EX-99.1 3 dex991.htm PRESS RELEASE PRESS RELEASE

Exhibit 99.1

 

Plum Creek Timber Company, Inc.

999 Third Avenue

Suite 4300

Seattle, Washington 98104

206 467 3600

  LOGO
 
 
 
 

 

News Release

 

     For more information contact:

For immediate release

   Investors: John Hobbs 1-800-858-5347

January 22, 2004

   Media: Kathy Budinick 1-206-467-3620

 

Plum Creek Timber Company, Inc. Reports Results for Fourth Quarter and Full Year 2003

 

SEATTLE, Wash. – Plum Creek Timber Company, Inc. (NYSE: PCL) today announced fourth quarter earnings of $56 million, or $0.30 per diluted share, on revenues of $315 million. These results include a $5 million asset impairment related to the expected sale of certain non-strategic timberlands. Earnings for the fourth quarter of 2002 were $54 million, or $0.29 per diluted share, on revenues of $281 million. Cash provided by operating activities in the fourth quarter totaled $70 million, an increase of $8 million, compared to $62 million for the same period of 2002.

 

Earnings for the full year 2003 were $192 million, or $1.04 per diluted share, on revenues of $1.2 billion. Full year 2003 results include the effect of $4 million of fire losses and $14 million of asset impairments related to the sale of non-strategic timberlands. The fire losses and $9 million of the asset impairments were reported in prior quarters. Earnings for 2002 were $233 million, or $1.26 per diluted share, on revenues of $1.1 billion. Cash provided by operating activities during 2003 totaled $369 million compared to $368 million reported for 2002. The Company ended 2003 with $260 million in cash and cash equivalents.

 

“We are pleased with our strong finish in 2003 with increased fourth quarter earnings, revenues and cash flow reflecting strengthening markets and the execution of our strategies,” said Rick Holley, president and chief executive officer. “Cash from operations was stable for the year despite challenging markets and the worst fire season in Company history. Throughout the year we worked to realize the full value of all our assets. Real estate sales captured value for assets significantly in excess of timberland values. Our forestry professionals did an excellent job of merchandising logs, capturing the full value of our harvest. This execution, coupled with our geographic and business diversity, enabled the Company to perform well.”

 

Review of Operations

 

Operating profit in the Northern Resources segment was $30 million during the fourth quarter, up $4 million (15 percent) compared to the prior year. Harvests in the segment


were 6 percent higher than fourth quarter 2002, primarily the result of additional harvest volume from Wisconsin timberlands acquired in December 2002. Sawlog prices were unchanged compared to the same period of 2002. Strong demand from pulpwood customers, such as paper mills and oriented strand board plants, led to a 10 percent improvement in pulpwood prices compared to those in the fourth quarter of 2002.

 

Operating profit in the Southern Resources segment was $62 million, up $11 million (22 percent) compared to $51 million for the fourth quarter of 2002. Higher sawlog harvest volumes and higher prices for both sawlogs and pulpwood drove the increase in operating profits when compared to the same period of 2002. Average sales realizations from softwood sawtimber were up modestly over the prior year, as lumber and plywood markets improved in the second half of 2003. Strong lumber and structural panel demand encouraged customers to begin to rebuild log inventories during the fourth quarter. The weakening U.S. dollar has improved domestic pulp and paper manufacturers’ competitive position in the world market. As a result, pulpwood prices improved nearly 18 percent when compared to the fourth quarter of 2002.

 

The Real Estate segment reported revenue of $16 million compared to $19 million in the fourth quarter of 2002. The difference reflects the transaction driven nature of this segment. Full year 2003 revenues increased 27 percent to $124 million when compared to 2002. Full year 2003 revenues include $13 million from the sale of non-strategic timberland. Fourth quarter sales were primarily comprised of higher and better use and recreation properties. Demand for conservation, development and recreational land remains strong.

 

The Company’s Manufacturing segment reported a $6 million profit for the fourth quarter, up $11 million from a $5 million loss reported for 2002’s fourth quarter. Prices for all of the Company’s major products showed improvement over the fourth quarter of 2002. Plywood prices were 32 percent higher as the result of strong housing demand and recovering industrial demand for structural panels. Lumber prices were up nearly 13 percent from depressed levels experienced during the fourth quarter of 2002. Medium density fiberboard (MDF) sales realizations were up 9 percent due to a higher valued product mix during fourth quarter 2003 when compared to the same period of 2002.

 

Outlook

 

Demand for sawlogs and pulpwood in the Northern Resources segment is strong and many mills in the Northeast and Northwest have low log inventories. In some regions customers are struggling to replenish log decks as the result of bad weather and limited availability of logging contractors. Customers are optimistic about the first half of 2004, and that, combined with the low log decks, is resulting in modest price increases in many regions of the Northern Resources segment. During the first quarter, the Northern Resources segment’s pulpwood and sawlog prices are expected to increase slightly from fourth quarter levels.

 

Southern timber markets are also showing continued signs of improvement. In general, sawlog customers expect strong demand and plan to operate their mills at higher levels in 2004. Many are working to build and maintain full log decks in anticipation of a good start to the 2004 building season. This has resulted in good demand for sawlogs in the region and some upward price movement. Pulpwood demand remains steady and pulpwood prices are expected to remain firm.


First quarter harvest volumes are expected to approximate first quarter 2003 levels in both the Northern and Southern Resources segments.

 

The Company expects Real Estate segment sales for the year, excluding the sale of large, non-strategic lands, to be between $140 and $160 million. First quarter Real Estate segment sales are expected to approach $60 million.

 

First quarter profits for the Manufacturing segment are expected to moderate somewhat as plywood prices recede from the very high levels experienced during the fourth quarter.

 

The Company expects first quarter earnings to be between $0.30 and $0.35 per share with full year earnings expected to be between $1.10 and $1.30 per share. These earnings expectations do not include any impact from the sale of large, non-strategic timberlands that the Company may execute in 2004.

 

Sale of Non-strategic Timberlands

 

The Company is pursuing the sale of approximately 700,000 acres of large tracts of non-strategic timberlands over the next two years. Currently the Company has signed sales agreements covering approximately 170,000 acres valued at approximately $77 million. These transactions are subject to customary closing contingencies and are expected to close during the first quarter

 

“The Company is focused on realizing the maximum value of all of its assets,” said Rick Holley. “Following the completion of a comprehensive asset analysis, we understand the value of all our lands and have begun to implement a plan to capture their full value. This effort will generate a significant amount of capital over the coming years.

 

“Disciplined capital allocation is job one at Plum Creek. Our reinvestment efforts will continue to focus on growing the per share value of the Company. We expect to reinvest a significant portion of land sale proceeds in quality timberlands that improve our current and future cash flow by improving our current and future harvests. Our high quality assets, strategic direction, focus and people position us to benefit further as business conditions improve.”

 

Earnings Conference Call and Supplemental Information

 

Plum Creek will hold a conference call today, January 22, at 5:00 p.m. EST (2:00 p.m. PST). A live webcast of the conference call may be accessed through Plum Creek’s Internet site at 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 of the call, referencing Plum Creek’s earnings. Those wishing to access the call from outside the United States and 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 4766952.

 

Supplemental financial information for Plum Creek operations, including statistical data, is available in the investors information section of Plum Creek’s website at www.plumcreek.com.

 

###

 

Plum Creek is one of the largest land and timber owners in the nation, with over eight million acres of timberlands in major timber producing regions of the United States and 10 wood products manufacturing facilities in the Northwest.

 

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)

 

     Year Ended

 
    

December 31,

2003


  

December 31,

2002


 
     (In Millions, Except
Per Share Amounts)
 

Revenues:

               

Timber

   $ 664    $ 649  

Real Estate

     124      98  

Manufacturing

     397      381  

Other

     11      9  
    

  


Total Revenues

     1,196      1,137  
    

  


Costs and Expenses:

               

Cost of Goods Sold:

               

Timber

     345      318  

Real Estate

     77      34  

Manufacturing

     390      370  

Other

     4      2  
    

  


Total Cost of Goods Sold

     816      724  

Selling, General and Administrative

     77      75  
    

  


Total Costs and Expenses

     893      799  
    

  


Operating Income

     303      338  

Interest Expense, net

     117      103  
    

  


Income before Income Taxes

     186      235  

Benefit (Provision) for Income Taxes

     6      (2 )
    

  


Net Income

   $ 192    $ 233  
    

  


Net Income per Share - Basic

   $ 1.05    $ 1.26  
    

  


Net Income per Share - Diluted

   $ 1.04    $ 1.26  
    

  


Weighted average number of Shares outstanding - Basic

     183.3      184.7  
    

  


Weighted average number of Shares outstanding - Diluted

     183.9      185.4  
    

  



PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 

     Quarter Ended

    

December 31,

2003


   

December 31,

2002


     (In Millions, Except Per
Share Amounts)

Revenues:

              

Timber

   $ 191     $ 168

Real Estate

     16       19

Manufacturing

     105       90

Other

     3       4
    


 

Total Revenues

     315       281
    


 

Costs and Expenses:

              

Cost of Goods Sold:

              

Timber

     97       86

Real Estate

     12       5

Manufacturing

     96       92

Other

     1       1
    


 

Total Cost of Goods Sold

     206       184

Selling, General and Administrative

     21       22
    


 

Total Costs and Expenses

     227       206
    


 

Operating Income

     88       75

Interest Expense, net

     31       26
    


 

Income before Income Taxes

     57       49

Benefit (Provision) for Income Taxes

     (1 )     5
    


 

Net Income

   $ 56     $ 54
    


 

Net Income per Share - Basic

   $ 0.31     $ 0.29
    


 

Net Income per Share - Diluted

   $ 0.30     $ 0.29
    


 

Weighted average number of Shares outstanding - Basic

     183.0       184.8
    


 

Weighted average number of Shares outstanding - Diluted

     183.7       185.3
    


 


PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

    

December 31,

2003


   

December 31,

2002


     (In Millions)

ASSETS

              

Current Assets:

              

Cash and Cash Equivalents

   $ 260     $ 246

Restricted Advance from Customer

     3       4

Accounts Receivable

     34       33

Inventories

     54       58

Investment in Grantor Trust

     13       10

Deferred Tax Asset

     11       11

Other Current Assets

     30       16
    


 

       405       378

Timber and Timberlands - Net

     3,674       3,599

Property, Plant and Equipment - Net

     303       307

Other Assets

     5       5
    


 

Total Assets

   $ 4,387     $ 4,289
    


 

LIABILITIES

              

Current Liabilities:

              

Current Portion of Long-Term Debt

   $ 33     $ 33

Accounts Payable

     27       25

Interest Payable

     28       21

Wages Payable

     23       23

Taxes Payable

     15       11

Deferred Revenue

     16       18

Liabilities Associated with Grantor Trust

     13       10

Other Current Liabilities

     13       12
    


 

       168       153

Long-Term Debt

     1,437       1,170

Lines of Credit

     594       669

Deferred Tax Liability

     37       44

Other Liabilities

     32       31
    


 

Total Liabilities

     2,268       2,067
    


 

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 - 300.0, issued (including Treasury Stock) - 185.1 at December 31, 2003 and 184.9 at December 31, 2002

     2       2

Additional Paid-In Capital

     2,151       2,197

Retained Earnings

     9       23

Treasury Stock, at cost, Common shares - 2.0 at December 31, 2003

     (43 )     —  
    


 

Total Stockholders’ Equity

     2,119       2,222
    


 

Total Liabilities and Stockholders’ Equity

   $ 4,387     $ 4,289
    


 


PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

    Year Ended

 
   

December 31,

2003


   

December 31,

2002


 
    (In Millions)  

Cash Flows From Operating Activities:

               

Net Income

  $ 192     $ 233  

Adjustments to Reconcile Net Income to

               

Net Cash Provided By Operating Activities:

               

Depreciation, Depletion and Amortization (Including $4 Loss Related to Forest Fires)

    107       105  

Basis of Real Estate Sold (Including $14 Impairment Losses)

    66       28  

Deferred Income Taxes

    (7 )     1  

Working Capital Changes

    2       (5 )

Other

    9       6  
   


 


Net Cash Provided By Operating Activities

    369       368  
   


 


Cash Flows From Investing Activities:

               

Property Additions (Excluding Timberland Acquisitions)

    (84 )     (91 )

Timberlands Acquired (Including Tax-Deferred Exchange Proceeds, Net)

    (162 )     (158 )
   


 


Net Cash Used In Investing Activities

    (246 )     (249 )
   


 


Cash Flows From Financing Activities:

               

Dividends

    (257 )     (275 )

Borrowings of Long-term Debt and Lines of Credit

    2,222       1,733  

Repayments of Long-term Debt and Lines of Credit

    (2,032 )     (1,542 )

Proceeds from Stock Option Exercises

    1       18  

Acquisition of Treasury Stock

    (43 )     —    
   


 


Net Cash Used In Financing Activities

    (109 )     (66 )
   


 


Increase In Cash and Cash Equivalents

    14       53  

Cash and Cash Equivalents:

               

Beginning of Period

    246       193  
   


 


End of Period

  $ 260     $ 246  
   


 



PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

 

     Quarter Ended

 
    

December 31,

2003


   

December 31,

2002


 
     (In Millions)  

Cash Flows From Operating Activities:

                

Net Income

   $ 56     $ 54  

Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:

                

Depreciation, Depletion and Amortization

     28       27  

Basis of Real Estate Sold (Including $5 Impairment Loss)

     9       4  

Deferred Income Taxes

     1       (5 )

Working Capital Changes

     (29 )     (16 )

Other

     5       (2 )
    


 


Net Cash Provided By Operating Activities

     70       62  
    


 


Cash Flows From Investing Activities:

                

Property Additions (Excluding Timberland Acquisitions)

     (24 )     (30 )

Timberlands Acquired (Including Tax-Deferred Exchange Proceeds, Net)

     (103 )     (133 )
    


 


Net Cash Used In Investing Activities

     (127 )     (163 )
    


 


Cash Flows From Financing Activities:

                

Dividends

     (64 )     (64 )

Borrowings of Long-term Debt and Lines of Credit

     558       582  

Repayments of Long-term Debt and Lines of Credit

     (458 )     (442 )

Proceeds from Stock Option Exercises

     —         1  
    


 


Net Cash Provided By Financing Activities

     36       77  
    


 


Decrease In Cash and Cash Equivalents

     (21 )     (24 )

Cash and Cash Equivalents:

                

Beginning of Period

     281       270  
    


 


End of Period

   $ 260     $ 246