MAXXAM Reports Results for 1998 Fourth Quarter, Full Year
HOUSTON--(BUSINESS WIRE)--Jan. 28, 1999--MAXXAM Inc. (ASE:MXM)
today reported a net loss of $27.0 million, or $3.86 per share, for
the fourth quarter of 1998, compared to net income of $14.6 million,
or $1.67 per share, for the fourth quarter of 1997. Net sales for the
fourth quarter of 1998 totaled $580.3 million, compared to $682.4
million in the same period of 1997.
MAXXAM's results for the quarter reflect significantly lower
results from aluminum operations due to approximately $50 million of
incremental expense and lost volume related to a strike, a $45 million
non-cash reduction in the carrying value of Kaiser Aluminum's
micromill assets, lower average realized prices, and reduced shipments
and sales of primary aluminum and fabricated aluminum products.
MAXXAM's results also reflect reduced shipments and sales by its
forest products operations.
For the full year of 1998, MAXXAM's net loss was $57.2 million,
or $8.17 per share, compared to net income of $65.2 million, or $7.14
per share, for 1997. Net sales for 1998 were $2,572.7 million,
compared to $2,729.1 million for 1997. Results for the full year
of 1998 include an extraordinary loss of $42.5 million for prepayment
premiums and the writeoff of deferred financing costs related to the
refinancing of debt of MAXXAM Group Inc., The Pacific Lumber Company,
and Scotia Pacific Holding Company.
MAXXAM had an operating loss of $37.1 million for the fourth
quarter and operating income of $125.6 million for the full year of
1998, compared to operating income of $60.8 million and $236.4 million
for the year ago periods.
MAXXAM operates primarily in three areas: aluminum, forest
products, and real estate.
ALUMINUM OPERATIONS
Aluminum operations reported an operating loss of $38.9 million
for the fourth quarter and operating income of $96.5 million for the
full year of 1998, compared to operating income of $48.4 million and
$174.0 million for the same periods of 1997. Net sales were $503.0
million in the fourth quarter and $2,256.4 million for the full year
of 1998, compared to $594.6 million and $2,373.2 million for the same
periods of 1997.
The strike by members of the United Steelworkers of America
forced Kaiser Aluminum to incur a number of unusual expenses during
the fourth quarter of 1998 and to forego sales volume from three
temporarily-idled aluminum-making potlines as Kaiser operated the five
affected facilities with salaried employees and replacement workers.
Kaiser has decided to seek strategic partners for further
development and deployment of its micromill assets. This change in
course requires different accounting treatment, and Kaiser accordingly
reduced the carrying value of the micromill to approximately $25
million.
In addition to these items, 1998 fourth quarter results reflect
lower average realized prices relative to the 1997 fourth quarter.
(NOTE: Separate press releases with additional details on
aluminum operations and on Kaiser's letter of intent to sell its 50%
interest in the AKW joint venture are being released today by Kaiser
Aluminum.)
FOREST PRODUCTS OPERATIONS
Operating income for forest products operations was $3.2 million
for the fourth quarter and $40.9 million for the full year of 1998,
compared to $18.4 million and $84.9 million for the same periods a
year ago. Operating cash flow (operating income before depletion and
depreciation) was $8.4 million for the fourth quarter and $63.4
million for the full year of 1998, compared to $25.1 million and
$111.0 million for the same periods of 1997. Net sales totaled $52.3
million for the fourth quarter and $233.6 million for the full year of
1998, compared to $70.7 million and $287.2 million for the same
periods a year ago.
Net sales for the 1998 fourth quarter and for all of 1998
declined primarily due to lower shipments in all categories of lumber.
Shipments for the 1998 fourth quarter were lower due in part to a
diminished supply of approved timber harvest plans combined with
regulatory and judicial restrictions on logging operations, which have
affected the company's ability to produce a desirable volume and mix
of products. The decline in the supply of timber harvest plans is
largely due to a reduced level of timber harvest plans submitted by
the company and delays in the regulatory approval process, both of
which have occurred as a result of implementing certain interim
agreements reached in connection with the Headwaters Agreement.
Shipments for the full year of 1998 were also affected by
well-above-normal rainfall in the first half and by a general
oversupply in the market for Douglas-fir common grade lumber.
Operating income for the fourth quarter and full year of 1998
decreased from the year-ago periods due principally to the decrease in
net sales discussed above.
REAL ESTATE AND OTHER OPERATIONS
The company's real estate and other operations reported operating
income of $1.9 million for the fourth quarter and $1.8 million for the
full year of 1998, compared to operating losses of $3.2 million and
$5.0 million for the comparable 1997 periods. The improved results are
due primarily to higher net sales.
Net sales for the fourth quarter and full year of 1998 were $25.0
million and $82.7 million, up from $17.1 million and $68.7 million in
1997. The fourth quarter increase was primarily due to higher revenues
from real estate development projects and from Sam Houston Race Park,
the company's horse racing track. The increase for all of 1998 was
primarily due to higher revenues from real estate development projects
and the race park, partially offset by a decline in revenues from
resort and commercial operations reflecting various asset dispositions
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. |
