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.

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