SEATTLE, Jan 29, 2002 (BUSINESS WIRE) -- Plum Creek Timber Company, Inc.(NYSE:PCL) today announced fourth quarter earnings of $226 million, or $1.25 perdiluted share.
Excluding non-recurring items, pro forma fourth quarter earnings were $43million, or $0.24 per diluted share. The reported earnings for fourth quarter2001 include $183 million, or $1.01 per diluted share, of non-recurring mergerrelated adjustments. These adjustments are detailed in an accompanyingreconciliation.
Plum Creek completed its merger with The Timber Company on October 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 the fourth quarter 2001 reflect the performance of thecombined companies and are not comparable to the results reported for priorperiods.
For the full year 2001 Plum Creek reported earnings of $338 million, or $2.58per diluted share, compared to $162 million, or $1.42 per diluted share, for thefull year 2000. Plum Creek reported earnings of $56 million, or $0.49 perdiluted share, for the fourth quarter 2000.
Pro forma funds from operations (FFO), a simplified measure of cash flow fromoperations defined as pro forma net income plus depreciation, depletion, andbasis in higher and better use lands sold, was $81 million for the fourthquarter of 2001. The Company ended the quarter and the year with $193 million incash and cash equivalents.
"Despite the challenges presented by difficult market conditions, Plum Creekposted good operating performance for both the quarter and the year. Ourresource operations aggressively marketed logs and stumpage to capture the bestvalue and the real estate business was well positioned to meet the high demandfor our unique properties. The manufacturing business remained profitable due tointense focus on cost control and our value added product mix," said RickHolley, President and CEO. "The results of the quarter illustrate the seamlessintegration and benefits of our merger with The Timber Company."
Review of Operations
Compared to fourth quarter 2000, sawlog prices declined 12% and 18% in theNorthern and Southern Resource segments, respectively, as the result of regionalmill closures and weak lumber markets. Pulpwood prices in the Northern Resourcesegment declined 16% due to weak demand and excess capacity in the pulp andpaper industry. Pulpwood prices in the Southern Resources segment wereessentially unchanged from low levels experienced in the fourth quarter of 2000.Plum Creek's fourth quarter higher and better use land sales revenue was $27million compared to the unusually high pro forma revenue of $78 million for thesame period of 2000, reflecting the uneven nature of the real estate business.
Fourth quarter prices for the company's lumber and plywood products increased 5%and 4%, respectively, when compared to the same period in 2000 as Plum Creek'sspecialty product mix performed better than commodity products. Lumber salesvolumes were 5% higher than the same period last year due largely to a strongrepair and remodel market. Sales volumes for plywood declined year-over-year asindustrial markets remained weak.
During the quarter Plum Creek began production on the company's new thin MDFline. Higher sales volumes reflect the sales of initial production from this newline.
We continue to see strong housing starts, good repair and remodel demand, andprospects for a recovery in pulp and paper markets. However, the persistentstrength of the U.S. dollar and overcapacity affecting most wood and papermarkets continue to put downward pressure on log and converted product prices.We anticipate a modest rebound in pricing in the second half of the year as theeconomy gradually strengthens.
In the first quarter, Plum Creek expects log prices in the South to increaseslightly as customers begin to rebuild depleted log inventories. Log prices inthe North should remain flat, reflecting continued customer uncertainty aboutfinished product prices. Real estate markets remain strong, although real estateincome in the first quarter is likely to be lower than the fourth quarter,reflecting the uneven nature of real estate transaction activity. The Companyexpects its lumber and plywood prices to moderate from fourth quarter levels.MDF sales volume should increase as the new thin board line continues toincrease production, while MDF prices should improve as premium-grade productionvolumes increase from the new line.
"As we head into 2002, Plum Creek is established as a large, diversified landand natural resources company managing forests, real estate and other naturalresources. Building on a strong track record of value delivery for shareholders,our proven team is committed to continuing to grow cash flow by actively andexpertly managing our resource base and realizing the full scope ofopportunities we now possess," concluded Holley.
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, January 29, at 2:00 p.m. PST todiscuss these results, emerging business opportunities and the outlook for thefirst quarter of 2002. To access the call, dial 1.877.679.9045 or 1.952.556.2802(outside North America) prior to the scheduled start time and reference accesscode 5761547. A recorded replay of the call will be available afterwards for 48hours by dialing 1.800.615.3210 and entering the same code.
Supplemental financial information for Plum Creek operations, includingstatistical data, is available 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 significanttimber-growing region of the United States and nine wood product mills in theNorthwest.
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. The accuracy of such statements issubject to a number of risks, uncertainties and assumptions including, but notlimited to, the cyclical nature of the forest products industry, our ability toharvest our timber, our ability to execute our acquisition strategy, and variousregulatory constraints. These risks, uncertainties and assumptions are detailedfrom time to time in our filings with the Securities and Exchange Commissionunder the Securities Exchange Act of 1934, as amended, and the Securities Act of1933, as amended. It is likely that if one or more of the risks materializes, orif one or more assumptions proves to be incorrect, the current expectations ofPlum Creek and its management will not be realized. Forward-looking statementsspeak only as of the date made, and neither Plum Creek nor its managementundertakes any obligation to update or revise any forward-looking statements.
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME (unaudited) Quarter Ended ------------- December 31, December 30, 2001 2000 ---- ---- (In Millions, Except Per Share)Revenues: Timber $ 126 $ 88 Real Estate 27 56 Manufacturing 86 -- Other 1 2 -------- -------- Total Revenues 240 146Costs and Expenses: Cost of Goods Sold: Timber 77 32 Real Estate 12 9 Manufacturing 83 -- Other -- -- -------- -------- Total Cost of Goods Sold 172 41 Selling, General and Administrative 28 9 -------- -------- Total Costs and Expenses 200 50 -------- --------Operating Income 40 96Interest Expense 24 11 -------- --------Income before Income Taxes 16 85(Provision) Benefit for Income Taxes 210 (29) -------- --------Net Income $ 226 $ 56 ======== ========Net Income per Share - Basic $ 1.26 $ 0.50 ======== ========Net Income per Share - Diluted $ 1.25 $ 0.49 ======== ========Weighted average number of Shares outstanding - Basic 179.3 112.7 -------- --------Weighted average number of Shares outstanding - Diluted 180.6 113.9 -------- -------- Our merger with The Timber Company was accounted for as a reverseacquisition, whereby the historical financial statements andaccounting policies of The Timber Company became those of Plum Creek'sas of the merger date. However, during the fourth quarter of 2001,Plum Creek changed its method of accounting for silviculture costsback to the method used by Plum Creek prior to the merger. The changeincreased fourth quarter's Net Income by $5 million and increased2001's Net Income by $13 million. Reconciliation of Fourth Quarter 2001 EarningsPro Forma Net IncomeFourth Quarter 2001$ MillionsReported Fourth Quarter Income $226 GAAP basis earningsTax Adjustment (216) One time elimination of The Timber Company ("TTC") deferred taxes as a result of converting from a C-corp to a REITTTC Employee Costs 9 Primarily severance costsExcess Profit in Inventory Elimination 8 Non-cash charge created by the merger transactionG-P Timber Deed Income 16 Income from 4th Qtr. 2001 harvest on former TTC lands that was accelerated to prior periods in 2001 due to the merger transaction -------Pro Forma Net Income $43 =======Pro Forma Basic EPS $0.24Pro Forma Diluted EPS $0.24 PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME Twelve Months Ended ------------------- December 31, December 30, 2001 2000 ---- ---- (In Millions, Except Per Share)Revenues: Timber $ 423 $ 382 Real Estate 80 103 Manufacturing 86 -- Other 9 8 ------- ------- Total Revenues 598 493Costs and Expenses: Cost of Goods Sold: Timber 188 134 Real Estate 20 18 Manufacturing 83 -- Other 1 -- ------- ------- Total Cost of Goods Sold 292 152 Selling, General and Administrative 56 38 ------- ------- Total Costs and Expenses 348 190 ------- -------Operating Income 250 303Interest Expense 54 44 ------- -------Income before Income Taxes 196 259(Provision) Benefit for Income Taxes 142 (97) ------- -------Net Income $ 338 $ 162 ======= =======Net Income per Share - Basic $ 2.61 $ 1.44 ======= =======Net Income per Share - Diluted $ 2.58 $ 1.42 ======= =======Weighted average number of Shares outstanding - Basic 129.5 112.7 ------- -------Weighted average number of Shares outstanding - Diluted 130.7 113.9 ------- ------- Our merger with The Timber Company was accounted for as a reverseacquisition, whereby the historical financial statements andaccounting policies of The Timber Company became those of Plum Creek'sas of the merger date. However, during the fourth quarter of 2001,Plum Creek changed its method of accounting for silviculture costsback to the method used by Plum Creek prior to the merger. The changeincreased fourth quarter's Net Income by $5 million and increased2001's Net Income by $13 million.
More information on Plum Creek Timber Co. may be accessed at:http://www.businesswire.com/cnn/pcl.shtml.
CONTACT: Plum Creek Timber Company, Inc. John Hobbs, 800/858-5347 www.plumcreek.com
Click Here for 4th Quarter 2001 Income Statements (In Excel)
Click Here for 4th Quarter 2001 Supplements (In Excel)
Copyright (C) 2002 Business Wire. All rights reserved.