Looks better than the numbers
HOUSTON--(BUSINESS WIRE)--July 21, 1998--MAXXAM Inc. (ASE:MXM) today reported net income of $12.4 million, or $1.57 per share, for the second quarter of 1998, compared to net income of $31.9 million, or $3.42 per share, for the second quarter of 1997. Net sales for the second quarter of 1998 totaled $699.6 million, compared to $689.1 million in the same period of 1997. Net income for the second quarter of 1997 included a non-recurring, non-cash tax provision benefit of $32.1 million resulting from the settlement of certain matters.
For the first six months of 1998, MAXXAM's net income was $14.3 million, or $1.83 per share, compared to $32.6 million, or $3.49 per share, for the same period of 1997. Net sales for the first six months of 1998 were $1,363.6 million, compared to $1,320.7 million for the first six months of 1997.
Operating income was $71.0 million for the second quarter and $122.3 million for the first six months of 1998, compared to $52.7 million and $101.7 million for the comparable periods of 1997. Operating income for the second quarter of 1997 included a nonrecurring pre-tax restructuring charge of $19.7 million in the company's aluminum operations.
MAXXAM operates primarily in three industries: aluminum, forest products, and real estate.
ALUMINUM OPERATIONS
Aluminum operations reported operating income of $56.8 million for the second quarter and $103.1 million for the first six months of 1998, compared to operating income of $36.7 million and $69.5 million for the same periods of 1997. Net sales were $614.8 million in the second quarter and $1,211.8 million for the first six months of 1998, compared to $597.1 million and $1,144.5 million in the same periods of 1997.
Operating income for the second quarter of 1998 was above that of a year ago, after excluding the restructuring charge from 1997 results, despite the impact of lower market prices for primary aluminum. The 1998 second quarter operating income reflects strong performance at the Trentwood, Washington, rolling mill, favorable earnings from the company's hedging program, and higher shipments of alumina and fabricated aluminum products.
(NOTE: A separate press release with additional details on aluminum operations is being released today by Kaiser Aluminum Corporation.)
FOREST PRODUCTS OPERATIONS
Operating income for forest products operations was $14.7 million for the second quarter and $24.8 million for the first six months of 1998, compared to $24.5 million and $43.3 million for the same periods a year ago. Operating cash flow (operating income before depletion and depreciation) was $20.5 million for the second quarter and $36.2 million for the first six months of 1998, compared to $31.1 million and $56.5 million for the same periods of 1997. Net sales totaled $63.5 million for the second quarter and $115.4 million for the first six months of 1998, compared to $76.9 million and $143.7 million for the same periods a year ago.
On a year-to-year comparison, net sales for the 1998 second quarter decreased primarily due to lower shipments of lumber, logs, and chips. Lumber shipments were lower due to the continuation of the inclement weather experienced in 1998's first quarter combined with wet weather and seasonal wildlife logging restrictions which (i) hindered logging operations, (ii) affected the company's ability to produce and ship a desirable mix of products, and (iii) reduced demand.
Operating income for the second quarter declined from the year-ago period principally because of the sales decreases discussed above.
REAL ESTATE AND OTHER OPERATIONS
The company's real estate and other operations segment reported operating income of $2.4 million for the second quarter and $0.8 million for the first six months of 1998, compared to operating losses of $1.8 million and $1.4 million for the comparable 1997 periods. The improved results are due primarily to higher earnings from the company's domestic U.S. real estate projects.
Net sales in the second quarter and first six months of 1998 were $21.3 million and $36.4 million, respectively, compared to $15.1 million and $32.5 million in 1997.
CORPORATE
As previously announced, MAXXAM may from time to time purchase shares of its common stock on national exchanges or in privately negotiated transactions. |
