Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for Third Quarter and Nine Months 2003
Oct 20, 2003
SEATTLE--(BUSINESS WIRE)--Oct. 20, 2003--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced third quarter earnings of $45million, or $0.25 per diluted share, on revenues of $290 million.Third quarter earnings included a $4 million expense, or $0.02 perdiluted share, related to fire losses experienced in Montana duringthe quarter. Earnings for the third quarter of 2002 were $70 million,or $0.38 per diluted share, on revenues of $310 million. Earnings forthe first nine months of 2003 were $136 million, or $0.74 per dilutedshare, on revenues of $881 million. Earnings for the same period of2002 were $179 million, or $0.97 per diluted share, on revenues of$856 million.
Cash provided by operating activities in the third quarter totaled$109 million compared to $131 million for the same period of 2002.Cash provided by operating activities in the first nine months of 2003totaled $299 million and included $13 million from the sale ofnon-strategic timberlands in Montana compared to $306 million for thesame period of 2002. The Company ended the third quarter of 2003 with$281 million in cash and cash equivalents.
Earnings were down $25 million compared to the same period lastyear. Of this reduction, $9 million was due to lower real estateactivity resulting from the transactional nature of the Real Estatesegment. Montana experienced its worst fire season in decades,reducing profits in the Northern Resources segment by $9 million, ofwhich $4 million was due to the fire losses and the remainder was dueto harvest curtailments. Additionally, a combination of plannedharvest reductions and lower sawlog prices reduced operating profitsby $7 million in the Southern Resources segment.
"Despite Montana's worst fire season in decades, our results camein as expected, highlighting the benefits of our geographic andbusiness line diversity," said Rick Holley, president and chiefexecutive officer. "We view the harvest reductions as a deferral ofincome. The trees continue to grow, we'll just simply harvest themlater than we originally anticipated. We continue to focus on valueoptimization to receive the best price for our logs. Our Real Estatesegment continues to grow as we capture additional value from selectland assets."
Review of Operations
An unusually severe fire season in Montana reduced operatingprofit for the Northern Resources segment when compared to the sameperiod of 2002. The $14 million operating profit was down $9 millioncompared to last year. The fires impacted results in the segment intwo ways: harvests were reduced and a $4 million book loss wasincurred related to timber that was destroyed. Overall NorthernResources harvests were 15 percent lower than third quarter 2002 dueprimarily to the fire related harvest curtailments. Sawlog prices werelargely unchanged compared to the same period of 2002. Stronger demandfrom paper mills and oriented strand board plants in the Northeast ledto good pulpwood demand, particularly hardwood pulpwood, and a 6percent improvement in pulpwood prices compared to third quarter of2002.
Operating profit in the Southern Resources segment was $50 millioncompared to $57 million for the same period of 2002. Lower harvestvolumes accounted for $3 million of the $7 million reduction inoperating profit. Poor softwood lumber markets during the past yearhave significantly reduced sawlog customers' profitability and keptsawlog prices low. A dramatic but temporary improvement in softwoodlumber prices that began in August of this year did not result inimproved sawlog prices. Sawmill operators recognized the temporarynature of the improved lumber market and continued cautious buying,maintaining low log inventories and switching to lower value, smallerdiameter logs rather than bid up prices. As a result of sawmilloperators' cautious approach to the market and their demand forsmaller diameter logs, average sawlog price realizations in the thirdquarter were approximately 11 percent below third quarter 2002 levelsand 3 percent lower than the second quarter of this year.
The Real Estate segment reported revenue of $28 million comparedto $38 million in the third quarter of 2002 reflecting the transactiondriven nature of this business. Third quarter sales were made up of aconsistent mix of higher and better use parcels and conservationproperties. Markets for conservation, development and recreationallands remain strong.
The Company's Manufacturing segment reported a $2 million loss forthe third quarter down $5 million compared to the same period of 2002but up $2 million compared to the second quarter of 2003. Operatingefficiency fell at the Company's Montana-based lumber and mediumdensity fiberboard (MDF) facilities as they reduced production andsales in response to log and fiber shortages resulting from the fireclosures. Reduced operating rates increased production costs andlowered lumber sales volume, more than offsetting flat lumber pricesand improved MDF price realizations when compared to last year.Improving demand for industrial plywood resulted in better plywoodpricing and continued profitability in this business.
Outlook
For the fourth quarter, the Company expects prices for itsSouthern Resources products to increase due to improved product mixand some price improvement for sawlogs. Northern Resources sawlogprices are expected to remain at third quarter levels, but a differentspecies mix is expected to reduce price realizations. Harvest volumesin the Southern Resources segment should increase from third quarterlevels due to normal seasonal factors. The Northern Resources harvestwill recover from the unusually low harvest levels experienced in thethird quarter and should exceed harvest levels reported for the fourthquarter of 2002.
The Company expects Real Estate segment sales for the year,excluding the second quarter sale of non-strategic Montana lands, toexceed $105 million.
Earnings for the Manufacturing segment are expected to improve inthe fourth quarter as a result of improved plywood prices andcontinued improvements in MDF operations.
The Company expects fourth quarter earnings to be between $0.24and $0.29 per share.
"During the fourth quarter of this year, we expect to see improvedprofitability in our core timber business as our Northern harvestsrecover from very low third quarter levels and customers begin tobuild log inventories for winter. Additionally, improvements in bothplywood and MDF should result in better performance from theManufacturing segment," concluded Holley. "We are hopeful that talksaimed at resolving the lumber trade dispute with Canada will resumeduring the quarter and will ultimately result in improved U.S. lumbermarkets. Finally, we are pleased with the progress and growth of theReal Estate segment and our ability to obtain higher value for aselect portion of our land assets."
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, October 20, at 5:00PM EDT (2:00 PM 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 code2977903.
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 land and timber owners in thenation, with over eight million acres of timberlands in major timberproducing 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 September 30, September 30, 2003 2002 (In Millions, Except Per Share Amounts)Revenues: Timber $ 473 $ 481 Real Estate 108 79 Manufacturing 292 291 Other 8 5 ------------- ------------- Total Revenues 881 856Costs and Expenses: Cost of Goods Sold: Timber 248 232 Real Estate 65 29 Manufacturing 294 278 Other 3 1 ------------- ------------- Total Cost of Goods Sold 610 540 Selling, General and Administrative 56 53 ------------- ------------- Total Costs and Expenses 666 593 ------------- -------------Operating Income 215 263Interest Expense, net 86 77 ------------- -------------Income before Income Taxes 129 186Benefit (Provision) for Income Taxes 7 (7) ------------- -------------Net Income $ 136 $ 179 ============= =============Net Income per Share - Basic $ 0.74 $ 0.97 ============= =============Net Income per Share - Diluted $ 0.74 $ 0.97 ============= =============Weighted average number of Shares outstanding - Basic 183.4 184.7 ------------- -------------Weighted average number of Shares outstanding - Diluted 184.0 185.4 ------------- ------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended September 30, September 30, 2003 2002 (In Millions, Except Per Share Amounts)Revenues: Timber $ 158 $ 170 Real Estate 28 38 Manufacturing 101 101 Other 3 1 ------------- -------------- Total Revenues 290 310Costs and Expenses: Cost of Goods Sold: Timber 88 87 Real Estate 10 11 Manufacturing 99 95 Other 1 1 ------------- -------------- Total Cost of Goods Sold 198 194 Selling, General and Administrative 20 19 ------------- -------------- Total Costs and Expenses 218 213 ------------- --------------Operating Income 72 97Interest Expense, net 29 25 ------------- --------------Income before Income Taxes 43 72Benefit (Provision) for Income Taxes 2 (2) ------------- --------------Net Income $ 45 $ 70 ============= ==============Net Income per Share - Basic $ 0.25 $ 0.38 ============= ==============Net Income per Share - Diluted $ 0.25 $ 0.38 ============= ==============Weighted average number of Shares outstanding - Basic 183.0 184.8 ------------- --------------Weighted average number of Shares outstanding - Diluted 183.7 185.5 ------------- -------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, 2003 2002 (In Millions) ASSETSCurrent Assets: Cash and Cash Equivalents $ 281 $ 246 Restricted Advance from Customer 16 4 Accounts Receivable 37 33 Inventories 47 58 Investment in Grantor Trust 13 10 Deferred Tax Asset 12 11 Other Current Assets 18 16 ------------- ------------- 424 378Timber and Timberlands - Net 3,584 3,599Property, Plant and Equipment - Net 303 307Other Assets 6 5 ------------- ------------- Total Assets $ 4,317 $ 4,289 ============= ============= LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 33 $ 33 Accounts Payable 29 25 Interest Payable 37 21 Wages Payable 19 23 Taxes Payable 16 11 Deferred Revenue 31 18 Liabilities Associated with Grantor Trust 13 10 Other Current Liabilities 17 14 ------------- ------------- 195 155Long-Term Debt 1,439 1,170Lines of Credit 491 669Deferred Tax Liability 36 44Other Liabilities 29 29 ------------- ------------- Total Liabilities 2,190 2,067 ------------- -------------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) - 185.0 at September 30, 2003 and 184.9 at December 31, 2002 2 2Additional Paid-In Capital 2,152 2,197Retained Earnings 16 23Treasury Stock, at cost, Common shares - 2.0 at September 30, 2003 (43) - ------------- ------------- Total Stockholders' Equity 2,127 2,222 ------------- ------------- Total Liabilities and Stockholders' Equity $ 4,317 $ 4,289 ============= ============= PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, September 30, 2003 2002 (In Millions)Cash Flows From Operating Activities:Net Income $ 136 $ 179Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Including $4 Loss Related to Forest Fires) 79 78 Basis of Real Estate Sold (Including $9 Impairment Loss) 57 24 Deferred Income Taxes (8) 6 Working Capital Changes 33 13 Other 2 6 -------------- --------------Net Cash Provided By Operating Activities 299 306 -------------- --------------Cash Flows From Investing Activities: Property Additions (Excluding Tax-Deferred Exchanges) (94) (73) Timberlands Acquired with Tax-Deferred Exchange Proceeds, Net (25) (13) -------------- --------------Net Cash Used In Investing Activities (119) (86) -------------- --------------Cash Flows From Financing Activities: Dividends (193) (211) Borrowings of Long-term Debt and Lines of Credit 1,664 1,151 Repayments of Long-term Debt and Lines of Credit (1,574) (1,100) Proceeds from Stock Option Exercises 1 17 Acquisition of Treasury Stock (43) - -------------- --------------Net Cash Used In Financing Activities (145) (143) -------------- --------------Increase In Cash and Cash Equivalents 35 77Cash and Cash Equivalents: Beginning of Period 246 193 -------------- -------------- End of Period $ 281 $ 270 ============== ============== PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Quarter Ended September 30, 2003 2002 (In Millions)Cash Flows From Operating Activities:Net Income $ 45 $ 70Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Including $4 Loss Related to Forest Fires) 28 28 Basis of Real Estate Sold 8 8 Deferred Income Taxes (3) 2 Working Capital Changes 28 19 Other 3 4 --------- ---------Net Cash Provided By Operating Activities 109 131 --------- ---------Cash Flows From Investing Activities: Property Additions (Excluding Tax-Deferred Exchanges) (56) (35) Timberlands Acquired with Tax-Deferred Exchange Proceeds, Net (8) (7) --------- ---------Net Cash Used In Investing Activities (64) (42) --------- ---------Cash Flows From Financing Activities: Dividends (64) (106) Borrowings of Long-term Debt and Lines of Credit 386 511 Repayments of Long-term Debt and Lines of Credit (330) (465) Proceeds from Stock Option Exercises 1 1 --------- ---------Net Cash Used In Financing Activities (7) (59) --------- ---------Increase In Cash and Cash Equivalents 38 30Cash and Cash Equivalents: Beginning of Period 243 240 --------- --------- End of Period $ 281 $ 270 ========= =========
Click Here for 3rd Quarter 2003 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.