Plum Creek Legacy News Releases

Plum Creek Timber Company, Inc. Reports Results for Third Quarter 2011

Oct 24, 2011

SEATTLE, Oct 24, 2011 (BUSINESS WIRE) -- Plum Creek Timber Company, Inc. (NYSE: PCL) today announced third quarter earnings of $50 million, or $0.31 per diluted share, on revenues of $293 million. Earnings for the third quarter of 2010 were $32 million, or $0.20 per diluted share, on revenues of $259 million.

Earnings for the first nine months of 2011 were $132 million, or $0.81 per diluted share, on revenues of $852 million. Earnings for the first nine months of 2010 were $154 million, or $0.94 per diluted share, on revenues of $834 million. Results for the first nine months of 2010 include an $11 million ($0.07 per diluted share) after-tax gain on the first-quarter sale of certain natural gas assets. As a result, income from continuing operations for the first nine months was $143 million, or $0.88 per diluted share.

Cash provided by operating activities during the first nine months of 2011 totaled $294 million. The company ended the third quarter with $291 million in cash and cash equivalents.

"Business conditions were largely unchanged during the past quarter, with relatively attractive pulpwood markets in most regions, healthy sawlog markets in the Northwest and Northeast and continued weak sawlog markets in the South. Our results for the quarter came in much as we anticipated," said Rick Holley, president and chief executive officer.

"The company's balance sheet remains healthy and we continue to have excellent financial flexibility. We continue to manage our portfolio of timber and land assets to maximize the long-term value of the company on a per-share basis. Consistent with this strategy, we completed the acquisition of 50,000 acres of timberlands in Georgia and Alabama during the quarter in addition to repurchasing nearly $25 million of stock," continued Holley.

Review of Operations

The Northern Resources segment reported a $7 million operating profit during the quarter compared to the $5 million profit for the same period of 2010. Northern Resources sawlog prices were more than $4 per ton (7 percent) higher than those experienced during the third quarter of 2010. Pulpwood prices also increased, up $3 per ton (8 percent) due to continued good demand from pulpwood customers in the Lake States and Northeast regions. As planned, the Northern Resources' total harvest volume was 1,161,000 tons, approximately 100,000 tons higher than 2010's third quarter harvest. Sawlog prices and volumes were higher than last year, due primarily to increased log demand from China.

Operating profit in the Southern Resources segment was $21 million for the third quarter of 2011 compared to $25 million for the same period of 2010. Average prices for pulpwood held steady while average sawlog prices increased approximately $1 per ton compared to the second quarter. However, prices for both products were lower than last year due to favorable supply conditions caused by abnormally dry weather conditions. Sawlog prices were $3 per ton (15 percent) lower, while pulpwood prices were $2 per ton (17 percent) lower than the average prices for the third quarter of 2010. Pulpwood prices remain attractive by historic standards in the South, and the company continued to focus its harvest activity on thinning stands that maximize pulpwood production. As a result, the mix of sawlogs (41 percent) and pulpwood (59 percent) harvested was similar to the third quarter of 2010, but significantly weaker than the long-term expected mix of 50/50 for the segment. Total third quarter harvest volumes in the segment were approximately 3.1 million tons, approximately 240,000 tons higher than those of the third quarter of 2010.

The Real Estate segment reported total revenue of $67 million and operating income of $46 million. Third quarter 2010 Real Estate segment revenue was $39 million resulting in operating income of $19 million.

The company sold approximately 36,000 acres of lands during the quarter. Land values were similar to those of the past several quarters. Sales consisted of approximately 24,500 acres of recreation lands with average values of $1,950 per acre, and 11,525 acres of small, non-strategic lands valued at approximately $1,230 per acre. Conservation sales consisted of 370 acres at an average value of $1,270 per acre.

The Manufacturing segment reported a $3 million operating profit, down $4 million from the $7 million profit reported during the third quarter of 2010. Lumber prices and sales volumes were similar to those of the third quarter of 2010. Profitability in the segment's panel businesses declined due to lower prices and sales volumes when compared to the third quarter of 2010. MDF prices were approximately 4 percent lower, and MDF sales volumes were approximately 2 percent lower than the same period of 2010. Plywood volumes were approximately 6 percent lower, while plywood prices were approximately 2 percent lower.

Capital Allocation

During the third quarter, the company completed the acquisition of 50,000 acres of timberlands located in Georgia and Alabama for approximately $75 million.

In addition, the company repurchased approximately 670,000 shares of common stock at an average price of $34.87 per share. At the end of the quarter, settlement had occurred on $15 million of the shares repurchased. The company has approximately $175 million remaining in its current share repurchase authorization, and 161.6 million shares outstanding.

Outlook

Overall, timber and rural land markets appear to be stable and the company does not expect to experience meaningful improvement in its markets during the coming quarter.

The company expects to harvest approximately 4 million tons of timber during the fourth quarter. As a result, the full-year 2011 harvest is expected to be similar to 2010's 15.4 million tons.

Fourth quarter revenues in the Real Estate segment are expected to be between $85 and $95 million. The Manufacturing segment results are expected to soften, but remain profitable during the fourth quarter.

The company expects to report fourth-quarter income between $0.37 and $0.42 per share, resulting in full-year 2011 income from continuing operations between $1.18 and $1.23 per share.

"During these challenging economic times, Plum Creek is fortunate to own a diversified portfolio of hard assets that provides operational and financial flexibility and is an excellent store of value for its owners," Holley continued. "Actively managing the portfolio to protect and grow the long-term value of an investment in Plum Creek is our primary job. We remain disciplined in allocating capital, investing in silviculture practices that enhance the productivity of our forests, acquiring lands that will earn above cost-of-capital returns, repurchasing shares, and reducing debt - whichever provides the highest return opportunity."

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, Oct. 24, at 5 p.m. EDT (2 p.m. PDT). A live webcast of the conference call may be accessed through Plum Creek's Web site at http://www.plumcreek.com by clicking on the "Investors" link.

Investors without internet access should dial 1-800-572-9852 at least 10 minutes prior to the start time, referencing Plum Creek's earnings. Those wishing to access the call from outside the United States/Canada should dial 1-706-645-9676, also referencing Plum Creek's earnings. Replay of the call will be available for 48 hours after completion of the live call and can be accessed at 1-800-642-1687 or 1-706-645-9291 (international calls), using the code 69757981.

Supplemental financial information for Plum Creek operations, including statistical data, is available in the "Investors" information section of Plum Creek's Web site at http://www.plumcreek.com.

Plum Creek is the largest and most geographically diverse private landowner in the nation with approximately 6.7 million acres of timberlands in major timber producing regions of the United States and wood products manufacturing facilities in the Northwest. For more information, visit http://www.plumcreek.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended. Some of these forward-looking statements 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 those words or other comparable terminology. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the cyclical nature of the forest products industry, our ability to harvest our timber, our ability to execute our acquisition strategy, the market for and our ability to sell or exchange non-strategic timberlands and timberland properties that have higher and better uses, and various regulatory constraints. These and other risks, uncertainties and assumptions are detailed from time to time in our filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as amended. It is likely that if one or more of the risks materializes, or if one or more assumptions prove to be incorrect, the current expectations of Plum Creek and its management will not be realized. Forward-looking statements are not guarantees of performance, and speak only as of the date made, and neither Plum Creek nor its management undertakes any obligation to update or revise any forward-looking statements.

PLUM CREEK TIMBER COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In Millions, Except Per Share Amounts) Nine Months Ended September 30,
20112010
REVENUES:
Timber $421$ 429
Real Estate 208181
Manufacturing 208208
Other 1516
Total Revenues 852834
COSTS AND EXPENSES:
Cost of Goods Sold:
Timber 327317
Real Estate 6869
Manufacturing 190184
Other 11
Total Cost of Goods Sold 586571
Selling, General and Administrative 7770
Total Costs and Expenses 663641
Other Operating Income (Expense), net 39
Operating Income 192202
Equity Earnings from Timberland Venture 4444
Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties) 6159
Interest Expense (Note Payable to Timberland Venture) 4343
Total Interest Expense, net 104102
Income before Income Taxes 132144
Provision for Income Taxes --1
Income from Continuing Operations 132143
Gain on Sale of Properties, net of tax --11
Net Income $132$ 154
PER SHARE AMOUNTS:
Income from Continuing Operations - Basic $0.81$ 0.88
Income from Continuing Operations - Diluted $0.81$ 0.88
Net Income per Share - Basic $0.81$ 0.95
Net Income per Share - Diluted $0.81$ 0.94
Weighted-Average Number of Shares Outstanding
- Basic 161.9162.2
- Diluted 162.2162.5
PLUM CREEK TIMBER COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In Millions, Except Per Share Amounts) Quarter Ended September 30,
20112010
REVENUES:
Timber $154$ 145
Real Estate 6739
Manufacturing 6770
Other 55
Total Revenues 293259
COSTS AND EXPENSES:

Cost of Goods Sold:

Timber 119108
Real Estate 1918
Manufacturing 6262
Other ----
Total Cost of Goods Sold 200188
Selling, General and Administrative 2420
Total Costs and Expenses 224208
Other Operating Income (Expense), net ----
Operating Income 6951
Equity Earnings from Timberland Venture 1415
Interest Expense, net:

Interest Expense (Debt Obligations to Unrelated Parties)

2020
Interest Expense (Note Payable to Timberland Venture) 1414
Total Interest Expense, net 3434
Income before Income Taxes 4932
Benefit for Income Taxes (1)--
Net Income $50$ 32
PER SHARE AMOUNTS:
Net Income per Share - Basic $0.31$ 0.20
Net Income per Share - Diluted $0.31$ 0.20
Weighted-Average Number of Shares Outstanding
- Basic 161.9161.6
- Diluted 162.2161.8
PLUM CREEK TIMBER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Millions, Except Per Share Amounts)

September 30,

2011

December 31,

2010

ASSETS
Current Assets:
Cash and Cash Equivalents $291$ 252
Accounts Receivable 3621
Inventories 4449
Deferred Tax Asset 77
Assets Held for Sale 3457
Other Current Assets 1524
427410
Timber and Timberlands, net 3,4433,405
Property, Plant and Equipment, net 140146
Equity Investment in Timberland Venture 189201
Deferred Tax Asset 810
Investment in Grantor Trusts (at Fair Value) 3635
Other Assets 3944
Total Assets $4,282$ 4,251
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt $395$ 94
Line of Credit 302166
Accounts Payable 2725
Interest Payable 2623
Wages Payable 1623
Taxes Payable 1712
Deferred Revenue 3325
Other Current Liabilities 87
824375
Long-Term Debt 1,2941,643
Note Payable to Timberland Venture 783783
Other Liabilities 8076
Total Liabilities 2,9812,877
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Preferred Stock, $0.01 Par Value, Authorized Shares - 75.0, Outstanding - None ----
Common Stock, $0.01 Par Value, Authorized Shares - 300.6, Outstanding (net of Treasury Stock) - 161.6 at September 30, 2011 and 161.6 at December 31, 2010 22
Additional Paid-In Capital 2,2582,243
Retained Earnings (Accumulated Deficit) (21)51
Treasury Stock, at Cost, Common Shares - 26.6 at September 30, 2011 and 26.2 at December 31, 2010 (927)(911 )
Accumulated Other Comprehensive Income (Loss) (11)(11 )
Total Stockholders' Equity 1,3011,374
Total Liabilities and Stockholders' Equity $4,282$ 4,251
PLUM CREEK TIMBER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
(In Millions) 20112010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $132$ 154
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization 7072
Basis of Real Estate Sold 5757
Equity Earnings from Timberland Venture (44)(44 )
Distributions from Timberland Venture 5656
Deferred Income Taxes 21
Gain on Sale of Properties and Other Assets --(13 )
Deferred Revenue from Long-Term Gas Leases (Net of Amortization) 145
Pension Plan Contributions (3)(4 )
Working Capital Changes --12
Other 1016
Net Cash Provided By Operating Activities 294312
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (Excluding Timberland Acquisitions) (43)(51 )
Timberlands and Minerals Acquired (88)--
Proceeds from Sale of Properties and Other Assets --13
Other --1
Net Cash Used In Investing Activities (131)(37 )
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends (204)(205 )
Borrowings on Line of Credit 1,0971,505
Repayments on Line of Credit (961)(1,505 )
Principal Payments and Retirement of Long-Term Debt (49)(53 )
Proceeds from Stock Option Exercises 92
Acquisition of Treasury Stock (16)(51 )
Net Cash Used In Financing Activities (124)(307 )
Increase (Decrease) In Cash and Cash Equivalents 39(32 )
Cash and Cash Equivalents:
Beginning of Period 252299
End of Period $291$ 267
PLUM CREEK TIMBER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Quarter Ended September 30,
(In Millions) 20112010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $50$ 32
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization 2624
Basis of Real Estate Sold 1414
Equity Earnings from Timberland Venture (14)(15 )
Distributions from Timberland Venture 2828
Deferred Income Taxes (2)--
Deferred Revenue from Long-Term Gas Leases (Net of Amortization) 2(1 )
Pension Plan Contributions (3)(4 )
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds 35--
Other Working Capital Changes (4)19
Other 58
Net Cash Provided By Operating Activities 137105
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (Excluding Timberland Acquisitions) (15)(20 )
Timberlands and Minerals Acquired (76)--
Other --1
Net Cash Used In Investing Activities (91)(19 )
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends (68)(69 )
Borrowings on Line of Credit 542368
Repayments on Line of Credit (467)(368 )
Acquisition of Treasury Stock (15)--
Net Cash Used In Financing Activities (8)(69 )
Increase (Decrease) In Cash and Cash Equivalents 3817
Cash and Cash Equivalents:
Beginning of Period 253250
End of Period $291$ 267

Click Here for 3rd Quarter 2011 Financial Supplements (in PDF)

SOURCE: Plum Creek Timber Company, Inc.

Plum Creek Timber Company, Inc.
Investors: John Hobbs, 1-800-858-5347
Media: Kathy Budinick, 1-888-467-3751

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