Pope Resources Reports Second Quarter Net Income of $3.5 Million.POULSBO, Wash. -- Pope pope: see papacy; Popes of the Roman Catholic Church, table; Roman Catholic Church. pope Ecclesiastical title of the bishop of Rome, head of the Roman Catholic church. Resources (Nasdaq:POPEZ) reported net income of $3.5 million, or 74 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ownership unit, on revenues of $15.6 million for the second quarter ended June June: see month. 30, 2006. This compares to net income of $4.1 million, or 86 cents per diluted ownership unit, on revenues of $16.1 million for the comparable period in 2005. Net income for the six months ended June 30, 2006, totaled $8.8 million, or $1.86 per diluted ownership unit, on revenues of $31.7 million. Net income for the corresponding period in 2005 totaled $8.7 million, or $1.83 per diluted ownership unit, on revenues of $32.8 million. Earnings before interest, taxes, depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able , and amortization (EBITDDA EBITDDA Earnings Before Income Tax, Depreciation, Depletion and Amortization ) for the quarter ended June 30, 2006, were $6.0 million, compared to $8.4 million for the second quarter of 2005. For the six months ended June 30, 2006, EBITDDA was $14.9 million, compared to $17.9 million for year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2005 results. "Our second quarter 2006 results were lower based primarily on our planned reduction in harvest (tool, networking) Harvest - A highly scalable, customisable system for discovering resources on the Internet. Version: 1.3. http://tardis.ed.ac.uk/harvest/. volume for 2006, as a result of which we experienced a 26% lower harvest volume compared to last year," said David L. Nunes Nunes is a Portuguese surname:
This page or section lists people with the surname Nunes. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Notwithstanding the impact to earnings from this reduction in harvest volume, second quarter results were buoyed by a 5% increase in log prices over the same period last year, and by $4.4 million of real estate sales which contributed $0.6 million of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. ." For the first six months of 2006 log sales volumes for our Fee Timber timber: see lumber; wood. segment decreased 15% compared to the same period in 2005, from 45 million board feet (MMBF MMBF Mean Miles Between Failure MMBF Thousand Thousand Board Feet (million board feet of timber) MMBF Mairoana-Mcfarland Bent Function ) in 2005 to 39 MMBF in 2006. This decline is in line with our previously announced reduction in annual harvest volume, from 74 MMBF in 2005 to 57 MMBF for 2006. Comparing the same six-month periods, average log prices were up $28 per thousand board feet (MBF MBF Thousand Board Feet MBF My Best Friend MBF Microsoft Business Framework MBF Medical Benefits Fund MBF My Boyfriend MBF Man's Best Friend MBF Management By Fact MBF Master Business Function (J.d. ), or 5%, compared to last year. Year-to-date Fee Timber operating income increased slightly in 2006 inasmuch as in·as·much as conj. 1. Because of the fact that; since. 2. To the extent that; insofar as. inasmuch as conj 1. since; because 2. the 2005 results included a heavier component of harvest from high depletion rate lands acquired in late-2004. Our Timberland Management & Consulting segment posted year-to-date operating income of $1.3 million in 2006, compared to $1.7 million for the first six months of 2005. The decline in operating income from this segment is the result of fewer assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. in 2006 offset only in part by earned property disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of fees. Operating income for our Real Estate segment declined from $0.8 million for the first six months of 2005 to $0.2 million for the comparable period in 2006 due to higher cost basis in lands sold in 2006 versus 2005. Over the balance of 2006, we anticipate closings from both our Gig Harbor harbor: see port. and Bremerton Bremerton (brĕm`ərtən), city (1990 pop. 38,142), Kitsap co., NW Wash., a harbor on an arm of Puget Sound; inc. 1901. The city was established (1891) when the area was selected as the site for the U.S. Puget Sound Naval Shipyard. projects that will cause this segment's operating income to exceed 2005 levels. About Pope Resources Pope Resources, a publicly traded limited partnership, and its subsidiaries Olympic O·lym·pic adj. Of or relating to the Olympic Games. Olympic Adjective of the Olympic Games Adj. 1. Olympic - of or relating to the Olympic Games; "Olympic winners" 2. Resource Management and Olympic Property Group, own or manage nearly 410,000 acres of timberland and development property in Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. and Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. . In addition, we provide forestry forestry, the management of forest lands for wood, water, wildlife, forage, and recreation. Because the major economic importance of the forest lies in wood and wood products, forestry has been chiefly concerned with timber management, especially reforestation, consulting and timberland investment management services to third-party owners and managers of timberland in Washington, Oregon, and California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . The company and its predecessor predecessor - parent 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 Translated from source code into machine code one line at a time. See interpreted language and interpreter. interpreted - interpreter as promises of future management actions or financial performance. Our future actions and actual performance will vary from current expectations and under various circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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; factors that affect the amount, timing and certainty CERTAINTY, UNCERTAINTY, contracts. In matters of obligation, a thing is certain, when its essence, quality, and quantity, are described, distinctly set forth, Dig. 12, 1, 6. It is uncertain, when the description is not that of one individual object, but designates only the kind. Louis. of our expected real estate sales; environmental and land use regulations that limit our ability to harvest timber and develop property; labor, equipment and transportation costs that affect our fee timber 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 Six months ended
June 30, June 30,
2006 2005 2006 2005
Revenues $15,610 $ 16,131 $ 31,693 $ 32,787
Costs and expenses:
Cost of sales (8,414) (7,410) (14,839) (15,214)
Operating expenses (3,461) (3,626) (6,934) (6,807)
------- -------- -------- --------
Operating income 3,735 5,095 9,920 10,766
Interest, net (217) (635) (526) (1,352)
------- -------- -------- --------
Income before income taxes and
minority interest 3,518 4,460 9,394 9,414
Income tax provision 8 (263) (437) (510)
------- -------- -------- --------
Income before minority interest 3,526 4,197 8,957 8,904
Minority interest 14 (128) (119) (229)
------- -------- -------- --------
Net income $ 3,540 $ 4,069 $ 8,838 $ 8,675
======= ======== ======== ========
Average units outstanding --
Basic 4,641 4,596 4,638 4,578
======= ======== ======== ========
Average units outstanding --
Diluted 4,753 4,757 4,750 4,740
======= ======== ======== ========
Basic net income per unit $ 0.76 $ 0.89 $ 1.91 $ 1.89
======= ======== ======== ========
Diluted net income per unit $ 0.74 $ 0.86 $ 1.86 $ 1.83
======= ======== ======== ========
CONSOLIDATED BALANCE SHEETS
(all amounts in $000's)
June 30,
2006 2005
-------- --------
Assets:
Cash $ 2,679 $ 1,574
Short term investments 20,000 8,007
Other current assets 6,948 4,517
Roads and timber 48,714 57,977
Properties and equipment 30,559 26,981
Other assets 1,124 989
-------- --------
Total $110,024 $100,045
======== ========
Liabilities and partners' capital:
Current liabilities $ 5,404 $ 3,976
Long-term debt, excluding current portion 30,919 32,497
Other long-term liabilities 321 211
Total liabilities 36,644 36,684
Partners' capital 73,380 63,361
-------- --------
Total $110,024 $100,045
======== ========
RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Net income $ 3,540 $ 4,069 $ 8,838 $ 8,675
Added back:
Interest, net 217 635 526 1,352
Depletion 2,119 3,223 4,692 7,066
Depreciation and amortization 175 167 359 319
Income tax expense (8) 263 437 510
------- ------- ------- -------
EBITDDA $ 6,043 $ 8,357 $14,852 $17,922
======= ======= ======= =======
RECONCILIATION BETWEEN CASH FROM OPERATIONS AND EBITDDA
(all amounts in $000's)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Cash from operations $ 7,858 $ 5,921 $12,313 $12,814
Added back:
Change in working capital 1,522 734 5,682 2,727
Interest 217 635 526 1,352
Deferred profit - 837 - 685
Minority interest 13 - - -
Deferred taxes 36 - 19 -
Income tax provision - 263 437 510
Less:
Deferred profit (666) - (941) -
Cost of land sold (2,856) (32) (2,869) (166)
Equity based compensation (72) - (195) -
Minority interest - - (120) -
Income tax provision (8) (1) - -
Other (1) - - -
------- ------- ------- --------
EBITDDA $ 6,043 $ 8,357 $14,852 $17,922
======= ======= ======= =======
SEGMENT INFORMATION
(all amounts in $000's)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Revenues:
Fee Timber $10,449 $13,220 $24,173 $26,883
Timberland Management &
Consulting (TM&C) 544 1,843 2,568 3,457
Real Estate 4,617 1,068 4,952 2,447
------- ------- ------- -------
Total 15,610 16,131 31,693 32,787
EBITDDA:
Fee Timber 6,195 8,090 15,071 17,001
TM&C 71 719 1,250 1,481
Real Estate 629 330 324 1,001
General & administrative (852) (782) (1,793) (1,561)
------- ------- ------- -------
Total 6,043 8,357 14,852 17,922
Depreciation, depletion and
amortization:
Fee Timber 2,181 3,160 4,825 7,029
TM&C 20 27 36 48
Real Estate 43 138 77 174
General & administrative 50 65 113 134
------- ------- ------- -------
Total 2,294 3,390 5,051 7,385
Operating income/(loss):
Fee Timber 4,014 4,930 10,246 9,972
TM&C 37 820 1,333 1,662
Real Estate 586 192 247 827
General & administrative (902) (847) (1,906) (1,695)
------- ------- ------- -------
Total $ 3,735 $ 5,095 $ 9,920 $10,766
======= ======= ======= =======
SELECTED STATISTICS
Three months ended Six months ended
30-Jun-06 30-Jun-05 30-Jun-06 30-Jun-05
Log sale volumes (thousand
board feet):
Sawlogs
Douglas-fir 11,842 12,195 28,282 25,876
Whitewood 1,149 4,113 3,145 7,528
Cedar 227 1,730 586 3,208
Hardwood 1,144 1,299 1,706 2,788
Pulp
All species 2,288 3,026 4,964 5,963
-------- -------- -------- --------
Total 16,650 22,363 38,683 45,363
======== ======== ======== ========
Average price realizations
(per thousand board feet):
Sawlogs
Douglas-fir 665 644 675 644
Whitewood 452 487 410 480
Cedar 1,182 981 993 943
Hardwood 670 563 646 597
Pulp
All species 260 205 255 212
Overall 603 577 606 578
Owned timber acres 114,440 115,103 114,440 115,103
Acres under management 291,925 527,316 291,925 527,316
Capital expenditures ($000's) $ 2,713 $ 744 $ 4,148 $ 1,691
Depletion ($000's) $ 2,119 $ 3,223 $ 4,692 $ 7,066
Depreciation ($000's) $ 175 $ 167 $ 359 $ 319
Debt to total capitalization 31% 35% 31% 35%
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's except per unit data)
Q2 2006 Q2 2006
vs. vs.
Q2 2005 Q1 2006
Total Total
Net income:
2nd Quarter 2006 $ 3,540 $ 3,540
1st Quarter 2006 5,298
2nd Quarter 2005 4,069
------- --------
Variance $ (529) $(1,758)
Detail of earnings variance:
Fee Timber
Log price realizations (A) $ 433 $ (83)
Log volumes (B) (3,296) (3,273)
Depletion 1,005 454
Production costs 862 579
Other Fee Timber 80 105
Timberland Management & Consulting
Management fee changes (673) (314)
Disposition fee changes - (1,343)
Other Timberland Mgmnt & Consulting (110) 398
Real Estate
Environmental remediation liability 108 -
Land sales 707 1,274
Depletion 99 -
Other Real Estate (520) (349)
General & administrative costs (55) 102
Interest expense 240 59
Other (taxes, minority int., interest inc.) 591 633
------- -------
Total change in earnings $ (529) $(1,758)
======= =======
(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.
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