<PAGE> 1
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 March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10239
PLUM CREEK TIMBER COMPANY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 91-1443693
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
999 Third Avenue, Seattle, Washington 98104-4096
Telephone: (206) 467-3600
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
___ ___
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PLUM CREEK TIMBER COMPANY, L.P.
COMBINED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------------------
1997 1996
---- ----
(In Thousands, Except Per Unit)
<S> <C> <C>
Revenues ......................................... $ 171,248 $ 127,694
--------------------------
Costs and Expenses:
Cost of Goods Sold ....................... 117,484 92,901
Selling, General and Administrative ...... 10,542 7,395
--------------------------
Total Costs and Expenses ............... 128,026 100,296
--------------------------
Operating Income ................................. 43,222 27,398
Interest Expense ................................. (15,465) (11,520)
Interest Income .................................. 257 139
Other Expense - Net .............................. (238) (24)
--------------------------
Income before Income Taxes ....................... 27,776 15,993
Provision for Income Taxes ....................... 418 78
--------------------------
Net Income ....................................... $ 27,358 $ 15,915
General Partner Interest ......................... 7,211 5,718
--------------------------
Net Income Allocable to Unitholders .............. $ 20,147 $ 10,197
==========================
Net Income per Unit .............................. $ 0.43 $ 0.25
==========================
</TABLE>
See accompanying Notes to Combined Financial Statements
2
<PAGE> 3
PLUM CREEK TIMBER COMPANY, L. P.
COMBINED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents ............... $ 142,155 $ 123,892
Accounts Receivable ..................... 32,956 23,697
Inventories ............................. 51,268 53,884
Timber Contract Deposits ................ 8,564 5,987
Other Current Assets .................... 4,237 15,025
---------- ----------
239,180 222,485
Timber and Timberlands - Net .................... 912,007 922,652
Property, Plant and Equipment - Net ............. 168,125 172,688
Other Assets .................................... 18,745 18,609
---------- ----------
Total Assets ............................ $1,338,057 $1,336,434
========== ==========
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt ....... $ 17,400 $ 17,400
Accounts Payable ........................ 9,049 13,443
Interest Payable ........................ 17,612 9,530
Wages Payable ........................... 12,245 13,187
Taxes Payable ........................... 8,203 5,275
Workers' Compensation Liabilities ....... 1,450 1,450
Other Current Liabilities ............... 8,909 9,212
---------- ----------
74,868 69,497
Long-Term Debt .................................. 602,400 602,400
Lines of Credit ................................. 161,000 161,000
Workers' Compensation Liabilities ............... 8,518 8,533
Other Liabilities ............................... 3,311 3,356
---------- ----------
Total Liabilities ....................... 850,097 844,786
---------- ----------
Commitments and Contingencies
PARTNERS' CAPITAL
Limited Partners' Units ......................... 486,627 490,105
General Partner ................................. 1,333 1,543
---------- ----------
Total Partners' Capital ................. 487,960 491,648
---------- ----------
Total Liabilities and Partners' Capital . $1,338,057 $1,336,434
========== ==========
</TABLE>
See accompanying Notes to Combined Financial Statements
3
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PLUM CREEK TIMBER COMPANY, L. P.
COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended March 31,
------------------------------
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income ................................................ $ 27,358 $ 15,915
Adjustments to Reconcile Net Income to
Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization .......... 16,929 13,923
Gain on Asset Dispositions - Net .................. (13) (53)
Working Capital Changes:
Accounts Receivable ............................. (9,259) (351)
Inventories ..................................... 2,616 (7,371)
Timber Contract Deposits and Other Current Assets 8,211 762
Accounts Payable ................................ (4,394) (8,202)
Other Accrued Liabilities ....................... 9,764 3,635
Other ............................................. 138 (603)
--------------------------
Net Cash Provided By Operating Activities ................. $ 51,350 $ 17,655
--------------------------
Cash Flows From Investing Activities:
Additions to Properties ........................... $ (2,057) $ (4,374)
Proceeds from Asset Dispositions .................. 16 449
Other ............................................. 156
--------------------------
Net Cash Used In Investing Activities ..................... $ (2,041) $ (3,769)
--------------------------
Cash Flows From Financing Activities:
Cash Distributions ................................ $ (31,046) $ (25,927)
Borrowings on Lines of Credit ..................... 165,250 134,500
Repayments on Lines of Credit ..................... (165,250) (134,500)
--------------------------
Net Cash Used In Financing Activities ..................... $ (31,046) $ (25,927)
--------------------------
Increase (Decrease) In Cash and Cash Equivalents .......... 18,263 (12,041)
Cash and Cash Equivalents:
Beginning of Period .............................. 123,892 87,604
--------------------------
End of Period ..................................... $ 142,155 $ 75,563
==========================
</TABLE>
See accompanying Notes to Combined Financial Statements
4
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PLUM CREEK TIMBER COMPANY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
The combined financial statements include all the accounts of Plum
Creek Timber Company, L.P. (the "Partnership"), Plum Creek Manufacturing, L.P.
("Manufacturing") and Plum Creek Marketing, Inc. ("Marketing"). All significant
intercompany transactions have been eliminated in the combination.
The Partnership owns 98 percent of Manufacturing and 96 percent of
Marketing. Plum Creek Management Company, L.P. (the "General Partner") manages
the businesses of the Partnership, Manufacturing and Marketing and owns the
remaining two percent general partner interest of Manufacturing and four percent
of Marketing. As used herein, "Company" refers to the combined entities of the
Partnership, Manufacturing and Marketing.
The financial statements included in this Form 10-Q are unaudited and
do not contain all of the information required by generally accepted accounting
principles to be included in a full set of financial statements. The financial
statements in the Partnership's 1996 annual report on Form 10-K include a
summary of significant accounting policies of the Company and should be read in
conjunction with this Form 10-Q. In the opinion of management, all material
adjustments necessary to present fairly the results of operations for such
periods have been included. All such adjustments are of a normal and recurring
nature. The results of operations for any interim period are not necessarily
indicative of the results of operations for the entire year.
The taxable income, deductions, and credits of the Partnership and
Manufacturing are allocated to the Unitholders based on the number of depositary
units representing limited partner interests ("Units") held and the holding
period. Distributions of cash to a Unitholder are considered a non-taxable
return of capital to the extent of the Unitholder's basis in the Units (as such
basis is increased by the allocable share of the Partnership's and
Manufacturing's taxable income). However, Unitholders are required to include in
their income tax filings their allocable share of the Partnership's and
Manufacturing's income, regardless of whether cash distributions are made. In
virtually all cases, a Unitholder's 1997 cash distribution will significantly
exceed the tax liability related to the Unitholder's allocated taxable income
from the Partnership and Manufacturing. For tax-exempt entities, such as IRAs,
most of the Partnership's and Manufacturing's taxable income is treated as
Unrelated Business Taxable Income ("UBTI"). To the extent a tax-exempt entity
has more than $1,000 of UBTI for a tax year, it may be required to pay federal
income taxes. Marketing, as a separate taxable corporation, provides for income
taxes on a separate company basis. Marketing provides for deferred taxes in
order to reflect the tax consequences in future years of the difference between
the financial statement and tax basis of assets and liabilities at year-end.
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Net Income per Unit is calculated using the weighted average number of
Units outstanding, divided into the combined Company net income, after adjusting
for the General Partner interest. The weighted average number of Units
outstanding was 46,323,300 and 40,608,300 for the three month periods ended
March 31, 1997 and 1996, respectively.
2. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- --------------
<S> <C> <C>
Raw materials (logs) $20,850 $23,171
Work-in-process 6,682 7,227
Export logs 681 1,048
Finished goods 15,606 15,034
------- -------
43,819 46,480
Supplies 7,449 7,404
------- -------
Total $51,268 $53,884
======= =======
</TABLE>
Excluding supplies, which are valued at average cost, the cost of the
LIFO inventories valued at the lower of average cost or market (which
approximates current cost) at March 31, 1997 and December 31, 1996 was $44.3
million and $46.4 million, respectively.
3. TIMBER AND TIMBERLANDS AND PROPERTY, PLANT AND EQUIPMENT
Timber and timberlands consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
-------- --------
<S> <C> <C>
Timber and logging roads - net $814,086 $824,160
Timberlands 97,921 98,492
-------- --------
Timber and Timberlands - net $912,007 $922,652
======== ========
</TABLE>
6
<PAGE> 7
Property, plant and equipment consisted of the following (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ----------
<S> <C> <C>
Land, buildings and improvements $ 60,173 $ 60,173
Machinery and equipment 230,678 229,513
--------- ---------
290,851 289,686
Accumulated depreciation (122,726) (116,998)
--------- ---------
Property, Plant and Equipment - net $ 168,125 $ 172,688
========= =========
</TABLE>
4. BORROWINGS
As of March 31, 1997, the Company had $161.0 million of borrowings under
its revolving line of credit and letters of credit outstanding in the amount of
$0.1 million. The revolving line of credit allows the Partnership to borrow $225
million, including up to $20 million of standby letters of credit issued on
behalf of the Partnership or Manufacturing, through December 13, 2001. As of
March 31, 1997, the Company had an unused bank line of credit totaling $64
million. As of April 4, 1997, $139 million of borrowings on the line of credit
were repaid.
5. SUBSEQUENT EVENTS
On April 15, 1997, the Board of Directors of the General Partner
authorized the Partnership to make a distribution of $0.55 per Unit for the
first quarter of 1997. Total distributions will equal approximately $34.0
million (including $8.5 million to the General Partner) and will be paid on May
29, 1997 to Unitholders of record on May 16, 1997.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
As used herein, "Company" refers to the combined entities of the
Partnership, Manufacturing, and Marketing. "Resources Segment" refers to the
combined timber and land management businesses of the Partnership and
"Manufacturing Segment" refers to the combined businesses of Manufacturing and
Marketing.
CURRENT MARKET CONDITIONS
Prices for domestic logs in the Cascades Region have improved since the
first quarter of 1996, primarily due to the continued strength of the lumber
markets and late fourth quarter 1996 weather-related production curtailments.
Prices for domestic logs in the Rockies Region for the first quarter of 1997
have remained relatively flat from those experienced during the same period in
the prior year. The upward price pressure due to the continued strength in the
housing market was offset by an adequate supply of logs and weak wood chip
prices. Pulp log and residual chip prices remain depressed in both the Cascades
and Rockies Regions during the first quarter of 1997 due to weak pulp and paper
markets and excess chip inventories. However, chip inventories continued to
decline during the first quarter. Domestic and pulp log prices in the Southern
Region strengthened during the first quarter of 1997 due to weather-related log
shortages.
Export log prices for the first quarter of 1997 were relatively flat
compared to the prior year first quarter. However, export log prices declined
throughout the first quarter of 1997 due to a decline in the valuation of the
Japanese yen against the U.S. dollar and high log inventories in both Japan and
on the U.S. West Coast. Export log inventories rose during the first quarter of
1997 due to a softening in demand and favorable harvesting conditions.
First quarter 1997 industry composite indices for lumber were 28%
higher than the first quarter of 1996 and comparable with the fourth quarter of
1996. First quarter 1997 lumber prices improved compared to the prior year first
quarter due to robust housing markets (first quarter 1997 new-home sales were
stronger than any quarter since 1978), reduced supply, and strength in the
repair and remodel markets in the retail sector. Demand for lumber has improved
due to a strong U.S. economy and favorable interest rates. The available supply
of lumber has declined due to the five year U.S. - Canadian lumber trade
agreement, which became effective April 1, 1996. First quarter 1997 Canadian
lumber exports to the United States decreased by 26% from the prior year first
quarter record of 4.5 billion board feet. There were additional supply
constraints of large diameter logs during the first quarter of 1997 due to
extremely wet weather which curtailed harvesting operations throughout the
Southern United States. First quarter 1997 lumber prices in the repair and
remodel markets improved compared to the prior year first quarter due to a
decline in the supply of preferred western species and numerous mills targeting
production toward the housing market sector.
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First quarter 1997 industry composite indices for commodity plywood
prices were comparable with the first quarter of 1996 and the fourth quarter of
1996. Despite continued capacity expansion of low-cost oriented strand board
(OSB), plywood prices remained firm during the first quarter due to
weather-related production curtailments in the Southern United States, low field
inventories, and strong housing markets. However, commodity plywood prices began
to decline near the end of the first quarter of 1997 due to improving weather
conditions and continued industry capacity expansion. North American structural
panel capacity expanded by 7% in 1996 and is expected to increase an additional
7% in 1997. The increased capacity has resulted in an unusually high OSB/plywood
price differential (for example, $130 per MSF for OSB vs $255 per MSF for
sheathing plywood) which is expected to cause more plywood sheathing users to
convert to OSB. First quarter 1997 MDF prices were relatively flat compared to
the prior year first quarter, but were 3% below fourth quarter 1996 prices. The
decline from fourth quarter 1996 prices was primarily due to continued industry
capacity expansion and aggressive pricing by start-up mills in an attempt to
increase market share. North American MDF annual production capacity expanded by
13% in 1996 and is expected to increase by an additional 50% between 1997 and
1999.
9
<PAGE> 10
RESULTS OF OPERATIONS
FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996
The following table compares operating income by segment for the
quarters ended March 31, 1997 and 1996.
Operating Income by Segment
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------
(In Thousands)
1997 1996
--------- --------
<S> <C> <C>
Resources Segment .................................... $ 39,099 $ 31,154
Manufacturing Segment ................................ 11,725 1,780
Other Costs and Eliminations ......................... (7,602) (5,536)
-------- --------
Total ............................................. $ 43,222 $ 27,398
======== ========
</TABLE>
Resources Segment revenues increased by $20.7 million, or 28%, to $94.4
million for the quarter ended March 31, 1997, compared to $73.7 million for the
quarter ended March 31, 1996. This increase was primarily due to revenues of
$23.3 million from the Southern Timberlands that were purchased in the Southern
Region Acquisition in the fourth quarter of 1996, increased land sales revenue
of $3.1 million, and increased in-woods chipping revenue, offset in part by
lower Northwest domestic and export log sales volumes. The increase in land
sales revenue was primarily due to the sale of 280 acres of higher and better
use lands during the first quarter of 1997 for approximately $3.0 million. First
quarter 1997 in-woods chipping revenue increased primarily due to the operation
of three in-woods chippers in the Rockies Region to provide a portion of our
commitment under a long-term chip supply agreement. Northwest domestic log sales
volume decreased by 15% compared to the first quarter of 1996, primarily due to
the October 1996 sale of 107,000 acres of timberland in the Rockies Region. In
addition, harvesting activity increased in the Rockies Region during the first
quarter of 1996 as a result of poor weather-related harvesting conditions during
the second half of 1995. Export log sales volume decreased by 9% compared to the
first quarter of 1996, primarily due to the diversion of lower quality export
logs to the domestic market in response to weaker Japanese demand and stronger
domestic markets.
Resources Segment costs and expenses increased by $12.8 million, or 30%,
to $55.3 million for the quarter ended March 31, 1997, compared to $42.5 million
for the quarter ended March 31, 1996. This increase was primarily due to $15.1
million of additional costs related to the Southern Region and increased log and
haul costs associated with first quarter 1997 in-woods chipping operations in
the Rockies Region, offset in part by lower domestic sawlog sales volume in the
Rockies Region in the first quarter of 1997 compared to the prior year first
quarter.
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Manufacturing Segment revenues increased by $33.3 million, or 39%, to
$118.9 million for the quarter ended March 31, 1997, compared to $85.6 million
for the quarter ended March 31, 1996. This increase was primarily due to
revenues of $35.4 million from the Southern Conversion Facilities, increased
lumber sales prices, and higher MDF and plywood sales volumes, offset in part by
decreased lumber and wood chip sales volume. Lumber sales prices in the
Northwest increased by 16% compared to the first quarter of 1996 due to the
reduced supply of lumber and the continued strength of both the housing sector
and the repair and remodel market in the retail sector. The supply of lumber for
the retail markets has declined due to numerous mills targeting production
toward the strong housing sector. Additionally, the supply of lumber for the
housing sector was reduced due to the quota on Canadian lumber exported to the
United States. MDF sales volume increased by 22% compared to the prior year
first quarter, primarily due to the resolution in the second half of 1996 of
production issues associated with the start-up of new high energy refiners.
Northwest plywood sales volume increased by 8% compared to the prior year first
quarter, primarily due to favorable housing markets and weather-related
production curtailments in the South during the first quarter of 1997. Northwest
lumber sales volume decreased by 18% compared to the prior year first quarter,
primarily due to the October 1996 sale of the Arden sawmill in Colville,
Washington. Wood chip sales volume decreased compared to the prior year first
quarter due to both the sale of the Arden sawmill and the temporary closure of
the Cle Elum chip plant which began in the spring of 1996 as a result of weak
pulp and paper markets.
Manufacturing Segment costs and expenses increased by $23.4 million, or
29%, to $107.2 million for the quarter ended March 31, 1997, compared to $83.8
for the quarter ended March 31, 1996. This increase was primarily due to $32.2
million of additional costs related to the Southern Region and increased MDF and
plywood sales volumes, offset in part by lower Northwest lumber sales volume.
Other Costs and Eliminations (which consists of corporate overhead,
intercompany log profit elimination, and intercompany LIFO elimination)
decreased operating income by $7.6 million in the first quarter of 1997,
compared to $5.5 million in the first quarter of 1996. The variance of $2.1
million is primarily due to increased corporate overhead.
Interest expense increased by $4.0 million, or 34%, to $15.5 million,
for the quarter ended March 31, 1997, compared to $11.5 million for the quarter
ended March 31, 1996, primarily due to the issuance of $200 million of senior
notes in the fourth quarter of 1996 related to the Southern Region Acquisition.
The income allocated to the General Partner increased by $1.5 million to
$7.2 million for the quarter ended March 31, 1997, compared to $5.7 million for
the quarter ended March 31, 1996. This increase was due to the issuance of 5.7
million additional Limited Partner Units in the fourth quarter of 1996, higher
quarterly distributions to Unitholders, and higher net income. The General
Partner's incentive distribution is based on the number of outstanding Units
times a percentage of the per Unit distribution paid to Limited Partners, which
was $0.51 per Unit during the first quarter of 1997, compared to $0.49 per Unit
during the first quarter of 1996. Net income is allocated to the
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General Partner based on 2 percent of the Company's net income (after adjusting
for the incentive distribution), plus the incentive distribution.
FINANCIAL CONDITION AND LIQUIDITY
During the first three months of 1997, net cash provided by operating
activities totaled $51.4 million compared to $17.7 million for the same period
in 1996. The increase of $33.7 million was primarily due to favorable working
capital changes of $18.5 million and higher net income of $11.4 million compared
to the prior year first quarter. The favorable working capital variance is
primarily due to $11.3 million and $10.0 million fluctuations in Other Current
Assets and Inventory, respectively. The change in Other Current Assets is
primarily due to the collection of an installment note receivable during the
first quarter of 1997 related to a fourth quarter 1996 higher and better use
land sale. The inventory change is primarily due to a greater increase in log
inventories at our Northwest Conversion Facilities during the first quarter of
1996 compared to the first quarter of 1997 and a seasonal decline in log
inventories at our Southern Conversion Facilities during the first quarter of
1997. Log inventories at our Northwest Conversion Facilities increased 3% during
the first quarter of 1997 compared to 18% during the first quarter of 1996, as a
result of poor weather-related harvesting conditions during the second half of
1995. Log inventories at our Southern Conversion Facilities decreased 51% during
the first quarter of 1997, primarily due to the build-up of log inventories
during the fourth quarter of 1996 in anticipation of the rainy season.
The Partnership has an unsecured revolving line of credit ("Line of
Credit") with a group of banks that permits the Partnership to borrow up to $225
million for general corporate purposes, including up to $20 million of standby
letters of credit issued on behalf of the Partnership or Manufacturing. The Line
of Credit matures on December 13, 2001 and bears a floating rate of interest. As
of March 31, 1997, the Partnership had $161.0 million outstanding under the Line
of Credit. As of April 4, 1997, the Partnership had repaid $139.0 million of the
borrowings under the Line of Credit.
The Company's borrowing agreements contain certain restrictive
covenants, including limitations on harvest levels, sales of assets, cash
distributions and the amount of future indebtedness. In addition, the Line of
Credit requires the maintenance of a required interest coverage ratio. The
Company was in compliance with its debt covenants as of March 31, 1997.
The Partnership will distribute $0.55 per Unit for the first quarter of
1997. The distribution will equal $34.0 million (including $8.5 million to the
General Partner), and will be paid on May 29, 1997 to Unitholders of record on
May 16, 1997. The computation of cash available for distribution includes
required reserves for the payment of principal and interest, as well as other
reserves established at the discretion of the General Partner for working
capital, capital expenditures, and future cash distributions.
Cash required to meet the Company's quarterly cash distributions,
capital expenditures and
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principal and interest payments will be significant. The General Partner expects
that all debt service and cash distributions will be funded from cash on hand
and cash generated from operations. It is anticipated that future capital
expenditures will be funded from cash on hand, cash generated from operations,
and borrowings under the Line of Credit.
CAPITAL EXPENDITURES
Capital expenditures for the first three months of 1997 totaled $2.1
million compared to $4.4 million for the same period in 1996. Total 1997 capital
expenditures are expected to equal $29.4 million, compared to $19.3 million
(excluding $560.7 million related to the Southern Region Acquisition) expended
in 1996. Planned capital expenditures for the Resources Segment in 1997 are
primarily for road construction and reforestation. The Manufacturing Segment's
1997 principal projects include continued reconfiguration of the Pablo sawmill
to allow for more efficient processing of small logs, various lumber and plywood
projects to improve productivity and increase recovery, as well as replacements
and upgrades of equipment in several of the Conversion Facilities.
OTHER INFORMATION
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Common Share"
("FAS 128"). FAS 128 simplifies the standards for computing earnings per share
and makes them comparable to international earnings per share standards. The
implementation of FAS 128 is required for financial statements issued for
periods ending after December 15, 1997; earlier application is not permitted.
The impact of the adoption of this standard is not expected to materially change
the Company's earnings per Unit presentation.
FEDERAL AND STATE REGULATIONS
THREATENED AND ENDANGERED SPECIES. The Endangered Species Act ("ESA")
protects species threatened with possible extinction. Protection of endangered
species may include the imposition of restrictions on timber harvesting and road
building activities in areas containing the affected species. A number of
species indigenous to the Timberlands have been listed as threatened or
endangered or have been proposed or are candidates for such status under the
ESA, including the northern spotted owl, marbled murrelet, gray wolf, red
cockaded woodpecker, mountain caribou, grizzly bear, bald eagle, bull trout and
various salmon species.
In November 1996, a lawsuit was filed by a number of groups in Federal
District Court for the District of Columbia challenging the process by which the
Clinton Administration adopted the "No-Surprises" Policy, which was incorporated
into the Partnership's Habitat Conservation Plan for the Cascades Region (the
"HCP"). See the discussion of the HCP in the Partnership's Form 10-K for the
year ended December 31, 1996. The challenged policy provides that no additional
costs will be imposed on, or land restrictions required from, the holder of an
incidental
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take permit issued in conjunction with an HCP absent extraordinary
circumstances. This lawsuit was recently settled, leaving the No-Surprises
Policy in effect. No assurance can be given, however, that similar challenges
will not arise in the future.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 2, 1997 the Company initiated arbitration proceedings against
Stone Container Corporation ("Stone") to enforce the pricing and volume
provisions of a long-term chip supply agreement, which Stone has disputed. Under
the agreement, Stone is obligated to purchase 280,000 bone dry units ("BDU") of
wood chips in 1997 at prices ranging up to $120 per BDU. The Company believes
Stone's position is without merit.
In addition, see the discussion of federal and state regulations under
Part I, Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Items 2, 3, 4 and 5 of Part II are not applicable and have been omitted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) LIST OF EXHIBITS
Each exhibit set forth below in the Index to Exhibits is filed as a
part of this report. Exhibits not incorporated by reference to a prior filing
are designated by an asterisk ("*"); all exhibits not so designated are
incorporated herein by reference to a prior filing as indicated.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Designation Nature of Exhibit
- ----------- -----------------
<S> <C>
3.1 Amended and Restated Agreement of Limited Partnership of Plum
Creek Timber Company, L.P. dated June 8, 1989, as amended and
restated through October 17, 1995 (Form 10-Q, File No.
1-10239, for the quarter ended September 30, 1995).
3.2 Certificate of Limited Partnership of Plum Creek Timber
Company, L.P., as filed with the Secretary of State of the
state of Delaware on April 12, 1989 (Form S-1, Regis. No.
33-28094, filed May, 1989).
27* Financial Data Schedule.
</TABLE>
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(b) REPORTS ON FORM 8-K
None.
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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.
PLUM CREEK TIMBER COMPANY, L.P.
(Registrant)
By: Plum Creek Management Company, L.P.
as General Partner
By: /s/ Diane M. Irvine
---------------------------
DIANE M. IRVINE
Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial and Accounting
Officer)
Date: May 14, 1997
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
27 FINANCIAL DATA SCHEDULE
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMBINED FINANCIAL
STATEMENTS OF PLUM CREEK TIMBER COMPANY, L.P. FOR THE THREE MONTHS ENDED MARCH
31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 142,155
<SECURITIES> 0
<RECEIVABLES> 34,397
<ALLOWANCES> 1,441
<INVENTORY> 51,268
<CURRENT-ASSETS> 239,180
<PP&E> 1,202,858
<DEPRECIATION> 122,726
<TOTAL-ASSETS> 1,338,057
<CURRENT-LIABILITIES> 74,868
<BONDS> 763,400
0
0
<COMMON> 0
<OTHER-SE> 487,960
<TOTAL-LIABILITY-AND-EQUITY> 1,338,057
<SALES> 171,248
<TOTAL-REVENUES> 171,248
<CGS> 117,484
<TOTAL-COSTS> 128,026
<OTHER-EXPENSES> 238
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,465
<INCOME-PRETAX> 27,776
<INCOME-TAX> 418
<INCOME-CONTINUING> 27,358
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,358
<EPS-PRIMARY> .43
<EPS-DILUTED> 0
</TABLE>
