Company to Revise Second and Third Quarter Financial Statements to Reflect
Deferral of Approximately $4.8 Million of Previously Reported Revenue and
EBITDDA
NEW YORK, Feb. 17 /PRNewswire/ -- U.S. Timberlands Company, L.P.
(Nasdaq: TIMBZ) today announced cash flow and operating results for the fourth
quarter and year ended December 31, 1998 and its decision to revise its second
and third quarter results to reflect the deferral of approximately $4.8
million of previously reported 1998 second and third quarter revenues and
EBITDDA.
Cash flow for the fourth quarter of 1998, as measured by EBITDDA, was
$12.8 million, or $0.98 per unit, compared to cash flow of $28.7 million, or
$2.18 per unit, for the fourth quarter of 1997. EBITDDA is defined as
operating income plus depletion, depreciation, road amortization and cost of
timber and property sales. The Company reported net income for the fourth
quarter of $0.6 million, or $0.05 per unit, compared with net income before
extraordinary item of $5.5 million, or $0.42 per unit, for the same period in
1997. Fourth quarter 1997 results include a $5.8 million non-cash charge for
the write-off of deferred financing costs in connection with the retirement of
certain debt upon completion of U.S. Timberlands' initial public offering in
November 1997. Adjusted for this extraordinary item, U.S. Timberlands
reported a net loss of $0.3 million or a loss of $0.02 per unit in the fourth
quarter of 1997. Included in the 1998 fourth quarter net income is
$0.9 million of income from the partial reversal of $1.9 million of non-cash
charges taken in 1998 and 1997 to mark-to-market a financial instrument in
accordance with FAS 80. In the fourth quarter of 1997, a $0.6 million
non-cash charge was taken to mark the financial instrument to market. The
term of the financial instrument expires in 1999. Revenues for the fourth
quarter of 1998 were $20.4 million compared with $36.3 million for the same
period in 1997. Revenues for the fourth quarter of 1997 included
$11.7 million from the sale of timberlands.
Cash flow for the full year 1998, as measured by EBITDDA, was
$44.2 million, or $3.37 per unit, compared to cash flow of $53.3 million, or
$4.06 per unit, for the same period of 1997. The Company reported a net loss
in 1998 of $6.4 million, or a loss of $0.49 per unit, compared with a loss
before extraordinary item of $1.4 million, or a loss of $0.10, for the same
period in 1997. Results for the year ended 1997 included $9.3 million in
non-cash charges for the write-off of deferred financing costs related to
extinguishment of debt. Adjusted for this extraordinary item, U.S.
Timberlands reported a net loss of $10.7 million, or a loss of $0.82 per unit
for 1997. Revenues for the full year 1998 were $71.3 million compared with
$77.3 million for the same period in 1997.
As previously announced, the fourth quarter distribution to Unitholders of
$.50 per unit was paid on February 12, 1999 to Unitholders of record as of
February 2, 1999.
The Company also announced today that during its year end audit, it was
determined that $5.5 million of revenue under certain stumpage contacts should
be deferred from 1998 into subsequent years. Of this amount, $4.8 million had
been recognized in the second and third quarters of 1998, and $0.7 million
applied to the fourth quarter of 1998. During 1998, the Company, with the
counsel of its then existing accounting firm and legal counsel, developed a
stumpage contract by which the Company recognized revenue at contract
execution and achieved capital gains treatment under such contracts when the
purchasers actually removed the timber from U.S. Timberlands' property. The
Company is party to six such contracts. Each contract allows the purchaser,
over a two-year period, to remove all specified timber in designated portions
of the Company's forests. The contracts provide for an initial payment with
additional monies paid as timber is removed at agreed upon unit prices, with
specific liquidated damages in the event that the purchaser does not remove
all of the specified timber by contract expiration. Management expects that
substantially all deferred revenues will be recognized in 1999.
The deferral of the stumpage contract revenues caused the Company to be in
non-compliance with certain of its bank covenants at year-end. The required
majority of the banks have waived such non-compliance so that the Company is
not in default under its credit agreement with the banks. In exchange for the
waiver, the Company agreed that future borrowings in excess of $2.0 million
will require the consent of the majority of the banks. The Company currently
has no borrowings outstanding under its credit agreement with the banks and it
had no outstanding borrowings at year-end. Management believes the Company
has access to adequate resources to meet all its operating and distribution
obligations for the next year.
John M. Rudey, Chairman, President and Chief Executive Officer, stated,
"We are pleased with our operating performance during 1998 and the progress we
have made in implementing a new and comprehensive management information,
reporting and control system. Our new management team is prepared to take
advantage of a number of business opportunities that will allow the Company to
diversify and expand into new areas that should be accretive to cash flow."
U.S. Timberlands Company, L.P. owns 617,000 fee acres of timberland and
cutting rights on 3,000 acres of timberland containing total merchantable
timber volume estimated to be approximately 2.0 billion board feet in Oregon
east of the Cascade Range. U.S. Timberlands specializes in the growing of
trees and the sale of logs and standing timber. Logs harvested from the
timberlands are sold to unaffiliated domestic conversion facilities. These
logs are processed for sale as lumber, molding products, doors, millwork,
commodity, specialty and overlaid plywood products, laminated veneer lumber,
engineered wood I-beams, particleboard, hardboard, paper and other wood
products. These products are used in residential, commercial and industrial
construction, home remodeling and repair and general industrial applications
as well as a variety of paper products. U.S. Timberlands also owns and
operates its own seed orchard and produces approximately five million conifer
seedlings annually from its nursery, approximately two hundred fifty thousand
of which are used for its own internal reforestation programs, with the
balance sold to other forest products companies.
Certain information discussed in this press release may constitute
forward-looking statements within the meaning of the federal securities law.
Although U.S. Timberlands believes that expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give
no assurance that its expectations will be achieved. Forward-looking
information is subject to certain risks, trends, and uncertainties that could
cause actual results to differ materially from those projected. Such risks,
trends and uncertainties include the highly cyclical nature of the forest
products industry, economic conditions in export markets, the possibility that
timber supply could increase if governmental, environmental or endangered
species policies change, and limitations on U.S. Timberlands' ability to
harvest its timber due to adverse natural conditions or increased governmental
restrictions. For a more complete description of factors which could impact
U.S. Timberlands and the statements contained herein, reference should be made
to U.S. Timberlands' filings with the United States Securities and Exchange
Commission.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Unit Information)
(Unaudited)
Quarter Ended December 31,
1998 1997
Revenues $20,417 $ 36,288
Cost and expenses:
Cost of goods sold 4,237 5,440
Cost of timber and property sales - 7,555
Depletion, depreciation and road
amortization 7,448 6,545
Silviculture 321 237
Selling, general and
administrative 3,047 1,950
Total cost and expenses 15,053 21,727
Operating income 5,364 14,561
Interest expense 5,497 7,503
Interest income (121) (260)
Financing fees 169 1,239
Other (income) expense -- net (829) 622
Income before extraordinary item 648 5,457
Extraordinary item -- loss on
extinguishment of debt - 5,766
Net income (loss) $648 $(309)
Income per Unit (before
extraordinary item
in 1997) (A) $0.05 $0.42
Units outstanding (A) 12,859,607 12,859,607
EBITDDA (B) $12,812 $ 28,661
EBITDDA per Unit (A) $ 0.98 $2.18
(A) Units outstanding used to compute net income (loss) and EBITDDA per
unit are based on the weighted average number of units outstanding. The
1997 weighted average units outstanding assumes that the units issued in
the Company's initial public offering were issued as of January 1, 1997.
Calculations of per unit amounts are made after giving effect to the
General Partner's allocation of net income (loss) or EBITDDA.
(B) EBITDDA is defined as operating income plus depletion, depreciation,
road amortization and cost of timber and property sales.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Unit Information)
Twelve Months Ended December 31,
1998 1997
(Unaudited)
Revenues $71,324 $77,345
Cost and expenses:
Cost of goods sold 15,950 16,885
Cost of timber and
property sales 5,917 8,746
Depletion, depreciation
and road amortization 21,938 17,303
Silviculture 733 893
Selling, general and
administrative 10,462 6,250
Total cost and expenses 55,000 50,077
Operating income 16,324 27,268
Interest expense 22,182 25,321
Interest income (460) (1,452)
Financing fees 675 4,193
Other (income) expense - net 310 574
Loss before extraordinary item (6,383) (1,368)
Extraordinary item -- loss on
extinguishment of debt - 9,337
Net loss $(6,383) $(10,705)
Loss per Unit (before
extraordinary item
in 1997) (A) $ (0.49) $(0.10)
Units outstanding (A) 12,859,607 12,859,607
EBITDDA (B) $44,179 $53,317
EBITDDA per Unit (A) $3.37 $ 4.06
(A) Units outstanding used to compute net loss and EBITDDA per unit are
based on the weighted average number of units outstanding. The 1997
weighted average units outstanding assumes that the units issued in the
Company's initial public offering were issued as of January 1, 1997.
Calculations of per unit amounts are made after giving effect to the
General Partner's allocation of net loss or EBITDDA.
(B) EBITDDA is defined as operating income plus depletion, depreciation,
road amortization and cost of timber and property sales.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, 1998 December 31, 1997
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $4,824 $10,625
Accounts receivable -- net 1,527 2,526
Prepaid and other 2,717 1,781
Total current assets 9,068 14,932
Timber, timberlands
and roads -- net 332,593 359,349
Seed orchard and nursery stock 1,883 1,828
Property, plant
and equipment -- net 1,155 1,261
Long term receivable - 1,171
Deferred financing fees 5,998 6,673
Total assets $350,697 $385,214
Liabilities
Current liabilities:
Accounts payable and accrued
liabilities $6,052 $7,353
Deferred revenue 1,614 5,744
Total current liabilities 7,666 13,097
Long-term debt 225,000 225,000
Minority interest 1,180 1,471
Partners' Capital
Partners' capital 116,851 145,646
Total liabilities and
partners' capital $350,697 $385,214
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
Twelve Months Ended December 31,
1998 1997
(Unaudited)
Cash Flows From Operating
Activities:
Net loss $(6,383) $(10,705)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation, depletion,
road amortization and
cost of timberland sold 27,855 26,775
Deferred financing fees 675 9,148
Other non-cash items 361 630
Working capital
changes - net (6,134) 435
Net cash provided by operating a
activities 16,374 26, 283
Cash Flows From Investing
Activities:
Ochoco acquisition - (110,873)
Timber and road additions - net (348) (534)
Repayment of receivable from
affiliate - 10,000
Capitalized seed orchard and
nursery costs - net (263) (240)
Purchase of property, plant and
equipment - net (33) (319)
Proceeds from sale of
logging equipment - 400
Net cash used in investing
activities (644) (101,566)
Cash Flows From Financing
Activities:
Long-term borrowings - 510,000
Repayment of long-term borrowings - (590,000)
Deferred financing fees - (12,720)
Partner Contribution - 1
Distribution to Unitholders (22,701) -
Distribution to member - (1,191)
Long term notes receivable
- net 1,170 -
Common Units Offering costs - (16,922)
Common Units Offering proceeds - 180,127
Net cash (used in) or provided
by financing activities (21,531) 69,295
Decrease in cash and cash
equivalents (5,801) (5,988)
Cash and cash equivalents
- beginning of period 10,625 16,613
Cash and cash equivalents
- end of period $4,824 $10,625
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED RESTATED QUARTERLY CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Unit Information)
(Unaudited)
Quarter Ended June 30, 1998
As Previously Adjustments(C) Restated
Reported
Revenues $21,814 $(3,192) $18,622
Cost and expenses:
Cost of goods sold 4,246 (232) 4,014
Cost of timber and property sales 5,917 - 5,917
Depletion, depreciation and road
amortization 5,173 (1,216) 3,957
Silviculture - 235 235
Selling, general and
administrative 1,763 (3) 1,760
Total cost and expenses 17,099 (1,216) 15,883
Operating income 4,715 (1,976) 2,739
Interest expense 5,635 - 5,635
Interest income (94) - (94)
Financing fees 169 - 169
Other (income) expense - net (85) - (85)
Net Loss $ (910) $(1,976) $(2,886)
Loss per Unit (A) $(0.07) $(0.15) $(0.22)
Units outstanding (A) 12,859,607 - 12,859,607
EBITDDA (B) $15,804 $(3,192) $12,612
EBITDDA per Unit (A) $1.20 $(0.24) $0.96
(A) Units outstanding used to compute net loss and EBITDDA per unit are
based on the weighted average number of units outstanding. Calculations
of per unit amounts are made after giving effect to the General Partner's
allocation of net loss or EBITDDA.
(B) EBITDDA is defined as operating income plus depletion, depreciation,
road amortization and cost of timber and property sales.
(C)The adjustment is the effect of deferring the recognition of revenue
from certain stumpage contracts to the period when the timber is
harvested. Revenues from these contracts were previously reported in the
period the contracts were executed.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED RESTATED QUARTERLY CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Unit Information)
(Unaudited)
Quarter Ended September 30, 1998
As Previously Adjustments(C) Restated
Reported
Revenues $26,096 $(1,568) $24,528
Cost and expenses:
Cost of goods sold 5,024 - 5,024
Cost of timber and property sales - - -
Depletion, depreciation and road
amortization 8,561 (787) 7,774
Silviculture 200 - 200
Selling, general and
administrative 2,026 - 2,026
Total cost and expenses 15,811 (787) 15,024
Operating income 10,285 (781) 9,504
Interest expense 5,587 - 5,587
Interest income (116) 46 (70)
Financing fees 169 - 169
Other (income) expense - net 1,248 - 1,248
Net Income $ 3,397 $(827) $2,570
Income per Unit (A) $0.26 $(0.06) $0.20
Units outstanding (A) 12,859,607 - 12,859,607
EBITDDA (B) $18,846 $(1,568) $17,278
EBITDDA per Unit (A) $1.44 $(0.12) $1.32
(A) Units outstanding used to compute net income and EBITDDA per unit are
based on the weighted average number of units outstanding. Calculations of
per unit amounts are made after giving effect to the General Partner's
allocation of net income or EBITDDA.
(B) EBITDDA is defined as operating income plus depletion, depreciation,
road amortization and cost of timber and property sales.
(C)The adjustment is the effect of deferring the recognition of revenue
from certain stumpage contracts to the period when the timber is
harvested. Revenues from these contracts were previously reported in the
period the contracts were executed.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED RESTATED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
June 30, 1998
As Previously Adjustments (A) Restated
Reported
Assets
Current assets:
Cash and cash equivalents $ 3,334 $- $3,334
Accounts receivable -- net 3,920 - 3,920
Prepaid and other 2,040 (1,737) 303
Total current assets 9,294 (1,737) 7,557
Timber, timberlands
and roads -- net 346,080 1,217 347,297
Seed orchard and nursery stock 1,640 8 1,648
Property, plant and
equipment -- net 1,227 - 1,227
Long term receivable 1,592 (599) 993
Deferred financing fees 6,336 - 6,336
Total assets $366,169 $(1,111) $ 365,058
Liabilities
Current liabilities:
Accounts payable and accrued
liabilities $ 6,203 $- $6,203
Deferred revenue 5,053 865 5,918
Total current liabilities 11,256 865 12,121
Long-term debt 225,000 - 225,000
Minority interest 1,299 (20) 1,279
Partners' Capital
Partners' capital 128,614 (1,956) 126,658
Total liabilities and
partners' capital $366,169 $(1,111) $ 365,058
(A) The adjustment is the effect of deferring the recognition of revenue
from certain stumpage contracts to the period when the timber is
harvested. Revenues from these contracts were previously reported in the
period the contracts were executed.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED RESTATED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
September 30, 1998
As Previously
Reported Adjustments (A) Restated
Assets
Current assets:
Cash and cash equivalents $10,936 $-- $10,936
Accounts receivable -- net 4,449 -- 4,449
Prepaid and other 4,081 (2,845) 1,236
Total current assets 19,466 (2,845) 16,621
Timber, timberlands and roads -- net 337,631 2,005 339,636
Seed orchard and nursery stock 1,768 -- 1,768
Property, plant and equipment -- net 1,194 -- 1,194
Long term receivable 678 (678) --
Deferred financing fees 6,167 -- 6,167
Total assets $366,904 $(1,518) $ 365,386
Liabilities
Current liabilities:
Accounts payable and
accrued liabilities $12,389 $-- $12,389
Deferred revenue 2,766 1,285 4,051
Total current liabilities 15,155 1,285 16,440
Long-term debt 225,000 -- 225,000
Minority interest 1,267 (28) 1,239
Partners' Capital
Partners' capital 125,482 (2,775) 122,707
Total liabilities and
partners' capital $366,904 $(1,518) $365,386
(A) The adjustment is the effect of deferring the recognition of revenue
from certain stumpage contracts to the period when the timber is
harvested. Revenues from these contracts were previously reported in
the period the contracts were executed.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED RESTATED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended June 30, 1998
As Previously
Reported Adjustments(A) Restated
Cash Flows From Operating Activities:
Net Loss $(7,624) $(1,976) $(9,600)
Adjustments to reconcile
net loss to net cash
provided by operating activities:
Depreciation, depletion,
road amortization and
cost of timberland sold 13,850 (1,217) 12,633
Deferred financing fees 337 -- 337
Other non-cash items -- -- --
Working capital changes - net (3,510) 2,561 (949)
Net cash provided by operating activities3,053 (632) 2,421
Cash Flows From Investing Activities:
Timber and road additions - net (252) 34 (218)
Capitalized seed orchard
and nursery costs - net (63) -- (63)
Purchase of property,
plant and equipment - net (28) -- (28)
Net cash used in investing activities (343) 34 (309)
Cash Flows From Financing Activities:
Distribution to Unitholders (9,580) -- (9,580)
Distribution to member -- -- --
Long term receivables - net (421) 598 177
Net cash used in financing activities (10,001) 598 (9,403)
Decrease in cash and cash equivalents (7,291) -- (7,291)
Cash and cash equivalents
- beginning of period 10,625 -- 10,625
Cash and cash equivalents
- end of period $ 3,334 $-- $3,334
(A) The adjustment is the effect of deferring the recognition of revenue
from certain stumpage contracts to the period when the timber is
harvested. Revenues from these contracts were previously reported in
the period the contracts were executed.
U.S. TIMBERLANDS COMPANY, L.P.
CONDENSED RESTATED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended September 30, 1998
As Previously
Reported Adjustments(A) Restated
Cash Flows From Operating Activities:
Net Loss $(4,227) $(2,803) $(7,030)
Adjustments to reconcile
net loss to net cash
provided by operating activities:
Depreciation, depletion,
road amortization and
cost of timberland sold 22,411 (2,005) 20,406
Deferred financing fees 506 -- 506
Other non-cash items 1,270 -- 1,270
Working capital changes - net (3,532) 4,132 600
Net cash provided by
operating activities 16,428 (676) 15,752
Cash Flows From Investing Activities:
Timber and road additions - net (530) -- (530)
Capitalized seed orchard
and nursery costs - net 92 -- 92
Purchase of property,
plant and equipment - net (32) -- (32)
Net cash used in investing activities (470) -- (470)
Cash Flows From Financing Activities:
Distribution to Unitholders (16,140) -- (16,140)
Distribution to member -- -- --
Long term receivables - net 493 676 1,169
Net cash used in financing activities(15,647) 676 (14,971)
Increase in cash and cash equivalents 311 -- 311
Cash and cash equivalents
- beginning of period 10,625 -- 10,625
Cash and cash equivalents
- end of period $10,936 $-- $10,936
(A) The adjustment is the effect of deferring the recognition of revenue
from certain stumpage contracts to the period when the timber is
harvested. Revenues from these contracts were previously reported in
the period the contracts were executed.
SOURCE U.S. Timbelands Company, L.P.
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Company News On-Call:
http://www.prnewswire.com/comp/128507.html or fax,
800-758-5804, ext. 128507
CONTACT:
Greg Byrne of U.S. Timberlands Company, L.P.,
212-755-1100; Stefanie King of Edelman Financial, 212-704-8291
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