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PLUM CREEK TIMBER COMPANY INC. Reports Operating Results (10-Q)

August 04, 2010 | About:

10qk

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PLUM CREEK TIMBER COMPANY INC. (PCL) filed Quarterly Report for the period ended 2010-06-30.

Plum Creek Timber Company Inc. has a market cap of $5.98 billion; its shares were traded at around $36.68 with a P/E ratio of 37 and P/S ratio of 4.7. The dividend yield of Plum Creek Timber Company Inc. stocks is 4.5%. Plum Creek Timber Company Inc. had an annual average earning growth of 3.1% over the past 10 years.PCL is in the portfolios of Jean-Marie Eveillard of First Eagle Investment Management, LLC, Tom Gayner of Markel Gayner Asset Management Corp, Jeff Auxier of Auxier Focus Fund, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Manning & Napier Advisors, Inc.

Highlight of Business Operations:

Northern Resources Segment operating income was $3 million for the second quarter of 2010 compared to an operating loss of $7 million for the second quarter of 2009. This increase of $10 million was due primarily to higher sawlog prices. Segment costs and expenses increased by $1 million, or 2%, to $43 million for the second quarter of 2010 due primarily to higher sawlog harvest levels. Log and haul rates per ton were flat during the second quarter of 2010 compared to the second quarter of 2009.

Revenues decreased by $35 million, or 45%, to $43 million in the second quarter of 2010. This decrease is due primarily to revenue of $38 million from selling 59,160 large, non-strategic acres in Wisconsin during 2009. Excluding the large non-strategic acres in Wisconsin, real estate revenues during the second quarter of 2010 increased slightly compared to second quarter 2009. This increase is due primarily to an increase in the number of higher and better use / recreational acres sold ($16 million), offset in part by lower revenue from the sale of conservation properties ($7 million) and small non-strategic properties ($7 million). The increase in higher and better use / recreational acres sold is due primarily to our focus on listing more lower valued properties. We continue to focus in regions with lower value higher and better use / recreational properties as demand in regions with higher value properties remains weak. Additionally, the timing of real estate sales is a function of many factors, including the general state of the economy, demand in local real estate markets, the ability to obtain entitlements, the number of properties listed for sale, the seasonal nature of sales (particularly in the northern states), the plans of adjacent landowners, our expectation of future price appreciation, the timing of harvesting activities, and the availability of government and not-for-profit funding.

due primarily to an increase in MDF sales volume, an improvement in plywood and lumber prices, and a gain from the sale of certain lumber manufacturing assets ($2 million). This gain is reported as Other Operating Income (Expense), net in our Consolidated Statements of Income. See Note 14 of the Notes to Consolidated Financial Statements. Manufactured Products Segment costs and expenses increased by $2 million, or 3%, to $68 million for the second quarter of 2010.

Provision (Benefit) for Income Taxes. The provision for income taxes was $2 million for the second quarter of 2010 compared to a benefit for income taxes of $3 million for the second quarter of 2009. The increase in tax expense of $5 million is due primarily to improved results in our manufacturing business which increased operating income by $10 million during the second quarter of 2010 compared to the second quarter of 2009 (resulting in $4 million higher tax expense in 2010).

Revenues increased by $13 million, or 14%, to $105 million in the first six months of 2010 compared to the first six months of 2009. This increase was due primarily to higher sawlog prices ($10 million) and higher sawlog harvest volumes ($10 million), partially offset by lower pulpwood harvest volumes ($5 million) and lower pulpwood prices ($3 million). Sawlog harvest volumes were 24% higher compared to the same period of 2009. This increase in harvest volume is due primarily to accelerating harvesting into the first half of 2010 from future quarters of 2010 to take advantage of favorable log prices. Pulpwood harvest volumes were 13% lower due primarily to temporarily increasing harvest levels in prior years to capture favorable pulpwood prices. Sawlog harvest levels for all of 2010 are expected to be comparable to the 2.1 million tons harvested during 2009 due primarily to continued harvest deferrals because of weak log prices and limited demand. Pulpwood harvest levels for all of 2010 are expected to decrease by approximately 20% compared to the 2.3 million tons harvested during 2009 due primarily to temporarily increasing harvest levels in prior years to capture favorable pulpwood prices.

Northern Resources Segment operating income was $7 million for the first six months of 2010 compared to an operating loss of $5 million for the first six months of 2009. This increase of $12 million was due primarily to higher sawlog prices. Segment costs and expenses increased by $1 million, or 1%, to $98 million for the first six months of 2010 due primarily to higher sawlog harvest levels.

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