Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for Second Quarter 2004
Jul 19, 2004
SEATTLE--(BUSINESS WIRE)--July 19, 2004--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced second quarter earnings of$57 million, or $0.31 per diluted share, on revenues of $341 million.Earnings for the second quarter of 2003 were $58 million, or $0.31 perdiluted share, on revenues of $318 million. Earnings for the first sixmonths of 2004 were $212 million, or $1.15 per diluted share, onrevenues of $838 million. Earnings for the first six months of 2003were $91 million, or $0.49 per diluted share, on revenues of $591million.
Cash provided by operating activities in the second quartertotaled $155 million including approximately $15 million from the saleof large, non-strategic timberlands. Cash provided by operatingactivities in the same period of 2003 was $144 million includingapproximately $13 million from the sale of large, non-strategictimberlands. Cash provided by operating activities in the first sixmonths of 2004 totaled $397 million and included approximately $129million from the sale of large, non-strategic timberlands. Cashprovided by operating activities in the first six months of 2003totaled $190 million and included approximately $13 million from thesale of large, non-strategic timberlands. The company reduced debt by$41 million during the quarter and ended the second quarter with $328million in cash and cash equivalents.
"Second quarter results came in as expected," said Rick Holley,president and chief executive officer. "Timber markets in most regionscontinued to strengthen modestly as our customers benefited fromstrong demand for lumber and plywood. Our Manufacturing segment postedits best results since 1999. For the quarter, Southern harvest levelswere below our expectations as torrential rains in June virtuallyhalted harvesting operations in western portions of the South. Thishas left many mills in the region with critically low log inventorieswhich should result in higher prices in the region as these millsrebuild their log inventories during the third quarter."
Review of Operations
The Northern Resources segment reported operating profit of $16million, up $1 million, compared to the same period of 2003. Stronghousing starts, repair and remodel activity, and industrial demand forwood products increased sawmill operating rates. As a result, sawlogprices in the Northern Resources segment were 12 percent highercompared to the second quarter of 2003. Pulp and paper marketsremained strong during the second quarter. Pulp and paper millsstruggled to maintain log inventories, particularly in Maine, due to apersistent shortage of harvesting contractors. As a result, pulpwoodprices were 14 percent higher in the second quarter of 2004 comparedto the same period of 2003.
Operating profit in the Southern Resources segment was $45 millioncompared to $55 million for the same period of 2003. Harvest volumesduring the second quarter were 11 percent lower than the secondquarter of 2003. This was the result of extremely difficult loggingconditions in the wet western sections of the South and the deferralof harvests from some pay-as-cut customers in the eastern regions ofthe South. These customers chose to buy lower-priced spot market logsfrom third parties and defer their harvest on higher-priced pay-as-cutcontracts.
Over the past 12 months, sawlog demand has improved throughout theSouth and sawlog prices, on average, have increased approximately 3percent. Price movements, however, are not uniform and have varied dueto local supply conditions. In some regions, sawlog prices haveincreased as much as 6 percent, while sawlog prices have been flat ordeclined modestly in other drier areas with excellent timberaccessibility. Pulpwood demand has remained good during the past year.However, Southern pulpwood customers have been able to maintain theirlog inventories at or above target levels. As a result, pulpwoodprices were slightly below the second quarter of 2003 levels whencustomers were aggressively building pulpwood inventories.
The Real Estate segment reported second quarter revenue of $50million compared to $57 million in the second quarter of 2003. Thesegment results were comprised of both higher and better use landsales and large, non-strategic timberland sales. Revenues from thesale of higher and better use lands were $34 million during the secondquarter of 2004. Gains from these sales were approximately $10million. Second quarter 2003 revenues from the sale of higher andbetter use lands were $44 million and resulted in gains of $21million. The second quarter 2004 results also included $15 million ofrevenue and $2 million in gains from the sale of large, non-strategictimberlands. Second quarter 2003 segment results also included $13million of revenue from the sale of large, non-strategic timberlandsthat had no gain.
The Manufacturing segment reported operating profit of $23million, up approximately $27 million, from the $4 million lossreported for the second quarter of 2003. Continued strong housing andimproving industrial demand led to higher prices for each of thecompany's manufactured products. Plywood prices were up 52 percentcompared to last year, while lumber prices were 41 percent higher.Medium density fiberboard (MDF) price realizations improved 18 percentcompared to the second quarter of 2003 as the result of strongerindustrial demand, reduced import competition, and a higher valuedproduct mix. Production efficiency gains at the company's MDFoperations also contributed to the improved performance of thesegment.
Other Actions
During the quarter, the company completed the previously announcedsale of its working interest in a coalbed methane project for $27million. The sale resulted in a pre-tax gain of $5 million ($3million, or $0.02 per diluted share, after-tax gain). In addition, thecompany acquired approximately 29,000 acres of Arkansas timberlandsfor $32 million as part of a 1031 tax-free exchange for timberlandssold in the first quarter.
Outlook
For the third quarter, the company expects many mills in thewestern areas of the South to rebuild severely depleted loginventories. This should temporarily boost sawlog prices in theregion. Sawlog prices in the eastern regions of the South are expectedto remain at current levels during the quarter. Low log inventoriesand continued contractor shortages in the Northeast should keepNorthern segment pulpwood prices steady. Good lumber and plywooddemand and tight log inventories in the Rockies should keep Northernsegment sawlog prices strong. Harvest volumes for both the Northernand Southern Resource segments will be higher in the third quartercompared to the second quarter due to normal seasonal factors. Thecompany expects to harvest between 18.5 and 19.0 million tons oftimber during 2004.
The Company expects Real Estate segment revenues for the remainderof the year to be between $55 and $65 million. Of this amount, thirdquarter revenues are expected to be between $30 and $35 million. Realestate segment results could be higher depending on the extent oflarge, non-strategic timberlands sold during the remainder of theyear.
Earnings for the Manufacturing segment are expected to moderate aslumber and plywood prices recede from the very strong levelsexperienced during the second quarter. Solid industrial demand isexpected to result in continued strong MDF prices during the remainderof the year.
The company expects earnings for the third quarter to be between$0.30 and $0.35 per share. Fourth quarter earnings are expected to bebetween $0.25 and $0.30 per share.
"Strong housing demand, growth in industrial demand and lowcustomer log inventories in many regions are providing a solidfoundation for good performance from our timber business for theremainder of the year," said Rick Holley. "While we expect lumber andplywood prices to recede from their current high levels, ourManufacturing segment will have an exceptional year in 2004. As aresult, we've increased our earnings estimates for the remainder of2004.
"Plum Creek continues to execute its strategy aimed at deliveringthe most value possible from each tree and every acre we own. Our landsales are capturing excellent values for non-core properties andproviding significant capital to grow shareholder value. We aremaintaining our disciplined approach to capital allocation. Wecontinually evaluate the best use of the cash we generate with thegoal of growing the per share value of the company."
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, July 19, 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 code7075719.
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 land and timber 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) Six Months Ended June 30, June 30, 2004 2003 ------ ------(In Millions, Except Per Share Amounts)Revenues: Timber $ 335 $ 315 Real Estate 238 80 Manufacturing 256 191 Other 9 5 ------ ------ Total Revenues 838 591 ------ ------Costs and Expenses: Cost of Goods Sold: Timber 173 160 Real Estate 124 55 Manufacturing 218 195 Other 3 2 ------ ------ Total Cost of Goods Sold 518 412 Selling, General and Administrative 40 36 ------ ------ Total Costs and Expenses 558 448Gain on Sale of Other Assets 5 - ------ ------Operating Income 285 143Interest Expense, net 56 57 ------ ------Income before Income Taxes 229 86Benefit (Provision) for Income Taxes (17) 5 ------ ------Net Income $ 212 $ 91 ====== ======Net Income per Share - Basic $ 1.16 $ 0.50 ====== ======Net Income per Share - Diluted $ 1.15 $ 0.49 ====== ======Weighted average number of Shares outstanding - Basic 183.2 183.5 ------ ------Weighted average number of Shares outstanding - Diluted 184.0 184.1 ------ ------ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended June 30, June 30, 2004 2003 ------ ------(In Millions, Except Per Share Amounts)Revenues: Timber $ 151 $ 159 Real Estate 50 57 Manufacturing 134 99 Other 6 3 ------ ------ Total Revenues 341 318 ------ ------Costs and Expenses: Cost of Goods Sold: Timber 80 79 Real Estate 38 36 Manufacturing 110 99 Other 2 1 ------ ------ Total Cost of Goods Sold 230 215 Selling, General and Administrative 22 19 ------ ------ Total Costs and Expenses 252 234Gain on Sale of Other Assets 5 - ------ ------Operating Income 94 84Interest Expense, net 27 29 ------ ------Income before Income Taxes 67 55Benefit (Provision) for Income Taxes (10) 3 ------ ------Net Income $ 57 $ 58 ====== ======Net Income per Share - Basic $ 0.31 $ 0.32 ====== ======Net Income per Share - Diluted $ 0.31 $ 0.31 ====== ======Weighted average number of Shares outstanding - Basic 183.3 183.0 ------ ------Weighted average number of Shares outstanding - Diluted 184.0 183.5 ------ ------ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, December 31, 2004 2003 (In Millions) ASSETSCurrent Assets: Cash and Cash Equivalents $ 328 $ 260 Restricted Advance from Customer 4 3 Accounts Receivable 44 34 Inventories 54 54 Investment in Grantor Trust 12 13 Deferred Tax Asset 11 11 Other Current Assets 18 30 ------------- ------------- 471 405Timber and Timberlands - Net 3,590 3,674Property, Plant and Equipment - Net 271 303Other Assets 7 5 ------------- ------------- Total Assets $ 4,339 $ 4,387 ============= ============= LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 32 $ 33 Accounts Payable 26 27 Interest Payable 28 28 Wages Payable 16 23 Taxes Payable 24 15 Deferred Revenue 22 16 Liabilities Associated with Grantor Trust 12 13 Other Current Liabilities 23 13 ------------- ------------- 183 168Long-Term Debt 1,408 1,437Lines of Credit 466 594Deferred Tax Liability 48 37Other Liabilities 24 32 ------------- ------------- Total Liabilities 2,129 2,268 ------------- -------------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) - 185.3 at June 30, 2004 and 185.1 at December 31, 2003 2 2Additional Paid-In Capital 2,157 2,150Retained Earnings 93 9Treasury Stock, at cost, Common shares - 2.0 (43) (43)Other Equity 1 1 ------------- ------------- Total Stockholders' Equity 2,210 2,119 ------------- ------------- Total Liabilities and Stockholders' Equity $ 4,339 $ 4,387 ============= ============= PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, June 30, 2004 2003 (In Millions)Cash Flows From Operating Activities:Net Income $ 212 $ 91Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 51 51 Basis of Real Estate Sold (Including Impairment Losses of $19 in 2004 and $9 in 2003) 114 49 Deferred Income Taxes 12 (5) Gain on Sale of Other Assets (5) - Working Capital Changes 16 5 Other (3) (1) -------------- --------------Net Cash Provided By Operating Activities 397 190 -------------- --------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (32) (38) Timberlands Acquired (Including Tax-Deferred Exchange Proceeds, Net) (39) (17) Proceeds from Sale of Other Assets 27 - -------------- --------------Net Cash Used In Investing Activities (44) (55) -------------- --------------Cash Flows From Financing Activities: Dividends (128) (129) Borrowings of Long-term Debt and Lines of Credit 1,227 1,278 Repayments of Long-term Debt and Lines of Credit (1,387) (1,244) Proceeds from Stock Option Exercises 3 - Acquisition of Treasury Stock - (43) -------------- --------------Net Cash Used In Financing Activities (285) (138) -------------- --------------Increase (Decrease) In Cash and Cash Equivalents 68 (3)Cash and Cash Equivalents: Beginning of Period 260 246 -------------- -------------- End of Period $ 328 $ 243 ============== ============== PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended June 30, June 30, 2004 2003 (In Millions)Cash Flows From Operating Activities:Net Income $ 57 $ 58Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 24 26 Basis of Real Estate Sold (Including Impairment Losses of $3 in 2004) 35 32 Deferred Income Taxes 5 (3) Gain on Sale of Other Assets (5) - Working Capital Changes 36 28 Other 3 3 ------------ --------------Net Cash Provided By Operating Activities 155 144 ------------ --------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (15) (22) Timberlands Acquired (Including Tax-Deferred Exchange Proceeds, Net) (15) (16) Proceeds from Sale of Other Assets 27 - ------------ --------------Net Cash Used In Investing Activities (3) (38) ------------ --------------Cash Flows From Financing Activities: Dividends (64) (64) Borrowings of Long-term Debt and Lines of Credit 621 496 Repayments of Long-term Debt and Lines of Credit (662) (503) Proceeds from Stock Option Exercises 1 - ------------ --------------Net Cash Used In Financing Activities (104) (71) ------------ --------------Increase In Cash and Cash Equivalents 48 35Cash and Cash Equivalents: Beginning of Period 280 208 ------------ -------------- End of Period $ 328 $ 243 ============ ==============
Click Here for 2nd Quarter 2004 Financial Supplements (in PDF)
CONTACT: Plum Creek Timber Company, Inc.
Investors: John Hobbs, 1-800-858-5347
Media: Kathy Budinick, 1-206-467-3620
SOURCE: Plum Creek Timber Company, Inc.