SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report Pursuant to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date of
Report (Date of Earliest Event Reported) February 12,
2010
Pope
Resources, A Delaware Limited Partnership
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
91-1313292
(I.R.S.
Employer
Identification
No.)
|
19245 Tenth Avenue NE,
Poulsbo, Washington 98370
(Address
of principal executive
offices) (ZIP
Code)
Registrant's
telephone number, including area code (360)
697-6626
NOT
APPLICABLE
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (SEE General Instruction A.2. below):
o Written communications
pursuant to Rule 425 under the Securities Act
(17
CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act
(17
CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
INFORMATION TO BE INCLUDED
IN THE REPORT
|
Item 2.02:
|
RESULTS
OF OPERATIONS AND FINANCIAL
CONDITION
|
On
February 12, 2010 the registrant issued a press release relating to its earnings
for the quarter ended December 31, 2009. A copy of that press release is
furnished herewith as Exhibit 99.1.
Item
9.01. FINANCIAL
STATEMENTS AND EXHIBITS
|
Exhibit No.
|
Description
|
|
|
99.1
|
Press
release of the registrant dated February 12,
2010
|
SIGNATURES
Pursuant
to the requirements of Section 13 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
POPE
RESOURCES, A DELAWARE LIMITED
PARTNERSHIP |
||||
|
DATE:
February 12, 2010
|
BY:
|
/s/
Thomas M. Ringo
|
||
| Thomas M. Ringo | ||||
|
Vice
President and Chief Financial Officer, Pope
Resources, A Delaware Limited Partnership, and Pope MGP, Inc., General Partner |
||||
Exhibit
99.1
Press
Release of the Registrant dated February 12, 2010
POPE
RESOURCES REPORTS FOURTH QUARTER 2009 EARNINGS
February
12, 2010
Contact:
Tom Ringo
VP
& CFO
360.697.6626
Fax
360.697.1156
NEWS
RELEASE
|
FOR IMMEDIATE RELEASE
|
NASDAQ:POPE
|
February
12, 2010
POPE RESOURCES REPORTS
FOURTH QUARTER LOSS OF $376,000
Pope
Resources (NASDAQ:POPE) reported a net loss attributable to unitholders of
$376,000, or $0.08 per diluted ownership unit, on revenue of $5.2 million for
the fourth quarter ended December 31, 2009. This compares to a net loss
attributable to unitholders of $1.4 million, or $0.32 per diluted ownership
unit, on revenue of $3.2 million for the comparable period in 2008.
Net loss
attributable to unitholders for the year ended December 31, 2009 totaled
$272,000, or $0.07 per diluted ownership unit, on revenue of $20.5 million.
Results for the full year ended December 31, 2009 include a $1.1 million loss on
early extinguishment of debt. Net income for the corresponding period
in 2008 totaled $1.2 million, or $0.23 per diluted ownership unit, on revenue of
$28.2 million.
Cash
provided by operations for the quarter ended December 31, 2009 was $853,000,
compared to cash used by operations of $1.8 million for the fourth quarter of
2008. For the year ended December 31, 2009, cash provided by operations was
$662,000, compared to $4.0 million in 2008.
“While we
concluded both the fourth quarter and year with small losses, we are seeing some
modest improvements in log pricing relative to earlier in 2009, with a sense
that a market bottom may have been reached,” said David L. Nunes, President and
CEO. “But we expect the home building sector’s recovery to be slow based on
continuing challenges with high unemployment, a large and growing stock of
foreclosed properties, and tight credit. We are entering 2010 with tempered log
price expectations and, as with the past two years, plan to harvest less than
our long-term sustainable level. We are targeting a harvest of 32 million board
feet (MMBF) for 2010, essentially the same as 2009 and nearly 50% below our
estimated long-term sustainable harvest level of 60 MMBF.”
Page 1 of
6
POPE
RESOURCES REPORTS FOURTH QUARTER 2009 EARNINGS
February
12, 2010
Fee
Timber operating income in the fourth quarter improved to the highest level
since the second quarter of 2008. Fourth quarter operating income increased from
$136,000 in 2008 to $1.7 million in 2009, driven by harvest volume that
increased from 2 MMBF in 2008 to 10 MMBF in 2009, offset in part by a 16%
decline in average realized log price, which fell from $494 per thousand board
feet (MBF) in 2008 to $415 per MBF in 2009. We also responded to a stronger
relative pulpwood market by shifting into some lower quality harvest units that
had a higher proportion of pulpwood volume. While this pushed down
our average realized log price, it allowed higher valued log inventory to
continue to add volume and value through biological growth.
Fee
Timber operating income for 2009 was $3.7 million compared to $6.3 million for
2008, a drop of 41%. This decline was driven by the combined effect of a 14%
drop in harvest volumes, from 38 MMBF in 2008 to 32 MMBF in 2009, and a 19%
decrease in average realized log price, which dropped from $506 per MBF in 2008
to $410 per MBF in 2009.
Our
Timberland Management & Consulting segment posted an operating loss of
$172,000 for the fourth quarter of 2009, higher than the operating loss of
$99,000 for the corresponding quarter in 2008 due to the termination of the
Cascade Timberlands contract in mid-2009. For the year ended December 31, 2009,
this segment’s operating loss of $375,000 represented an improvement on 2008’s
operating loss of $543,000 due in large part to a reduction in expense
associated with forming our second timberland investment fund, offset partially
by the loss of the Cascade contract.
The
operating loss of $398,000 posted by our Real Estate segment for the fourth
quarter of 2009 was slightly higher than the operating loss of $344,000 for
2008’s fourth quarter. For the year ended December 31, 2009, this segment’s
operating income of $1.7 million represented a significant reversal of 2008’s
operating loss of $1.1 million due in large part to a $3.3 million conservation
easement sale in the third quarter of 2009.
General
& Administrative expenses for 2009 declined 6% to $3.7 million, compared to
$4.0 million in the prior year. This improvement was driven primarily by
cost-cutting measures put in place at the end of the first quarter due to our
lower harvest level and the uncertainty with respect to the length of the
recession, offset partially by legal costs incurred in pursuing our SLARS
arbitration case.
A
significant contributing factor to our overall loss for 2009 was the decision to
refinance one of our two timber mortgages, which resulted in the aforementioned
$1.1 million loss on early extinguishment of debt. In an effort to both reduce
the future refinancing risk on our two timber mortgages, both due in 2011, and
reduce our weighted average interest expense, we decided to refinance the
mortgage with the higher interest rate of 9.65%. Our new mortgage
reduced our interest rate to 6.4%, extended the term out 10 years, and folded in
the debt extinguishment costs as incremental borrowing.
The
incremental interest expense from our refinancing largely overshadowed the
positive impact of the cost cutting initiative we launched at the end of the
first quarter. In addition to the general and administrative savings
described above, this effort lowered our other operating expenses by 25%, or
$2.4 million. While not immediately apparent in a year in which we are recording
overall losses, we are encouraged by this initiative as it is expected to
improve our overall cost competitiveness in the future.
The
financial schedules attached to this earnings release provide detail on
individual segment results and operating statistics.
Page 2 of
6
POPE
RESOURCES REPORTS FOURTH QUARTER 2009 EARNINGS
February
12, 2010
About
Pope Resources
Pope
Resources, a publicly traded limited partnership, and its subsidiaries Olympic
Resource Management and Olympic Property Group, own or manage 152,000 acres of
timberland and development property in Washington and Oregon. We also
manage, co-invest in, and consolidate two timberland investment funds that we
manage for a fee. In addition, we offer our forestry consulting and timberland
investment management services to third-party owners and managers of timberland
in Washington, Oregon, and California. The company and its predecessor companies
have owned and managed timberlands and development properties for more than 150
years. Additional information on the company can be found at www.poperesources.com. The
contents of our website are not incorporated into this release or into our
filings with the Securities and Exchange Commission.
This
press release contains a number of projections and statements about our expected
financial condition, operating results, business plans and objectives. These
statements reflect management's estimates based on current goals and its
expectations about future developments. Because these statements describe our
goals, objectives, and anticipated performance, they are inherently uncertain,
and some or all of these statements may not come to pass. Accordingly, they
should not be interpreted as promises of future management actions or financial
performance. Our future actions and actual performance will vary from current
expectations and under various circumstances the results of these variations may
be material and adverse. Some of the factors that may cause actual operating
results and financial condition to fall short of expectations include conditions
in the housing construction and wood-products markets that affect demand for our
products; factors that affect our ability to anticipate and respond adequately
to fluctuations in the market prices for our products; environmental and land
use regulations that limit our ability to harvest timber and develop property,
including changes in those regulations; conditions affecting credit markets as
they affect the availability of capital and costs of borrowing; labor, equipment
and transportation costs that affect our net income; the impacts of natural
disasters on our timberlands and on surrounding areas; and our ability to
discover and to accurately estimate liabilities associated with our properties.
Other factors are set forth in that part of our Annual Report on Form 10-K
entitled "Risk Factors." Other issues that may have an adverse and material
impact on our business, operating results, and financial condition include those
risks and uncertainties discussed in our other filings with the Securities and
Exchange Commission. Forward-looking statements in this release are made only as
of the date shown above, and we cannot undertake to update these
statements.
Page 3 of
6
Pope
Resources, A Delaware Limited Partnership
Unaudited
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(all
amounts in $000's, except per unit amounts)
|
Three months ended December 31,
|
Twelve months ended December 31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenues
|
$ | 5,218 | $ | 3,150 | $ | 20,478 | $ | 28,178 | ||||||||
|
Costs
and expenses:
|
||||||||||||||||
|
Cost
of sales
|
(2,346 | ) | (936 | ) | (8,372 | ) | (14,071 | ) | ||||||||
|
Operating
expenses
|
(2,946 | ) | (3,556 | ) | (10,827 | ) | (13,418 | ) | ||||||||
|
Operating
income (loss)
|
(74 | ) | (1,342 | ) | 1,279 | 689 | ||||||||||
|
Interest
income
|
52 | 115 | 219 | 965 | ||||||||||||
|
Interest
expense
|
(552 | ) | (616 | ) | (2,317 | ) | (2,469 | ) | ||||||||
|
Capitalized
interest
|
238 | 339 | 1,091 | 1,279 | ||||||||||||
|
SLARS
impairment and loss on dispositions
|
(246 | ) | (88 | ) | (318 | ) | (381 | ) | ||||||||
|
Income
(loss) before debt extinguishment costs
|
(582 | ) | (1,592 | ) | (46 | ) | 83 | |||||||||
|
Debt
extinguishment costs
|
- | - | (1,137 | ) | - | |||||||||||
|
Income
(loss) before income taxes
|
(582 | ) | (1,592 | ) | (1,183 | ) | 83 | |||||||||
|
Income
tax benefit (expense)
|
(33 | ) | 67 | (39 | ) | 61 | ||||||||||
|
Net
income (loss)
|
(615 | ) | (1,525 | ) | (1,222 | ) | 144 | |||||||||
|
Net
loss attributable to noncontrolling interests
|
239 | 86 | 950 | 1,018 | ||||||||||||
|
Net
income (loss) attributable to Pope Resources' unitholders
|
$ | (376 | ) | $ | (1,439 | ) | $ | (272 | ) | $ | 1,162 | |||||
|
Average
units outstanding - Basic
|
4,520 | 4,601 | 4,539 | 4,597 | ||||||||||||
|
Average
units outstanding - Diluted
|
4,520 | 4,601 | 4,539 | 4,660 | ||||||||||||
|
Basic
net income (loss) per unit
|
$ | (0.08 | ) | $ | (0.32 | )* | $ | (0.07 | ) | $ | 0.23 | * | ||||
|
Diluted
net income (loss) per unit
|
$ | (0.08 | ) | $ | (0.32 | )* | $ | (0.07 | ) | $ | 0.23 | * | ||||
*Earnings
(loss) per unit differ from amounts previously reported due to retrospective
application of new accounting guidance for determining whether instruments
granted
in share-based payment transactions are participating securities.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(all
amounts in $000's)
|
||||||||
|
31-Dec-09
|
31-Dec-08
|
|||||||
|
Assets:
|
||||||||
|
Pope
Resources cash and cash equivalents
|
$ | 6,035 | $ | 15,931 | ||||
|
ORM
Timber Funds cash and cash equivalents
|
1,145 | 2,047 | ||||||
|
Cash
and cash equivalents
|
7,180 | 17,978 | ||||||
|
Auction
rate securities, current
|
690 | - | ||||||
|
Other
current assets
|
1,392 | 1,868 | ||||||
|
Total
current assets
|
9,262 | 19,846 | ||||||
|
Roads
and timber, net
|
120,787 | 92,753 | ||||||
|
Properties
and equipment, net
|
54,581 | 47,946 | ||||||
|
Auction
rate securities, non-current
|
796 | 3,619 | ||||||
|
Other
assets
|
1,630 | 1,247 | ||||||
|
Total
|
$ | 187,056 | $ | 165,411 | ||||
|
Liabilities
and equity:
|
||||||||
|
Current
liabilities
|
$ | 3,066 | $ | 3,581 | ||||
|
Long-term
debt, excluding current portion
|
28,659 | 28,169 | ||||||
|
Other
long-term liabilities
|
1,274 | 1,490 | ||||||
|
Total
liabilities
|
32,999 | 33,240 | ||||||
|
Partners'
capital
|
83,126 | 87,817 | ||||||
|
Noncontrolling
interests
|
70,931 | 44,354 | ||||||
|
Total
|
$ | 187,056 | $ | 165,411 | ||||
Page 4 of
6
|
RECONCILIATION
BETWEEN NET INCOME (LOSS) AND CASH FLOWS FROM OPERATIONS
|
||||||||||||||||
|
(all
amounts in $000's)
|
||||||||||||||||
|
Three
months ended December 31,
|
Twelve
months ended December 31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Net
income (loss)
|
$ | (615 | ) | $ | (1,525 | ) | $ | (1,222 | ) | $ | 144 | |||||
|
Added
back:
|
||||||||||||||||
|
Depletion
|
552 | 26 | 2,001 | 3,437 | ||||||||||||
|
Timber
depletion on HBU sale
|
- | 352 | - | 478 | ||||||||||||
|
SLARS
activity
|
246 | 88 | 318 | 381 | ||||||||||||
|
Depreciation
and amortization
|
195 | 195 | 810 | 774 | ||||||||||||
|
Unit
compensation
|
154 | 162 | 621 | 584 | ||||||||||||
|
Deferred
taxes
|
(82 | ) | (126 | ) | (222 | ) | (143 | ) | ||||||||
|
Excess
unit compensation tax benefit
|
(17 | ) | (167 | ) | (17 | ) | (167 | ) | ||||||||
|
Development
expenditures*
|
(414 | ) | (1,226 | ) | (1,639 | ) | (3,451 | ) | ||||||||
|
Cost
of land sold
|
8 | 54 | 127 | 2,614 | ||||||||||||
|
Change
in operating accounts
|
826 | 401 | (115 | ) | (699 | ) | ||||||||||
|
Cash
provided by (used in) operations
|
$ | 853 | $ | (1,766 | ) | $ | 662 | $ | 3,952 | |||||||
* 2008
amounts have been revised due to a change in the classification of real estate
development expenditures from investing to operating activities
|
SEGMENT
INFORMATION
|
||||||||||||||||
|
(all
amounts in $000's)
|
||||||||||||||||
|
Three
months ended December 31,
|
Twelve
months ended December 31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenues:
|
||||||||||||||||
|
Pope
Resources Fee Timber
|
$ | 4,683 | $ | 1,616 | $ | 14,816 | $ | 18,706 | ||||||||
|
ORM
Timber Funds
|
27 | 46 | 31 | 4,845 | ||||||||||||
|
Total
Fee Timber
|
4,710 | 1,662 | 14,847 | 23,551 | ||||||||||||
|
Timberland
Management & Consulting (TM&C)
|
51 | 211 | 601 | 944 | ||||||||||||
|
Real
Estate
|
457 | 1,277 | 5,030 | 3,683 | ||||||||||||
|
Total
|
5,218 | 3,150 | 20,478 | 28,178 | ||||||||||||
|
Operating
income (loss):
|
||||||||||||||||
|
Fee
Timber
|
1,694 | 136 | 3,724 | 6,294 | ||||||||||||
|
TM&C
|
(172 | ) | (99 | ) | (375 | ) | (543 | ) | ||||||||
|
Real
Estate
|
(398 | ) | (344 | ) | 1,663 | (1,111 | ) | |||||||||
|
General
& administrative
|
(1,198 | ) | (1,035 | ) | (3,733 | ) | (3,951 | ) | ||||||||
|
Total
|
$ | (74 | ) | $ | (1,342 | ) | $ | 1,279 | $ | 689 | ||||||
|
SELECTED
STATISTICS
|
||||||||||||||||
|
Three
months ended
|
Twelve
months ended
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Log
sale volumes (thousand board feet):
|
||||||||||||||||
|
Sawlogs
|
||||||||||||||||
|
Douglas-fir
|
7,373 | 1,508 | 22,383 | 24,913 | ||||||||||||
|
Whitewood
|
526 | 86 | 1,080 | 3,121 | ||||||||||||
|
Cedar
|
149 | 54 | 827 | 795 | ||||||||||||
|
Hardwood
|
135 | 51 | 835 | 977 | ||||||||||||
|
Pulp
|
||||||||||||||||
|
All
species
|
2,017 | 374 | 7,336 | 7,942 | ||||||||||||
|
Total
|
10,200 | 2,073 | 32,461 | 37,748 | ||||||||||||
|
Average
price realizations (per thousand board feet):
|
||||||||||||||||
|
Sawlogs
|
||||||||||||||||
|
Douglas-fir
|
438 | 516 | 435 | 537 | ||||||||||||
|
Whitewood
|
332 | 384 | 309 | 412 | ||||||||||||
|
Cedar
|
718 | 1,222 | 817 | 1,245 | ||||||||||||
|
Hardwood
|
466 | 588 | 446 | 638 | ||||||||||||
|
Pulp
|
||||||||||||||||
|
All
species
|
329 | 307 | 296 | 359 | ||||||||||||
|
Overall
|
415 | 494 | 410 | 506 | ||||||||||||
|
Owned
timber acres
|
114,000 | 114,000 | 114,000 | 114,000 | ||||||||||||
|
Acres
owned by Funds
|
36,000 | 24,000 | 36,000 | 24,000 | ||||||||||||
|
Third-party
managed acres
|
- | 267,000 | - | 267,000 | ||||||||||||
|
Capital
expenditures ($000's)
|
672 | 2,641 | 2,863 | 6,070 | ||||||||||||
|
Depletion
($000's)
|
552 | 378 | 2,001 | 3,915 | ||||||||||||
|
Depreciation
and amortization ($000's)
|
195 | 195 | 810 | 774 | ||||||||||||
|
Debt
to total capitalization (excludes noncontrolling interest)
|
26 | % | 25 | % | 26 | % | 25 | % | ||||||||
Page 5 of
6
|
QUARTER
TO QUARTER COMPARISONS
|
||||||||
|
(Amounts
in $000's except per unit data)
|
||||||||
|
Q4
2009 vs. Q4 2008
|
Q4
2009 vs. Q3 2009
|
|||||||
|
Total
|
Total
|
|||||||
|
Net
income (loss) attributable to Pope Resources' unitholders:
|
||||||||
|
4th
Quarter 2009
|
$ | (376 | ) | $ | (376 | ) | ||
|
3rd
Quarter 2009
|
920 | |||||||
|
4th
Quarter 2008
|
(1,439 | ) | ||||||
|
Variance
|
$ | 1,063 | $ | (1,296 | ) | |||
|
Detail
of earnings variance:
|
||||||||
|
Fee
Timber
|
||||||||
|
Log
price realizations (A)
|
$ | (806 | ) | $ | 275 | |||
|
Log
volumes (B)
|
4,015 | 1,476 | ||||||
|
Depletion
|
(524 | ) | (136 | ) | ||||
|
Production
costs
|
(1,278 | ) | (420 | ) | ||||
|
Other
Fee Timber
|
151 | 146 | ||||||
|
Timberland
Management & Consulting
|
||||||||
|
Management
fee changes
|
(208 | ) | (20 | ) | ||||
|
Other
Timberland Mgmnt & Consulting
|
135 | 6 | ||||||
|
Real
Estate
|
||||||||
|
Environmental
remediation liability
|
(30 | ) | (30 | ) | ||||
|
Land
and conservation easement sales
|
(719 | ) | (2,906 | ) | ||||
|
Timber
depletion on HBU sale
|
346 | (6 | ) | |||||
|
Other
Real Estate
|
349 | (170 | ) | |||||
|
General
& administrative costs
|
(163 | ) | (408 | ) | ||||
|
Net
interest expense
|
(99 | ) | 24 | |||||
|
Debt
extinguishment costs
|
- | 1,137 | ||||||
|
Other
(taxes, noncontrolling int., impairment)
|
(106 | ) | (264 | ) | ||||
|
Total
change in earnings
|
$ | 1,063 | $ | (1,296 | ) | |||
(A) Price
variance calculated by extending the change in average realized price by current
period volume.
(B)
Volume variance calculated by extending change in sales volume by the average
log sales price for the comparison period.
Page 6 of
6