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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) April 26, 2005
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Pope Resources, A Delaware Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 91-1313292
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19245 Tenth Avenue NE, Poulsbo, Washington 98370
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (360) 697-6626
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NOT APPLICABLE
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(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):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-(b))
[ ] 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
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Item 2.02: RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 26, 2005 the registrant issued a press release relating to its earnings
for the quarter ended March 31, 2005. A copy of that press release is furnished
herewith as Exhibit 99.1.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description
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99.1 Press release of the registrant dated April 26, 2005
SIGNATURES
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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: April 26, 2005 BY: /s/ Thomas M. Ringo
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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 April 26, 2005
Pope Resources Reports First Quarter Net Income of $4.6 Million
POULSBO, Wash.--(BUSINESS WIRE)--April 26, 2005--Pope Resources
(Nasdaq:POPEZ) reported net income of $4.6 million, or 97 cents per diluted
ownership unit, on revenues of $16.7 million for the first quarter ended March
31, 2005. This compares to net income of $4.0 million, or 87 cents per diluted
ownership unit, on revenues of $11.7 million for the comparable period in 2004.
Earnings before interest, taxes, depreciation, depletion, and amortization
(EBITDDA) were $9.6 million for the current quarter versus $6.4 million for the
comparable period in 2004.
"We enjoyed one of the strongest quarters in the Partnership's history,
with solid performances across all three of our business segments," said David
L. Nunes, President and CEO. "Following two timberland acquisitions which closed
in 2004, first quarter log harvest volume for our Fee Timber segment increased
13%, from 20 million board feet (MMBF) in 2004 to 23 MMBF in 2005. Average log
prices were also up $40 per thousand board feet (MBF), representing a 7%
increase over 2004's first quarter log prices. However, due to the addition of
log harvest volume coming from a fourth quarter acquisition, which carries a
significantly higher non-cash depletion expense, operating income for our Fee
Timber segment declined by $1.1 million, from $6.1 million in 2004 to $5.0
million in 2005. Our Timberland Management & Consulting segment generated an
operating profit for the first time in five quarters on the strength of our new
management agreement with Cascade Timberlands LLC, which spans 522,000 acres of
timberland in Washington and Oregon. This new contract, initiated in January
2005, propelled first quarter operating income to $0.8 million, compared to an
operating loss of $0.4 million in 2004. Lastly, our Real Estate segment got off
to a strong start with higher rural residential land sales leading to operating
income of $0.6 million in the first quarter of 2005, compared to an operating
loss of $0.2 million for the comparable period in 2004."
The decrease in Fee Timber operating income in the first quarter of 2005
compared to the prior year is attributable to an increase in current quarter
depletion expense that more than offset the current quarter's comparatively
higher harvest volumes and realized log prices. The increase in depletion
expense stemmed from harvest activity on timberland purchased in the fourth
quarter of 2004 for which a separate depletion pool was created. The separate
depletion pool was created because the timber inventory from this acquisition
was almost completely merchantable. We expect to harvest a total of
approximately 79 MMBF in 2005, of which 21 MMBF is expected to come from this
separate depletion pool. The depletion cost resulting from log harvests on this
acquired timberland will approximate the net stumpage value (delivered log price
less harvesting and transportation cost) realized on the sale of this particular
timber. As such, the incremental harvest from this acquired property will result
in a negligible net income impact while nonetheless generating operating cash
flow or EBITDDA. Fee Timber EBITDDA increased from $7.6 million in the first
quarter of 2004 to $8.9 million in the first quarter of 2005 in contrast with
the aforementioned decline in operating income when comparing the two periods.
The Partnership's debt to total capitalization ratio was 36% as of March
31, 2005, down from 42% at the end of the first quarter of 2004.
The Partnership does not expect first quarter 2005 financial results to be
indicative of results for each of the ensuing quarters in 2005. With no internal
sawmills to supply, the Partnership is able to capitalize on short-term market
conditions by altering the timing of planned annual harvest volumes. For
example, timber volume harvested in the first quarter represented 29% of the
planned 2005 harvest of 79 MMBF. Similarly, as a result of strong market
conditions, the Real Estate segment has completed about 50% of their planned
development property sales in 2005 as of the end of the first quarter.
About Pope Resources
Pope Resources, a publicly traded limited partnership, and its subsidiaries
Olympic Resource Management and Olympic Property Group, own or manage over
640,000 acres of timberland and development property in Washington and Oregon.
In addition, we provide forestry consulting and timberland 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.orm.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 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;
labor, equipment and transportation costs that affect our net income; and
economic conditions that affect consumer demand for our products and the prices
we receive for them. Other factors are set forth in that part of our Annual
Report on Form 10-K entitled "Management's Discussion & Analysis of Financial
Condition and Results of Operation - Risks and Uncertainties." 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.
Management considers earnings (net income or loss) before interest expense,
income taxes, depreciation, depletion and amortization (EBITDDA) to be a
relevant and meaningful indicator of liquidity and earnings performance commonly
used by investors, financial analysts and others in evaluating companies in its
industry and, as such, has provided this information in addition to the
generally accepted accounting principle-based presentation of net income or loss
and cash from operations. In that context, "depletion" refers to a measure of
the reduction in value of timberland upon the harvest of growing timber from
that land.
Pope Resources, A Delaware Limited Partnership
Unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in $000's, except per unit amounts)
Three months ended
March 31,
2005 2004
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Revenues $ 16,656 $11,732
Costs and expenses:
Cost of sales (7,804) (4,488)
Operating expenses (3,181) (2,496)
Interest, net (717) (750)
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Total expenses (11,702) (7,734)
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Income before income taxes 4,954 3,998
Income tax (expense) (247) -
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Income before minority interest 4,707 3,998
Minority interest (101) -
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Net income $ 4,606 $ 3,998
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Weighted average units outstanding -
Basic (000's) 4,561 4,518
Weighted average units outstanding -
Diluted (000's) 4,730 4,575
Basic net income per unit $ 1.01 $ 0.88
Diluted net income per unit $ 0.97 $ 0.87
CONSOLIDATED BALANCE SHEETS
(all amounts in $000's)
March 31,
2005 2004
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Assets:
Cash and short-term investments $ 4,472 $ 3,358
Other current assets 3,802 3,575
Roads and timber 61,023 54,903
Properties and equipment 26,604 24,918
Other assets 1,112 1,375
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Total $97,013 $88,129
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Liabilities and partners' capital:
Current liabilities $ 4,946 $ 3,486
Long-term debt, excluding current portion 32,504 34,574
Other long-term liabilities 211 333
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Total liabilities 37,661 38,393
Partners' capital 59,352 49,736
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Total $97,013 $88,129
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RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended
31-Mar-05 31-Mar-04 31-Dec-04
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Net income $ 4,606 $ 3,998 $ 820
Added back:
Interest, net 717 750 728
Depletion 3,843 1,471 1,353
Depreciation and amortization 152 168 152
Income tax expense 247 -
Less:
Income tax benefit - - -
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EBITDDA $ 9,565 $ 6,387 $ 3,053
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RECONCILIATION BETWEEN CASH FROM OPERATIONS AND EBITDDA
(all amounts in $000's)
Three months ended
31-Mar-05 31-Mar-04 31-Dec-04
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Cash from operations $6,893 $4,225 $3,595
Added back:
Change in working capital 1,993 1,519 -
Interest 717 750 728
Deferred profit - -
Income tax expense 247 - -
Other 1 1 -
Less:
Change in working capital - - (824)
Deferred profit (152) (108) (275)
Income tax benefit - - -
Cost of land sold (134) - (169)
Other - - (2)
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EBITDDA $9,565 $6,387 $3,053
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SEGMENT INFORMATION
(all amounts in $000's)
Three months ended
31-Mar-05 31-Mar-04 31-Dec-04
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Revenues:
Fee Timber $13,663 $11,411 $ 5,576
Timberland Management &
Consulting (TM&C) 1,614 126 602
Real Estate 1,379 195 1,799
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Total 16,656 11,732 7,977
EBITDDA:
Fee Timber 8,911 7,633 2,960
TM&C 863 (382) (10)
Real Estate 671 (218) 904
General & administrative (880) (646) (801)
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Total 9,565 6,387 3,053
Depreciation, depletion and
amortization:
Fee Timber 3,869 1,502 1,395
TM&C 21 22 22
Real Estate 36 23 19
General & administrative 69 92 69
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Total 3,995 1,639 1,505
Operating income (loss):
Fee Timber 5,042 6,131 1,565
TM&C 842 (404) (32)
Real Estate 635 (241) 885
General & administrative (848) (738) (870)
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Total $ 5,671 $ 4,748 $ 1,548
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SELECTED STATISTICS
Three months ended
31-Mar-05 31-Mar-04 31-Dec-04
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Log sale volumes (thousand board feet):
Export conifer 3,510 5,624 1,153
Domestic conifer 15,065 11,690 5,414
Pulp conifer 2,937 2,633 1,422
Hardwoods 1,488 405 1,111
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Total 23,000 20,352 9,100
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Three months ended
31-Mar-05 31-Mar-04 31-Dec-04
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Average price realizations (per
thousand board feet):
Export conifer $ 661 $ 659 $ 676
Domestic conifer 616 554 590
Pulp conifer 273 221 209
Hardwoods 627 558 617
Overall 580 540 544
Owned timber acres 115,103 115,125 118,488
Acres under management 527,316 5,316 527,316
Capital expenditures ($000's) 948 9,331(b) 13,267(a)
Depletion ($000's) 3,843 1,471 1,353
Depreciation and amortization
($000's) 152 168 152
Debt to total capitalization 36% 42% 40%
(a) Includes $12.3 million timberland acquisition closed in October
2004.
(b) Includes $8.5 million timberland acquisition closed in January
2004.
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's except per unit data)
Q1 2005 vs. Q1 2004 Q1 2005 vs. Q4 2004
Total Per Unit Total Per Unit
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Net income:
1st Quarter 2005 $ 4,606 $ 1.01 $ 4,606 $ 1.01
4th Quarter 2004 820 0.18
1st Quarter 2004 3,998 0.88
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Variance $ 608 $ 0.13 $ 3,786 $ 0.83
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Detail of earnings variance:
Fee Timber:
Log price realizations (A) $ 920 $ 0.21 $ 828 $ 0.18
Log volumes (B) 741 0.17 5,413 1.21
Timberland sale income (6) - - -
Depletion (2,372) (0.53) (2,490) (0.55)
Other Fee Timber (372) (0.09) (274) (0.06)
Timberland Management &
Consulting:
Management fee changes 1,187 0.26 832 0.19
Other Timberland Mgmnt &
Consulting 59 0.01 42 0.01
Real Estate:
Land sales 903 0.20 (314) (0.07)
Other (27) (0.01) 64 0.01
General & administrative costs (110) (0.02) 22 -
Interest expense 38 0.01 2 -
Other (taxes, minority int.,
interest inc.) (353) (0.08) (339) (0.09)
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Total change in net income $ 608 $ 0.13 $ 3,786 $ 0.83
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(A) Price variance allocated based on changes in price using the
lower period volume.
(B) Volume variance allocated based on change in sales volume and the
average log sales price for the current period less variance in
log production costs.
CONTACT: Pope Resources
Tom Ringo, 360-697-6626
Fax 360-697-1156