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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-Q
--------------------------
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-23259
------------------------------
U.S. TIMBERLANDS COMPANY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 91-1842156
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Fifth Avenue, Suite 3725, Seattle, Washington 98101-2636
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 206-652-5000
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
U.S. TIMBERLANDS COMPANY, L.P.
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Unit)
(Unaudited)
Quarter Ended June 30,
----------------------
1998 1997
-------- --------
Revenues $ 21,814 $ 11,462
Costs and expenses:
Cost of goods sold 4,246 4,286
Cost of timberland sales 5,917 --
Depletion, depreciation and road amortization 5,173 3,035
Selling, general and administrative 1,763 1,702
-------- --------
Total costs and expenses 17,099 9,023
-------- --------
Operating income 4,715 2,439
Interest expense 5,635 5,558
Interest income (94) (408)
Financing fees 169 1,199
Other income - net (85) (83)
-------- --------
Net loss (910) (3,827)
-------- --------
General partner and minority interest 18 --
-------- --------
Net loss allocable to Unitholders $ (892) $ (3,827)
======== ========
Net loss per Unit - Basic
Common $ (0.07) $ --
======== ========
Subordinated $ (0.07) $ (0.89)
======== ========
Net loss per Unit - Diluted $ (0.07) $ (0.89)
======== ========
See accompanying Notes to Consolidated Financial Statements.
Page 2 of 15
<PAGE>
U.S. TIMBERLANDS COMPANY, L.P.
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Unit)
Six Months Ended June 30,
-------------------------
1998 1997
-------- --------
(Unaudited) (Audited)
Revenues $ 29,571 $ 23,796
Costs and expenses:
Cost of goods sold 6,899 7,811
Cost of timberland sales 5,917 --
Depletion, depreciation and road amortization 7,933 6,586
Selling, general and administrative 5,390 2,892
-------- --------
Total costs and expenses 26,139 17,289
-------- --------
Operating income 3,432 6,507
Interest expense 11,098 10,877
Interest income (269) (774)
Financing fees 337 2,198
Other income - net (110) (20)
-------- --------
Net loss (7,624) (5,774)
General partner and minority interest 152 --
-------- --------
Net loss allocable to Unitholders $ (7,472) $ (5,774)
======== ========
Net loss per Unit - Basic
Common $ (0.58) $ --
======== ========
Subordinated $ (0.58) $ (1.35)
======== ========
Net loss per Unit - Diluted $ (0.58) $ (1.35)
======== ========
See accompanying Notes to Consolidated Financial Statements.
Page 3 of 15
<PAGE>
U.S. TIMBERLANDS COMPANY, L.P.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30, December 31,
1998 1997
------------ -------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 3,334 $ 10,625
Accounts receivable - net 3,920 2,526
Prepaid expenses and other assets 2,040 1,781
-------- --------
Total current assets 9,294 14,932
Timber, timberlands and roads - net 346,080 359,349
Seed orchard and nursery stock 1,640 1,828
Property, plant and equipment - net 1,227 1,261
Notes receivable 1,592 1,171
Deferred financing fees 6,336 6,673
-------- --------
Total assets $366,169 $385,214
======== ========
Liabilities
Current liabilities:
Accounts payable and accrued liabilities $ 6,203 $ 7,353
Deferred revenue 5,053 5,744
-------- --------
Total current liabilities 11,256 13,097
Long-term debt 225,000 225,000
Minority interest 1,299 1,471
Partners' capital
General partner interest 1,299 1,471
Limited partner interest 127,315 144,175
-------- --------
Total liabilities and partners' capital $366,169 $385,214
======== ========
See accompanying Notes to Consolidated Financial Statements.
Page 4 of 15
<PAGE>
U.S. TIMBERLANDS COMPANY, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
Six Months Ended June 30,
---------------------------
1998 1997
------------- ------------
(Unaudited) (Audited)
Cash Flows From Operating Activities:
Net loss $ (7,624) $ (5,774)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depletion, depreciation, road amortization and
cost of timber and timberland sold 13,850 6,934
Amortization of deferred financing fees 337 348
Working capital changes - net (3,510) 4,615
-------- --------
Net cash provided by operating activities 3,053 6,123
Cash Flows From Investing Activities:
Timber and road additions (252) (326)
Repayment of receivable from affiliate -- 10,000
Capitalized seed orchard and nursery costs (63) (81)
Purchase of property, plant and equipment (28) (283)
Proceeds from sale of logging equipment -- 400
-------- --------
Net cash provided by (used in) investing
activities (343) 9,710
Cash Flows From Financing Activities:
Distribution to Unitholders (9,580) --
Distribution to member -- (1,191)
Long-term receivables - net (421) --
Deferred offering costs - common units -- (868)
-------- --------
Net cash used in financing activities (10,001) (2,059)
-------- --------
Increase (decrease) in cash and cash equivalents (7,291) 13,774
Cash and cash equivalents - beginning of period 10,625 16,613
-------- --------
Cash and cash equivalents - end of period $ 3,334 $ 30,387
======== ========
Supplemental Cash Flow Information:
Cash paid for interest $ 10,588 $ 6,786
======== ========
See accompanying Notes to Consolidated Financial Statements.
Page 5 of 15
<PAGE>
U.S. TIMBERLANDS COMPANY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per Unit amounts or as otherwise indicated)
(Unaudited)
1. Organization, Nature Of Operations And Basis Of Presentation
Organization
The accompanying consolidated financial statements include the accounts of
U.S. Timberlands Company, L.P. (the "Master Partnership"), a Delaware master
limited partnership, and its 99%-owned subsidiary U.S. Timberlands Klamath
Falls, L.L.C. ("USTK"), collectively referred to hereafter as the Company. All
significant intercompany transactions have been eliminated in consolidation. The
Master Partnership was formed on June 27, 1997 to acquire and own substantially
all of the equity interests in USTK and to acquire and own the business and
assets of U.S. Timberlands Management Company, L.L.C. U.S. Timberlands Services
Company, L.L.C. (the "General Partner") manages the businesses of the Company
and owns a 1% general partner interest in the Master Partnership. The General
Partner also owns a 1% member's interest in USTK.
Nature of Operations
The primary activities of the Company are growing trees and selling logs
and standing timber to third party wood processors. The Company's timberlands
are located in Oregon, east of the Cascade Range. Logs harvested from the
Company's timberlands are sold to unaffiliated domestic conversion facilities.
These logs are processed for sale as lumber; molding products; doors; mill work;
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; general industrial applications; and a
variety of paper products. The Company also owns and operates its own seed
orchard and nursery and produces approximately five million genetically selected
conifer seedlings each year. About half of the annual seedling production is
used by the Company for its own reforestation programs; the balance is sold to
other forest products companies.
Basis of Presentation
These consolidated financial statements have been prepared by the Company,
without audit by independent public accountants, pursuant to the rules and
regulations of the United States Securities and Exchange Commission. In the
opinion of management, the consolidated financial statements include all normal
recurring adjustments necessary to present fairly the information required to be
set forth therein. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted from these statements pursuant to such
rules and regulations and, accordingly, should be read in conjunction with the
consolidated financial statements included in the Company's 1997 Annual Report
to Unitholders. Certain reclassifications have been made to the 1997 amounts
presented for comparability purposes and have no impact on net income. Operating
results for the six months ended June 30, 1998 are not necessarily indicative of
the results that may be expected for the full year.
There have been no significant changes in the accounting policies of the
Company. There were no significant changes in the Company's commitments and
contingencies as previously described in the 1997 Annual Report on Form 10-K.
Page 6 of 15
<PAGE>
2. Per Unit Information
The Company accounts for loss per Unit in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." Under SFAS
No. 128, the Company is required to present basic loss per Common and
Subordinated Unit, and diluted loss per Unit information. Basic loss per Common
and Subordinated Unit is calculated by dividing the loss allocable to Common and
Subordinated Units, after adjusting for the General Partner's effective 2%
interest, by the weighted average number of Common and Subordinated Units
outstanding. The loss for the three and six month periods ended June 30, 1998
and June 30, 1997 is allocated to the Common and Subordinated Units utilizing
the book liquidation method which allocates loss in accordance with liquidation
preferences, as set forth in the Company's Partnership Agreement, of the Common
and Subordinated Unitholders' partners' capital accounts. Diluted loss per Unit
is calculated by dividing loss, after adjusting for the General Partner's
effective 2% interest during the three and six month periods ended June 30,
1998, by the weighted average number of Common and Subordinated Units.
The weighted average number of Units outstanding are as follows:
Basic
Three and Six Month ---------------------------
Periods Ended Common Subordinated Diluted
------------- ------ ------------ -------
June 30, 1998 8,577,487 4,282,120 12,859,607
June 30, 1997 -- 4,282,120 4,282,120
Pro forma loss per Unit (computed as if the Common and Subordinated Units
were issued as of January 1, 1997) for the six months ended June 30, 1997, is
$(0.44).
3. Subsequent Event
On July 22, 1998, the Board of Directors of the General Partner authorized
the Master Partnership to make a distribution of $0.50 per Unit. The total
distribution will be $6,561 (including $131 to the General Partner) and will be
paid on August 14, 1998 to Unitholders of record on August 4, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The Company's principal operations consist of the growing and harvesting
of timber and the selling of logs and related by-products. The Company's ability
to implement its business strategy over the long term and its results of
operations depend upon a number of factors, many of which are beyond its
control. These factors include general industry conditions; domestic prices and
supply and demand for logs, which may be indirectly affected by economic
conditions in export markets; seasonality; government regulation and competition
from other supplying regions and substitute products.
Page 7 of 15
<PAGE>
Current Market Conditions
The key lumber price indicator for Ponderosa pine for the quarter ended
June 30, 1998 was unchanged from the first quarter of 1998 but decreased 28%
from the quarter ended June 30, 1997. Likewise, the second quarter 1998 product
price indicator for Douglas fir decreased 11% compared to the second quarter of
1997. White fir and Lodgepole pine product price indicators for the second
quarter 1998 decreased 7% and 2%, respectively, from levels in the comparable
period of 1997.
Although product prices for the second quarter of 1998 decreased from
price levels experienced in the second quarter of 1997, the Company's average
log prices were higher than the key price indicators for the second quarter of
1998. This was due primarily to an overall improvement in the Company's market
planning and execution. Advanced sales coordination with customers regarding
desirable log delivery schedules and improved bucking and sorting by contract
loggers enhanced the quality and timing of the Company's sales in the second
quarter of 1998.
Second quarter 1998 prices for the Company's log sales decreased 2%
compared to the second quarter of 1997. Second quarter 1998 log inventories at
customer conversion facilities decreased from first quarter 1998 levels but were
still moderately high and kept demand in line with supply. In addition to the
relatively high second quarter 1998 customer inventory levels, a general decline
in lumber prices caused log converters to hold or lower log price bids.
During the second quarter of 1998, the Company structured stumpage sales
to meet customer demands for longer-term purchases. Despite an extended spring
breakup that delayed the Company's logging operations, planned harvest levels
for the second quarter of 1998 were met through the sale of two stumpage tracts.
In addition, the Company completed a planned sale of 15,304 acres of timberland
containing 26,600 MBF of timber during the second quarter. The sale, which is
the only sale of timberland planned for 1998, generated $6.3 million in revenue.
Forward-Looking Statements
Certain information contained in this report may constitute
forward-looking statements within the meaning of the federal securities laws.
Although the Company 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 the Company's ability to harvest its timber
due to adverse natural conditions or increased governmental restrictions. These
and other risks are described in the Company's other reports and registration
statements, which are available from the United States Securities and Exchange
Commission.
Page 8 of 15
<PAGE>
Results of Operations
Quarter Ended June 30, 1998 Compared to Quarter Ended June 30, 1997
Revenues. Revenues for the quarter ended June 30, 1998 were $21.8 million,
an increase of $10.3 million or 90% over revenues of $11.5 million for the
quarter ended June 30, 1997. This was primarily attributable to a $6.3 million
increase in sales of timberlands and a $3.8 million increase in stumpage sales.
Log and stumpage sales volumes for the quarter ended June 30, 1998 were
34,600 MBF, an increase of 36% over log and stumpage sales volumes of 25,400 MBF
for the quarter ended June 30, 1997. The increase in total sales volumes was
primarily due to increased stumpage sales. The average log and stumpage sales
price for the quarter ended June 30, 1998 was $432 per MBF, slightly lower than
the $433 per MBF average for the quarter ended June 30, 1997. Although product
price indicators for the quarter ended June 30, 1998 were generally lower than
product price indicators for the comparable period in 1997, the Company
maintained its second quarter pricing levels by improving its market planning
and execution. Advanced sales coordination with customers regarding desirable
log delivery schedules and improved bucking and sorting by contract loggers
enhanced the quality and timing of the Company's second quarter 1998 sales.
Revenue from a planned sale of timberland during the quarter ended June
30, 1998 was $6.3 million. There were no such sales of timberland during the
quarter ended June 30, 1997.
Operating Costs. Operating costs were $17.1 million for the quarter ended
June 30, 1998, an increase of $8.1 million or 90% over operating costs of $9.0
million for the quarter ended June 30, 1997. This increase was primarily the
result of a $5.9 million increase in the cost of timberland sold and a $2.2
million increase in depreciation, depletion and road amortization ("DD&A")
expenses.
Cost of goods sold ("COGS") was $4.3 million for the quarter ended June
30, 1998, unchanged from cost of goods sold of $4.3 million for the quarter
ended June 30, 1997. COGS remained flat as the Company's second quarter 1998 log
harvest volumes did not change significantly from second quarter 1997 levels.
During the quarter ended June 30, 1998, the Company sold 15,304 acres of
timberland with a cost basis of $5.9 million. No sales of timberland were made
during the quarter ended June 30, 1997.
DD&A expense was $5.2 million for the quarter ended June 30, 1998, a $2.2
million or 70% increase over DD&A expense of $3.0 million for the quarter ended
June 30, 1997. This increase was primarily due to increased stumpage sales and
the increase in the Company's depletion rate, which resulted from the Ochoco
timberlands acquisition in July 1997.
Selling, general and administrative ("SG&A") expenses for the quarter
ended June 30, 1998 were $1.8 million, an increase of 4% over comparable
expenses of $1.7 million for the quarter ended June 30, 1997. This increase was
primarily due to the increased cost of operating as a publicly owned company.
Interest Expense. Interest expense was $5.6 million for the quarter ended
June 30, 1998 and related to the $225.0 million aggregate principal amount of
senior unsecured notes that the Company issued to the public on November 13,
1997 (the "Notes"). Interest expense of $5.6 million for the quarter ended June
30, 1997 related primarily to $215.0 million of term debt
Page 9 of 15
<PAGE>
and $90.0 million of revolving debt incurred in connection with the acquisition
of the Klamath Falls timberlands in August 1996.
Financing Fees. The Company deferred $6.7 million of fees incurred in
connection with the issuance of the Notes. The amortization of these fees during
the quarter ended June 30, 1998 was $0.2 million. During the quarter ended June
30, 1997, the Company recognized $1.2 million of expense related to debt
guarantee fees and amortization of deferred financing fees.
Six Months Ended June 30, 1998 Compared To Six Months Ended June 30, 1997
Revenues. Revenues for the six months ended June 30, 1998 were $29.6
million, an increase of $5.8 million or 24% over revenues of $23.8 million for
the six months ended June 30, 1997. This was primarily attributable to a $6.3
million increase in timberland sales and a $1.2 million increase in stumpage
sales, partially offset by a decrease of $1.8 million in log sales.
Log and stumpage sales volumes for the six months ended June 30, 1998 were
53,000 MBF, a decrease of 8% from log and stumpage sales volumes of 57,800 MBF
for the six months ended June 30, 1997. The decrease in sales volumes was
primarily due to extended spring break-up conditions experienced in the first
quarter of 1998 as compared to the first quarter of 1997. Average log and
stumpage prices increased by 6%, to $428 per MBF for six months ended June 30,
1998 from $403 per MBF for the six months ended June 30, 1997, primarily due to
an increased mix of higher value timber and the results of enhanced marketing
efforts.
Revenue from a planned sale of timberland during the six months ended June
30, 1998 was $6.3 million. There were no such timberland sales during the six
months ended June 30, 1997.
Operating Costs. Operating costs were $26.1 million for the six months
ended June 30, 1998, an increase of $8.8 million or 51% over operating costs of
$17.3 million for the six months ended June 30, 1997. This increase was
primarily the result of a $5.9 million increase in the cost of timberland sold,
a $2.5 million increase in SG&A expenses, and a $1.3 million increase in DD&A
expense, partially offset by a $0.9 million decrease in COGS.
COGS was $6.9 million for the six months ended June 30, 1998, a decrease
of $0.9 million or 12% from COGS of $7.8 million for the six months ended June
30, 1997. This decrease was primarily due to decreased logging costs resulting
from the 10% decrease in logs harvested by the Company during the six months
ended June 30, 1998 as compared to the six months ended June 30, 1997.
During the six months ended June 30, 1998, the Company sold 15,304 acres
of timberland with a cost basis of $5.9 million. No sales of timberland were
made during the six months ended June 30, 1997.
DD&A expense was $7.9 million for the six months ended June 30, 1998, a
$1.3 million or 21% increase over DD&A expense of $6.6 million for the six
months ended June 30, 1997. This increase was primarily attributable to the
increase in the Company's depletion rate, which resulted from the Ochoco
timberlands acquisition in July 1997. The increase in the Company's depletion
rate was partially offset by an 8% decrease in log and stumpage sales volumes
during the six months ended June 30, 1998 as compared to the six months ended
June 30, 1997.
Page 10 of 15
<PAGE>
SG&A expenses were $5.4 million for the six months ended June 30, 1998, an
increase of $2.5 million or 86% over comparable expenses of $2.9 million for the
six months ended June 30, 1997. This increase was primarily due to the increased
cost of operating as a publicly owned company combined with the one-time
expenses of $1.1 million related to severance costs and the repurchase of member
interests in the General Partner in the first quarter of 1998.
Interest Expense. Interest expense was $11.1 million for the six months
ended June 30, 1998 and related to the $225.0 million aggregate principal amount
of the Notes. Interest expense of $10.9 million for the six months ended June
30, 1997 related primarily to $215.0 million of term debt and $90.0 million of
revolving debt incurred in connection with the acquisition of the Klamath Falls
timberlands in August 1996.
Financing Fees. The Company deferred $6.7 million of fees incurred in
connection with the issuance of the Notes. The amortization of these fees during
the first six months of 1998 was $0.3 million. During the six months ended June
30, 1997, the Company recognized $2.2 million of expense related to debt
guarantee fees and amortization of deferred financing fees.
Financial Condition and Liquidity
During the six months ended June 30, 1998, net cash provided by operating
activities totaled $3.1 million compared to $6.1 million for the same period in
1997. The decrease of $3.0 million was primarily the result of increased
revenues offset by additional SG&A expenses and a decrease in cash flows from
working capital in the first half of 1998 as compared to the same period in
1997. Cash and cash equivalents at June 30, 1998 totaled $3.3 million, or $27.1
million less than at June 30, 1997. The decrease in cash and cash equivalents is
primarily due to the acquisition of the Ochoco timberlands and expenses
associated with the recapitalization and debt refinancing transactions that took
place in the second half of 1997, as well as the initial distribution to
Unitholders, which was made in May 1998.
The Company has a $100.0 million unsecured revolving credit facility (the
"Bank Credit Facility") with a group of banks, which consists of a $75.0 million
acquisition facility and a $25.0 million working capital facility. The Bank
Credit Facility will expire November 19, 2000. At that time, amounts borrowed
under the working capital facility will be due and payable, and the Company may
elect to convert amounts borrowed under the acquisition facility to a term loan
payable in sixteen equal quarterly installments. As of June 30, 1998, there were
no outstanding borrowings under the Bank Credit Facility.
Capital expenditures for the six months ended June 30, 1998 totaled $0.3
million. As the Company does not currently own and does not plan to own or
operate manufacturing facilities, and all logging is subcontracted to third
parties, it is anticipated that capital expenditures in the future will not be
material and will consist mainly of land management and silvicultural
expenditures. It is not currently anticipated that the Company will either
maintain log inventories (although small log inventories may be maintained for a
short period of time) or incur material capital expenditures for machinery and
equipment. The Company anticipates that capital expenditures will be $2.0
million for the year ended December 31, 1998. Capital expenditures will consist
of capitalized silvicultural costs, computer hardware and software expenditures,
and miscellaneous equipment. Capital expenditures will be funded from cash on
hand and cash generated from current operations.
Page 11 of 15
<PAGE>
Cash required to meet the Company's Minimum Quarterly Distributions (as
required by the Partnership Agreement), and interest and principal payments on
indebtedness will be significant. The General Partner expects that the quarterly
cash distributions and debt service will be funded from cash on hand and cash
generated from current operations.
Year 2000 Compliance
The Company has evaluated its financial and operational systems and
applications for compliance with Year 2000 requirements. In the course of this
evaluation, the Company obtained certifications from vendors that its timber
inventory and timberland resource management systems are Year 2000 compliant.
Further, in connection with the Company's scheduled programs to replace certain
other systems, specifically its financial reporting system and local and wide
area networks, the Company included Year 2000 compliance among its key criteria
in selecting the replacement applications. The installation and testing of these
replacement systems is currently in progress and is expected to be completed by
November 1998. The Company has replaced or upgraded its computers to assure its
business systems are supported by machines that comply with Year 2000
requirements.
The Company is currently assessing the Year 2000 readiness of certain
vendors and other third parties with whom it conducts significant business or
maintains a significant business relationship (e.g., scaling bureaus, contract
loggers, and payroll and 401(k) service bureaus). This assessment will be
completed by November 1998. At this time, the Company believes that these third
parties are properly addressing Year 2000 compliance issues. Therefore, the
Company believes that the specific costs associated with achieving Year 2000
compliance for its own systems, and any costs associated with any Year 2000
issues of third parties, will not have a material effect on the Company's
financial condition or results of operations.
Other Information
Voters from the State of Oregon have approved an initiative for the
November 1998 ballot which requires, among other things, maintenance of at least
sixty well-distributed trees ten inches or larger in diameter at breast height
or eighty square feet of basal area per acre. The initiative is designed to
eliminate clearcutting as a harvest method. The initiative, if passed, could
have a material adverse impact on the Company's financial condition and results
of operations, as it could limit the ability of the Company to harvest its
timberlands in accordance with its current harvest plans. It cannot be
determined whether the initiative will be passed by the voters in the November
election and enacted into law.
Page 12 of 15
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is no pending litigation and, to the knowledge of the Company, there
is no threatened litigation, the unfavorable resolution of which would have a
material adverse effect on the business or financial condition of the Company.
ITEMS 2, 3, 4 AND 5 OF PART II are not applicable and have been omitted.
Page 13 of 15
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
+3.1 - Amended and Restated Agreement of Limited Partnership of
U.S. Timberlands Company, L.P.
+3.2 - Second Amended and Restated Operating Agreement of U.S.
Timberlands Klamath Falls, L.L.C.
**3.3 - Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of U.S. Timberlands Company, L.P.
+10.1 - Credit Agreement among U.S. Timberlands Klamath Falls,
L.L.C. and certain banks
+10.2 - Indenture among U.S. Timberlands Klamath Falls, L.L.C., U.S.
Timberlands Finance Corp. and State Street Bank and Trust
Company, as trustee
+10.3 - Contribution, Conveyance and Assumption Agreement among U.S.
Timberlands Company, L.P. and certain other parties
*10.4 - Form of U.S. Timberlands Company, L.P. 1997 Long-Term
Incentive Plan
*10.5 - Employment Agreement for Mr. Rudey
++10.6 - Employment Agreement for Mr. Symington
++10.7 - Employment Agreement for Mr. Michie
++10.8 - Employment Agreement for Mr. McDowell
*10.9 - Supply Agreement between U.S. Timberlands Klamath Falls,
L.L.C. and Collins Products LLC
27.1 - Financial Data Schedule
* Incorporated by reference to the same numbered Exhibit to the Registrant's
Registration Statement on Form S-1 filed November 13, 1997.
** Incorporated by reference to the same numbered Exhibit to the Registrant's
Quarterly Report on Form 10-Q filed May 15, 1998.
+ Incorporated by reference to the same numbered Exhibit to the Registrant's
Current Report on Form 8-K filed January 15, 1998.
++ Incorporated by reference to the same numbered Exhibit to the Registrant's
Annual Report on Form 10-K filed March 31, 1998.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter ended
June 30, 1998.
Page 14 of 15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigneds thereunto duly authorized.
Date: August 14, 1998 U.S. TIMBERLANDS COMPANY, L.P.
By: U.S. Timberlands Services Company, L.L.C.
as General Partner
By: /s/ ALLEN E. SYMINGTON
-----------------------------------------
Allen E. Symington
President and Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
By: /s/ JOHN C. MCDOWELL
-----------------------------------------
John C. McDowell
Vice President-Finance and Controller
(Principal Accounting Officer
and Duly Authorized Officer)
Page 15 of 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMBINED
FINANCIAL STATEMENTS OF U.S. TIMBERLANDS COMPANY, L.P. FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,334
<SECURITIES> 0
<RECEIVABLES> 5,977
<ALLOWANCES> 100
<INVENTORY> 0
<CURRENT-ASSETS> 9,294
<PP&E> 1,476
<DEPRECIATION> 249
<TOTAL-ASSETS> 366,169
<CURRENT-LIABILITIES> 11,256
<BONDS> 225,000
0
0
<COMMON> 0
<OTHER-SE> 128,614
<TOTAL-LIABILITY-AND-EQUITY> 366,169
<SALES> 29,571
<TOTAL-REVENUES> 29,571
<CGS> 6,899
<TOTAL-COSTS> 26,139
<OTHER-EXPENSES> 227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,098
<INCOME-PRETAX> (7,624)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,624)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,624)
<EPS-PRIMARY> (0.58)
<EPS-DILUTED> (0.58)
</TABLE>
