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) July 29,
2009
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):
[ ]
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
Item
2.02: RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
On July
29, 2009 the registrant issued a press release relating to its earnings for the
quarter ended June 30, 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 July 29, 2009
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:
July 29, 2009
|
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
|
|||
POPE RESOURCES
REPORTS SECOND QUARTER 2009 EARNINGS
July 29, 2009
|
Contact: Tom
Ringo
VP
& CFO
360.697.6626
Fax
360.697.1156
|
|
|
NEWS
RELEASE
|
|
| FOR IMMEDIATE RELEASE | Nasdaq:POPE |
July 29,
2009
POPE RESOURCES REPORTS
SECOND QUARTER LOSS OF $693,000
Pope
Resources (Nasdaq:POPE) reported a net loss attributable to unitholders of
$693,000, or $0.16 per diluted ownership unit, on revenue of $3.7 million for
the second quarter ended June 30, 2009. This compares to net income attributable
to unitholders of $1.7 million, or $0.36 per diluted ownership unit, on revenue
of $11.3 million for the comparable period in 2008.
Net loss
for the six months ended June 30, 2009 totaled $816,000, or $0.18 per diluted
ownership unit, on revenue of $8.6 million. Net income for the corresponding
period in 2008 totaled $2.6 million, or $0.55 per diluted ownership unit, on
revenue of $17.6 million.
Cash used
in operations for the quarter ended June 30, 2009 was $979,000, compared to cash
provided by operations of $5.1 million for the second quarter of 2008. For the
six months ended June 30, 2009, cash used in operations was $215,000, compared
to cash provided by operations of $5.6 million for year-to-date 2008
results.
“Second
quarter and year-to-date results for the first six months of 2009 were anemic by
any standard,” said David L. Nunes, President and CEO. ”Although markets began
to show significant weakness by the middle of 2008, results for 2009 were
substantially poorer. Markets for both our logs and rural residential lots are
as difficult as they have been in a generation, with prices and profit margins
compressed by a combination of high inventories, limited demand, and continued
constraints in credit markets. We entered 2009 aiming to harvest 37 million
board feet (MMBF), nearly 30% below our estimated long-term sustainable harvest
level of 52 MMBF. Even at this reduced harvest level, we chose to throttle back
our harvest activities in the second quarter rather than push a ‘normal’ log
volume onto these depressed markets. Through the first half of 2009, we
harvested only 43% of this planned annual harvest volume, in contrast to 64% of
the full-year total through the first half of 2008. We will be closely
monitoring log market trends for the balance of the year and may elect to defer
an even greater percentage of our sustainable harvest level than originally
anticipated. In
the face of these difficult market conditions, we implemented cost-cutting
measures across all our business units at the end of the first quarter which we
expect will offset a portion of the negative effects of the current market
environment.”
Page 1 of
6
POPE RESOURCES REPORTS SECOND QUARTER 2009
EARNINGS
July 29, 2009
July 29, 2009
Operating
income in the second quarter for Fee Timber declined 89%, from $3.0 million in
2008 to $312,000 in 2009. This drop was driven primarily by a 50% reduction in
our harvest volume, from 14 MMBF in 2008 to 7 MMBF in 2009, compounded by a 33%
decline in average realized log price, which declined from $501 per thousand
board feet (MBF) in 2008 to $338 per MBF in 2009. We consciously lowered the
percentage of our planned annual harvest in the second quarter based on both
poor current market conditions and the belief that markets could improve towards
the end of the year. As a result, we harvested only 19% of our planned annual
harvest during the second quarter, a level that is half that of the prior year
in which second quarter harvest volume represented 38% of the full-year
total.
For the
first six months of 2008, Fee Timber operating income declined 68%, from $5.2
million in 2008 to $1.7 million in 2009. This decline was driven by the combined
effect of a 34% drop in harvest volumes, from 24 MMBF in 2008 to 16 MMBF in
2009, and a 20% decrease in average realized log price, which dropped from $516
per MBF in 2008 to $415 per MBF in 2009.
Our
Timberland Management & Consulting segment posted an operating loss of
$45,000 for the six months ended June 30, 2009, which was an improvement on the
$321,000 operating loss for the same period in 2008. This comparative
improvement, however, is not expected to hold through the full year as our
management contract for Cascade Timberlands was terminated in July due, in part,
to inactive log markets in Cascade’s operating area.
Revenue
generated by the Real Estate segment declined by $607,000 for the first six
months of the year while operating performance improved slightly, with the
decline in land sales activity offset by an even greater decline in operating
expenses. Year-to-date operating losses for this segment were $653,000 for 2009
as compared to $706,000 in 2008.
General
& Administrative expenses for the first six months of 2009 declined 8% to
$1.7 million, compared to $1.9 million in the prior year. This
improvement was driven primarily by cost-cutting measures put in place at the
end of the first quarter.
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 140,000
acres of timberland and development property in Washington. 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. We also manage, co-invest in, and consolidate two timberland
investment funds that we manage for a fee. 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.
Page 2 of
6
POPE RESOURCES REPORTS SECOND QUARTER 2009
EARNINGS
July 29, 2009
July 29, 2009
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; 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
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Pope
Resources, A Delaware Limited Partnership
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||||||||||||||||
|
Unaudited
|
||||||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
|
(all
amounts in $000's, except per unit amounts)
|
||||||||||||||||
|
Three
months ended June 30,
|
Six
months ended June 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenues
|
$ | 3,666 | $ | 11,252 | $ | 8,645 | $ | 17,592 | ||||||||
|
Costs
and expenses:
|
||||||||||||||||
|
Cost
of sales
|
(1,882 | ) | (6,289 | ) | (4,080 | ) | (8,968 | ) | ||||||||
|
Operating
expenses
|
(2,508 | ) | (3,348 | ) | (5,330 | ) | (6,304 | ) | ||||||||
|
Operating
income (loss)
|
(724 | ) | 1,615 | (765 | ) | 2,320 | ||||||||||
|
Interest
income
|
63 | 218 | 132 | 613 | ||||||||||||
|
Interest
expense
|
(593 | ) | (606 | ) | (1,210 | ) | (1,240 | ) | ||||||||
|
Capitalized
interest
|
313 | 311 | 618 | 619 | ||||||||||||
|
Gain
on SLARS redemption
|
3 | - | 3 | - | ||||||||||||
|
SLARS
impairment
|
- | - | (60 | ) | - | |||||||||||
|
Income
(loss) before income taxes
|
(938 | ) | 1,538 | (1,282 | ) | 2,312 | ||||||||||
|
Income
tax expense
|
(5 | ) | - | (5 | ) | (57 | ) | |||||||||
|
Net
income (loss)
|
(943 | ) | 1,538 | (1,287 | ) | 2,255 | ||||||||||
|
Net
loss attributable to noncontrolling interest Timber Fund I,
LP
|
240 | 145 | 459 | 369 | ||||||||||||
|
Net
loss attributable to noncontrolling interest Timber Fund II,
Inc.
|
10 | - | 12 | - | ||||||||||||
|
Net
income (loss) attributable to Pope Resources' unitholders
|
$ | (693 | ) | $ | 1,683 | $ | (816 | ) | $ | 2,624 | ||||||
|
Average
units outstanding - Basic
|
4,529 | 4,583 | 4,561 | 4,601 | ||||||||||||
|
Average
units outstanding - Diluted
|
4,529 | 4,678 | 4,561 | 4,699 | ||||||||||||
|
Basic
net income (loss) per unit
|
$ | (0.16 | ) | $ | 0.36 | $ | (0.18 | ) | $ | 0.56 | ||||||
|
Diluted
net income (loss) per unit
|
$ | (0.16 | ) | $ | 0.36 | $ | (0.18 | ) | $ | 0.55 | ||||||
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(all
amounts in $000's)
|
||||||||
|
30-Jun-09
|
31-Dec-08
|
|||||||
|
Assets:
|
||||||||
|
Pope
Resources cash and cash equivalents
|
$ | 9,444 | $ | 15,931 | ||||
|
ORM
Timber Funds cash and cash equivalents
|
1,939 | 2,047 | ||||||
|
Cash
and cash equivalents
|
11,383 | 17,978 | ||||||
|
Other
current assets
|
1,466 | 1,868 | ||||||
|
Total
current assets
|
12,849 | 19,846 | ||||||
|
Roads
and timber, net
|
91,889 | 92,753 | ||||||
|
Properties
and equipment, net
|
48,949 | 47,946 | ||||||
|
Auction
rate securities
|
3,678 | 3,619 | ||||||
|
Other
assets
|
1,667 | 1,247 | ||||||
|
Total
|
$ | 159,032 | $ | 165,411 | ||||
|
Liabilities
and equity:
|
||||||||
|
Current
liabilities
|
$ | 2,877 | $ | 3,581 | ||||
|
Long-term
debt, excluding current portion
|
26,865 | 28,169 | ||||||
|
Other
long-term liabilities
|
1,326 | 1,490 | ||||||
|
Total
liabilities
|
31,068 | 33,240 | ||||||
|
Partners'
capital
|
83,635 | 87,817 | ||||||
|
Accumulated
other comprehensive income
|
141 | - | ||||||
|
Noncontrolling
interests
|
44,188 | 44,354 | ||||||
|
Total
|
$ | 159,032 | $ | 165,411 | ||||
|
RECONCILIATION
BETWEEN NET INCOME (LOSS) AND CASH FLOWS FROM OPERATIONS
|
|||||||||||||||||
|
(all
amounts in $000's)
|
|||||||||||||||||
|
Three
months ended June 30,
|
Six
months ended June 30,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
Net
income (loss)
|
$ | (943 | ) | $ | 1,538 | $ | (1,287 | ) | $ | 2,255 | |||||||
|
Added
back:
|
|||||||||||||||||
|
Depletion
|
464 | 1,083 | 1,033 | 1,738 | |||||||||||||
|
Timber
depletion on HBU sale
|
- | - | - | 126 | |||||||||||||
|
SLARS
activity
|
(3 | ) | - | 57 | - | ||||||||||||
|
Depreciation
and amortization
|
202 | 197 | 405 | 385 | |||||||||||||
|
Unit
compensation
|
144 | 93 | 303 | 206 | |||||||||||||
|
Deferred
taxes
|
(109 | ) | - | (109 | ) | - | |||||||||||
|
Cost
of land sold
|
116 | 2,344 | 116 | 2,517 | |||||||||||||
|
Change
in operating accounts
|
(850 | ) | (113 | ) | (733 | ) | (1,588 | ) | |||||||||
|
Cash
provided by (used in) operations
|
$ | (979 | ) | $ | 5,142 | $ | (215 | ) | $ | 5,639 | |||||||
|
SEGMENT
INFORMATION
|
||||||||||||||||
|
(all
amounts in $000's)
|
||||||||||||||||
|
Three
months ended June 30,
|
Six
months ended June 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenues:
|
||||||||||||||||
|
Pope
Resources Fee Timber
|
$ | 2,754 | $ | 7,341 | $ | 7,274 | $ | 12,793 | ||||||||
|
ORM
Timber Funds
|
- | 2,747 | 1 | 2,855 | ||||||||||||
|
Total
Fee Timber
|
2,754 | 10,088 | 7,275 | 15,648 | ||||||||||||
|
Timberland
Management & Consulting (TM&C)
|
303 | 254 | 511 | 478 | ||||||||||||
|
Real
Estate
|
609 | 910 | 859 | 1,466 | ||||||||||||
|
Total
|
3,666 | 11,252 | 8,645 | 17,592 | ||||||||||||
|
Operating
income (loss):
|
||||||||||||||||
|
Fee
Timber
|
312 | 2,960 | 1,678 | 5,241 | ||||||||||||
|
TM&C
|
59 | (123 | ) | (45 | ) | (321 | ) | |||||||||
|
Real
Estate
|
(194 | ) | (206 | ) | (653 | ) | (706 | ) | ||||||||
|
General
& administrative
|
(901 | ) | (1,016 | ) | (1,745 | ) | (1,894 | ) | ||||||||
|
Total
|
$ | (724 | ) | $ | 1,615 | $ | (765 | ) | $ | 2,320 | ||||||
|
SELECTED
STATISTICS
|
||||||||||||||||
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Log
sale volumes (thousand board feet):
|
||||||||||||||||
|
Sawlogs
|
||||||||||||||||
|
Douglas-fir
|
4,953 | 8,928 | 12,483 | 16,129 | ||||||||||||
|
Whitewood
|
207 | 1,230 | 272 | 1,742 | ||||||||||||
|
Cedar
|
180 | 392 | 244 | 460 | ||||||||||||
|
Hardwood
|
271 | 451 | 390 | 652 | ||||||||||||
|
Pulp
|
||||||||||||||||
|
All
species
|
1,509 | 3,461 | 2,476 | 4,987 | ||||||||||||
|
Total
|
7,120 | 14,462 | 15,865 | 23,970 | ||||||||||||
|
Average
price realizations (per thousand board feet):
|
||||||||||||||||
|
Sawlogs
|
||||||||||||||||
|
Douglas-fir
|
343 | 525 | 443 | 546 | ||||||||||||
|
Whitewood
|
290 | 416 | 294 | 432 | ||||||||||||
|
Cedar
|
867 | 1,222 | 850 | 1,227 | ||||||||||||
|
Hardwood
|
430 | 671 | 443 | 661 | ||||||||||||
|
Pulp
|
||||||||||||||||
|
All
species
|
247 | 366 | 239 | 363 | ||||||||||||
|
Overall
|
338 | 501 | 415 | 516 | ||||||||||||
|
Owned
timber acres
|
114,000 | 114,000 | 114,000 | 114,000 | ||||||||||||
|
Acres
under management
|
291,000 | 291,000 | 291,000 | 291,000 | ||||||||||||
|
Capital
expenditures ($000's)
|
924 | 301 | 1,704 | 2,286 | ||||||||||||
|
Depletion
($000's)
|
464 | 1,083 | 1,033 | 1,864 | ||||||||||||
|
Depreciation
and amortization ($000's)
|
202 | 197 | 405 | 385 | ||||||||||||
|
Debt
to total capitalization (excludes noncontrolling interest)
|
25 | % | 24 | % | 25 | % | 24 | % | ||||||||
|
QUARTER
TO QUARTER COMPARISONS
|
||||||||
|
(Amounts
in $000's except per unit data)
|
||||||||
|
Q2
2009 vs. Q2 2008
|
Q2
2009 vs. Q1 2009
|
|||||||
|
Total
|
Total
|
|||||||
|
Net
income (loss) attributable to Pope Resources' unitholders:
|
||||||||
|
2nd
Quarter 2009
|
$ | (693 | ) | $ | (693 | ) | ||
|
1st
Quarter 2009
|
(123 | ) | ||||||
|
2nd
Quarter 2008
|
1,683 | |||||||
|
Variance
|
$ | (2,376 | ) | $ | (570 | ) | ||
|
Detail
of earnings variance:
|
||||||||
|
Fee
Timber
|
||||||||
|
Log
price realizations (A)
|
$ | (1,164 | ) | $ | (990 | ) | ||
|
Log
volumes (B)
|
(3,682 | ) | (775 | ) | ||||
|
Depletion
|
619 | 105 | ||||||
|
Production
costs
|
1,585 | 369 | ||||||
|
Other
Fee Timber
|
(6 | ) | 237 | |||||
|
Timberland
Management & Consulting
|
||||||||
|
Management
fee changes
|
95 | 95 | ||||||
|
Other
Timberland Mgmnt & Consulting
|
87 | 68 | ||||||
|
Real
Estate
|
||||||||
|
Land
sales
|
(316 | ) | 140 | |||||
|
Other
Real Estate
|
328 | 125 | ||||||
|
General
& administrative costs
|
115 | (57 | ) | |||||
|
Net
interest expense
|
(140 | ) | 26 | |||||
|
Other
(taxes, noncontrolling int., impairment)
|
103 | 87 | ||||||
|
Total
change in earnings
|
$ | (2,376 | ) | $ | (570 | ) | ||
|
(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.
|
||||||||