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) May 3, 2007
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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
(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 May 3, 2007 the registrant issued a press release relating to its earnings
for the quarter ended March 31, 2007. 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 May 3, 2007
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: May 3, 2007 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 First Quarter Net Income of $0.9 Million
POULSBO, Wash.--(BUSINESS WIRE)--May 3, 2007--Pope Resources
(Nasdaq:POPEZ) reported net income of $854,000, or $0.18 per diluted
ownership unit, on revenues of $6.8 million for the first quarter
ended March 31, 2007. This compares to net income of $5.3 million, or
$1.11 per diluted ownership unit, on revenues of $16.1 million for the
comparable period in 2006.
Earnings before interest, taxes, depreciation, depletion, and
amortization (EBITDDA) were $1.8 million for the current quarter
versus $8.8 million for the comparable period in 2006.
"Our significant decline in first quarter earnings compared to
2006 was due primarily to a 54% drop in harvest volume coupled with a
5% decline in average realized log prices," said David L. Nunes,
President and CEO. "This decline in harvest volume was a result of a
decision to shift more of our planned annual harvest volume to later
in the year as a response to significantly weakened market dynamics
associated with a softer housing market. As a result, we harvested
just 18% of our planned annual harvest volume in the first three
months of this year, which compares with 40% of our annual harvest
during the first quarter of 2006."
Operating income generated by our Fee Timber segment decreased to
$2.4 million from $6.2 million in 2006, due to the aforementioned drop
in harvest volume and decline in average realized log prices. Harvest
volume for the first quarter of 2007 was 10 million board feet (MMBF)
compared to 22 MMBF for the comparable quarter in 2006. Average log
realizations declined by $30 per thousand board feet (MBF), or 5%,
from $608 per MBF in the first quarter of 2006 to $578 per MBF in the
first quarter of 2007. While prices for our bellwether domestic
Douglas-fir sawlogs were down 10% for the quarter, our overall average
realized log price declined at only half that rate due to a
substantial increase in pulp log prices. These prices were up due to a
regional curtailment of sawmill production which in turn resulted in
higher chip prices given reduced availability of residual chip volume
in the market. We took advantage of this market dynamic and shifted
our harvest mix to include a higher proportion of lower quality
pulpwood stands.
Our Timberland Management & Consulting segment posted an operating
loss of $131,000 versus operating income of $1.3 million for the
comparable period in 2006. The primary factor contributing to this
decline was a nonrecurring timberland disposition fee earned in the
first quarter of 2006. We also had fewer acres under management in the
current quarter compared to a year ago as a result of the disposition
of client-owned property. This decline in acres under management was
partially offset by the acquisition of 24,000 acres of timberland by
ORM Timber Fund I, LP in the fourth quarter of 2006. On a positive
note, we marked an important milestone this quarter with the first
timber harvest coming from lands owned by the Fund. The financial
results for Pope Resources' 20% ownership stake in the Fund are
included in reported performance for our Fee Timber segment.
Our Real Estate segment generated a loss in the first quarter of
2007 of $561,000 compared to an operating loss of $339,000 in 2006's
comparable period. On the heels of record results in 2006 we did not
have any closings in the first quarter of 2007 and anticipate that
most of the Real Estate revenue generated in 2007 will result from
recognizing approximately $8.6 million of deferred revenue from two
transactions that closed last year.
About Pope Resources
Pope Resources, a publicly traded limited partnership, and its
subsidiaries Olympic Resource Management and Olympic Property Group,
own or manage over 430,000 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.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 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 to accurately 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 OPERATING DATA
(all amounts in $000's, except per unit amounts)
Three months ended March 31,
2007 2006
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Revenues $ 6,787 $ 16,083
Costs and expenses:
Cost of sales (2,837) (6,425)
Operating expenses (3,262) (3,473)
Interest, net 9 (309)
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Total expenses (6,090) (10,207)
Income before income
taxes and minority
interest 697 5,876
Income tax expense (7) (445)
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Income before minority
interest 690 5,431
Minority interest 164 (133)
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Net income $ 854 $ 5,298
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Weighted average units
outstanding - Basic
(000's) 4,664 4,635
Weighted average units
outstanding - Diluted
(000's) 4,800 4,753
Basic net income per
unit $ 0.18 $ 1.14
Diluted net income per
unit $ 0.18 $ 1.11
CONSOLIDATED BALANCE SHEET DATA
(All amounts in $000's)
March 31, December 31,
2007 2006
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Assets:
Cash and short-term investments $ 27,952 $ 32,194
Other current assets 10,055 8,933
Roads and timber 97,674 98,110
Properties and equipment 39,584 39,026
Other assets 2,007 2,019
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Total $ 177,272 $ 180,282
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Liabilities and partners' capital:
Current liabilities $ 12,886 $ 14,775
Long-term debt, excluding current
portion 29,576 30,866
Other long-term liabilities 329 351
Total liabilities 42,791 45,992
Minority interest-ORM Timber Fund I,
LP 46,521 46,685
Partners' capital 87,960 87,605
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Total $ 177,272 $ 180,282
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RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended
31-Mar-07 31-Mar-06
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Net income $ 854 $ 5,298
Added back:
Interest, net (9) 309
Depletion 711 2,573
Depreciation and
amortization 202 185
Income tax expense 7 445
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EBITDDA $ 1,765 $ 8,810
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RECONCILIATION BETWEEN CASH FROM OPERATIONS AND EBITDDA
(all amounts in $000's)
Three months ended
31-Mar-07 31-Mar-06
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Cash from operations $ (811) $ 4,725
Added back:
Change in
working
capital 2,896 3,918
Minority
interest 164 -
Interest - 309
Income tax
expense 7 445
Less:
Deferred
revenue (192) (275)
Interest (9) -
Deferred
taxes - (17)
Minority
interest - (133)
Cost of land
sold (32) (13)
Unit
compensation (258) (149)
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EBITDDA $ 1,765 $ 8,810
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SEGMENT INFORMATION
(all amounts in $000's)
Three months ended
31-Mar-07 31-Mar-06
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Revenues:
Fee Timber $ 6,192 $ 13,724
Timberland Management & Consulting (TM&C) 352 2,024
Real Estate 243 335
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Total 6,787 16,083
EBITDDA:
Fee Timber 3,363 8,877
TM&C (110) 1,307
Real Estate (517) (305)
General & administrative (971) (1,069)
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Total 1,765 8,810
Depreciation, depletion and amortization:
Fee Timber 794 2,645
TM&C 21 16
Real Estate 44 34
General & administrative 54 63
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Total 913 2,758
Operating income (loss):
Fee Timber 2,405 6,232
TM&C (131) 1,296
Real Estate (561) (339)
General & administrative (1,025) (1,004)
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Total $ 688 $ 6,185
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SELECTED STATISTICS
Three months ended
31-Mar-07 31-Mar-06
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Log sale volumes (thousand board feet):
Sawlogs
Douglas-fir 7,116 16,440
Whitewood 791 1,997
Cedar 60 359
Hardwood 129 562
Pulp
All species 1,944 2,675
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Total 10,040 22,033
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Three months ended
31-Mar-07 31-Mar-06
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Average price realizations (per thousand board
feet):
Sawlogs
Douglas-fir 611 681
Whitewood 492 439
Cedar 1,193 873
Hardwood 671 598
Pulp
All species 467 251
Overall 578 608
Three months ended
31-Mar-07 31-Mar-06
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Owned timber acres(A) 137,708 114,513
Acres under management 292,773 291,925
Capital expenditures ($000's) 1,309 1,435
Depletion ($000's) 711 2,573
Depreciation ($000's) 202 185
Debt to total capitalization 26% 31%
(A) Includes 24,000 acres owned by ORM Timber Fund I, LP (the Fund).
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's)
Q1 2007 vs. Q1 2006 Q1 2007 vs. Q4 2006
Total Total
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Net income:
1st Quarter 2007 $ 854 $ 854
4th Quarter 2006 7,793
1st Quarter 2006 5,298
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Variance $ (4,444) $ (6,939)
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Detail of earnings variance:
Fee Timber:
Log price realizations(B) $ (301) $ (412)
Log volumes(C) (7,300) 3,923
Production costs 1,744 (1,324)
Depletion 1,862 (456)
Other Fee Timber 168 (110)
Timberland Management &
Consulting:
Management fee changes (301) (123)
Disposition fees (1,343) -
Other Timberland Mgmnt &
Consulting 217 92
Real Estate:
Land sales (96) (9,106)
Other (126) 596
General & administrative
costs (21) 25
Interest expense 117 (77)
Other (taxes, minority int.,
interest inc.) 936 33
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Total change in net income $ (4,444) $ (6,939)
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(B) Price variance calculated by applying the change in price to
current period volume.
(C) Volume variance calculated by applying the change in sales volume
to the average log sales price for the prior period.
CONTACT: Pope Resources
Tom Ringo, VP & CFO, 360-697-6626
Fax: 360-697-1156