberlands with recreation,conservation and development uses. Fourth quarter sales were primarilycomprised of conservation properties and small, non-strategictimberlands.
The Manufacturing segment reported a $1 million profit for thefourth quarter including the $9 million pre-tax lumber impairmentcharge. During the fourth quarter of 2003, the segment reported a $6million profit. Prices for all of the company's manufactured productsshowed improvement over those of the fourth quarter of 2003. Stronghousing and industrial demand for lumber resulted in a 12 percentincrease in lumber prices compared to the fourth quarter of 2003.Lumber sales volumes were approximately 5 percent higher than the sameperiod of 2003. Plywood prices were 8 percent higher as the result ofstrong industrial demand for structural panels, while sales volumeswere similar to the fourth quarter of 2003. Medium density fiberboard(MDF) sales realizations were up 21 percent due to a higher valueproduct mix and improved demand compared to the fourth quarter of2003. Production efficiency gains in the company's MDF operationsresulted in a 12 percent increase in sales volume compared to thefourth quarter of 2003.
Strategic Progress
During the quarter, the company acquired approximately 48,500acres of productive timberlands in the state of Maine for $33 million.These well-managed timberlands complement the company's existingtimberland base in Maine and are included in a proposed Resource Plancovering approximately 40 percent of the company's ownership in thestate. Plum Creek will file an application for the Plan with Maine'sLand Use Regulation Commission in early 2005.
As part of an ongoing effort aimed at identifying, evaluating andcapturing the value of non-timber natural resources, the company solda portion of its coal assets for approximately $23 million.
"These fourth quarter actions highlight the progress we continueto make on a number of strategic fronts," said Holley.
"Our Maine Resource Plan draws attention to the creative power ofour people and our commitment to the thoughtful, long-term stewardshipof Plum Creek's assets. The Plan will accommodate important communityvalues and needs of the state, while providing Plum Creek apredictable environment in which to operate in the state over the longterm.
"Our efforts in the natural resources business are capturingsignificant value for our shareholders and growing the cash generationcapacity of our non-timber resources. During 2004, this business grewits operating cash flow, while the sales of coal and our coalbedmethane operating interest captured over $50 million in proceeds, anexcellent value for our shareholders. We will continue building ournon-timber resource business, determining the best method to maximizethe value of the assets on a case-by-case basis."
Outlook
Lumber, plywood, and oriented strand board customers are workingto build their log decks in anticipation of a strong first half of2005. The company is experiencing good pulpwood demand from pulp andpaper mills in all regions. Log prices in several Southern markets areimproving modestly. Timber markets in both the Northern and Southernsegments are expected to hold at current levels or increase modestlythroughout the first half of 2005.
During 2005, the company expects to harvest between 18.5 and 19.5million tons of timber. The mix of sawlogs and pulpwood is expected tobe similar to the 2004 harvest mix. First quarter harvest volumes areexpected to approximate the fourth quarter 2004 levels in both theNorthern and Southern Resources segments.
The company expects Real Estate segment sales for the year,excluding the sale of large, non-strategic lands, to be between $200and $230 million. First quarter Real Estate segment sales are expectedto approach $70 million.
First quarter profits for the Manufacturing segment are expectedto be slightly lower than in the fourth quarter of 2004 excluding theimpact of the fourth quarter lumber impairment. Plywood and lumberprices are expected to be modestly lower than the prices thatprevailed during the fourth quarter.
The Company expects first quarter 2005 earnings to be between$0.47 and $0.52 per share with full year earnings expected to bebetween $1.45 and $1.65 per share. These earnings expectations do notinclude any impact from the sale of non-timber natural resource assetsor large, non-strategic timberlands that the company may execute in2005.
"Improved operating performance and the execution of our long-termstrategies for value creation increased earnings and cash flow during2004. As a result, we enter 2005 in excellent financial health. Ourbalance sheet is strong and business conditions remain favorable. Wewill continue to execute our long-term strategies for value creationwith discipline and patience. We are optimistic about 2005 and enterthe year with confidence in our ability to recognize and buildlong-term value for our shareholders," concluded Holley.
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, January 31, 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 code1896501.
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 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) Year Ended --------------------------- December 31, December 31, 2004 2003 ------------ ------------ (In Millions, Except Per Share Amounts)Revenues: Timber $ 694 $ 664 Real Estate 303 124 Manufacturing 518 397 Other 13 11 ------------ ------------ Total Revenues 1,528 1,196 ------------ ------------Costs and Expenses: Cost of Goods Sold: Timber 368 345 Real Estate 149 77 Manufacturing 449 390 Other 4 4 ------------ ------------ Total Cost of Goods Sold 970 816 Selling, General and Administrative 86 77 ------------ ------------ Total Costs and Expenses 1,056 893Gain on Sale of Other Assets 5 - ------------ ------------Operating Income 477 303Interest Expense, net 111 117 ------------ ------------Income before Income Taxes 366 186Benefit (Provision) for Income Taxes (27) 6 ------------ ------------Income from Continuing Operations 339 192Gain on Sale of Properties, net of tax 23 - ------------ ------------Net Income $ 362 $ 192 ============ ============Income from Continuing Operations per Share - Basic $ 1.85 $ 1.05 ============ ============Income from Continuing Operations per Share - Diluted $ 1.84 $ 1.04 ============ ============Net Income per Share - Basic $ 1.97 $ 1.05 ============ ============Net Income per Share - Diluted $ 1.97 $ 1.04 ============ ============Weighted average number of Shares outstanding - Basic 183.4 183.3 ------------ ------------Weighted average number of Shares outstanding - Diluted 184.1 183.9 ------------ ------------ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended --------------------------- December 31, December 31, 2004 2003 ------------- ------------ (In Millions, Except Per Share Amounts)Revenues: Timber $ 181 $ 191 Real Estate 23 16 Manufacturing 122 105 Other 1 3 ------------- ------------ Total Revenues 327 315 ------------- ------------Costs and Expenses: Cost of Goods Sold: Timber 99 97 Real Estate 9 12 Manufacturing 117 96 Other 1 1 ------------- ------------ Total Cost of Goods Sold 226 206 Selling, General and Administrative 24 21 ------------- ------------ Total Costs and Expenses 250 227 ------------- ------------Operating Income 77 88Interest Expense, net 27 31 ------------- ------------Income before Income Taxes 50 57Benefit (Provision) for Income Taxes - (1) ------------- ------------Income from Continuing Operations 50 56Gain on Sale of Properties, net of tax 23 - ------------- ------------Net Income $ 73 $ 56 ============= ============Income from Continuing Operations per Share - Basic $ 0.28 $ 0.31 ============= ============Income from Continuing Operations per Share - Diluted $ 0.28 $ 0.30 ============= ============Net Income per Share - Basic $ 0.40 $ 0.31 ============= ============Net Income per Share - Diluted $ 0.40 $ 0.30 ============= ============Weighted average number of Shares outstanding - Basic 183.7 183.0 ------------- ------------Weighted average number of Shares outstanding - Diluted 184.4 183.7 ------------- ------------ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31, December 31, 2004 2003 ------------ ------------ (In Millions, Except Per Share Amounts) ASSETSCurrent Assets: Cash and Cash Equivalents $ 347 $ 267 Restricted Advance from Customer 4 3 Accounts Receivable 40 34 Inventories 71 54 Deferred Tax Asset 10 11 Other Current Assets 27 30 ------------ ------------ 499 399Timber and Timberlands - Net 3,590 3,674Property, Plant and Equipment - Net 253 303Investment in Grantor Trusts 29 26Other Assets 7 5 ------------ ------------ Total Assets $ 4,378 $ 4,407 ============ ============ LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 32 $ 33 Accounts Payable 41 34 Interest Payable 28 28 Wages Payable 25 23 Taxes Payable 22 15 Deferred Revenue 16 16 Other Current Liabilities 20 13 ------------ ------------ 184 162Long-Term Debt 1,405 1,437Lines of Credit 448 594Deferred Tax Liability 45 37Other Liabilities 56 58 ------------ ------------ Total Liabilities 2,138 2,288 ------------ ------------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) -- 185.7 at December 31, 2004 and 185.1 at December 31, 2003 2 2Additional Paid-In Capital 2,168 2,150Retained Earnings 111 9Treasury Stock, at cost, Common shares -- 2.0 (43) (43)Other Equity 2 1 ------------ ------------ Total Stockholders' Equity 2,240 2,119 ------------ ------------ Total Liabilities and Stockholders' Equity $ 4,378 $ 4,407 ============ ============ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Year Ended --------------------------- December 31, December 31, 2004 2003 ------------ ------------ (In Millions)Cash Flows From Operating Activities:Net Income $ 362 $ 192Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Includes $9 Lumber Impairment Charge in 2004 and $4 Loss Related to Forest Fires in 2003) 114 108 Basis of Real Estate Sold (Includes Impairment Losses of $21 in 2004 and $14 in 2003) 134 66 Deferred Income Taxes 9 (7) Gain on Sales of Other Assets and Properties (28) - Working Capital Changes 6 4 Other 3 9 ------------ ------------Net Cash Provided By Operating Activities 600 372 ------------ ------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (70) (84) Timberlands Acquired (Including Tax- Deferred Exchange Proceeds, Net) (66) (162) Proceeds from Sale of Other Assets 46 - Other (1) (1) ------------ ------------Net Cash Used In Investing Activities (91) (247) ------------ ------------Cash Flows From Financing Activities: Dividends (260) (257) Borrowings of Long-term Debt - 298 Retirement of Long-term Debt (33) (33) Borrowings on Lines of Credit 2,147 1,922 Repayments on Lines of Credit (2,295) (1,997) Proceeds from Stock Option Exercises 12 1 Acquisition of Treasury Stock - (43) ------------ ------------Net Cash Used In Financing Activities (429) (109) ------------ ------------Increase In Cash and Cash Equivalents 80 16Cash and Cash Equivalents: Beginning of Period 267 251 ------------ ------------ End of Period $ 347 $ 267 ============ ============ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended --------------------------- December 31, December 31, 2004 2003 ------------ ------------ (In Millions)Cash Flows From Operating Activities:Net Income $ 73 $ 56Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Includes $9 Lumber Impairment Charge in 2004) 36 29 Basis of Real Estate Sold (Includes Impairment Losses of $1 in 2004 and $5 in 2003) 7 9 Deferred Income Taxes (3) 1 Gain on Sales of Other Assets and Properties (23) - Working Capital Changes (9) (24) Other 3 5 ------------ ------------Net Cash Provided By Operating Activities 84 76 ------------ ------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (21) (24) Timberlands Acquired (Including Tax- Deferred Exchange Proceeds, Net) (21) (103) Proceeds from Sale of Other Assets 19 - Other (1) (1) ------------ ------------Net Cash Used In Investing Activities (24) (128) ------------ ------------Cash Flows From Financing Activities: Dividends (66) (64) Borrowings of Long-term Debt and Lines of Credit 476 556 Retirement of Long-term Debt and Lines of Credit (495) (456) Proceeds from Stock Option Exercises 3 - ------------ ------------Net Cash Provided by (Used In) Financing Activities (82) 36 ------------ ------------Increase In Cash and Cash Equivalents (22) (16)Cash and Cash Equivalents: Beginning of Period 369 283 ------------ ------------ End of Period $ 347 $ 267 ============ ============
Click Here for 4th Quarter 2004 Financial Supplements (in PDF)
CONTACT: Plum Creek Timber Company, Inc.
Investors: John Hobbs, 800-858-5347
Media: Kathy Budinick, 206-467-3620
SOURCE: Plum Creek Timber Company, Inc.