MAXXAM Reports Results for 1999 First Quarter
HOUSTON--(BUSINESS WIRE)--April 21, 1999--MAXXAM Inc. (ASE:MXM)
today reported net income of $112.1 million, or $14.35 per share, for
the first quarter of 1999, compared to $1.9 million, or $0.25 per
share, for the first quarter of 1998.
Net sales for the first quarter of 1999 totaled $544.8 million,
compared to $664.0 million for the same period of 1998. MAXXAM
recorded a 1999 first quarter operating loss of $35.2 million,
compared to operating income of $51.3 million for the first quarter of
1998.
MAXXAM's 1999 first quarter results reflect three significant
factors. First, the landmark sale of the Headwaters timberlands to the
governments of the United States and the State of California on
March 1, 1999 resulted in a one-time pre-tax gain of $239.8 million
($142.1 million net of deferred taxes or $18.17 per share). Second, the
Company's forest products operations in the quarter were adversely
affected by a decline in the supply of available logs due to an
insufficient number of timber harvest plans. Third, the performance of
Kaiser Aluminum was adversely affected by an 18% decline in the market
price of primary aluminum compared with the same period last year, and
relatively low shipment levels in its four product lines.
Commenting on MAXXAM's operating results in the first quarter of
1999 relative to those of the year-ago period, MAXXAM Inc. Chairman
and CEO Charles Hurwitz said, "While our real estate and racing
operations recorded positive results, aluminum prices were depressed
and our forest products operations were negatively affected by the
intense Headwaters negotiations. However, during the first quarter we
took a number of important steps to help MAXXAM over the long-term.
"In the forest products business we did the right thing for our
Company, our employees, our investors, and the public by successfully
completing the Headwaters Agreement, which should create greater
future predictability in our forest products operations. In the
aluminum business, we have positioned our operations in a stronger
competitive position to prosper when aluminum prices rise. In the real
estate and racing business, we continue to aggressively market, and
make investments in, our valuable portfolio of properties so that they
may continue to grow.
"We are confident that these steps will allow the Company to
prosper in the long-term."
MAXXAM operates in the following areas: aluminum, forest
products, real estate and racing.
ALUMINUM OPERATIONS
In the first quarter of 1999, aluminum operations reported an
operating loss of $31.5 million, compared to operating income of $46.3
million for the same period last year. Net sales were $479.4 million,
compared to $597.0 million for the comparable period in 1998.
Kaiser Aluminum reported a loss primarily due to the decline in
the market price of primary aluminum, which created significant
declines in realized prices, and due to lower shipments in three of
its four major businesses.
With the exception of smelter curtailment and restart activity,
the five Kaiser plants affected by a labor dispute operated at close
to, or better than, normal levels. In addition, on April 1, 1999
Kaiser completed the sale of its interest in a joint venture for
approximately $70 million. It expects that transaction to result in a
pre-tax gain of just under $50 million to be reflected in the second
quarter.
(Note: A separate press release with additional details on
aluminum operations is being release today by Kaiser Aluminum
Corporation.)
FOREST PRODUCTS OPERATIONS
The Company's forest products operations had an operating loss of
$1.4 million for the first quarter of 1999, as compared to $10.1
million in operating income for the comparable period last year. This
decrease was due primarily to lower net sales combined with higher
cost of sales.
Net sales totaled $46.7 million for the first quarter of 1999,
compared to $51.9 million for the first quarter of 1998, reflecting
lower shipments of upper and common grade redwood lumber, offset
somewhat by higher shipments of Douglas-fir common grade lumber. The
decrease in shipments was primarily due to a lack of logs available
for conversion into lumber products. A diminished supply of approved
timber harvest plans, combined with seasonal restrictions on logging
operations, continues to affect log supply.
Increased cost of sales was due to higher logging costs and
manufacturing inefficiencies resulting from production curtailments at
the Company's sawmills.
REAL ESTATE AND RACING OPERATIONS
The Company's real estate and racing operations reported
operating income of $0.2 million for the first quarter of 1999
compared to a $1.6 million operating loss for the same period in 1998.
The increase was due primarily to net sales, which increased to $18.7
million from $15.1 million during the same period in 1998. The
increase resulted largely from higher revenues at the
Company's Palmas del Mar real estate development project in
Puerto Rico and increases in pari-mutuel wagering at Sam Houston Race
Park. |
