Plum Creek Timber is the second largest private timberland owner in the United States with approximately 7.8 million acres of timberlands located in 19 states. Their timberlands are well diversified not only by species mix but also by age distribution. Growth rates vary depending on species location age and forestry practices. They manage their timberlands in two business segments: the Northern Resources Segment and the Southern Resources Segment. Plum Creek Timber Company Inc. has a market cap of $5.29 billion; its shares were traded at around $32.51 with a P/E ratio of 19.1 and P/S ratio of 3.2. The dividend yield of Plum Creek Timber Company Inc. stocks is 5.1%. Plum Creek Timber Company Inc. had an annual average earning growth of 7.9% over the past 5 years.
Highlight of Business Operations:Real Estate Segment operating income was 27% of its third quarter revenues for 2009 compared to 67% for 2008. This change was due primarily to the non-cash exchange, as the book value of the timberlands we disposed of approximated the exchange value of $25 million, and selling lower value conservation and higher and better use / recreational properties. Real Estate Segment costs and expenses increased by $18 million to $53 million in the third quarter of 2009 due primarily to the non-cash exchange during 2009 ($25 million).
The Manufactured Products Segment operated at approximately break-even for the third quarter of 2009 compared to a $4 million operating loss for the third quarter of 2008. Included in the third quarter of 2009, was a $4 million pension settlement charge resulting from the headcount reductions at our manufacturing operations. See Note 12 of the Notes to Consolidated Financial Statements. Manufactured Products Segment costs and expenses decreased by $42 million, or 39%, to $66 million for the third quarter of 2009. This decrease was due primarily to lower lumber, plywood and MDF sales volume, partially offset by higher pension expense.
Other Costs and Eliminations. Other costs and eliminations (which consists of corporate overhead and intercompany profit elimination) decreased operating income by $9 million during the third quarter of 2009 and by $17 million during the third quarter of 2008. The decrease in expenses of $8 million was due primarily to lower share-based compensation expense ($5 million), reduced depreciation on information technology assets ($1 million) and higher legal and other advisory costs incurred in the third quarter of 2008 related to the Timberland Venture transaction in 2008 ($1 million).
of 2009, we recorded our share of equity earnings from SDT of $14 million, which includes amortization ($2 million increase in equity earnings) of the difference between the book value of the companys investment and its proportionate share of SDTs net assets. We received cash distributions of $28 million from SDT during the third quarter of 2009.
Interest Expense, net (Debt Obligations to Unrelated Parties). Interest expense, net of interest income, for debt obligations to unrelated parties decreased $13 million, or 37%, to $22 million in the third quarter of 2009. This decrease was due primarily to lower borrowings outstanding compared to the third quarter of 2008 ($8 million) and lower interest rates on our variable rate debt ($5 million). During the fourth quarter of 2008, we paid down approximately $420 million of debt, consisting of $219 million of debt principal payments and a $201 million reduction of outstanding borrowings on our line of credit. During the first nine months of 2009, we paid down approximately $203 million of debt, consisting of $108 million of scheduled debt principal payments and $95 million of debt principal prepayments. A portion of the scheduled debt payments in 2009 was funded by an increase of $33 million on our line of credit. As of September 30, 2009, the weighted-average interest rate for the borrowings on the line of credit was 0.67%.
Benefit for Income Taxes. The benefit for income taxes was $3 million for the third quarter of 2009 compared to a benefit for income taxes of $5 million for the third quarter of 2008. The decrease in the tax benefit of $2 million is due primarily to lower losses in our manufacturing business in the third quarter of 2009 compared to the third quarter of 2008.
Read the The complete ReportPCL is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Tom Gayner of Markel Gayner Asset Management Corp.