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Tejon Ranch Co. Reports Earnings from 2008 Operations

^{Published on 2009-02-25 06:46:30, Last Modified on 2009-02-25 06:48:40 - Market Wire}
 

TEJON RANCH, Calif.--([ BUSINESS WIRE ])--Tejon Ranch Co. (NYSE:TRC) today announced total revenues from operations and net income for the year ended December 31, 2008, as well as for the fourth quarter of 2008. Revenue from operations for the year ended December 31, 2008 increased to $40,121,000, up 24% compared to $32,344,000 of revenue for the same period during 2007. For 2008, the Company had net income of $4,112,000, or $0.23 per common share compared to net income of $7,333,000, or $0.42 per common share in 2007. Even as our 2008 revenues increased, our equity in earnings of unconsolidated joint ventures declined to earnings of $2,227,000 in 2008 from earnings of $10,580,000 in 2007. All per share references in this release are presented on a fully diluted basis.

For the fourth quarter of 2008, the Company had a net loss of $23,000, or $0.00 per common share, compared to net income of $985,000, or $.06 per common share for the fourth quarter of 2007. Revenue from operations for the fourth quarter of 2008 was $10,372,000, compared to $9,981,000 of revenue during the same period in 2007.

"Overall, we are pleased with our 2008 results given the adverse economic conditions in which we are all operating," said Robert A. Stine, President and CEO of Tejon Ranch Co. "While we believe 2009 could be a difficult earnings year, we will continue moving aggressively forward with our plans to gain entitlements for our two residential communities, Centennial and Tejon Mountain Village."

Results of Operations for the Year Ended December 31, 2008:

The most significant reason for 2008's decline in net income was the decrease in our share of earnings from unconsolidated joint ventures compared to 2007. This decline was the result of the sale of the industrial building owned by our Tejon Dermody joint venture in July 2007. That sale resulted in a gain of $17,114,000 before tax, of which we recognized 50%, and which is included as equity in earnings of unconsolidated joint ventures in the 2007 results.

The $7,777,000 increase in total revenues in 2008 came from growth in the commercial/industrial revenue category, which saw an increase of $10,294,000, primarily from sales of developed and undeveloped land, increases in oil royalties and improved base and percentage rents from our power plant lease with Calpine. This improvement was somewhat offset by a decrease in our farming revenues, primarily due to decreased yields on our pistachio crop, the absence of walnut revenues, and a decline in prices for our 2008 almond crop.

Results of Operations for the Fourth Quarter of 2008:

The overall improvement in fourth quarter 2008 revenue, when compared to 2007, is the result of an increase in commercial/industrial revenues of $1,349,000 offset by a decline in farming revenue of $958,000. Commercial/industrial revenues increased during the fourth quarter of 2008 primarily due to a land sale and improved oil royalties. Farming revenues decreased during the quarter due to the absence of walnut revenues, lower almond prices, and reduced pistachio production. These declines in orchard crop revenues were partially offset by increased wine grape crop grape revenue as compared to the fourth quarter of 2007.

The decrease in net income of $1,008,000 is primarily attributable to the $2,181,000 decrease in profitability of our farming segment as it absorbed higher water costs and cultural costs as petroleum-based chemicals and fertilizer costs increased. The decrease was partially offset by improved commercial/industrial segment profits from higher revenues as described above.

2009 Outlook:

Management considers the capital structure of the Company to be very solid with approximately $176,000,000 of total capital at December 31, 2008, with debt accounting for less than 2% of total capital. During these difficult times our strong financial position will allow us to continue to pursue our strategies of land entitlement, development, and conservation. At December 31, 2008 we had cash and securities totaling approximately $55,000,000 and $27,250,000 of availability on lines of credit to meet any short-term funding needs.

The Company expects 2009 to be a more difficult year than 2008 as the economic recession continues. The recession impacts demand for commercial/industrial products, lowers oil prices, and potentially impacts prices received for our crop products. The Company continues to expect that the variability of its quarterly and annual operating results will continue during 2009. Prices received by the Company for many of its products are dependent upon the prevailing market conditions and commodity prices. Many of the Company's projects, especially in real estate, require a lengthy process to complete the entitlement and development phases before revenue can begin to be recognized. The timing of projects and sales of both real estate inventory and non-strategic assets can vary from year-to-year; therefore it is difficult for the Company to accurately predict quarterly and annual revenues and results of operations. Since our residential housing projects, Centennial and Tejon Mountain Village, are in the entitlement phase of development we do not have inventory for sale in the market, and therefore our business plans to date have not been affected by the recession in the housing and real estate industry. However, we cannot project the condition of the housing market or the stability of the mortgage industry at the time these residential projects move into their development and marketing phases.

During 2009, the Company expects to continue to invest funds toward the achievement of entitlements for its land and for major infrastructure development within its active industrial development, Tejon Industrial Complex.

Tejon Ranch Co. is a diversified real estate development and agribusiness company, whose principal asset is its 270,000-acre land holding located approximately 60 miles north of Los Angeles and 30 miles south of Bakersfield.

More information about Tejon Ranch Co. can be found online at [ http://www.tejonranch.com ].

Forward-Looking Statements:

The statements contained herein, which are not historical facts, are forward-looking statements based on economic forecasts, strategic plans and other factors, which by their nature involve risk and uncertainties. In particular, among the factors that could cause actual results to differ materially are the following: business conditions and the general economy, future commodity prices and yields, market forces, the ability to obtain various governmental entitlements and permits, interest rates and other risks inherent in real estate and agriculture businesses. For further information on factors, which could affect the Company, the reader should refer to the Company's filings with the Securities and Exchange Commission.