SEATTLE, WA  -- Plum Creek Timber Co., Inc. today announced fourth quarter earnings of $61 million, or $0.38 per diluted share, on revenues of $315 million. Earnings for the fourth quarter of 2010 were $59 million, or $0.37 per diluted share, on revenues of $356 million. Earnings for the fourth quarter of 2010 include a $13 million, or $0.08 per diluted share, loss on the early extinguishment of debt.

Earnings for the full year of 2011 were $193 million, or $1.19 per diluted share, on revenues of $1.17 billion. Earnings for the full year of 2010 were $213 million, or $1.31 per diluted share, on revenues of $1.19 billion. Results for the full year of 2010 include an $11 million, or $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 2010 was $202 million, or $1.24 per diluted share. Results for 2010 include the loss from the early retirement of debt mentioned above.

“Plum Creek posted another good year in 2011,” said Rick Holley, president and chief executive officer. “Once again, our unmatched geographic diversity helped us manage the business for long-term value despite some challenging market conditions. Income from continuing operations declined from our 2010 level as improved profitability in our Northern Resources segment offset some of the impact from lower log prices in the South. We produced $374 million of cash flow from our operations, more than enough to pay an attractive dividend, reinvest in our business, and maintain a strong balance sheet.

“During the past year we acquired 60,000 acres of productive timberland and repurchased $25 million of common stock at very attractive prices. Both are moves that enhance the long-term value of Plum Creek. As we enter 2012, we have excellent financial flexibility and more than half-a-billion dollars of available liquidity.

“While we are not anticipating a significant rebound in the economy or housing in 2012, we do expect our cash flow to grow in 2012. We expect cash flow from our timber resource segments to improve in 2012 while we expect cash flows from our other business segments to be generally stable. We are well positioned, and looking forward to continued growth in 2012 and beyond.”

The company generated $275 million in operating income for 2011, a decline of $22 million from 2010’s $297 million operating income. The change was driven by a $22 million decline in operating profit from the company’s timber resource segments. Stronger export demand for west coast logs served to improve profitability in the Northern Resources segment by $11 million. This was offset by a decline in Southern log prices when unusually dry weather in 2011 caused a temporary expansion of log supplies. Operating profit in the Southern Resources segment declined $33 million.

The company’s harvest level of 15.8 million tons was approximately 2 percent higher than the 2010 harvest of 15.4 million tons. In the North, the total harvest was unchanged. Lower pulpwood harvests in the Northeast were offset by higher sawlog harvests in Oregon where the company responded to growing export demand. As a result, the Northern Resources segment sawlog harvest was 200,000 tons higher than 2010 and sawlog prices averaged approximately 10 percent higher. In the South, the company increased its pulpwood harvest 375,000 tons, nearly 6 percent, to capture relatively attractive pulpwood prices while modestly reducing its sawlog harvest.

In the Real Estate segment, the company reported revenue of $301 million in 2011 and $336 million in 2010. Income was $195 million during 2011 compared with $180 million during 2010. The segment’s 2011 results were generated by the sale of approximately 185,000 acres of lands at values generally consistent with those of 2010.

Operating income from the company’s Manufacturing segment was $15 million, a decline of $9 million from 2010. The segment’s 2010 operating profit benefitted $2 million from the sale of idled mill equipment. Product prices and sales volumes in each of the segment’s product lines were largely similar to 2010 levels. Higher raw material costs, particularly resin, reduced segment profitability.

Review of Quarterly Operations

The Northern Resources segment reported operating profit of $7 million for the fourth quarter, compared to a $1 million profit reported in the fourth quarter of 2010. Sawlog prices have improved significantly in the Pacific Northwest over the past year as export demand increased, particularly from China. As a result, the average Northern Resource sawlog price increased $5 per ton, or approximately 7 percent, from the fourth quarter of 2010. The company increased its sawlog harvest 195,000 tons, or approximately 40 percent, compared to the same period of 2010 in response to the more attractive pricing. Average pulpwood prices were $2 per ton, or 6 percent, higher when compared to the same period of 2010 as demand for pulpwood in the Lake States and Northeast regions remained solid. The fourth quarter’s pulpwood harvest of approximately 460,000 tons was slightly higher than the same period of 2010.

The Southern Resources segment reported fourth quarter operating profit of $19 million, down $9 million from the fourth quarter of 2010. Timber prices in the US South have declined approximately 10 percent over the past year as dry weather patterns across the South in 2011 expanded the supply of available timber. Prices for sawlogs declined approximately $2 per ton and pulpwood prices have declined about $1 per ton from the fourth quarter of 2010. Rather than harvest at these prices, the company reduced its sawlog harvest by approximately 10 percent. Pulpwood prices remained attractive by historic standards and the company increased its pulpwood harvest approximately 100,000 tons, or 6 percent, compared to the same period of 2010.

The Real Estate segment reported revenue of $93 million and operating profit of $61 million in the fourth quarter of 2011. The segment reported $155 million of revenue and $73 million of operating profit for the fourth quarter of 2010. The 2010 results include $89 million of revenue and $37 million of operating income from the final phase of the Montana conservation sale.

During the fourth quarter, the company sold approximately 40,000 acres of land, approximately 18,000 acres of which consisted of a large, non-strategic sale of timberlands in western Oregon for $60 million. The balance of the properties sold consisted of 8,700 acres of rural recreation lands that captured approximately $2,100 per acre. Approximately 7,300 acres of conservation lands sold for nearly $1,000 per acre, and 5,400 acres of lower productivity, non-strategic properties captured $1,345 per acre.

The Manufacturing segment reported operating profit of $3 million for the fourth quarter of 2011, unchanged from the same period of 2010. Prices for lumber, plywood, and MDF were similar to fourth quarter 2010 levels. Lumber sales volumes were similar to those of the fourth quarter of 2010, while plywood and MDF sales volumes improved 15 percent and 17 percent, respectively.

Recent Acquisition of Timber

Last week the company completed the purchase of approximately 4.7 million tons of mature southern yellow pine timber in a negotiated timber deed transaction valued at $103 million. The timber is located in the Gulf South region where the company has a market-leading presence and a broad and established customer base. This purchase is exclusively composed of standing mature and near-mature southern yellow pine plantation timber. With biologic growth, the timber is expected to produce between 700,000 tons and 800,000 tons of annual harvest over the next eight years with sawlogs accounting for approximately 80 percent of the harvest volume. The acquisition is expected to be cash flow accretive and earnings neutral in the first year and become increasingly earnings and cash flow accretive over the eight-year life of the investment.

Outlook

The company plans to harvest between 16.5 and 17.0 million tons of timber this year, up from 2011’s 15.8 million ton harvest. The harvest expectations for 2012 incorporate the planned harvest volume from the recently acquired timber deed mentioned above.

Real Estate segment sales for the year are expected to be between $275 million and $325 million with a higher than typical land basis expense of approximately 40 percent of sales. The higher land basis reduces our reported net income approximately $0.25 per share when compared to 2011, but has no effect on cash flow. First quarter sales are expected to be as much as $120 million.

The Manufacturing segment is expected to generate income similar to 2011’s $15 million profit

Third-party interest expense in 2012 is expected to be similar to 2011’s $81 million level.

Reflecting all of these factors, the company expects 2012 income to be between $1.00 and $1.25 per share. The company expects to report first quarter income between $0.20 and $0.25 per share.

“The decline in the midpoint of our earnings outlook for 2012 is a function of the higher land basis expense we expect this year in our Real Estate segment. Overall, we expect the fundamental performance of our core timber resource business to improve and expect the balance of our businesses to be stable contributors in the coming year. As a result, we expect cash flow in 2012 to increase approximately $50 million from 2011’s results.

“Disciplined capital allocation is the most effective tool we use to preserve and grow shareholder value. In 2012, we will evaluate all our opportunities for value creation including debt reduction, share repurchase, and acquisitions,” concluded Holley.

Plum Creek is the largest and most geographically diverse private landowner in the nation with approximately 6.6 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 plumcreek.com.

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

In Millions, Except Per Share Amounts)

 

Year Ended December 31,

 

2011

 

2010

REVENUES:

 

 

 

 

Timber

 

$

572

 

 

$

569

 

Real Estate

 

301

 

 

336

 

Manufacturing

 

273

 

 

265

 

Other

 

21

 

 

20

 

Total Revenues

 

1,167

 

 

1,190

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

Cost of Goods Sold:

 

 

 

 

Timber

 

445

 

 

421

 

Real Estate

 

92

 

 

148

 

Manufacturing

 

250

 

 

236

 

Other

 

2

 

 

2

 

Total Cost of Goods Sold

 

789

 

 

807

 

Selling, General and Administrative

 

106

 

 

95

 

Total Costs and Expenses

 

895

 

 

902

 

 

 

 

 

 

Other Operating Income (Expense), net

 

3

 

 

9

 

 

 

 

 

 

Operating Income

 

275

 

 

297

 

 

 

 

 

 

Equity Earnings from Timberland Venture

 

56

 

 

57

 

 

 

 

 

 

Interest Expense, net:

 

 

 

 

Interest Expense (Debt Obligations to Unrelated Parties)

 

81

 

 

80

 

Interest Expense (Note Payable to Timberland Venture)

 

58

 

 

58

 

Total Interest Expense, net

 

139

 

 

138

 

 

 

 

 

 

Loss on Extinguishment of Debt

 

 

 

(13

)

 

 

 

 

 

Income before Income Taxes

 

192

 

 

203

 

 

 

 

 

 

Provision (Benefit) for Income Taxes

 

(1

)

 

1

 

 

 

 

 

 

Income from Continuing Operations

 

193

 

 

202

 

 

 

 

 

 

Gain on Sale of Properties, net of tax

 

 

 

11

 

 

 

 

 

 

Net Income

 

$

193

 

 

$

213

 

 

 

 

 

 

PER SHARE AMOUNTS:

 

 

 

 

 

 

 

 

 

Income from Continuing Operations – Basic

 

$

1.19

 

 

$

1.25

 

Income from Continuing Operations – Diluted

 

$

1.19

 

 

$

1.24

 

 

 

 

 

 

Net Income per Share – Basic

 

$

1.19

 

 

$

1.31

 

Net Income per Share – Diluted

 

$

1.19

 

 

$

1.31

 

 

 

 

 

 

Weighted-Average Number of Shares Outstanding

 

 

 

 

– Basic

 

161.7

 

 

162.1

 

– Diluted

 

162.0

 

 

162.3

 

 

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

(In Millions, Except Per Share Amounts)

 

Quarter Ended December 31,

 

2011

 

2010

REVENUES:

 

 

 

 

Timber

 

$

151

 

 

$

140

 

Real Estate

 

93

 

 

155

 

Manufacturing

 

65

 

 

57

 

Other

 

6

 

 

4

 

Total Revenues

 

315

 

 

356

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

Cost of Goods Sold:

 

 

 

 

Timber

 

118

 

 

104

 

Real Estate

 

24

 

 

79

 

Manufacturing

 

60

 

 

52

 

Other

 

1

 

 

1

 

Total Cost of Goods Sold

 

203

 

 

236

 

Selling, General and Administrative

 

29

 

 

25

 

Total Costs and Expenses

 

232

 

 

261

 

 

 

 

 

 

Other Operating Income (Expense), net

 

 

 

 

 

 

 

 

 

Operating Income

 

83

 

 

95

 

 

 

 

 

 

Equity Earnings from Timberland Venture

 

12

 

 

13

 

 

 

 

 

 

Interest Expense, net:

 

 

 

 

Interest Expense (Debt Obligations to Unrelated Parties)

 

20

 

 

21

 

Interest Expense (Note Payable to Timberland Venture)

 

15

 

 

15

 

Total Interest Expense, net

 

35

 

 

36

 

 

 

 

 

 

Loss on Extinguishment of Debt

 

 

 

(13

)

 

 

 

 

 

Income before Income Taxes

 

60

 

 

59

 

 

 

 

 

 

Provision (Benefit) for Income Taxes

 

(1

)

 

 

 

 

 

 

 

Net Income

 

$

61

 

 

$

59

 

 

 

 

 

 

PER SHARE AMOUNTS:

 

 

 

 

 

 

 

 

 

Net Income per Share – Basic

 

$

0.38

 

 

$

0.37

 

Net Income per Share – Diluted

 

$

0.38

 

 

$

0.37

 

 

 

 

 

 

Weighted-Average Number of Shares Outstanding

 

 

 

 

– Basic

 

161.4

 

 

161.6

 

– Diluted

 

161.6

 

 

161.9

 

 

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

(In Millions, Except Per Share Amounts)

 

December 31,
2011

 

December 31,
2010

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

Cash and Cash Equivalents

 

$

254

 

 

$

252

 

Accounts Receivable

 

28

 

 

21

 

Inventories

 

48

 

 

49

 

Deferred Tax Asset

 

6

 

 

7

 

Assets Held for Sale

 

103

 

 

57

 

Other Current Assets

 

15

 

 

24

 

 

 

454

 

 

410

 

 

 

 

 

 

Timber and Timberlands, net

 

3,377

 

 

3,405

 

Property, Plant and Equipment, net

 

138

 

 

146

 

Equity Investment in Timberland Venture

 

201

 

 

201

 

Deferred Tax Asset

 

17

 

 

10

 

Investment in Grantor Trusts (at Fair Value)

 

36

 

 

35

 

Other Assets

 

36

 

 

44

 

Total Assets

 

$

4,259

 

 

$

4,251

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current Liabilities:

 

 

 

 

Current Portion of Long-Term Debt

 

$

352

 

 

$

94

 

Line of Credit

 

348

 

 

166

 

Accounts Payable

 

25

 

 

25

 

Interest Payable

 

26

 

 

23

 

Wages Payable

 

20

 

 

23

 

Taxes Payable

 

9

 

 

12

 

Deferred Revenue

 

27

 

 

25

 

Other Current Liabilities

 

8

 

 

7

 

 

 

815

 

 

375

 

 

 

 

 

 

Long-Term Debt

 

1,290

 

 

1,643

 

Note Payable to Timberland Venture

 

783

 

 

783

 

Other Liabilities

 

108

 

 

76

 

Total Liabilities

 

2,996

 

 

2,877

 

 

 

 

 

 

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) – 161.3 at December 31, 2011 and 161.6 at December 31, 2010

 

2

 

 

2

 

Additional Paid-In Capital

 

2,261

 

 

2,243

 

Retained Earnings (Accumulated Deficit)

 

(28

)

 

51

 

Treasury Stock, at Cost, Common Shares – 26.9 at December 31, 2011 and 26.2 at December 31, 2010

 

(937

)

 

(911

)

Accumulated Other Comprehensive Income (Loss)

 

(35

)

 

(11

)

Total Stockholders’ Equity

 

1,263

 

 

1,374

 

Total Liabilities and Stockholders’ Equity

 

$

4,259

 

 

$

4,251

 

 

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(In Millions)

 

2011

 

2010

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net Income

 

$

193

 

 

$

213

 

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

 

 

 

 

Depreciation, Depletion and Amortization

 

96

 

 

96

 

Basis of Real Estate Sold

 

77

 

 

132

 

Equity Earnings from Timberland Venture

 

(56

)

 

(57

)

Distributions from Timberland Venture

 

56

 

 

57

 

Deferred Income Taxes

 

 

 

1

 

Gain on Sale of Properties and Other Assets

 

 

 

(13

)

Loss on Extinguishment of Debt

 

 

 

13

 

Deferred Revenue from Long-Term Gas Leases (Net of Amortization)

 

11

 

 

3

 

Timber Deed Acquired

 

(5

)

 

 

Pension Plan Contributions

 

(3

)

 

(4

)

Working Capital Changes Impacting Cash Flow:

 

 

 

 

 

 

Income Tax Receivable

 

(1

)

 

13

 

Other Working Capital Changes

 

(7

)

 

(17

)

Other

 

13

 

 

12

 

Net Cash Provided By Operating Activities

 

374

 

 

449

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Capital Expenditures (Excluding Timberland Acquisitions)

 

(70

)

 

(71

)

Timberlands and Minerals Acquired

 

(101

)

 

 

Proceeds from Sale of Properties and Other Assets

 

 

 

13

 

Purchases of Marketable Securities

 

 

 

(2

)

Other

 

 

 

2

 

Net Cash Used In Investing Activities

 

(171

)

 

(58

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Dividends

 

(272

)

 

(272

)

Borrowings on Line of Credit

 

1,921

 

 

1,783

 

Repayments on Line of Credit

 

(1,739

)

 

(1,937

)

Proceeds from Issuance of Long-Term Debt

 

 

 

575

 

Debt Issuance Costs

 

 

 

(7

)

Principal Payments and Retirement of Long-Term Debt

 

(95

)

 

(531

)

Proceeds from Stock Option Exercises

 

10

 

 

2

 

Acquisition of Treasury Stock

 

(26

)

 

(51

)

Net Cash Used In Financing Activities

 

(201

)

 

(438

)

 

 

 

 

 

Increase (Decrease) In Cash and Cash Equivalents

 

2

 

 

(47

)

Cash and Cash Equivalents:

 

 

 

 

Beginning of Period

 

252

 

 

299

 

 

 

 

 

 

End of Period

 

$

254

 

 

$

252

 

 

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31,

(In Millions)

 

2011

 

2010

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net Income

 

$

61

 

 

$

59

 

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

 

 

 

 

Depreciation, Depletion and Amortization

 

26

 

 

24

 

Basis of Real Estate Sold

 

20

 

 

75

 

Equity Earnings from Timberland Venture

 

(12

)

 

(13

)

Distributions from Timberland Venture

 

 

 

1

 

Deferred Income Taxes

 

(2

)

 

 

Loss on Extinguishment of Debt

 

 

 

13

 

Deferred Revenue from Long-Term Gas Leases (Net of Amortization)

 

(3

)

 

(2

)

Timber Deed Acquired

 

(5

)

 

 

Working Capital Changes

 

(8

)

 

(16

)

Other

 

3

 

 

(4

)

Net Cash Provided By Operating Activities

 

80

 

 

137

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Capital Expenditures (Excluding Timberland Acquisitions)

 

(27

)

 

(20

)

Timberlands and Minerals Acquired

 

(13

)

 

 

Purchases of Marketable Securities

 

 

 

(2

)

Other

 

 

 

1

 

Net Cash Used In Investing Activities

 

(40

)

 

(21

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Dividends

 

(67

)

 

(67

)

Borrowings on Line of Credit

 

824

 

 

278

 

Repayments on Line of Credit

 

(778

)

 

(432

)

Proceeds from Issuance of Long-Term Debt

 

 

 

575

 

Debt Issuance Costs

 

 

 

(7

)

Principal Payments and Retirement of Long-Term Debt

 

(46

)

 

(478

)

Proceeds from Stock Option Exercises

 

1

 

 

 

Acquisition of Treasury Stock

 

(10

)

 

 

Other

 

(1

)

 

 

Net Cash Used In Financing Activities

 

(77

)

 

(131

)

 

 

 

 

 

Increase (Decrease) In Cash and Cash Equivalents

 

(37

)

 

(15

)

Cash and Cash Equivalents:

 

 

 

 

Beginning of Period

 

291

 

 

267

 

 

 

 

 

 

End of Period

 

$

254

 

 

$

252

 

 

 

Source: Plum Creek Timber Company, Inc.

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