FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
Commission File Number 1-8857
MAXXAM GROUP INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-1310680
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
5847 SAN FELIPE, SUITE 2600 77057
HOUSTON, TEXAS (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (713) 975-7600
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 / /
Number of shares of common stock outstanding at August 1, 1995: 100
Registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the
reduced disclosure format.
<PAGE>
MAXXAM GROUP INC.
INDEX
PART I. - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheet at June 30, 1995
and December 31, 1994 3
Consolidated Statement of Operations for the three and
six months ended June 30, 1995 and 1994 4
Consolidated Statement of Cash Flows for the six
months ended June 30, 1995 and 1994 5
Condensed Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures S-1
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
(In thousands of dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 68,156 $ 48,575
Marketable securities 21,254 19,514
Receivables:
Trade 11,702 23,170
Other 2,308 7,435
Inventories 64,354 70,098
Prepaid expenses and other current assets 4,775 3,717
----------- --------------
Total current assets 172,549 172,509
Timber and timberlands, net of depletion of $194,368 and
$188,003 at June 30, 1995 and December 31, 1994,
respectively 345,774 350,871
Property, plant and equipment, net of accumulated
depreciation of $62,811 and $59,081 at June 30, 1995 and
December 31, 1994, respectively 101,248 103,183
Deferred financing costs, net 28,705 30,096
Deferred income taxes 64,728 61,498
Restricted cash 32,325 32,402
Other assets 6,827 6,122
----------- --------------
$ 752,156 $ 756,681
=========== ==============
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable $ 5,394 $ 3,703
Accrued interest 25,557 25,765
Accrued compensation and related benefits 9,099 10,622
Deferred income taxes 12,986 12,986
Other accrued liabilities 3,116 3,266
Long-term debt, current maturities 13,928 13,670
----------- --------------
Total current liabilities 70,080 70,012
Long-term debt, less current maturities 765,317 768,786
Other noncurrent liabilities 29,361 30,365
----------- --------------
Total liabilities 864,758 869,163
----------- --------------
Contingencies
Stockholder's deficit:
Common stock, $.08-1/3 par value; 1,000 shares
authorized; 100 shares issued - -
Additional capital 81,287 81,287
Accumulated deficit (193,889) (193,769)
----------- --------------
Total stockholder's deficit (112,602) (112,482)
----------- --------------
$ 752,156 $ 756,681
=========== ==============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(In thousands of dollars)
<S> <C> <C> <C> <C>
Net sales:
Lumber and logs $ 59,686 $ 56,232 $ 106,669 $ 109,885
Other 5,958 6,744 10,943 9,804
---------- ---------- ---------- ----------
65,644 62,976 117,612 119,689
---------- ---------- ---------- ----------
Operating expenses:
Costs of goods sold (exclusive of
depletion and depreciation) 33,034 31,059 62,504 64,191
Selling, general and administrative 3,525 4,023 7,617 8,333
Depletion and depreciation 7,318 5,250 13,301 11,315
---------- ---------- ---------- ----------
43,877 40,332 83,422 83,839
---------- ---------- ---------- ----------
Operating income 21,767 22,644 34,190 35,850
Other income (expense):
Investment, interest and other income 2,445 1,918 4,247 9,637
Interest expense (19,407) (19,230) (38,930) (38,320)
---------- ---------- ---------- ----------
Income (loss) before income taxes and
extraordinary item 4,805 5,332 (493) 7,167
Credit (provision) in lieu of income taxes (1,633) (2,186) 373 (3,057)
---------- ---------- ---------- ----------
Income (loss) before extraordinary item 3,172 3,146 (120) 4,110
Extraordinary item:
Loss on litigation settlement, net of
related credit in lieu of income
taxes of $6,312 - (14,866) - (14,866)
---------- ---------- ---------- ----------
Net income (loss) $ 3,172 $ (11,720) $ (120) $ (10,756)
========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
(In thousands of dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (120) $ (10,756)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depletion and depreciation 13,301 11,315
Amortization of deferred financing costs and discounts on
long-term debt 6,511 5,852
Net purchases of marketable securities (6,989) (11,815)
Net gains on marketable securities (1,393) (522)
Decrease in receivables 14,095 1,357
Decrease in inventories, net of depletion 3,534 1,420
Increase in accounts payable 1,691 4,806
Increase in other liabilities 1,324 6,045
Increase in prepaid expenses and other current assets (1,058) (100)
Increase in accrued and deferred income taxes (583) (3,255)
Decrease in accrued interest (208) (302)
Other (339) (39)
----------- -----------
Net cash provided by operating activities 29,766 4,006
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of note receivable from affiliate 2,500 -
Net proceeds from sale of assets 14 122
Capital expenditures (4,495) (6,462)
----------- -----------
Net cash used for investing activities (1,981) (6,340)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash released 77 132
Principal payments on long-term debt (8,281) (8,147)
Net payments under revolving credit agreements - (2,900)
----------- -----------
Net cash used for financing activities (8,204) (10,915)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 19,581 (13,249)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 48,575 39,001
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 68,156 $ 25,752
=========== ===========
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reduction of margin borrowings for marketable securities $ 6,648 $ 1,020
Timber and timberlands acquired subject to loan from seller - 850
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of capitalized interest $ 32,627 $ 32,770
Income taxes paid - -
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
1. GENERAL
The information contained in the following notes to the
consolidated financial statements is condensed from that which would appear
in the annual consolidated financial statements; accordingly, the
consolidated financial statements included herein should be reviewed in
conjunction with the consolidated financial statements and related notes
thereto contained in the Annual Report on Form 10-K filed by MAXXAM Group
Inc. with the Securities and Exchange Commission for the fiscal year ended
December 31, 1994 (the "Form 10-K"). All references to the "Company"
include MAXXAM Group Inc. and its subsidiary companies unless otherwise
indicated or the context indicates otherwise. Accounting measurements at
interim dates inherently involve greater reliance on estimates than at year
end. The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the entire year.
The consolidated financial statements included herein are
unaudited; however, they include all adjustments of a normal recurring
nature which, in the opinion of management, are necessary to present fairly
the consolidated financial position of the Company at June 30, 1995, the
consolidated results of operations for the three and six months ended June
30, 1995 and 1994 and consolidated cash flows for the six months ended June
30, 1995 and 1994. Certain reclassifications of prior period information
have been made to conform to the current presentation. The Company is a
wholly owned subsidiary of MAXXAM Inc. ("MAXXAM").
2. CASH AND CASH EQUIVALENTS
At June 30, 1995 and December 31, 1994, cash and cash equivalents
includes $11,695 and $19,439, respectively, which is restricted for debt
service payments on the 7.95% Timber Collateralized Notes due 2015.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Lumber $ 54,385 $ 55,310
Logs 9,969 14,788
----------- ------------
$ 64,354 $ 70,098
=========== ============
</TABLE>
4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
7.95% Timber Collateralized Notes due July 20, 2015 $ 355,576 $ 363,811
11-1/4% Senior Secured Notes due August 1, 2003 100,000 100,000
12-1/4% Senior Secured Discount Notes due August 1, 2003,
net of discount 87,849 82,779
10-1/2% Senior Notes due March 1, 2003 235,000 235,000
Other 820 866
------------- -------------
779,245 782,456
Less: current maturities (13,928) (13,670)
------------- -------------
$ 765,317 $ 768,786
============= =============
</TABLE>
<PAGE>
5. CONTINGENCIES
The Company's operations are subject to a variety of California
and federal laws and regulations dealing with timber harvesting, endangered
species, water quality and air and water pollution. The Company does not
expect that compliance with such existing laws and regulations will have a
material adverse effect on the Company's future operating results or
financial position; however, there can be no assurance that future
legislation, governmental regulations or judicial or administrative
decisions would not adversely affect the Company or its ability to sell
lumber, logs or timber. For example, on June 30, 1995, the United States
Supreme Court issued the Sweet Home v. Babbitt decision finding that under
the federal Endangered Species Act (the "ESA") the use of private property
can be restricted in a manner to prevent significant modification to habitat
for endangered or threatened species. Also, in July 1995, in a case
entitled Marbled Murrelet v. Babbitt (Case No. C-91-522R), a U.S. District
Court in Seattle ordered the U.S. Fish and Wildlife Service (the "USFWS")
to make its final designation of critical habitat for the marbled murrelet
by January 29, 1996 and to issue its proposed final designation of critical
habitat by August 1, 1995. Although the USFWS is not expected to publish
its proposed final designation of critical habitat for the marbled murrelet
until mid-August 1995, the USFWS has indicated that it is contemplating
designating considerable portions of Pacific Lumber's timberlands as critical
habitat for the marbled murrelet. When the proposed designation is published,
it will be subject to a 60-day comment period. Pacific Lumber intends to
vigorously oppose any designation which it believes is erroneous or improper.
It will be impossible to determine the potential adverse impact of such
designation on the Company's financial position or results of operations until
such time as the proposed designation is published and finalized.
Additionally, there continue to be other regulatory actions and lawsuits
seeking to have various species listed as threatened or endangered under
the ESA and/or the California Endangered Species Act and to designate
critical habitat for such species. It is uncertain what impact, if any,
such listings and/or designations of critical habitat will have on the
Company's financial position or results of operation.
Various groups and individuals have filed objections with the
California Department of Forestry ("CDF") regarding the CDF's actions and
rulings with respect to certain of the Company's timber harvesting plans
("THPs"), and the Company expects that such groups and individuals will
continue to file objections to the Company's THPs. In addition, lawsuits
are pending and threatened which seek to prevent the Company from
implementing certain of its approved THPs and undertaking other timber
harvesting operations. These challenges have severely restricted The
Pacific Lumber Company's ("Pacific Lumber," a wholly owned subsidiary of
the Company) ability to harvest virgin old growth redwood timber on its
property during the past few years, as well as substantial amounts of
virgin Douglas-fir timber which are located in virgin old growth redwood
stands. No assurance can be given as to the extent of such litigation in
the future. The Company believes that environmentally focused challenges
to its THPs are likely to occur in the future, particularly with respect to
virgin and residual old growth timber. Although such challenges have delayed
or prevented the Company from conducting a portion of its operations, to date
such challenges have not had a material adverse effect on the Company's
consolidated financial position or results of operations. It is, however,
impossible to predict the future nature or degree of such challenges or
their ultimate impact on the operating results or consolidated financial
position of the Company.
The Company is also involved in various claims, lawsuits and
proceedings relating to a wide variety of other matters. While there are
uncertainties inherent in the ultimate outcome of such matters and it is
impossible to presently determine the ultimate costs that may be incurred,
management believes the resolution of such uncertainties and the incurrence
of such costs should not have a material adverse effect on the Company's
consolidated financial position or results of operations.
<PAGE>
6. ITEM RELATED TO 1992 EARTHQUAKE
In the second quarter of 1995, Pacific Lumber recorded a
reduction in cost of sales of $1,527 from business interruption insurance
proceeds for the settlement of claims related to the April 1992 earthquake.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following should be read in conjunction with the response to
Part I, Item 1 of this Report and Items 7 and 8 of the Form 10-K. Any
capitalized terms used but not defined in this Item have the same meaning
given to them in the Form 10-K.
RESULTS OF OPERATIONS
The Company's business is highly seasonal in that the Company has
historically experienced lower first and fourth quarter sales due largely
to the general decline in construction related activity during the winter
months. Accordingly, the Company's results for any one quarter are not
necessarily indicative of results to be expected for the full year. The
following table presents selected operational and financial information for
the three and six months ended June 30, 1995 and 1994.
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(In millions of dollars, except shipments and prices)
<S> <C> <C> <C> <C>
Shipments:
Lumber: (1)
Redwood upper grades 12.8 12.8 23.5 25.7
Redwood common grades 64.8 55.7 115.9 105.1
Douglas-fir upper grades 1.4 1.9 3.2 4.4
Douglas-fir common grades and other 15.1 16.5 31.5 31.9
----------- ----------- ----------- -----------
Total lumber 94.1 86.9 174.1 167.1
=========== =========== =========== ===========
Logs (2) 1.6 4.8 2.1 10.3
=========== =========== =========== ===========
Wood chips (3) 52.8 64.9 99.7 95.2
=========== =========== =========== ===========
Average sales price:
Lumber: (4)
Redwood upper grades $ 1,478 $ 1,469 $ 1,508 $ 1,437
Redwood common grades 498 458 467 453
Douglas-fir upper grades 1,290 1,373 1,333 1,391
Douglas-fir common grades 378 426 378 445
Logs (4) 559 638 482 658
Wood chips (5) 99 85 94 81
Net sales:
Lumber, net of discount $ 58.8 $ 53.1 $ 105.7 $ 103.1
Logs .9 3.1 1.0 6.8
Wood chips 5.2 5.6 9.4 7.7
Cogeneration power .4 .9 .8 1.5
Other .3 .3 .7 .6
----------- ----------- ----------- -----------
Total net sales $ 65.6 $ 63.0 $ 117.6 $ 119.7
=========== =========== =========== ===========
Operating income $ 21.8 $ 22.6 $ 34.2 $ 35.9
=========== =========== =========== ===========
Operating cash flow (6) $ 29.1 $ 27.9 $ 47.5 $ 47.2
=========== =========== =========== ===========
Income (loss) before income taxes and
extraordinary item $ 4.8 $ 5.3 $ (.5) $ 7.2
=========== =========== =========== ===========
Net income (loss) $ 3.2 $ (11.7) $ (.1) $ (10.8)
=========== =========== =========== ===========
<FN>
(1) Lumber shipments are expressed in millions of board feet.
(2) Log shipments are expressed in millions of feet, net Scribner scale.
(3) Wood chip shipments are expressed in thousands of bone dry units of 2,400 pounds.
(4) Dollars per thousand board feet.
(5) Dollars per bone dry unit.
(6) Operating income before depletion and depreciation, also referred to as "EBITDA."
</TABLE>
<PAGE>
Shipments
Lumber shipments to third parties for the second quarter of 1995
increased from the second quarter of 1994. Increased shipments of redwood
common lumber were partially offset by decreased shipments of other common
grade lumber. Log shipments for the second quarter of 1995 were 1.6
million feet (net Scribner scale), a decrease from 4.8 million feet for the
second quarter of 1994.
Lumber shipments to third parties for the six months ended June
30, 1995 increased from the six months ended June 30, 1994. Increased
shipments of redwood common lumber were partially offset by decreased
shipments of upper grade redwood lumber and upper grade Douglas-fir lumber.
Log shipments for the six months ended June 30, 1995 were 2.1 million feet,
a decrease from 10.3 million feet for the six months ended June 30, 1994.
Net sales
Revenues from net sales of lumber and logs for the second quarter
of 1995 increased as compared to the second quarter of 1994. This increase
was principally due to higher shipments and average realized prices of
redwood common lumber, partially offset by decreased log shipments and a
decrease in the average realized price for common grade Douglas-fir lumber.
The decrease in other sales for the second quarter of 1995 as compared to
the second quarter of 1994 was due to lower sales of electrical power and
decreased sales of wood chips.
Revenues from net sales of lumber and logs for the six months
ended June 30, 1995 decreased as compared to the six months ended June 30,
1994. This decrease was principally due to lower shipments of logs, upper
grade redwood lumber and upper grade Douglas-fir lumber and a decrease in
the average realized price for common grade Douglas-fir lumber, partially
offset by increased shipments of redwood common lumber and increases in the
average realized prices for both upper and common grades of redwood lumber.
The increase in other sales for the six months ended June 30, 1995 as
compared to the six months ended June 30, 1994 was due to increased sales
of wood chips, partially offset by lower sales of electrical power.
Operating income
Operating income for the second quarter of 1995 and the six
months ended June 30, 1995 decreased as compared to the same periods in
1994. These decreases were primarily due to lower sales of logs, partially
offset by higher gross margins on wood chip sales and higher sales of
lumber. Cost of goods sold for the second quarter of 1995 was reduced by
$1.5 million of business interruption insurance proceeds for the settlement
of claims related to the April 1992 earthquake. Costs of lumber sales for
the six months ended June 30, 1995 were favorably impacted by lower
purchases of logs from third parties and improved sawmill productivity.
Income (loss) before income taxes and extraordinary item
Income before income taxes and extraordinary item for the second
quarter of 1995 decreased as compared to the second quarter of 1994. This
decrease was primarily due to the decrease in operating income as discussed
above. The loss before income taxes and extraordinary item for the six
months ended June 30, 1995, as compared to income for the six months ended
June 30, 1994, resulted from lower investment, interest and other income
and the decrease in operating income. Investment, interest and other
income for the six months ended June 30, 1994 included a franchise tax
refund of $7.2 million (the substantial portion of which represented
interest) from the State of California.
<PAGE>
FINANCIAL CONDITION AND INVESTING AND FINANCING ACTIVITIES
As of June 30, 1995, the Company had consolidated long-term debt
of $733.0 million (net of current maturities and restricted cash deposited
in the Liquidity Account) as compared to $736.4 million at December 31,
1994. The decrease in long-term debt was primarily due to principal
payments on the Timber Notes.
The Company conducts its operations through its principal
operating subsidiaries, Pacific Lumber and Britt Lumber Co., Inc.
("Britt"). The indentures governing the Pacific Lumber Senior Notes and
the Timber Notes and Pacific Lumber's Revolving Credit Agreement contain
various covenants which, among other things, limit the payment of dividends
and restrict transactions between Pacific Lumber and its affiliates. As of
June 30, 1995, under the most restrictive of these covenants, approximately
$14.6 million of dividends could be paid by Pacific Lumber. During the six
months ended June 30, 1995, Pacific Lumber paid dividends totalling $11.0
million.
In March 1995, Britt paid dividends consisting of $6.0 million of
receivables from its parent, MAXXAM Properties Inc. ("MPI," a wholly owned
subsidiary of the Company). These receivables represented prior cash
advances from Britt to MPI.
The indenture governing the MGI Notes contains various covenants
which, among other things, limit the payment of dividends and restrict
transactions between the Company and its affiliates. As of June 30, 1995,
under the most restrictive of these covenants, approximately $4.9 million
of dividends could be paid by the Company.
As of June 30, 1995, $19.7 million of borrowings was available
under Pacific Lumber's Revolving Credit Agreement, of which $4.7 million
was available for letters of credit. No borrowings were outstanding as of
June 30, 1995, and letters of credit outstanding amounted to $10.3 million.
Pacific Lumber has signed a commitment letter with the bank which will
amend the Revolving Credit Agreement to extend its maturity date to May 31,
1998 and provide for an additional $30.0 million of available borrowings.
The Company anticipates that cash flows from operations, together
with existing cash, marketable securities and available sources of
financing, will be sufficient to fund the working capital and capital
expenditures requirements of the Company and its respective subsidiaries
for the foreseeable future; however, due to its highly leveraged condition,
the Company is more sensitive than less leveraged companies to factors
affecting its operations, including governmental regulation affecting its
timber harvesting practices, increased competition from other lumber
producers or alternative building products and general economic conditions.
TRENDS
During the first five months of 1995, a combination of severe
weather conditions, seasonally low log inventories, the issuance of a
temporary restraining order ("TRO") (which required Pacific Lumber to cease
all timber harvesting operations on one of the few all-season harvest sites
from which it had been able to supplement its log inventories), and other
regulatory delays forced Pacific Lumber to curtail operations at one of its
four sawmills and to temporarily idle another sawmill from April 17 to May
2, 1995. During late May, the weather improved and the TRO was lifted,
thereby allowing Pacific Lumber to resume operations on such harvesting
site. See Part II, Item 1. "Legal Proceedings--Timber Harvesting
Litigation." Accordingly, Pacific Lumber has since been able to secure an
adequate supply of logs in order to resume normal operations of its
sawmills.
<PAGE>
Additional judicial or regulatory actions adverse to Pacific
Lumber, further regulatory delays and inclement weather in northern
California, independently or collectively, could again impair Pacific
Lumber's ability to maintain adequate log inventories and force Pacific
Lumber to temporarily idle or curtail operations at certain of its lumber
mills from time to time.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 of the Form 10-K and Part II, Item 1
of the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1995 (the "Form 10-Q") for information concerning material
legal proceedings with respect to the Company. The following material
developments have occurred with respect to such legal proceedings. Any
capitalized or italicized terms used but not defined in this Item have the
same meaning given to them in the Form 10-K and the Form 10-Q.
In connection with the Kayes/Miller action, on June 15, 1995, the
U.S. Ninth Circuit Court of Appeals denied defendants' petition for
rehearing. On August 7, 1995, the defendants requested the U.S. Supreme Court
to review the case by filing a petition for writ of certiorari.
TIMBER HARVESTING LITIGATION
In connection with the Marbled Murrelet, et al. v. Bruce Babbitt,
Secretary, Department of Interior, et al. (No. C93-1400) action, on June
20, 1995, the court entered judgment which permanently enjoined
implementation of THP 90-237 in order to protect the marbled murrelet; the
court also awarded plaintiffs attorneys' fees and costs in the amount of
approximately $1.1 million. On July 19, 1995, the Company indicated that it
intended to appeal the court's decision.
In connection with the Sierra Club and EPIC v. The California
Department of Forestry, Scotia Pacific Holding Co., et al. (No. 95 DR 0072)
action, on May 18, 1995, the court dismissed the case. On May 19, 1995,
plaintiffs appealed the court's decision and requested an emergency stay of
harvesting. On June 6, 1995, the Court of Appeal denied the plaintiffs'
request for a stay of timber harvesting operations; however, plaintiffs are
continuing their appeal of the trial court's decision. In July 1995, USFWS
and CDFG inspected the Company's property and determined that certain areas
(which the Company estimates to be approximately 6,000 acres) are
suitable marbled murrelet habitat and have prohibited harvesting on these
timberlands from April 1 through September 15 (the marbled murrelet breeding
and nesting season), in addition to certain other restrictions to assure
that there is no adverse impact on the marbled murrelet.
The Thron, et al. v. Pacific Lumber, et al. (No. 95 DR 0100)
action was filed to challenge THP 95-042, which relates to 198 acres of
residual old growth timber. On May 18, 1995, the trial court denied the
plaintiffs' request for a preliminary injunction in respect of THP 95-042
and on June 13, 1995, the Court of Appeals denied plaintiffs' petition,
thereby allowing Pacific Lumber to proceed with harvesting. On June 20,
1995, the California Supreme Court denied plaintiffs' request for a stay
of timber harvesting operations on THP 95-042. On May 15, 1995, a
stipulation was filed with the court which allowed plaintiffs to amend
their petition to challenge the approvals of other THPs in the area (if
and when these THPs are approved by CDF). These additional THPs included
THP 95-002 relating to 366 acres of residual old growth redwood timber,
which CDF approved on May 2, 1995. On June 29, 1995, the court denied
plaintiffs' motion for a preliminary injunction on THP 95-002.
On June 23, 1995, EPIC and others filed an action entitled Thron,
et al. v. Pacific Lumber, et al. (No. 95 DR 0182) in Superior Court of
Humboldt County. This action relates to THP 94-558 which covers
approximately 265 acres of primarily residual old growth timber. This
action seeks withdrawal of the approval of THP 94-558 by CDF. Plaintiffs
allege, among other things, that Pacific Lumber, Scotia Pacific Holding
Company and others violated the California Business and Professions Code
by committing unfair business practices in seeking approval of THP 94-558.
Plaintiffs sought both a preliminary injunction and "restitution of the
value of and disgorgement of all profits from the sale of timber harvested"
in connection with THP 94-558. On July 19, 1995, the trial court denied
plaintiffs' request for a prelminary injunction and on July 21, 1995 the
Court of Appeals denied plaintiffs' request for a stay of timber operations
in connection with THP 94-558.
On April 28, 1995, a lawsuit was filed entitled Lost Coast
League, et al. v. CDF, et al. (No. 95 DR 0119) in the Superior Court of
Humboldt County. This lawsuit challenges the March 30, 1995 re-approval of
THP 93-537 which relates to 121 acres of primarily old growth Douglas fir.
(In prior litigation entitled Lost Coast League, et. al. v. CDF, et. al.
(No. 94 DR 0046), the Court set aside CDF's initial approval of THP 93-537
and remanded the THP to CDF for further review and consideration.)
ITEM 5. OTHER INFORMATION
A variety of bills are currently pending in the California
legislature and the U.S. Congress which relate to the business of the
Company, including the protection and acquisition of old growth and other
timberlands, environmental protection and the restriction, regulation and
administration of timber harvesting practices. For example, a bill was
recently introduced in the California legislature which would, among other
things, initiate negotiations by the California Resources Agency with Pacific
Lumber for the public acquisition of approximately 4,700 acres of Pacific
Lumber's timberlands, 3,000 acres of which is a contiguous block of virgin
old growth redwood forest often referred to as the "Headwaters Forest."
Since this bill and the other bills are subject to amendment, it is
premature to assess the ultimate content of these bills, the likelihood of
any of the bills passing, or the impact of these bills on the financial
position or results of operations of Pacific Lumber or the Company.
Furthermore, any bills which are passed are subject to executive veto and
court challenge.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
27 Financial Data Schedule
B. REPORTS ON FORM 8-K:
None.
<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 undersigned thereunto duly authorized, who has signed this report on
behalf of the Registrant and as the principal accounting officer of the
Registrant.
MAXXAM GROUP INC.
Date: August 11, 1995 By: GARY L. CLARK
Gary L. Clark
Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated balance sheet and consolidated statement of operations
and is qualified in its entirety by reference to such consolidated financial
statements together with the related footnotes thereto.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 68,156
<SECURITIES> 21,254
<RECEIVABLES> 11,702
<ALLOWANCES> 0
<INVENTORY> 64,354
<CURRENT-ASSETS> 172,549
<PP&E> 164,059
<DEPRECIATION> 62,811
<TOTAL-ASSETS> 752,156
<CURRENT-LIABILITIES> 70,080
<BONDS> 779,245
<COMMON> 0
0
0
<OTHER-SE> (112,602)
<TOTAL-LIABILITY-AND-EQUITY> 752,156
<SALES> 117,612
<TOTAL-REVENUES> 117,612
<CGS> 62,504
<TOTAL-COSTS> 62,504
<OTHER-EXPENSES> 20,918
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,930
<INCOME-PRETAX> (493)
<INCOME-TAX> (373)
<INCOME-CONTINUING> (120)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (120)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
