Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for First Quarter 2003
Apr 21, 2003
SEATTLE--(BUSINESS WIRE)--April 21, 2003--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced first quarter earnings of $33million, or $0.18 per diluted share, on revenues of $273 million.
Reported first quarter earnings included a $9 million, or $0.05per diluted share, impairment charge of non-strategic timberlandsexpected to be sold in the second quarter of this year. Earnings forthe first quarter 2002 were $56 million, or $0.30 per diluted share,on revenues of $275 million.
Cash provided by operating activities in the first quarter totaled$46 million. This amount reflects a seasonal working capitalinvestment of $23 million and a $6 million reduction due to othernon-cash adjustments. Cash provided by operating activities for thesame period last year was $73 million after a $15 million investmentin working capital and a $3 million reduction due to other non-cashadjustments. The Company ended the first quarter 2003 with $208million in cash and cash equivalents.
"Difficult market conditions continued to persist in many of ourtimber markets. However, the benefits of our geographically diverseasset base and locally focused management were evident this quarter.We took advantage of opportunities to capture greater value byincreasing harvests in regions with limited log availability due tounusually wet weather, while decreasing our activities in areas wherepricing remained weak. Additionally, we continued to capture highervalues in our real estate business for properties with uniqueconservation, recreation or development attributes. As a result, ourfirst quarter income and cash flow were somewhat better than ouroriginal expectations, although our outlook for the full year remainsthe same," said Rick Holley, President and CEO.
Review of Operations
Operating profit in the Northern Resources segment was $23 millionin the first quarter compared to $20 million for the same period of2002. Prices have recovered somewhat from the depressed levelsexperienced in the first quarter of 2002 with Northern sawlogs up over3% and Northern pulpwood prices up approximately 8%. Harvestingactivity was modestly higher when compared to the first quarter of2002 as the Company began delivering wood to customers from itsrecently acquired property in Wisconsin.
Operating profit in the Southern Resources segment was $49million, down approximately $6 million from the same period of 2002.Harvest volumes were lower than first quarter 2002, but higher thananticipated as the Company moved to take advantage of temporarilytight log supplies in certain markets. The sawlog harvest was 9% lowerthan the first quarter of 2002 while the pulpwood harvest was 5% lowerthan the same period last year. First quarter sawlog prices were$1/ton lower than the same period last year due to continued difficultlumber markets. Pulpwood prices were slightly higher than thoseexperienced in the first quarter of 2002. Widespread access to "allweather tracts" allowed the Company to take advantage of higher pricesin some regions due to a combination of low customer log inventoriesand wet weather.
First quarter revenue for the Real Estate segment was $23 millionfor both 2003 and 2002. Sales during the quarter represented abalanced mix of conservation, recreation and development properties.Interest in the Company's properties remained high from a diverserange of conservation interests, developers, and individuals.
The Company's Manufacturing segment reported a $5 million loss forthe quarter compared to a $2 million profit in the same period of2002. Lumber prices in first quarter 2003 were 14% lower than thoseexperienced in the first quarter of 2002 reflecting a continuedoversupply of lumber in the U.S. market, due in part to high levels ofCanadian lumber imports. Medium density fiberboard (MDF) prices andsales volumes were higher than last year due to the continued start-upof the Company's second MDF line. Increased production costs,including raw material and energy prices, offset the revenue gainsderived from higher prices and production volumes. Prices and salesvolumes for the Company's plywood products were similar to the firstquarter 2002 levels.
Share Repurchase
During the quarter the Company opportunistically repurchasedapproximately two million shares of its stock at an average price ofapproximately $21.53 per share.
"We evaluated several timberland tracts for acquisition during thequarter but none matched our disciplined financial returnrequirements. The timberland investment opportunity that did haveattractive financial returns was our own stock. We took advantage ofthat opportunity and repurchased shares at what we believe are verycompelling values," continued Holley.
Outlook
In the second quarter, Plum Creek expects log prices throughoutits operating regions to approximate first quarter levels. Typicalseasonal harvest patterns are expected with harvest levels in theSouth increasing in the second quarter while harvests in the North areexpected to decline from first quarter levels due to thawing springweather that restricts harvesting activities.
The Company anticipates continued strong interest in its realestate properties from individuals, developers and conservationbuyers. The Company continues to expect Real Estate sales for the yearto be between $80 and $100 million.
Lumber prices are expected to improve seasonally during the secondquarter as building activity increases throughout the United States.The ongoing lumber dispute with Canada is currently a source ofcontinued uncertainty in lumber markets. Negotiations during the firstquarter made important progress toward a resolution but at this timeit is uncertain when negotiations will resume. Ultimately an agreementshould have a positive effect on U.S. lumber and log markets. However,the extent and timing of any influence is not possible to determine atthis time.
Plywood prices are expected to improve as building activityincreases seasonally and industrial demand improves modestly. MDFsales volume should continue to increase as the new MDF line addsproduction. MDF sales realizations should improve as higher value,thin-board production volumes increase from the new line.
The Company expects second quarter earnings to be between $0.22and $0.27 per share.
"Plum Creek has a tremendous asset base and we are committed toachieving the best value for every acre through a comprehensiveapproach to land and timber management. Our strong balance sheet,disciplined capital allocation and capabilities in timbermerchandising, real estate, and natural resources are positioning theCompany to continue to perform well despite continued tough marketconditions," concluded Holley.
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, April 21, at 5:00 PMEDT (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 800/572-9852 atleast 10 minutes prior to the start, referencing Plum Creek'searnings. Those wishing to access the call from outside UnitedStates/Canada should dial 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 at800/642-1687 or 706/645-9291 (international calls), using the code9366940.
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 8 million acres of timberlands in every region ofthe United States and ten wood product manufacturing facilities in theNorthwest.
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,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 proves to be incorrect,the current 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 STATEMENT OF INCOME (UNAUDITED) Quarter Ended ---------------------- March 31, March 31, 2003 2002 ---------- ---------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 156 $ 157 Real Estate 23 23 Manufacturing 92 93 Other 2 2 ---------- ---------- Total Revenues 273 275Costs and Expenses: Cost of Goods Sold: Timber 81 74 Real Estate 19 11 Manufacturing 96 89 Other 1 - ---------- ---------- Total Cost of Goods Sold 197 174 Selling, General and Administrative 17 17 ---------- ---------- Total Costs and Expenses 214 191 ---------- ----------Operating Income 59 84Interest Expense, net 28 26 ---------- ----------Income before Income Taxes 31 58Benefit (Provision) for Income Taxes 2 (2) ---------- ----------Net Income $ 33 $ 56 ========== ==========Net Income per Share - Basic $ 0.18 $ 0.30 ========== ==========Net Income per Share - Diluted $ 0.18 $ 0.30 ========== ==========Weighted average number of Shares outstanding - Basic 184.1 184.5 ---------- ----------Weighted average number of Shares outstanding - Diluted 184.6 185.3 ---------- ---------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) March 31, December 31, 2003 2002 ------------ ------------ (In Millions) ASSETSCurrent Assets: Cash and Cash Equivalents $ 208 $ 246 Restricted Advance from Customer 17 4 Accounts Receivable 34 33 Inventories 61 58 Investment in Grantor Trust 11 10 Deferred Tax Asset 11 11 Other Current Assets 30 16 ------------ ------------ 372 378Timber and Timberlands - Net 3,579 3,599Property, Plant and Equipment - Net 303 307Other Assets 7 5 ------------ ------------ Total Assets $ 4,261 $ 4,289 ============ ============ LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 33 $ 33 Accounts Payable 18 25 Interest Payable 38 21 Wages Payable 11 23 Taxes Payable 11 11 Deferred Revenue 26 18 Liabilities Associated with Grantor Trust 11 10 Other Current Liabilities 15 14 ------------ ------------ 163 155Long-Term Debt 1,468 1,170Lines of Credit 412 669Deferred Tax Liability 42 44Other Liabilities 26 29 ------------ ------------ Total Liabilities 2,111 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 March 31, 2003 and 184.9 at December 31, 2002 2 2Additional Paid-In Capital 2,175 2,197Retained Earnings 16 23Treasury Stock, at cost, Common shares - 2.0 at March 31, 2003 (43) - ------------ ------------ Total Stockholders' Equity 2,150 2,222 ------------ ------------ Total Liabilities and Stockholders' Equity $ 4,261 $ 4,289 ============ ============ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Quarter Ended ------------------------ March 31, March 31, 2003 2002 ----------- ----------- (In Millions)Cash Flows From Operating Activities:Net Income $ 33 $ 56Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 25 26 Basis of Real Estate Sold (including Impairment Loss) 17 9 Deferred Income Taxes (2) - Working Capital Changes (23) (15) Other (4) (3) ----------- -----------Net Cash Provided By Operating Activities 46 73 ----------- -----------Cash Flows From Investing Activities: Property Additions (Excluding Tax- Deferred Exchanges) (16) (17) Timberlands Acquired with Tax-Deferred Exchange Proceeds, Net (1) - ----------- -----------Net Cash Used In Investing Activities (17) (17) ----------- -----------Cash Flows From Financing Activities: Dividend (65) - Borrowings of Long-term Debt and Lines of Credit 782 263 Repayments of Long-term Debt and Lines of Credit (741) (241) Proceeds from Stock Option Exercises - 14 Acquisition of Treasury Stock (43) - ----------- -----------Net Cash Provided By (Used In) Financing Activities (67) 36 ----------- -----------Increase (Decrease) In Cash and Cash Equivalents (38) 92Cash and Cash Equivalents: Beginning of Period 246 193 ----------- ----------- End of Period $ 208 $ 285 =========== ===========
Click Here for 1st Quarter 2003 Financial Supplements (in Excel)
CONTACT:
Plum Creek Timber Company, Inc.
John Hobbs, 800/858-5347
www.plumcreek.com
SOURCE:
Plum Creek Timber Company, Inc.