Tejon Ranch Co. Reports Third Quarter Results of Operations - 2009

http://www.businesswire.com/news/home/20091029006613/en

TEJON RANCH, Calif.--(Business Wire)--
Tejon Ranch Co. (NYSE:TRC) today announced a net loss from operations for the
third quarter of 2009, which ended September 30, 2009, and a net loss from
operations for the first nine months of 2009, compared to the same respective
time frames in 2008. For the third quarter of 2009, the Company had a net loss
of $288,000, or $0.02 per common share, compared to net income of $3,884,000, or
$0.22 per common share during the third quarter of 2008. Revenue from operations
for the third quarter of 2009 was $10,250,000 compared to $14,482,000 of revenue
during the same period in 2008. All per share references in this release are
presented on a fully-diluted basis.

For the first nine months of 2009, the Company had a net loss of $3,115,000, or
$0.18 per common share, compared to net income of $4,135,000, or $0.24 per
common share for the first nine months of 2008. Revenue from operations for the
nine months ending September 30, 2009 was $18,423,000 compared to $29,749,000 of
revenue during the same period of 2008.

Results of Operations for the First Nine Months of 2009:

The decline in revenue during the first nine months of 2009 resulted primarily
from decreases in farming revenue, commercial/industrial revenue and land sales.
Commercial/industrial revenue decreased $10,114,000, primarily due to the
absence of land sales during the first nine months of 2009, while the same
period of 2008 included revenues of $6,589,000 from land sales. Land sales
activity declined largely due to the economic recession and the increased
availability of warehouse/distribution sites in the Inland Empire region of
Southern California. Oil and mineral royalties declined $2,941,000 during the
period due largely to a decrease in oil royalties that are tied directly to the
market price for oil, which declined compared to the same period of 2008.
Revenues from our power plant lease also declined during the first nine months
of 2009 due to a decrease in percentage rents as a result of lower electricity
rates. Farming revenues decreased $1,406,000 during the first nine months of
2009, compared to the same period in 2008, primarily because fewer prior year
crop almonds were available for sale during the period. A reduction in 2009
pistachio revenue of $181,000 and a reduction in 2009 grape revenues of $141,000
also contributed to this decline.

The decline in earnings for the first nine months of 2009 is attributable to the
decrease in revenues described above. However, that decline in revenue was
partially offset by lower operating expenses in our commercial/industrial and
farming segments, and in our corporate operations. Expenses within our
commercial/industrial segment decreased $1,272,000 during the first nine months
of 2009, due primarily to a reduction in cost of sales of $1,152,000 related to
land sale transactions in 2008 and to lower professional service fees. Farming
costs declined $280,000 during the first nine months of 2009, compared to the
same period in 2008, due to a decrease in cost of sales for prior year crop
almonds and a decline in fuel costs. Corporate general and administrative costs
fell $366,000 during the period due to decreases in compensation costs related
to incentive compensation and a decrease in professional service fees due to the
timing of incurrence of these costs.

Results of Operations for the Third Quarter of 2009:

Revenues from operations fell $4,232,000 during the third quarter of 2009, as
compared to the same period of 2008. The decline is primarily attributable to a
$4,000,000 reduction in commercial/industrial revenue due to a lack of land sale
revenue and a decrease in oil and mineral royalties of $1,528,000 due to reduced
oil prices. Farming revenues decreased $426,000 as a result of the sale of fewer
2009 crop year almonds in the third quarter as compared to the third quarter of
2008.

Earnings fell during the third quarter of 2009, as compared to the same period
of 2008, due primarily to the decline in revenues just described and increases
in operating expense. Corporate expenses increased $903,000 in the third quarter
of 2009, compared to the third quarter of 2008, mainly driven by compensation
cost increases of $929,000. Compensation costs in the third quarter of 2008 were
reduced significantly as previously accrued incentive stock compensation costs
were reversed in that quarter as the related milestone targets were not
achieved. Expenses for the commercial/industrial segment increased $208,000
during the quarter due to higher compensation cost and higher water costs
related to development activities. Farming segment costs saw a small increase
during the quarter due primarily to higher compensation costs and water costs.

2009 Outlook:

During the remainder of 2009 the Company anticipates the completion of phase one
infrastructure at the Tejon Industrial Complex and continued investments in our
joint ventures. Our financial position will allow us to continue to pursue these
investments as well as our long-term strategies of land entitlement,
development, and conservation. On September 30, 2009, we had cash and securities
totaling approximately $37.5 million to meet short-term funding or working
capital needs. The decline in cash and investments from the prior quarter end is
due to investment in infrastructure at the Tejon Industrial Complex and
contributions to joint ventures.

The Company expects the remainder of 2009 to continue to be difficult as
negative economic factors impact our operating segments. The economic recession
has negatively impacted demand for our commercial/industrial products, lowered
oil prices, and potentially could have a detrimental [negative] impact on demand
and prices received for our crops. The Company expects the variability of its
quarterly and annual operating results to continue during the remainder of 2009
and into 2010. Prices received by the Company for many of its products are
dependent upon the prevailing market conditions and commodity prices.

On October 5, 2009, the Company received entitlement approval from Kern County
for its Tejon Mountain Village (TMV) development. There is still much work to be
completed, however, before construction at TMV can begin. Our Centennial project
will continue to require much work and time in order to complete the entitlement
process in Los Angeles County. 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 are
not in the development phase, 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.

Tejon Ranch Co. is a diversified real estate development and agribusiness
company, whose principal asset is its more than 268,000-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
that could affect the Company, the reader should refer to the Company`s filings
with the Securities and Exchange Commission.

TEJON RANCH CO.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THIRD QUARTER ENDED SEPTEMBER 30

(In thousands, except earnings per share)

(Unaudited)

Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
Revenues:
Real estate - commercial/industrial $ 4,046 $ 8,046 $ 11,244 $ 21,358
Real estate - resort/residential 194 - 194 -
Farming 6,010 6,436 6,985 8,391
Total revenues 10,250 14,482 18,423 29,749

Costs and Expenses:
Real estate - commercial/industrial 3,031 2,823 9,263 10,535
Real estate - resort/residential 1,526 1,458 3,457 3,228
Farming 4,982 4,794 6,639 6,919
Corporate expenses 1,963 1,060 6,028 6,394
Total expenses 11,502 10,135 25,387 27,076

Operating income (loss) (1,252 ) 4,347 (6,964 ) 2,673

Other income
Investment income 325 358 1,235 1,534
Interest expense - - (70 ) (70 )
Other income 15 83 34 331
Total other income 340 441 1,199 1,795

Income (loss) from operations before equity in earnings of unconsolidated joint ventures (912 ) 4,788 (5,765 ) 4,468
Equity in earnings of unconsolidated joint ventures, net 386 834 478 1,522
Non-controlling interest consolidated entity 50 - 50 -
Operating income (loss),
before income tax expense (benefit) (476 ) 5,622 (5,237 ) 5,990

Income tax expense (benefit) (188 ) 1,738 (2,122 ) 1,855
Net income (loss) (288 ) 3,884 (3,115 ) 4,135
Net income (loss) per share, basic $ (0.02 ) $ 0.23 $ (0.18 ) $ 0.24
Net income (loss) per share, diluted $ (0.02 ) $ 0.22 $ (0.18 ) $ 0.24
Weighted average number of shares outstanding:
Common stock 17,007,044 16,959,133 17,005,143 16,929,870
Common stock equivalents - stock options 475,764 597,359 459,223 666,865
Diluted shares outstanding 17,482,808 17,556,492 17,464,366 17,596,735

For the three and nine months ended September 30, 2009, diluted net loss per
share is based on the weighted average number of shares of common stock
outstanding, because the impact of common stock equivalents is antidilutive.

Tejon Ranch Co.
Allen Lyda, 661-248-3000

Copyright Business Wire 2009