SEATTLE, Jul 17, 2002 (BUSINESS WIRE) -- Plum Creek Timber Company, Inc.(NYSE:PCL) today announced second quarter earnings of $53 million, or $0.29 perdiluted share on revenues of $271 million.
Results for the first six months of 2002 were $109 million, or $0.59 per dilutedshare on revenues of $546 million.
Plum Creek completed its merger with The Timber Company on Oct. 6, 2001. Foraccounting purposes, The Timber Company is considered the surviving entitybecause of the structure of the merger. Therefore, reported financial resultsfor periods prior to the merger reflect the financial results of The TimberCompany. Results for 2002 reflect the performance of the combined companies andare not comparable to the results reported for 2001.
Funds from operations were $84 million for the second quarter of 2002 and $175million for the first six months of the year. Funds from operations is definedas net income plus depreciation, depletion, amortization and basis in higher andbetter use lands sold. The Company ended the quarter with $240 million in cashand cash equivalents.
Plum Creek's second quarter dividend will be announced July 23, 2002, followingthe Company's Board of Directors' meeting.
"Earnings for the second quarter were better than expected primarily due tohigher than anticipated real estate sales. Markets have improved since lowsexperienced in the fourth quarter of 2001 and demand for most of our products isgood. As we look at the timber portion of our business, we have not seen anynotable price improvements due to the sluggish economic recovery and largeshipments of Canadian lumber in advance of the tariff put in place in May. Aweaker U.S. dollar and tariffs on Canadian lumber may improve the competitiveposition of domestic pulp, paper and lumber producers and could set the stagefor pricing improvement for both sawlogs and pulpwood," said Rick Holley,president and CEO.
Review of Operations
Operating profit in the Northern segment was $11 million compared to $20 millionfor the first quarter. Second quarter results in the Northern segment weredriven by a 31% reduction in the harvest relative to the first quarter. This isa typical seasonal pattern due to limits placed on harvesting operations duringthe spring thaw. Northern segment sawlog prices were up 6% from first quarterlevels but trended downward during the quarter.
Operating profit in the Southern segment improved $9 million, to $64 million,compared to first quarter. This improvement was due, in part, to seasonallyhigher harvests, which were up 10% compared to the first quarter. Pricing forSouthern sawlogs and pulpwood was flat. An improved mix with a higher proportionof larger diameter sawlogs resulted in higher weighted average prices forsawlogs when compared to the first quarter.
Second quarter revenue for the Real Estate segment was $18 million, which wasbetter than expected but less than the $23 million reported in the first quarter2002, reflecting the transaction driven nature of the real estate business.
The Company's Manufacturing segment reported a $1 million operating profit, down$1 million from the prior quarter. Good demand and adequately supplied marketsresulted in stable prices and volumes for lumber and plywood. Medium densityfiberboard (MDF) sales volumes increased 22% from the first quarter due toincreased production on the new MDF line. Prices for MDF were up 3% as the salesmix improved. However, these positive developments were more than offset bystart-up issues related to the new thin board line, which resulted in the MDFbusiness recording a loss for the quarter.
Despite strong housing starts and good repair and remodel demand, log priceshave not shown any notable improvement. The positive influence of a weakeningU.S. dollar has not yet impacted wood and paper markets. At the same time, theultimate effects of the tariff on Canadian lumber have not yet been felt due toincreased shipments of Canadian lumber in advance of the tariff imposition. Forthe second half of the year, Plum Creek expects log prices to remain flat withsome potential improvement in the fourth quarter of the year.
The Company continues to experience strong interest in its real estateproperties from developers and conservation buyers as it positions propertiesfor sale or exchange. Anticipated real estate revenue for the year is expectedto be between $75 and $100 million.
The Company expects lumber and plywood prices to decline modestly in the thirdquarter from second quarter levels due to sufficient supply for the products.Sales volume should continue to increase as the new MDF line adds production.The MDF business is expected to be profitable in the third quarter.
"We continue to focus our attention on the long-term value opportunities createdby Plum Creek's combination of management and our large and diverse asset base.Our real estate business continues to identify and position valuable propertiesfor sale or exchange to development or conservation buyers, and we remainencouraged by the potential of the natural resource business. We will manage ourlands with a focus on long-term value creation while taking advantage of marketopportunities. We continue to evaluate areas of growth that match ourdisciplined investment criteria and allow us to create value by applying ourland management expertise," concluded Holley.
Earnings Conference Call, Webcast, and Supplemental Information
Plum Creek's conference call is scheduled today at 2:00 PM PDT. Executivemanagement will discuss these results, current business conditions and theoutlook for the third quarter of 2002. To access the call, dial 877/679-9051 or952/556-2804 (outside North America) prior to the scheduled start time andreference the Plum Creek earnings call. A recorded replay of the call will beavailable for 48 hours after the call by dialing 800/615-3210 or 703/326-3020(outside North America) and entering the conference code 5761547.
A live webcast of the call is also available. Go to Plum Creek's Internet site,www.plumcreek.com , and click on the "Investor" link.
Supplemental financial information for Plum Creek operations is availableattached to the earnings release in the investor information section of PlumCreek's website at www.plumcreek.com.
Plum Creek, a real estate investment trust, is one of the largest land owners inthe nation, with over 7.8 million acres of timberlands in every region of theUnited States and ten wood product manufacturing facilities in the Northwest.
This press release contains forward-looking statements within the meaning of thePrivate Litigation Reform Act of 1995, as amended. Some of these forward-lookingstatements can be identified by the use of forward-looking words such as"believes," "expects," "may," "will," "should," "seek," "approximately,""intends," "plans," "estimates," or "anticipates," or the negative of thosewords or other comparable terminology. A number of important factors could causeactual results to differ materially from those described in the forward-lookingstatements. Some of these factors include, but are not limited to, changes ingovernmental, legislative and environmental restrictions; catastrophic lossesfrom fires, floods, windstorms, earthquakes, volcanic eruptions, insectinfestations or diseases; changes in economic conditions and competition in ourdomestic and export markets; our failure to qualify as a REIT or our failure toachieve the expected competitive advantages of operating as a REIT; anunanticipated reduction in the demand for timber products and/or anunanticipated increase in the supply of timber products; our failure to makestrategic acquisitions or to integrate any such acquisitions effectively or,conversely, our failure to make strategic divestitures; the failure to meet ourexpectations with respect to our likely future performance; and other factorsdescribed in our filings with the Securities and Exchange Commission, which areavailable at the web site maintained by the Securities and Exchange Commissionat "http://www.sec.gov." It is likely that if one or more of the risksmaterializes, or if one or more assumptions proves to be incorrect, the currentexpectations of Plum Creek and its management will not be realized.Forward-looking statements speak only as of the date made, and neither PlumCreek nor its management undertakes any obligation to update or revise anyforward-looking statements.
More information on Plum Creek Timber Co. may be accessed at:http://www.businesswire.com/cnn/pcl.shtml.
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Quarter Ended ------------- June 30, June 30, 2002 2001 ---- ---- (In Millions, Except Per Share)Revenues: Timber $ 154 $ 68 Real Estate 18 30 Manufacturing 97 - Other 2 2 --------- --------- Total Revenues 271 100Costs and Expenses: Cost of Goods Sold: Timber 71 33 Real Estate 7 6 Manufacturing 94 - Other - - --------- --------- Total Cost of Goods Sold 172 39 Selling, General and Administrative 17 9 --------- --------- Total Costs and Expenses 189 48 --------- ---------Operating Income 82 52Interest Expense, net 26 10 --------- ---------Income before Income Taxes 56 42Provision for Income Taxes 3 15 --------- ---------Net Income $ 53 $ 27 ========= =========Net Income per Share - Basic $ 0.29 $ 0.24 ========= =========Net Income per Share - Diluted $ 0.29 $ 0.24 ========= =========Weighted average number of Shares outstanding - Basic 184.7 112.7 --------- ---------Weighted average number of Shares outstanding - Diluted 185.4 113.9 --------- --------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Six Months Ended ---------------- June 30, June 30, 2002 2001 ---- ---- (In Millions, Except Per Share)Revenues: Timber $ 311 $ 178 Real Estate 41 34 Manufacturing 190 - Other 4 5 --------- ------- Total Revenues 546 217Costs and Expenses: Cost of Goods Sold: Timber 145 70 Real Estate 18 6 Manufacturing 183 - Other - - --------- ------- Total Cost of Goods Sold 346 76 Selling, General and Administrative 34 18 --------- ------- Total Costs and Expenses 380 94 --------- -------Operating Income 166 123Interest Expense, net 52 21 --------- -------Income before Income Taxes 114 102Provision for Income Taxes 5 38 --------- -------Net Income $ 109 $ 64 ========= =======Net Income per Share - Basic $ 0.59 $ 0.57 ========= =======Net Income per Share - Diluted $ 0.59 $ 0.56 ========= =======Weighted average number of Shares outstanding - Basic 184.6 112.7 --------- -------Weighted average number of Shares outstanding - Diluted 185.4 113.9 --------- -------
Click Here for 2nd Quarter 2002 Financial Supplements (in Excel)
Plum Creek Timber Company, Inc.
John Hobbs, 800/858-5347
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