SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report Pursuant to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of Earliest Event Reported) October 31, 2007
Pope
Resources, A Delaware Limited Partnership
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
91-1313292
(I.R.S.
Employer
Identification
No.)
|
|
19245
Tenth Avenue NE, Poulsbo, Washington
|
98370
|
|
(Address
of principal executive offices)
|
(ZIP
Code)
|
Registrant's
telephone number, including area code (360) 697-6626
NOT
APPLICABLE
(Former
name or former address, if changed since last report.)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (SEE General Instruction A.2. below):
|
o
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
|
|
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
|
|
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-(b))
|
|
|
|
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
INFORMATION
TO BE INCLUDED IN THE REPORT
|
Item
7
|
Regulation
FD Disclosure
|
On
October
31, 2007 Dave Nunes, President and CEO presented to a group of investors the
presentation furnished herewith as Exhibit 99.1. The information contained
in this Current Report shall not be deemed to be "filed" for the purposes of
Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or
otherwise subject to the liabilities of that section, nor shall it be
incorporated by reference into a filing under the Securities Act of 1933, or
the
Exchange Act, except as shall be expressly set forth by specific reference
in
such filing. The furnishing of these materials is not intended to constitute
a
representation that such furnishing is required by Regulation FD or that the
materials include material investor information that is not otherwise publicly
available. In addition, the Registrant does not assume any obligation to update
such information in the future.
|
Item
9.01.
|
FINANCIAL
STATEMENTS AND EXHIBITS
|
|
Exhibit
No.
|
Description
|
|
|
|
||
|
99.1
|
Investor
presentation dated October 31, 2007
|
SIGNATURES
Pursuant
to the requirements of Section 13 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
POPE
RESOURCES, A DELAWARE LIMITED PARTNERSHIP
|
||||
|
|
||||
|
|
||||
|
DATE:
October 31, 2007
|
BY:
|
/s/ Thomas M. Ringo | ||
| Thomas M. Ringo | ||||
|
Vice
President and Chief Financial Officer, Pope
Resources,
A Delaware Limited Partnership, and
Pope
MGP, Inc., General
Partner
|
||||
Exhibit
99.1
POPE
RESOURCES POPE RESOURCES New York Investor
Presentation October 31, 2007
2 Safe
Harbor Safe Harbor This presentation contains forward-looking
statements. These forwardlooking statements are subject to a number
of risks and should not be relied upon as predictions of future
events. Some of the forward-looking statements can be identified by
the use of forward-looking words such as “believes”, “expects”,
“may”, “will”, “should”, “seeks”, “approximately”, “intends”,
“plans”, “estimates”, “projects”, “strategy” or “anticipates” or the
negative of those words or other comparable terminology.
Forward-looking statements involve inherent risks and uncertainties.
A number of important factors could cause actual results to differ
materially from those described in the forward-looking statements.
Some of these factors include, but are not limited to: changes
in forestry, land use, environmental, and other governmental
regulations; risk of losses from fires, floods, windstorms, and other
natural disasters; risk of loss from insect infestations or tree
diseases; changes in economic conditions and competition in our
domestic and export markets; an unanticipated reduction in the demand
for timber products and/or an unanticipated increase in the supply of
timber products; and other factors described from time to time in our
filings with the Securities and Exchange Co
mmission.
3 •
Last remaining timber MLP • Established in 1985 as a spin-off from
Pope & Talbot • 4.7 million units outstanding, with limited
public float – 21% controlled by GP’s and broader “family”
ownership – 25% controlled by Private Capital Management –
Limited other institutional ownership – Over one-third held by retail
investors • Thinly traded • Market capitalization and
enterprise value of approximately $200 million • YTD 2007 (thru Q3)
revenues of $34 million • YTD 2007 (thru Q3) net income of $9 million
or $1.91/Unit • YTD 2007 (thru Q3) EBITDDA of $14
million • Unit distribution increased to $0.40/quarter effective Q3
2007 Pope Resources Overview Pope Resources Overview
4 Pope
Resources Ownership Pope Resources Ownership • General
Partners – Two corporate GP’s own collectively about 1.5%
of Pope Resources – Each of GP’s owned 50/50
by Peter Pope and his cousin, Emily Andrews –
$150,000/year management fee, unchanged since spin-off –
Sliding-scale profit-sharing interest in third-party
service subsidiary • Limited Partners – Private
Capital Management at 25% (initial stake in 1993) –
“Family” position at 21% (including GP interest) – Limited
other institutional ownership – Over one-third held by
retail investors Outside
Directors 0.6% Management 2.4% Private
Cap. Mgt. 25.2% U.S.
Trust 4.3% Other Inst. <
1% 6.0% All Other 41.0% GP
Ownership 20.5%
5
Business Segments Business Segments • Fee Timber – 114,000
acres of timberland in western Washington – Producing 49 MMBF of
annual log harvest volume – Future growth will be primarily through
co-investment with ORM Timber Funds • Timberland Management &
Consulting – Olympic Resource Management (ORM) subsidiary provides
investment management and third-party timberland management
services – Provide investment management services on 24,000 acres in
Washington on behalf ORM Timber Fund I, a $62 million private equity
fund formed in 2005 – Manage 292,000 acres in Oregon for Cascade
Timberlands LLC – ORM has managed 1.5 million acres of timberland in
the Western U.S. for Hancock Timber Resource Group, Pioneer
Resources, and Cascade Timberlands • Real Estate – 2,500
acres of higher and better use properties in west Puget Sound –
Seeking development entitlements to add value to land – Primary role
is as a master developer, selling lands to o
ther
developers following entitlement process
6 Financial
Performance Financial Performance – Eleven Eleven-Year Summary Year
Summary Q3 1997 1998 1999 2000 2001 2002 2003 2004 2005
2006 2007 Revenues: Fee Timber 19.7 21.0 23.5 21.4 25.0
23.3 22.9 33.6 44.4 35.3 30.6 Timberland Mgmnt & Consulting 8.9
11.7 11.0 9.7 7.3 2.4 1.6 7.8 3.7 1.1 Real Estate 10.4 13.1 15.7 18.2
13.1 1.6 1.7 4.5 4.8 27.3 2.6 Total Revenues 30.1 43.0 50.9 50.6 47.8
32.2 27.0 39.6 57.0 66.3 34.3 Net Income/(Loss) 3.5 8.8 5.1 (6.3)
(0.4) 3.3 3.5 10.2 13.7 24.9 9.2 Net Income/(Loss) per Unit 0.78 $
1.94 $ 1.11 $ (1.38) $ (0.10) $ 0.74 $ 0.78 $ 2.22 $ 2.88 $ 5.23 $ 1.91
$ EBITDDA 6.2 11.9 9.0 (3.0) 10.6 9.3 10.1 18.9 28.4 33.2
13.9 Operating Cash Flow 5.8 9.2 8.3 10.0 11.2 9.0 8.6 17.9 28.9 43.6
12.0 Timberland Harvest (MMBF) 33.2 38.9 42.0 37.3 36.3 45.1 45.0
60.3 74.2 54.5 47.9 Unitholder Distributions per Unit 0.49 $ 0.40 $
0.40 $ 0.40 $ - $ 0.10 $ 0.24 $ 0.44 $ 0.80 $ 1.06 $ 1.36 $ * Unit
Trading Prices: High 31.00 $ 32.50 $ 35.00 $ 29.25 $ 24.50 $ 15.50 $
15.99 $ 25.25 $ 56.85 $ 36.00 $ 50.01 $ Low 17.40 $ 24.06 $ 27.88 $
19.00 $ 14.00 $ 9.30 $ 7.00 $ 15.00 $ 19.35 $ 30.00 $ 34.25 $ *
Projected for full year 2007 (All amounts in $ millions, except per
unit data)
7 Investment
Grade Balance Sheet Investment Grade Balance Sheet (in
$millions) 30-Sep-07 YE 2006 Assets Cash &
short-term investments 30.9 32.2 Other current assets 11.8
9.0 Properties and equipment, net of depletion/depreciation 137.1
137.1 Other assets 1.5 2.0 Total assets 181.4
180.3 Liabilities & Equity Current liabilities
(excluding current portion of long-term debt) 10.9 13.4 Total debt
(current and long-term) 30.8 32.2 Other liabilities 0.3
0.4 Total liabilities 42.0 46.0 Minority interest - ORM
Timber Fund I, LP 46.0 46.7 Partners' capital 93.4
87.6 Total liabilities & partners' capital 181.4
180.3
8 Pope
Resources Growth Strategy Pope Resources Growth Strategy • Free cash
flow, after debt service and distributions, to be used to –
Co-investment in ORM Timber Funds – Opportunistically pursue fee
(owned) timberland acquisitions – Where appropriate, invest in real
estate projects • Growth Capital – No current expectation
for secondary offering of Units • Equity “currency” too cheap to
issue new Units – Debt capacity • Between $50 and $80
million of incremental debt capacity, depending upon the value of
Units and cash flows – Near-term growth fueled primarily by organic
cash flow generation • Strive to increase Unit distribution over
time – Current distribution is $1.60/Unit per year, for a yield of
3.7%
9 Fee
Timber Strategy Fee Timber Strategy • Acquisition of Columbia tree
farm in 2001 and two smaller acquisitions in 2004 have filled much of
our age-class gap and provided for higher near-term cash flow
(2004-2006) • Non-declining harvest level of 49 MMBF over next
decade, before gradually increasing to 54 MMBF • Future
fee timber growth will come through co-investment in new ORM Timber
Funds – Participate in acquisition economies assoc
iated
with larger transactions – Facilitate being in the market on a
regular basis
10 Productive
Acres & Inventory by Age Class (1/1/07) Productive Acres & Inventory by
Age Class
(1/1/07) - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 clearcut
0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
65+ Productive Acres by Age Class 0
20 40 60 80 100 120 140 MMBF
Inventory by Age Class Acres MMBF Total Productive
Acres 100,571
Acres Total Merchantable In
ventory 404
MMBF
11 Timberland
Management & Consulting Strategy Timberland Management & Consulting
Strategy • Raise capital for investing in timberlands: ORM Timber
Fund II – $100 million of equity capital – 20%
co-investment by Pope Resources and affiliates – ORMLLC will serve as
manager • Manage timberlands acquired on behalf of ORM Timber Fund I,
L.P. – 24,000 acres acquired for $58 million – 20%
co-investment by Pope Resources and affiliates – ORMLLC serves as
GP • Manage timberlands for third-party clients –
Full-service management, selected forestry consulting services,
workout specialist • Managing 292,000 acres on behalf of
Cascade Timberlands – Ancillary benefits accrue to fee timber
properties through management expertise and economies of
scale
12 Real
Estate Strategy Real Estate Strategy • Push real estate properties
through entitlement and permitting pipeline to point where sale
opportunity is optimal – Work to partner with communities to help
maximize value of property portfolio • Recognize timing of sales
will be “lumpy” • Develop future pipeline
of higher-and-better-use (HBU) properties from current
fee timber portfolio west of Seattle • Work to
capitalize on regional infrastructure improvements, such
as the n
ew
Tacoma Narrows bridge and future passenger
ferry service
13 Gig
Harbor Project Gig Harbor Project • Commercial zoning: –
Costco sale closed in 2006 and store opening Nov. 2 –
Commercial pad sale closed Dec 2006 under construction –
16 acres remaining • Business park zoning: – YMCA opened
July 2007 – 64 acres remaining • Residential
zoning: – 170 acres at 4 units/acre – 30 acres at 8
units/acre – Estimated total yield of 750 to 900 units,
based on topography • Road, water
,
and sewer infrastructure largely completed
14 Bremerton
Project Bremerton Project • Projected consisted originally
of 260 acres • Following completion of preliminary plat,
200- acre residential portion of property was sold
in 2006 for $12 million • Remaining
60-acre industrial park under development in
two phases, with a total of 24 lots
15 Kingston
Project Kingston Project • Sale of 426 acre heritage park
to county in 2004 • Option to expand park by
369 acres • 305 acres located 1 mile from
Kingston ferry terminal incorporated into urban
growth area • 765 residential lots entitled •
Preliminary plat for first phase of construction to
be submitted by yearend 2007
16 Port
Gamble Project Port Gamble Project • Port Gamble historic
mill town is a many-faceted, long-term project which
is part of broader north Kitsap strategy impacting
8,000 acres of our o
wnership •
Planning currently for development of former mill site and
remaining portion of town site • Working to
incorporate elements of surrounding timberlands into
long-term plan
17
18
19 Recent
Trends in POPEZ Trading Activity Recent Trends in POPEZ Trading
Activity • Improved liquidity – Increased trading volume
during the past three years, spurred on originally by investment
newsletter article in early 2005 – Much more market maker interest
and tighter bid-ask spreads – Average trade size has declined to
under 200 units from over 500 in the preceding four
years • Four large 2007 timberland transactions* concentrated in
Washington and Oregon continued to fuel interest in the asset class
and in our Units – Longview Fibre (587,000 acres) acquired by
Brookfield Asset Management for $2.15 billion (est. timberland value
of $3,155/acre) – Menasha (138,000 acres) acquired by The Campbell
Group for $550 million (est. timberland value of
$3,985/acre) – Ohio STRS portfolio (430,000 acres) acquired by The
Campbell Group for $780 million (est. western timberland value of
$4,000/acre) – MassPRIM portfolio (185,000 acres) to be acquired by
Sierra Pacific and Rosboro for $660 m
illion
(est. timberland value of $3,565/acre) *RISI Timberland Markets
Report, internal estimates
20 $30 $35 $40 $45 $50 1/3/06 2/3/06 3/3/06 4/3/06 5/3/06 6/3/06 7/3/06 8/3/06 9/3/06 10/3/06 11/3/06 12/3/06 1/3/07 2/3/07 3/3/07 4/3/07 5/3/07 6/3/07 7/3/07 8/3/07 9/3/07 10/3/07 Unit
Price -
10 20 30 40 50 60 Daily
Volume (000) Left Axis: Blue line - Daily closing
price Red vertical lines - Daily high/low range Right
Axis: Black vertical lines - Daily volume POPEZ Trading
Activity (Jan. 2006 t
o
present) POPEZ Trading Activity (Jan. 2006 to present)
21
POPEZ Trading Activity (Jan. 2006 to present) POPEZ Trading
Activity (Jan. 2006 to
present) $30 $35 $40 $45 $50 1/3/06 2/3/06 3/3/06 4/3/06 5/3/06 6/3/06 7/3/06 8/3/06 9/3/06 10/3/06 11/3/06 12/3/06 1/3/07 2/3/07 3/3/07 4/3/07 5/3/07 6/3/07 7/3/07 8/3/07
9/3/07 10/3/07 Unit
Price -
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Daily
Volume Daily closing price 60
trading-day moving average of dail
y
price 60 trading-day moving average of
daily volume (right axis)
22 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2000
2001 2002 2003 2004 2005 2006 '07 YTD Trading Volume -
1,000 2,000 3,000 4,000 5,000 6,000 Non-Block
Trades Annual Non-Block Trading Volume (left
axis) Number of Non-Block Trades (right
axis) Pope Resources Non Pope Resources Non-Block Trading Volume
Block Trading Volume
23 Where
We Still Trail Our Peers Where We Still Trail Our Peers • While Unit
price has stabilized above $40, we still trail our peers in other key
valuation measures tied to cash flow – Ratio of Unit price to cash
flow generated still trails all our peers – Ratio of enterprise value
(market capitalization plus total debt and timber fund minority
interest, less cash) to EBITDDA also trails all our peers • Closing
these gaps in our trading multiples has the potential to
yield si
gnificant
upside in the value of our Units given how much cash we
are generating
24 - 2
4 6
8 10 12 14 16 18 20 99.4
00.1 00.2 00.3 00.4 01.1 01.2 01.3 01.4 02.1 02.2 02.3 02.4 03.1 03.2 03.3
03.4
04.1 04.2 04.3 04.4 05.1 05.2 05.3 05.4 06.1 06.2 06.3 06.4 Ratio of
Stock Price to Cash Flow per Share Plum Creek Deltic Rayonier Pope
Resources Pope Resources asset impairment charges
reversed * “Trailing Cash Flow” defined as EBITDDA for
POPE
Z
and as either EBITDDA or cash flow from operations for other 3
firms. Unit Price as Multiple of Trailing Cash Flows* Unit Price as
Multiple of Trailing Cash Flows*
25 Enterprise
Value to EBITDDA Multiples Enterprise V
alue
to EBITDDA
Multiples - 5 10 15 20 25 2000
2001 2002 2003 2004 2005 2006 EV to EBITDDA Multiple Plum
Creek Deltic Rayonier Pope
Resources
26 Reasons
for Gap in Public Market Valuation Reasons for Gap in Public Market
Valuation • Small size – Peer companies substantially
larger from enterprise value standpoint (Deltic 3.6x, Rayonier 17.5x,
Plum Creek 43x larger as of year-end 2006) • Very low
liquidity – Limited float with roughly half the Units essentially not
traded • Timber has never been efficiently valued in public
markets – Markets do not account for varied age-class
structures • Real estate portfolio creating “lumpy” cash flows that
are discounted by the market • Difficulty of describing
real estate portfolio – Breadth of project type within portfolio adds
to challenge • MLP structure limits potential investor
pool
27 Pope
Resources Pope Resources - Summary of Investment Opportunity Summary of
Investment Opportunity • Still a deep discount to NAV in spite of
recent rise in Unit price – Imputed value of all lands (fee timber,
ORM Timber Fund I, and real estate portfolio), based on enterprise
value, is approximately $1,770 per acre • Below comparable timberland
values • Ignores incremental value of real estate portfolio that is
well poised to capture values associated with rising west Puget Sound
population • Highly tax-efficient vehicle for investing in timberland
asset class – Efficient flow-through tax treatment –
Competitive distribution yield relative to timber REITs – Compelling
diversification benefits of timberland asset class • Adding value
through use of free cash flow – Co-investment in ORM Timber
Funds – Opportunistic acquisitions adjacent to real estate
projects – Increases in distribution level over past six
years • Improved alignment with increase
d
insider ownership in past few years • Favorable liquidity trends and
overall investment performance
28 Peer
Company Dividend Yields Peer Company Dividend Yields – September 2007 September
2007 0% 1% 2% 3% 4% 5% 6% 7% TimberWest Potlatch Rayonier Pope
Resources Plum Creek Louisiana
P acific Weyerhaeuser International
Paper Temple Inland St.
Joe Deltic Dividend Yield
29 Total
Total Unitholder Unitholder Return Return (Value of $10,000 invested
at spin (Value of $10,000 invested at spin-off, assuming re off, assuming
re-investment of after investment of after-tax distributions) tax
distributions) $- $50 $100 $150 $200 $250 $300 85
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 Value
($000) Compound Annual Growth Rates: Pre-tax
After-tax Pope Res. 16.7% 16
.5% S&P
500 12.2% 11.5% Spread 4.5% 5.0%
POPE
RESOURCES POPE RESOURCES