MAXXAM Reports Results for Second Quarter and First Half of 1999
HOUSTON--(BUSINESS WIRE)--July 21, 1999--MAXXAM Inc. (ASE:MXM)
today reported a net loss of $18.1 million, or $2.59 per share, for
the second quarter of 1999, compared to net income of $12.4 million,
or $1.57 per share, for the second quarter of 1998. Net sales for the
second quarter of 1999 totaled $588.8 million, compared to $699.6
million in the same period of 1998.
For the first six months of 1999, MAXXAM reported net income of
$94.0 million, or $12.01 per share, compared to $14.3 million, or
$1.83 per share, for the same period of 1998. Net income for the first
six 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
State of California recorded during the first quarter of 1999.
Net sales for the first six months of 1999 were $1,133.6 million,
compared to $1,363.6 million for the first six months of 1998.
MAXXAM reported operating losses of $2.6 million for the second
quarter and $37.8 million for the first six months of 1999, compared
to operating income of $71.0 million and $122.3 million for the
comparable periods of 1998.
Commenting on the Company's operating performance, MAXXAM
Chairman and Chief Executive Officer Charles Hurwitz said, "Financial
performance for the second quarter of 1999 was primarily a reflection
of several factors. Kaiser Aluminum was negatively affected by lower
price realizations in all four business segments. Simultaneously, our
forest products segment experienced a temporary lack of approved
timber harvest plans due to the implementation of the new regulatory
regime instituted with the sale of the Headwaters timberlands.
"The Company is confident that the performance of Kaiser Aluminum
will improve as metal prices rise, and we are encouraged by the recent
strengthening in primary aluminum prices. We also remain fully
supportive of the manner in which Kaiser has responded to the
unfortunate accident at its Gramercy, Louisiana facility, the concern
it has shown for the Gramercy community, and its efforts to prevent
such an incident from ever happening again.
"Regarding our forest products operations, we anticipate that the
number of approved timber harvest plans will increase during the
second half of 1999 as the complexity of the new regulatory structure
is fully understood and managed. Indeed, the recent approval of the
first timber harvest plans under the new habitat conservation plan
indicates that this is beginning to happen. In addition, our real
estate and racing operations are well positioned to grow as we
continue to aggressively market our valuable portfolio of properties."
MAXXAM operates primarily in aluminum, forest products, real
estate and racing.
ALUMINUM OPERATIONS
Aluminum operations reported operating income of $2.2 million for
the second quarter and an operating loss of $29.3 million for the
first six months of 1999, compared to operating income of $56.8
million and $103.1 million for the same periods of 1998. Net sales
were $525.0 million in the second quarter and $1,004.4 million for the
first six months of 1999, compared to $614.8 million in the second
quarter and $1,211.8 million for the first six months of 1998.
Operating results relative to the second quarter of 1998 were
unfavorably affected by lower price realizations in all four business
segments. However, operating income was positive after two successive
quarters of losses. This improvement was due to higher shipments and
improved cost performance.
Other income and expense for the second quarter of 1999 include a
pre-tax gain of $50.5 million on the sale of Kaiser Aluminum's
interest in a joint venture. This was offset by a non-cash, pre-tax
charge of $38.0 million for asbestos related claims, and a pre-tax
charge of $13.5 million to reflect a mark-to-market adjustment on
certain aluminum hedging programs.
(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 experienced operating losses of $3.3
million for the second quarter and $4.7 million for the first six
months of 1999, compared to operating income of $14.7 million and
$24.8 million for the same periods of 1998. Net sales totaled $41.4
million for the second quarter and $88.1 million for the first half of
1999 compared to $63.5 million and $115.4 million for the same periods
in 1998.
Results for the second quarter and first half of 1999 are a
reflection of a temporarily diminished supply of approved timber
harvest plans combined with seasonal restrictions on logging
operations. These events brought about a reduced supply of logs for
production and manufacturing inefficiencies from sawmill production
curtailments.
REAL ESTATE AND RACING OPERATIONS
Real estate and racing operations reported operating income of
$0.7 million for the second quarter, and $0.9 million for the first
half of 1999, compared to $2.4 million and $0.8 million for the same
periods in 1998. Net sales in the second quarter and first six months
of 1999 were $22.4 million and $41.1 million, respectively, compared
to $21.3 million and $36.4 million in 1998.
Operating income decreased during the second quarter of 1999 from
the same period in 1998 primarily due to lower real estate sales. For
the first six months of 1999 operating income was essentially
unchanged from the comparable 1998 period as improved results from Sam
Houston Race Park were offset by a decline in real estate 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. |
