Plum Creek Timber Company, Inc. Reports Results For Third Quarter 2012

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In Millions, Except Per Share Amounts)		Nine Months Ended September 30,
		2012				2011
REVENUES:
Timber		$	480			$	421
Real Estate		243				208
Manufacturing		246				208
Other		16				15
Total Revenues		985				852
COSTS AND EXPENSES:
Cost of Goods Sold:
Timber		374				327
Real Estate		124				68
Manufacturing		217				190
Other		1				1
Total Cost of Goods Sold		716				586
Selling, General and Administrative		86				77
Total Costs and Expenses		802				663
Other Operating Income (Expense), net		1				3
Operating Income		184				192
Equity Earnings from Timberland Venture		42				44
Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)		61				61
Interest Expense (Note Payable to Timberland Venture)		43				43
Total Interest Expense, net		104				104
Income before Income Taxes		122				132
Provision (Benefit) for Income Taxes		(2		)		—
Net Income		$	124			$	132
PER SHARE AMOUNTS:
Net Income per Share – Basic		$	0.77			$	0.81
Net Income per Share – Diluted		$	0.76			$	0.81
Weighted-Average Number of Shares Outstanding
– Basic		161.5				161.9
– Diluted		161.8				162.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In Millions, Except Per Share Amounts)		Quarter Ended September 30,
		2012				2011
REVENUES:
Timber		$	168			$	154
Real Estate		96				67
Manufacturing		85				67
Other		5				5
Total Revenues		354				293
COSTS AND EXPENSES:
Cost of Goods Sold:
Timber		130				119
Real Estate		40				19
Manufacturing		74				62
Other		—				—
Total Cost of Goods Sold		244				200
Selling, General and Administrative		31				24
Total Costs and Expenses		275				224
Other Operating Income (Expense), net		—				—
Operating Income		79				69
Equity Earnings from Timberland Venture		14				14
Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)		21				20
Interest Expense (Note Payable to Timberland Venture)		14				14
Total Interest Expense, net		35				34
Income before Income Taxes		58				49
Provision (Benefit) for Income Taxes		(1		)		(1		)
Net Income		$	59			$	50
PER SHARE AMOUNTS:
Net Income per Share – Basic		$	0.36			$	0.31
Net Income per Share – Diluted		$	0.36			$	0.31
Weighted-Average Number of Shares Outstanding
– Basic		161.5				161.9
– Diluted		161.9				162.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In Millions, Except Per Share Amounts)		September 30, 2012				December 31,2011
ASSETS
Current Assets:
Cash and Cash Equivalents		$	320			$	254
Accounts Receivable		39				28
Inventories		49				48
Deferred Tax Asset		6				6
Assets Held for Sale		44				103
Other Current Assets		14				15
		472				454
Timber and Timberlands, net		3,423				3,377
Property, Plant and Equipment, net		128				138
Equity Investment in Timberland Venture		187				201
Deferred Tax Asset		18				17
Investment in Grantor Trusts (at Fair Value)		38				36
Other Assets		37				36
Total Assets		$	4,303			$	4,259
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt		$	176			$	352
Line of Credit		351				348
Accounts Payable		29				25
Interest Payable		25				26
Wages Payable		19				20
Taxes Payable		16				9
Deferred Revenue		31				27
Other Current Liabilities		9				8
		656				815
Long-Term Debt		1,567				1,290
Note Payable to Timberland Venture		783				783
Other Liabilities		98				108
Total Liabilities		3,104				2,996
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Preferred Stock, $0.01 Par Value, Authorized Shares – 75.0, Outstanding – None		—				—
Common Stock, $0.01 Par Value, Authorized Shares – 300.6, Outstanding (net of Treasury Stock) – 161.6 at September 30, 2012 and 161.3 at December 31, 2011		2				2
Additional Paid-In Capital		2,273				2,261
Retained Earnings (Accumulated Deficit)		(108		)		(28		)
Treasury Stock, at Cost, Common Shares – 26.9 at September 30, 2012 and 26.9 at December 31, 2011		(938		)		(937		)
Accumulated Other Comprehensive Income (Loss)		(30		)		(35		)
Total Stockholders’ Equity		1,199				1,263
Total Liabilities and Stockholders’ Equity		$	4,303			$	4,259

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Nine Months Ended September 30,
(In Millions)		2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		$	124			$	132
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization		87				70
Basis of Real Estate Sold		111				57
Equity Earnings from Timberland Venture		(42		)		(44		)
Distributions from Timberland Venture		56				56
Deferred Income Taxes		(1		)		2
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)		(6		)		14
Timber Deed Acquired		(98		)		—
Pension Plan Contributions		(10		)		(3		)
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		—				—
Other Working Capital Changes		5				—
Other		11				10
Net Cash Provided By Operating Activities		237				294
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (Excluding Timberland Acquisitions)		(52		)		(43		)
Timberlands and Minerals Acquired		(18		)		(88		)
Other		(1		)		—
Net Cash Used In Investing Activities		(71		)		(131		)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends		(204		)		(204		)
Borrowings on Line of Credit		1,712				1,097
Repayments on Line of Credit		(1,709		)		(961		)
Proceeds from Issuance of Long-Term Debt		450				—
Debt Issuance Costs		(3		)		—
Principal Payments and Retirement of Long-Term Debt		(350		)		(49		)
Proceeds from Stock Option Exercises		5				9
Acquisition of Treasury Stock		(1		)		(16		)
Net Cash Used In Financing Activities		(100		)		(124		)
Increase (Decrease) In Cash and Cash Equivalents		66				39
Cash and Cash Equivalents:
Beginning of Period		254				252
End of Period		$	320			$	291

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Quarter Ended September 30,
(In Millions)		2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		$	59			$	50
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization		31				26
Basis of Real Estate Sold		36				14
Equity Earnings from Timberland Venture		(14		)		(14		)
Distributions from Timberland Venture		28				28
Deferred Income Taxes		—				(2		)
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)		(1		)		2
Pension Plan Contributions		(3		)		(3		)
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		—				35
Other Working Capital Changes		7				(4		)
Other		5				5
Net Cash Provided By Operating Activities		148				137
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (Excluding Timberland Acquisitions)		(17		)		(15		)
Timberlands and Minerals Acquired		(5		)		(76		)
Net Cash Used In Investing Activities		(22		)		(91		)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends		(68		)		(68		)
Borrowings on Line of Credit		583				542
Repayments on Line of Credit		(683		)		(467		)
Proceeds from Issuance of Long-Term Debt		450				—
Debt Issuance Costs		—				—
Principal Payments and Retirement of Long-Term Debt		(350		)		—
Proceeds from Stock Option Exercises		2				—
Acquisition of Treasury Stock		—				(15		)
Net Cash Used In Financing Activities		(66		)		(8		)
Increase (Decrease) In Cash and Cash Equivalents		60				38
Cash and Cash Equivalents:
Beginning of Period		260				253
End of Period		$	320			$	291

PLUM CREEK TIMBER COMPANY, INC.

SEGMENT DATA

(UNAUDITED)

		Nine Months Ended September 30,
(In Millions)		2012				2011
Revenues:
Northern Resources		$	185			$	167
Southern Resources		312				266
Real Estate		243				208
Manufacturing		246				208
Other		16				15
Eliminations		(17		)		(12		)
Total Revenues		$	985			$	852
Operating Income (Loss):
Northern Resources		$	15			$	17
Southern Resources		66				55
Real Estate		113				134
Manufacturing		22				12
Other ( A)		14				16
Other Costs and Eliminations, net		(46		)		(42		)
Total Operating Income		$	184			$	192
Adjusted EBITDA by Segment: (B)
Northern Resources		$	35			$	36
Southern Resources		118				92
Real Estate		225				192
Manufacturing		33				22
Other		14				16
Other Costs and Eliminations, net		(45		)		(41		)
Total		$	380			$	317

(A) During the first nine months of 2011, the company received a payment of $2 million for the settlement of a dispute that related to certain mineral rights. This amount is reported as Other Operating Gain/(Loss) in our Other Segment and is included in Other Operating Income (Expense), net in the Consolidated Statements of Income.

(B) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities.

PLUM CREEK TIMBER COMPANY, INC.

SEGMENT DATA

(UNAUDITED)

		Quarter Ended September 30,
(In Millions)		2012				2011
Revenues:
Northern Resources		$	65			$	68
Southern Resources		110				93
Real Estate		96				67
Manufacturing		85				67
Other		5				5
Eliminations		(7		)		(7		)
Total Revenues		$	354			$	293
Operating Income (Loss):
Northern Resources		$	5			$	7
Southern Resources		23				21
Real Estate		54				46
Manufacturing		9				3
Other		5				5
Other Costs and Eliminations, net		(17		)		(13		)
Total Operating Income		$	79			$	69
Adjusted EBITDA by Segment: (A)
Northern Resources		$	12			$	14
Southern Resources		42				35
Real Estate		90				60
Manufacturing		13				7
Other		5				5
Other Costs and Eliminations, net		(16		)		(13		)
Total		$	146			$	108

(A) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities.

Plum Creek Timber Company, Inc

Segment Data - Adjusted EBITDA

Reconciliation of Operating Income and Net Cash

Provided by Operating Activities

(Unaudited)

We define Adjusted EBITDA as earnings from continuing operations, excluding equity method earnings, and before interest, taxes, depreciation, depletion, amortization, and basis in lands sold. Adjusted EBITDA is not considered a measure of financial performance under U.S. generally accepted accounting principles (U.S. GAAP) and the items excluded from Adjusted EBITDA are significant components of our consolidated financial statements.

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