HOUSTON--(BUSINESS WIRE)--Oct. 25, 2000--MAXXAM Inc. (AMEX: MXM) today reported a net loss of $16.7 million, or $2.47 per share, for the third quarter of 2000, compared to a net loss of $37.4 million, or $5.35 per share, for the third quarter of 1999. Net sales for the third quarter of 2000 totaled $610.2 million, compared to $585.3 million in the same period of 1999.
For the first nine months of 2000, MAXXAM reported a net loss of $1.5 million, or $0.22 per share, compared to net income of $56.6 million, or $7.23 per share, for the same period of 1999. Net income for the first nine months of 1999 included a one-time pre-tax gain of $239.8 million ($142.1 million net of deferred taxes) for the landmark sale of the Headwaters timberlands to the governments of the United States and the State of California in March 1999. Net sales for the first nine months of 2000 were $1,854.6 million compared to $1,718.9 million for the first nine months of 1999.
MAXXAM reported operating income of $1.4 million for the third quarter and $100.5 million for the first nine months of 2000, compared to operating losses of $19.1 million and $56.9 million for the comparable periods of 1999.
MAXXAM operates primarily in aluminum, forest products, real estate and racing.
ALUMINUM OPERATIONS
Aluminum operations reported operating income of $4.3 million for the third quarter and operating income of $95.7 million for the first nine months of 2000, compared to operating losses of $10.6 million and $39.9 million for the same periods of 1999. Net sales were $537.1 million in the third quarter and $1,645.3 million for the first nine months of 2000, compared to $520.3 million and $1,524.7 million for the year ago periods.
Operating income for the third quarter of 2000 included a $40.5 million gain on the sale of power contracts, a $38.5 million charge related to settlement of Kaiser's labor dispute, and other non-recurring charges of $29.6 million. The operating loss for the third quarter of 1999 included impairments and other non-recurring charges totaling $24.1 million. Excluding these special items, third-quarter operating income was well above that of the year ago period, due in large measure to higher shipments and realized prices for primary aluminum. (Note: A separate press release with additional details on aluminum operations is being released today by Kaiser Aluminum Corporation.)
FOREST PRODUCTS OPERATIONS
Forest products operations reported operating income of $0.1 million for the third quarter and $14.5 million for the first nine months of 2000, compared to operating losses of $3.8 million and $8.5 million for the same periods of 1999. Net sales totaled $49.4 million for the third quarter and $152.7 million for the first nine months of 2000, compared to $49.0 million and $137.1 million for the same year ago periods.
Net sales for the quarter were largely unchanged as the impact of lower shipments of upper grade lumber and lower prices for common grade Douglas-fir lumber were offset by higher prices for redwood lumber. The improvement in operating income resulted from a lower cost of sales due to increased efficiencies at the sawmills and a reduction in logging costs.
Results for the first nine months of 2000 compared to the year-ago period are a reflection of higher prices for redwood lumber and higher shipments of common grade redwood and Douglas-fir lumber. This improvement in shipments was offset in part by lower shipments of upper grade redwood lumber due to continuing reductions in the volume of old-growth logs available for the production of lumber. The failure of government agencies to approve timber harvest plans in a timely manner continues to adversely affect log supply.
REAL ESTATE OPERATIONS
Real estate operations reported operating income of $0.8 million for the third quarter and an operating loss of $1.3 million for the first nine months of 2000, compared to operating losses of $2.9 million and $4.2 million for the same periods of 1999. Net sales in the third quarter and first nine months of 2000 were $15.7 million and $34.2 million, compared to $9.2 million and $37.4 million for the year-ago periods.
Net sales and operating income for the third quarter increased due to higher real estate sales at Fountain Hills and an acreage sale at the Waterwood project. The decrease in net sales for first nine months of 2000 is due to lower sales of real estate at the Palmas del Mar and Mirada development projects. Operating losses decreased for the first nine months of 2000 from the same period in 1999 primarily due to an insurance reimbursement for a 1998 hurricane-induced business interruption experienced at Palmas del Mar.
RACING OPERATIONS
Racing operations reported operating income of $0.5 million for the third quarter and $2.0 million for the first nine months of 2000, compared to operating income of $0.3 million and $2.5 million for the same periods of 1999. Net sales in the third quarter and first nine months of 2000 were $8.0 million and $22.4 million, compared to $6.8 million and $19.7 million for the year ago periods.
Racing operations' 2000 third quarter and nine-month net sales increased primarily due to the opening of Valley Race Park in Harlingen, Texas. Operating income for the third quarter was up only slightly from the same period in 1999 as higher marketing expenses at Sam Houston Race Park and start-up costs related to the grand opening of Valley Race Park in 2000 offset the improvement in net sales.
CORPORATE
As previously announced in prior earnings statements, MAXXAM may from time to time purchase shares of its common stock on national exchanges or in privately negotiated transactions.
Company press releases may contain statements that constitute ``forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. The company cautions that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those expressed or implied in the forward-looking statements as a result of various factors.
MAXXAM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In millions of dollars, except share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2000 1999 2000 1999
------ ------ ------ ------
Net sales $610.2 $585.3 $1,854.6 $1,718.9
Costs and expenses (608.8) (604.4) (1,754.1) (1,775.8)
------- ------- -------- --------
Operating income (loss) 1.4 (19.1) 100.5 (56.9)
Other income (expense):
Gain on sale of
Headwaters
Timberlands -- -- -- 239.8
Investment, interest
and other income
(expense), net 5.8 (11.4) 40.3 13.1
Interest expense (47.7) (49.1) (146.4) (147.7)
------- ------- -------- --------
Income (loss) before
income taxes and
minority interests (40.5) (79.6) (5.6) 48.3
Credit (provision) for
income taxes 16.0 26.9 2.2 (28.9)
Minority interests 7.2 15.3 (0.1) 37.2
------- ------- -------- --------
Income (loss) before
extraordinary item (17.3) (37.4) (3.5) 56.6
Extraordinary item:
Gain on repurchase of
debt, net of income
tax provision of
$1.3 million 0.6 -- 2.0 --
------- ------- -------- --------
Net income (loss) $(16.7) $(37.4) $(1.5) $56.6
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Basic earnings (loss)
per common share:
Income (loss) before
extraordinary item $(2.54) $(5.35) $(0.50) $8.08
Extraordinary item 0.07 -- 0.28 --
------- ------- -------- --------
Net income (loss) $(2.47) $(5.35) $(0.22) $8.08
======= ======= ======== ========
Diluted earnings (loss)
per common and common
equivalent share:
Income (loss) before
extraordinary item $(2.54) $(5.35) $(0.50) $7.23
Extraordinary item 0.07 -- 0.28 --
------- ------- -------- --------
Net income (loss) $(2.47) $(5.35) $(0.22) $7.23
======= ======= ======== ========
Weighted average common
and common equivalent
shares outstanding
(in thousands):
Basic 6,767 7,001 6,965 7,001
Diluted 6,767 7,001 6,965 7,826