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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) February 1, 2006
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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 February 1, 2006 the registrant issued a press release relating to its
earnings for the quarter ended December 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 February 1, 2006
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: February 1, 2006 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 Fourth Quarter Earnings of $0.9 Million
POULSBO, Wash.--(BUSINESS WIRE)--Feb. 1, 2006--Pope Resources
(Nasdaq:POPEZ) reported earnings of $0.9 million or 18 cents per diluted
ownership unit, on revenues of $8.9 million for the quarter ended December 31,
2005. This compares to earnings of $0.8 million or 18 cents per diluted
ownership unit, on revenues of $8.0 million for the quarter ended December 31,
2004.
Net income for the twelve months ended December 31, 2005 totaled $13.7
million, or $2.88 per diluted ownership unit, on revenues of $57.0 million. For
the corresponding period in 2004, net income totaled $10.2 million, or $2.22 per
diluted ownership unit, on revenues of $39.6 million.
Earnings before interest, income tax, depreciation, depletion, and
amortization (EBITDDA) for the quarter ended December 31, 2005 were $2.9
million, compared to $3.1 million for the fourth quarter of 2004. For the twelve
months ended December 31, 2005, EBITDDA was $28.4 million, compared to $18.9
million in 2004.
"With a solid foundation for growth laid down over the past few years, we
posted our strongest results in over a decade in 2005," said David L. Nunes,
President and CEO. "Three primary drivers contributed to this breakout year:
continued favorable market conditions in our core log markets, a significant new
timberland management client, and robust markets for rural residential real
estate."
In the fourth quarter of 2005, our Fee Timber segment experienced a 2%
increase in average log prices from the corresponding quarter in 2004, while log
volumes decreased from 9 million board feet (MMBF) in 2004 to 8 MMBF in 2005.
Fee Timber operating income for both the fourth quarter of 2005 and 2004 was
$1.6 million. On a year-to-date basis, average realized log prices increased 9%,
rising from $529 per thousand board feet (MBF) in 2004 to $576 per MBF in 2005.
Total harvest volume increased to 74 MMBF in 2005 from 60 MMBF in 2004. Fee
Timber segment operating income increased 8%, from $15.1 million in 2004 to
$16.3 million in 2005.
While the increased harvest level in 2005 resulted in substantially higher
log revenues, it did not translate to a corresponding increase in operating
income due to the use of a separate depletion pool on 17 MMBF of timber
harvested in 2005 from a late-2004 timberland purchase. The separate depletion
pool was used to account for timber harvested from this acquired property
because it was stocked primarily with merchantable timber. While the harvest of
this 17 MMBF did not generate significant incremental earnings, it did
contribute to significantly higher cash flow, allowing the Partnership to
recover much of the purchase price of the property while leaving an incremental
1,300 acres of prime timberland.
On the strength of a new management contract, results for our Timberland
Management & Consulting segment improved substantially, with operating income of
$3.5 million in 2005 compared to a loss of $0.6 million for 2004. Similarly,
this segment reported operating income of $1.5 million for the fourth quarter of
2005 compared to breakeven results for the fourth quarter of 2004. This
improvement in both quarterly and annual performance is due to our taking on a
significant new client in January 2005 for whom we have performed timberland
management, forestry consulting, and property disposition services.
Our Real Estate segment also performed well in 2005, posting its second
consecutive profitable year, with operating income of $1.3 million on revenues
of $4.8 million. This compares to operating income of $1.6 million on revenues
of $4.5 million in 2004. The majority of Real Estate segment sales in 2005 were
generated from a new rural residential land sale program which generated $3.0
million of revenue from 18 sales totaling 523 acres. In addition, in 2005 we
recognized $0.9 million of revenue from a bulk land sale of 390 acres. This
compares to 2004's revenue of $3.5 million from two large bulk land sales
totaling 636 acres.
The financial schedules attached to this earnings release provide 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 nearly
560,000 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; our
ability to discover and accurately to estimate liabilities associated with our
properties; 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 "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.
Management considers earnings (net income or loss) before interest expense,
income taxes, depreciation, depletion and amortization (EBITDDA) to be an
important measure of operating profitability, particularly when comparing
results between different timber-owning companies because there are varying
methods of calculating depletion expense under GAAP. With different issuers
employing various calculation methodologies, disclosure of EBITDDA can make it
easier for the reader to make meaningful comparisons between the operating
results and cash-generating capabilities of different timber companies.
Pope Resources, A Delaware Limited Partnership
Unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in $000's, except per unit amounts)
Three months ended Twelve months ended
Dec.31, Dec. 31,
2005 2004 2005 2004
Revenues $ 8,907 $ 7,977 $ 57,006 $ 39,648
Costs and expenses:
Cost of sales (2,751) (3,299) (24,596) (15,184)
Operating expenses (4,264) (3,130) (14,931) (11,336)
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Opertaing income 1,892 1,548 17,479 13,128
Interest, net (539) (728) (2,477) (2,952)
Minority interest (46) - (321) -
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Income before income taxes 1,307 820 14,681 10,176
Income tax provision (435) - (997) -
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Net income 872 820 13,684 10,176
========= ========= ========== ==========
Average units outstanding -
Basic (000's) 4,646 4,522 4,605 4,522
========= ========= ========== ==========
Average units outstanding -
Diluted (000's) 4,780 4,629 4,753 4,594
========= ========= ========== ==========
Basic net income per unit $ 0.19 $ 0.18 $ 2.97 $ 2.25
========= ========= ========== ==========
Diluted net income per unit $ 0.18 $ 0.18 $ 2.88 $ 2.22
========= ========= ========== ==========
CONSOLIDATED BALANCE SHEETS
(all amounts in $000's)
Dec. 31,
2005 2004
Assets:
Cash and short-term investments $ 18,361 $ 757
Other current assets 5,770 2,073
Roads and timber 53,019 64,485
Properties and equipment 28,543 26,198
Other assets 665 1,355
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Total 106,358 94,868
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Liabilities and partners' capital:
Current liabilities 7,454 5,935
Long-term debt, excluding current portion 32,281 34,164
Other long-term liabilities 218 236
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Total liabilities 39,953 40,335
Partners' capital 66,405 54,533
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Total 106,358 94,868
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RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended Twelve months ended
31-Dec-05 31-Dec-04 31-Dec-05 31-Dec-04
Net income $ 872 $ 820 $ 13,684 $ 10,176
Added back:
Interest, net 539 728 2,477 2,952
Income tax provision 435 - 997 -
Depletion 922 1,353 10,611 5,092
Depreciation and
amortization 159 152 641 660
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EBITDDA $ 2,927 $ 3,053 $ 28,410 $ 18,880
======== ======== ========== ==========
RECONCILIATION BETWEEN CASH FROM OPERATIONS AND EBITDDA
(all amounts in $000's)
Three months ended Twelve months ended
31-Dec-05 31-Dec-04 31-Dec-05 31-Dec-04
Cash from operations $ 6,656 $ 3,595 $ 28,909 $ 17,854
Added back:
Interest, net 539 728 2,477 2,952
Deferred profit - - 614 -
Income tax expense 435 - 997 -
Other - 1 - -
Less:
Change in working capital (4,456) (827) (4,075) (902)
Unit compensation (76) - (76) -
Deferred profit (81) (275) - (815)
Cost of land sold (90) (169) (434) (209)
Other - - (2) -
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EBITDDA $ 2,927 $ 3,053 $ 28,410 $ 18,880
======== ======== ========== ==========
SEGMENT INFORMATION
(dollar amounts in 000's, except
average price realizations)
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
Revenues:
Fee Timber $ 5,194 $ 5,576 $ 44,424 $ 33,571
Timberland Management &
Consulting (TM&C) 2,641 602 7,764 1,601
Real Estate 1,072 1,799 4,818 4,476
-------- -------- -------- --------
Total $ 8,907 $ 7,977 $ 57,006 $ 39,648
-------- -------- -------- --------
EBITDDA:
Fee Timber $ 2,544 $ 2,960 $ 27,034 $ 20,319
TM&C 1,508 (10) 3,644 (510)
Real Estate (10) 904 1,449 1,719
General & administrative and
minority interest (1,115) (801) (3,717) (2,648)
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Total $ 2,927 $ 3,053 $ 28,410 $ 18,880
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Depreciation, depletion and
amortization:
Fee Timber $ 950 $ 1,395 $ 10,714 $ 5,193
TM&C 23 22 97 88
Real Estate 43 19 178 133
General & administrative 65 69 263 338
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Total $ 1,081 $ 1,505 $ 11,252 $ 5,752
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Operating income/(loss):
Fee Timber $ 1,594 $ 1,565 $ 16,320 $ 15,126
TM&C 1,485 (32) 3,540 (598)
Real Estate (53) 885 1,270 1,586
General & administrative (1,134) (870) (3,651) (2,986)
-------- -------- -------- --------
Total $ 1,892 $ 1,548 $ 17,479 $ 13,128
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Log sale volumes (thousand
board feet):
Export conifer 952 1,153 5,732 8,885
Domestic conifer 5,373 5,414 53,442 38,869
Pulp conifer 1,338 1,422 9,928 9,648
Hardwoods 677 1,111 5,143 2,914
-------- -------- -------- --------
Total 8,340 9,100 74,245 60,316
======== ======== ======== ========
Average price realizations
(per thousand board feet):
Export conifer $ 641 $ 676 $ 660 $ 658
Domestic conifer 620 590 631 571
Pulp conifer 223 209 213 224
Hardwoods 561 617 605 588
Overall 554 544 576 529
Owned acres 117,000 118,000 117,000 118,000
Acres under management 439,000 522,000 439,000 522,000
Capital expenditures $ 4,132 $ 948 $ 6,756 $ 3,260
Depletion 922 1,353 10,611 5,092
Depreciation 159 152 641 660
Debt to total capitalization 34% 40% 34% 40%
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's)
Q4 2005 vs. Q4 2004 Q4 2005 vs. Q3 2005
Total Total
Net income:
4th Quarter 2005 872 872
3rd Quarter 2005 4,137
4th Quarter 2004 820
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Variance 52 (3,265)
Detail of earnings variance:
Fee Timber
Log price realizations (A) 83 (217)
Log volumes (B) (413) (7,077)
Log production costs (95) 2,177
Depletion 431 1,701
Other Fee Timber 22 255
Timberland Management &
Consulting
Management fee changes 918 724
Consulting fees 18 (413)
Disposition fees 1,388 1,380
Other Timberland Mgmnt &
Consulting (807) (599)
Real Estate
Development property sales (562) (280)
Environmental remediation (90) 18
Other (285) (286)
General & administrative costs (264) (312)
Interest expense 14 (14)
Other (taxes, minority int.,
interest inc.) (306) (322)
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Total change in earnings 52 (3,265)
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(A) Price variance calculated based on changes in price using the
current period volume.
(B) Volume variance calculated based on change in sales volume
using the average log sales price for the prior period.
CONTACT: Pope Resources
Tom Ringo, 360-697-6626
Fax: 360-697-1156