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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) October 25, 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 October 25, 2005 the registrant issued a press release relating to its
earnings for the quarter ended September 30, 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 October 25, 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: October 25, 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
Pope Resources Reports Third Quarter Earnings of $4.1 Million
POULSBO, Wash.--(BUSINESS WIRE)--Oct. 25, 2005--Pope Resources
(Nasdaq:POPEZ) reported net income of $4.1 million, or 87 cents per
diluted ownership unit, on revenues of $15.3 million for the third
quarter ended September 30, 2005. This compares to net income of $1.4
million, or 30 cents per diluted ownership unit, on revenues of $8.1
million, for the same period in 2004.
Net income for the nine months ended September 30, 2005, totaled
$12.8 million, or $2.70 per diluted ownership unit, on revenues of
$48.1 million. Net income for the corresponding period in 2004 totaled
$9.4 million, or $2.04 per diluted ownership unit, on revenues of
$31.7 million.
Earnings before interest, income tax, depreciation, depletion, and
amortization (EBITDDA) for the quarter ended September 30, 2005, was
$7.6 million, compared to $3.2 million for the third quarter of 2004.
For the nine months ended September 30, 2005, EBITDDA was $25.5
million, compared to $15.8 million for year-to-date 2004 results.
"On the continued strength in our core log markets, rural
residential real estate land sales, and a major third-party timberland
management contract, we enjoyed outstanding third quarter results,"
said David L. Nunes, President and CEO. "On top of already strong
first and second quarter results, this year is shaping up to be one of
the best years in the partnership's 20-year history."
In the current quarter our Fee Timber segment has benefited from a
12% increase in average log prices from the corresponding quarter in
2004. On a year-to-date basis, average log prices are up 10% over last
year. In addition, a timberland acquisition that closed in late 2004
contributed 7 million board feet (MMBF) of additional harvest in the
third quarter relative to the prior year's third quarter and 15 MMBF
on a year-to-date basis as compared to 2004. While this incremental
volume carries a higher depletion expense due to having a separate
depletion pool, the Fee Timber segment nevertheless generated $1.7
million of higher operating income in the current quarter as compared
to the prior year. On a year-to-date basis, the Fee Timber segment
generated $1.2 million more operating income as compared to 2004.
Throughout 2005, the Real Estate segment has enjoyed a surge of
buyer interest in rural residential lots. The Real Estate segment has
worked diligently over the past year to first identify and then bring
to market a pipeline of such properties. Sales of these rural
residential lots, which consist of a mix of properties in the historic
Real Estate land portfolio and properties recently transferred from
the Fee Timber portfolio, totaled $1.1 million in the current quarter
and $3.1 million year-to-date. These sales propelled Real Estate
operating income to $0.5 million in the current quarter and $1.3
million year-to-date. This compares to an operating loss of $0.3
million in the third quarter of 2004 and operating income of $0.7
million for the prior year-to-date.
The Timberland Management & Consulting segment, which began
serving a new timberland management customer in January 2005,
generated operating income of $0.4 million in the current quarter
compared to breakeven results for the prior year. On a year-to-date
basis, this segment has generated $2.1 million of operating income
compared to an operating loss of $0.6 million in the prior year.
The primary driver behind the improvement in year-to-date EBITDDA
is an increase in timber harvested as a result of a timberland
acquisition in late 2004. Year-to-date harvest volumes have increased
almost 15 million board feet (MMBF), or 29%, from a year ago. However,
because the volume from this acquisition has its own separate
depletion pool, the increased harvest related to this acquisition has
less of an impact to earnings as compared to the impact on EBITDDA.
Results for 2005's fourth quarter will not approach those of the
first three quarters since we have harvested 83% of the target volume
for 2005 in the first nine months.
The financial and statistical schedules attached to this earnings
release provide selected detail on individual segment results and
operating statistics.
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 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.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 cost of timber harvested.
Pope Resources, A Delaware Limited Partnership
Unaudited
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in $000's except income per unit)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
Revenues $ 15,312 $ 8,051 $ 48,099 $ 31,671
Costs and expenses:
Cost of sales (6,631) (3,269) (21,845) (11,885)
Operating expenses (3,860) (2,723) (10,667) (8,206)
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Operating income 4,821 2,059 15,587 11,580
Interest, net (586) (698) (1,938) (2,224)
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Income before income taxes and
minority interest 4,235 1,361 13,649 9,356
Income tax
benefit/(provision) (52) - (562) -
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Income before minority interest 4,183 1,361 13,087 9,356
Minority interest (46) - (275) -
------- ------- -------- --------
Net income $ 4,137 $ 1,361 $ 12,812 $ 9,356
======= ======= ======== ========
Average units outstanding --
Basic (000's) 4,621 4,522 4,593 4,520
Average units outstanding --
Diluted (000's) 4,773 4,608 4,742 4,588
Basic net income per unit $ 0.90 $ 0.30 $ 2.79 $ 2.07
Diluted net income per unit $ 0.87 $ 0.30 $ 2.70 $ 2.04
CONDENSED CONSOLIDATED BALANCE SHEETS
(all amounts in $000's)
September 30, December 31,
2005 2004
Assets:
Cash $ 3,009 $ 757
Short-term investments 14,000 -
Other current assets 6,772 2,073
Roads and timber 53,779 62,684
Properties and equipment 25,735 27,999
Other assets 877 1,355
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Total $ 104,172 $ 94,868
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Liabilities and partners' capital:
Current liabilities $ 5,045 $ 5,935
Long-term debt, excluding current
portion 32,308 34,164
Other long-term liabilities 211 236
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Total liabilities 37,564 40,335
Partners' capital 66,608 54,533
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Total $ 104,172 $ 94,868
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RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended Nine months ended
30-Sep-05 30-Sep-04 30-Sep-05 30-Sep-04
Net income $ 4,137 $ 1,361 $ 12,812 $ 9,356
Added back:
Interest, net 586 698 1,938 2,224
Income tax provision 52 - 562 -
Depletion 2,623 975 9,689 3,740
Depreciation and amortization 163 165 482 507
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EBITDDA $ 7,561 $ 3,199 $ 25,483 $ 15,827
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RECONCILIATION BETWEEN CASH FROM OPERATIONS AND EBITDDA
(all amounts in $000's)
Three months ended Nine months ended
30-Sep-05 30-Sep-04 30-Sep-05 30-Sep-04
Cash from operations $ 9,439 $ 2,763 $ 22,253 $ 15,510
Added back:
Change in working capital - 237 1,249 -
Interest, net 586 698 1,938 2,224
Deferred profit 10 - 695 -
Income tax expense 52 - 562 -
Other - 2 - 1
Less:
Change in working capital (2,217) - - (1,328)
Deferred profit - (465) - (540)
Deferred taxes (84) - (594) -
Minority interest (46) - (275) -
Cost of land sold (178) (36) (344) (40)
Other (1) - (1) -
------- ------ ------- -------
EBITDDA $ 7,561 $ 3,199 $ 25,483 $ 15,827
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SEGMENT INFORMATION
(all amounts in $000's)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
Revenues:
Fee Timber $ 12,347 $ 7,215 $ 39,230 $ 27,995
Timberland Management &
Consulting (TM&C) 1,666 477 5,123 999
Real Estate 1,299 359 3,746 2,677
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Total $ 15,312 $ 8,051 $ 48,099 $ 31,671
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EBITDDA:
Fee Timber $ 7,489 $ 4,055 $ 24,490 $ 17,359
TM&C 419 (41) 2,129 (500)
Real Estate 457 (246) 1,458 815
General & administrative and
minority interest (804) (569) (2,594) (1,847)
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Total $ 7,561 $ 3,199 $ 25,483 $ 15,827
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Depreciation, depletion and
amortization:
Fee Timber $ 2,735 $ 997 $ 9,764 $ 3,798
TM&C 26 22 74 66
Real Estate (39) 30 135 114
General & administrative 64 91 198 269
------- ------ ------- -------
Total $ 2,786 $ 1,140 $ 10,171 $ 4,247
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Operating income/(loss):
Fee Timber $ 4,754 $ 3,058 $ 14,726 $ 13,561
TM&C 393 (63) 2,055 (566)
Real Estate 496 (276) 1,323 701
General & administrative (822) (660) (2,517) (2,116)
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Total $ 4,821 $ 2,059 $ 15,587 $ 11,580
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SELECTED STATISTICS
Three months ended Nine months ended
30-Sep-05 30-Sep-04 30-Sep-05 30-Sep-04
Log sale volumes (thousand
board feet):
Export conifer 2,123 550 7,596 7,732
Domestic conifer 14,115 9,236 45,253 33,455
Pulp conifer 2,655 2,807 8,590 8,226
Hardwoods 1,649 716 4,466 1,803
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Total 20,542 13,309 65,905 51,216
======== ======== ======== ========
Average price realizations
(per thousand board feet):
Export conifer $ 683 $ 695 $ 675 $ 655
Domestic conifer 626 591 629 568
Pulp conifer 211 226 211 227
Hardwoods 643 564 612 570
Overall 580 517 579 526
Owned acres 117,585 112,240 117,585 112,240
Acres under management 527,316 5,316 527,316 5,316
Capital expenditures ($000's) 932 395 2,624 2,311
Depletion ($000's) 2,623 975 9,689 3,740
Depreciation ($000's) 163 165 482 507
Debt to total capitalization 34% 40% 34% 40%
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's except per unit data)
Q3 2005 vs. Q3 2004 Q3 2005 vs. Q2 2005
Total Per Total Per
Diluted Diluted
Unit Unit
Net income:
3rd Quarter 2005 $ 4,137 $ 0.87 $ 4,137 $ 0.87
2nd Quarter 2005 4,069 0.86
3rd Quarter 2004 1,361 0.30
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Variance $ 2,776 $ 0.57 $ 68 $ 0.01
Detail of earnings variance:
Fee Timber
Log price realizations (A) $ 838 $ 0.17 $ 67 $ 0.01
Log volumes (B) 4,188 0.83 (1,059) (0.18)
Production costs (1,630) (0.32) 123 0.02
Depletion (1,648) (0.33) 600 0.10
Other Fee Timber (52) (0.01) 93 0.02
Timberland Management & Consulting
Management fee changes 176 0.04 (279) (0.05)
Other Timberland Mgmnt &
Consulting 280 0.06 (148) (0.03)
Real Estate - -
Land sales 829 0.16 273 0.05
Environmental remediation
liability 63 0.01 - -
Other Real Estate (120) (0.02) 31 0.01
General & administrative costs (162) (0.03) 25 -
Interest expense 29 0.01 (1) -
Other (taxes, minority int.,
interest inc.) (15) - 343 0.06
------- ------- ------- -------
Total change in earnings $ 2,776 $ 0.57 $ 68 $ 0.01
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(A) Price variance calculated by multiplying change in average price
by prior period volume.
(B) Volume variance calculated by multiplying change in volume by
current average price.
CONTACT: Pope Resources
Tom Ringo, 360-697-6626
Fax: 360-697-1156