PLUM CREEK TIMBER CO INC - FORM 8-K - EX-99.2 - SUPPLEMENTAL FINANCIAL INFORMATION

Attached files

file	filename
8-K - FORM 8-K - PLUM CREEK TIMBER CO INC	a201409308k.htm
EX-99.1 - PRESS RELEASE - PLUM CREEK TIMBER CO INC	exhibit99120140930.htm

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)




	Nine Months Ended September 30,
(In Millions, Except Per Share Amounts)	2014			2013
REVENUES:
Timber	$	563		$	487
Real Estate	169			227
Manufacturing	275			279
Energy and Natural Resources	26			16
Other	15			—
Total Revenues	1,048			1,009

COSTS AND EXPENSES:
Cost of Goods Sold:
Timber	407			364
Real Estate	75			83
Manufacturing	241			237
Energy and Natural Resources	8			3
Other	14			—
Total Cost of Goods Sold	745			687
Selling, General and Administrative	82			89
Total Costs and Expenses	827			776

Other Operating Income (Expense), net	9			(2		)

Operating Income	230			231

Earnings from Unconsolidated Entities	44			47

Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)	81			61
Interest Expense (Note Payable to Timberland Venture)	43			43
Total Interest Expense, net	124			104

Income before Income Taxes	150			174

Provision (Benefit) for Income Taxes	4			—

Net Income	$	146		$	174

PER SHARE AMOUNTS:

Net Income per Share – Basic	$	0.82		$	1.06
Net Income per Share – Diluted	$	0.82		$	1.06

Weighted-Average Number of Shares Outstanding
– Basic	177.0			162.7
– Diluted	177.3			163.2


SUPPLEMENTAL INCOME STATEMENT INFORMATION:
Equity Earnings from Timberland Venture	$	48		$	47
Equity Loss from Real Estate Development Ventures	(4		)	—
Earnings from Unconsolidated Entities	$	44		$	47

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)



	Quarter Ended September 30,
(In Millions, Except Per Share Amounts)	2014			2013
REVENUES:
Timber	$	200		$	171
Real Estate	69			96
Manufacturing	91			94
Energy and Natural Resources	8			5
Other	7			—
Total Revenues	375			366

COSTS AND EXPENSES:
Cost of Goods Sold:
Timber	144			132
Real Estate	35			31
Manufacturing	78			80
Energy and Natural Resources	3			1
Other	6			—
Total Cost of Goods Sold	266			244
Selling, General and Administrative	23			28
Total Costs and Expenses	289			272

Other Operating Income (Expense), net	5			(3		)

Operating Income	91			91

Earnings from Unconsolidated Entities	15			16

Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)	27			20
Interest Expense (Note Payable to Timberland Venture)	14			14
Total Interest Expense, net	41			34

Income before Income Taxes	65			73

Provision (Benefit) for Income Taxes	4			1

Net Income	$	61		$	72

PER SHARE AMOUNTS:

Net Income per Share – Basic	$	0.34		$	0.44
Net Income per Share – Diluted	$	0.34		$	0.44

Weighted-Average Number of Shares Outstanding
– Basic	176.8			163.0
– Diluted	177.1			163.4


SUPPLEMENTAL INCOME STATEMENT INFORMATION:
Equity Earnings from Timberland Venture	$	16		$	16
Equity Loss from Real Estate Development Ventures	(1		)	—
Earnings from Unconsolidated Entities	$	15		$	16

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



(In Millions, Except Per Share Amounts)	September 30, 2014			December 31, 2013
ASSETS
Current Assets:
Cash and Cash Equivalents	$	90		$	433
Accounts Receivable	44			29
Inventories	59			55
Deferred Tax Asset	4			9
Assets Held for Sale	30			92
Other Current Assets	21			15
	248			633

Timber and Timberlands, net	4,156			4,180
Minerals and Mineral Rights, net	292			298
Property, Plant and Equipment, net	119			118
Equity Investment in Timberland Venture	202			211
Equity Investment in Real Estate Development Ventures	139			139
Deferred Tax Asset	20			17
Investment in Grantor Trusts (at Fair Value)	47			45
Other Assets	54			54
Total Assets	$	5,277		$	5,695

LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt	$	—		$	—
Line of Credit	152			467
Accounts Payable	36			24
Interest Payable	32			22
Wages Payable	20			29
Taxes Payable	17			10
Deferred Revenue	29			26
Other Current Liabilities	8			10
	294			588

Long-Term Debt	2,415			2,414
Note Payable to Timberland Venture	783			783
Other Liabilities	81			78
Total Liabilities	3,573			3,863

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) – 175.9 at September 30, 2014 and 177.0 at December 31, 2013	2			2
Additional Paid-In Capital	2,952			2,942
Retained Earnings (Accumulated Deficit)	(261		)	(173		)
Treasury Stock, at Cost, Common Shares – 28.3 at September 30, 2014 and 27.0 at December 31, 2013	(992		)	(940		)
Accumulated Other Comprehensive Income (Loss)	3			1
Total Stockholders’ Equity	1,704			1,832
Total Liabilities and Stockholders’ Equity	$	5,277		$	5,695

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Nine Months Ended September 30,
(In Millions)	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	146		$	174
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization (Includes $2 MDF Fire Impairment Loss in 2014 and $4 Loss Related to Forest Fires in 2013)	101			86
Basis of Real Estate Sold	60			69
Earnings from Unconsolidated Entities	(44		)	(47		)
Distributions from Timberland Venture	57			56
Deferred Income Taxes	2			(1		)
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)	(4		)	(6		)
Timber Deed Acquired	—			(18		)
Working Capital Changes	4			(12		)
Other	—			19
Net Cash Provided By (Used In) Operating Activities	322			320

CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures, Excluding Timberland Acquisitions (Includes $9 MDF Fire Replacement Capital in 2014)	(65		)	(51		)
Timberlands Acquired	—			(80		)
Mineral Rights Acquired	—			(156		)
Contributions to Real Estate Development Ventures	(9		)	—
Distributions from Real Estate Development Ventures	5			—
Insurance Recoveries (Property Damage)	3			—
Net Cash Provided By (Used In) Investing Activities	(66		)	(287		)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends	(234		)	(212		)
Borrowings on Line of Credit	985			1,251
Repayments on Line of Credit	(1,300		)	(848		)
Principal Payments and Retirement of Long-Term Debt	—			(174		)
Proceeds from Stock Option Exercises	2			35
Acquisition of Treasury Stock	(52		)	(2		)
Net Cash Provided By (Used In) Financing Activities	(599		)	50

Increase (Decrease) In Cash and Cash Equivalents	(343		)	83
Cash and Cash Equivalents:
Beginning of Period	433			356

End of Period	$	90		$	439

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Quarter Ended September 30,
(In Millions)	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	61		$	72
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization (Includes $4 Loss Related to Forest Fires in 2013)	35			35
Basis of Real Estate Sold	29			27
Earnings from Unconsolidated Entities	(15		)	(16		)
Distributions from Timberland Venture	29			29
Deferred Income Taxes	2			—
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)	(2		)	(2		)
Working Capital Changes	(3		)	28
Other	(3		)	7
Net Cash Provided By (Used In) Operating Activities	133			180

CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures, Excluding Timberland Acquisitions (Includes $5 MDF Fire Replacement Capital in 2014)	(25		)	(20		)
Timberlands Acquired	—			(2		)
Mineral Rights Acquired	—			(156		)
Contributions to Real Estate Development Ventures	(5		)	—
Distributions from Real Estate Development Ventures	4			—
Insurance Recoveries (Property Damage)	3			—
Net Cash Provided By (Used In) Investing Activities	(23		)	(178		)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends	(78		)	(72		)
Borrowings on Line of Credit	237			530
Repayments on Line of Credit	(237		)	(376		)
Proceeds from Stock Option Exercises	1			—
Acquisition of Treasury Stock	(50		)	—
Net Cash Provided By (Used In) Financing Activities	(127		)	82

Increase (Decrease) In Cash and Cash Equivalents	(17		)	84
Cash and Cash Equivalents:
Beginning of Period	107			355

End of Period	$	90		$	439

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

SEGMENT DATA

(UNAUDITED)



	Nine Months Ended September 30,
(In Millions)	2014			2013
Revenues:
Northern Resources	$	198		$	194
Southern Resources	386			313
Real Estate	169			227
Manufacturing	275			279
Energy and Natural Resources	26			16
Other	15			—
Eliminations	(21		)	(20		)
Total Revenues	$	1,048		$	1,009

Operating Income (Loss):
Northern Resources	$	34		$	24
Southern Resources	99			74
Real Estate	91			138
Manufacturing ^(A)	35			35
Energy and Natural Resources	18			14
Other ^(B)	(5		)	—
Other Costs and Eliminations, net ^(C)	(46		)	(54		)
Total Operating Income	$	226		$	231

Adjusted EBITDA by Segment: ^(D)
Northern Resources	$	55		$	47
Southern Resources	158			119
Real Estate	152			208
Manufacturing	47			47
Energy and Natural Resources	24			16
Other	(2		)	—
Other Costs and Eliminations, net	(45		)	(53		)
Total	$	389		$	384

(A)

During the second quarter of 2014, we experienced a fire at our MDF facility and recorded a $2 million loss representing the net book value of the building and equipment damaged or destroyed by the fire. During the first nine months of 2014, we also recorded a $9 million gain related to partial insurance recoveries the company expects to receive. The amount of insurance recoveries was based on the costs incurred during the first nine months of 2014 to rebuild or replace the damaged building and equipment. Substantially all of these costs were capitalized during the first nine months of 2014. Both the building and equipment loss and the insurance recoveries are reported as Other Operating Gain in our Manufacturing Segment and are included in Other Operating Income (Expense), net in the Consolidated Statements of Income.


(B)	For Segment reporting, Equity Loss from Real Estate Development Ventures of $(4) million is included in Operating Income (Loss) for the Other Segment.


(C)	During the first nine months of 2013, the company recorded a loss of $5 million related to the early termination of an equipment lease. The lease was accounted for as an operating lease. This amount is reported as an operating loss in Other Costs and Eliminations, net and is included in Other Operating Income (Expense), net in the Consolidated Statements of Income.


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

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

SEGMENT DATA

(UNAUDITED)



	Quarter Ended September 30,
(In Millions)	2014			2013
Revenues:
Northern Resources	$	71		$	67
Southern Resources	136			111
Real Estate	69			96
Manufacturing	91			94
Energy and Natural Resources	8			5
Other	7			—
Eliminations	(7		)	(7		)
Total Revenues	$	375		$	366

Operating Income (Loss):
Northern Resources	$	13		$	5
Southern Resources	35			27
Real Estate	34			63
Manufacturing ^(A)	16			11
Energy and Natural Resources	6			5
Other ^(B)	(1		)	—
Other Costs and Eliminations, net ^(C)	(13		)	(20		)
Total Operating Income	$	90		$	91

Adjusted EBITDA by Segment: ^(D)
Northern Resources	$	20		$	16
Southern Resources	57			44
Real Estate	64			91
Manufacturing	19			15
Energy and Natural Resources	8			6
Other	1			—
Other Costs and Eliminations, net	(13		)	(20		)
Total	$	156		$	152

(A) During the second quarter of 2014, we experienced a fire at our MDF facility and recorded a $2 million loss representing the net book value of the building and equipment damaged or destroyed by the fire. During the third quarter of 2014, we recorded a $5 million gain related to partial insurance recoveries the company expects to receive. The amount of insurance recoveries was based on the costs incurred during the third quarter of 2014 to rebuild or replace the damaged building and equipment. Substantially all of these costs were capitalized during the third quarter of 2014. Both the building and equipment loss and the insurance recoveries are reported as Other Operating Gain in our Manufacturing Segment and are included in Other Operating Income (Expense), net in the Consolidated Statements of Income.

(B) For Segment reporting, Equity Loss from Real Estate Development Ventures of $(1) million is included in Operating Income (Loss) for the Other Segment.

(C) During the third quarter of 2013, the company recorded a loss of $5 million related to the early termination of an equipment lease. The lease was accounted for as an operating lease. This amount is reported as an operating loss in Other Costs and Eliminations, net and is included in Other Operating Income (Expense), net in the Consolidated Statements of Income.

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

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

SELECTED OPERATING STATISTICS

(UNAUDITED)



		2014
		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Sales Realization	Units
Southern Resources
Sawlog	$/Ton Stumpage	$	22	$	22	$	22			$	22
Pulpwood	$/Ton Stumpage	$	12	$	12	$	12			$	12
Northern Resources
Sawlog	$/Ton Delivered	$	86	$	83	$	86			$	85
Pulpwood	$/Ton Delivered	$	43	$	41	$	46			$	44

Lumber⁽¹⁾	$/MBF	$	573	$	594	$	579			$	582
Plywood ⁽¹⁾	$/MSF	$	451	$	468	$	498			$	474
Fiberboard ⁽¹⁾	$/MSF	$	678	$	675	$	677			$	677

Sales Volume
Southern Resources
Sawlog	1,000 Tons	1,550		1,619		1,644				4,813
Pulpwood	1,000 Tons	2,054		2,159		2,395				6,608
Total Harvest		3,604		3,778		4,039		—		11,421
Northern Resources
Sawlog	1,000 Tons	667		499		595				1,761
Pulpwood	1,000 Tons	470		248		430				1,148
Total Harvest		1,137		747		1,025		—		2,909

Lumber	MBF	37,703		39,697		40,445				117,845
Plywood	MSF	39,188		37,620		46,693				123,501
Fiberboard	MSF	50,681		54,831		48,810				154,322

		2013
		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Sales Realization	Units
Southern Resources
Sawlog	$/Ton Stumpage	$	21	$	21	$	22	$	22	$	22
Pulpwood	$/Ton Stumpage	$	11	$	11	$	11	$	12	$	11
Northern Resources
Sawlog	$/Ton Delivered	$	77	$	79	$	79	$	81	$	79
Pulpwood	$/Ton Delivered	$	43	$	42	$	43	$	43	$	43

Lumber⁽¹⁾	$/MBF	$	568	$	544	$	498	$	536	$	534
Plywood ⁽¹⁾	$/MSF	$	462	$	464	$	457	$	450	$	458
Fiberboard ⁽¹⁾	$/MSF	$	639	$	668	$	680	$	672	$	665

Sales Volume
Southern Resources
Sawlog	1,000 Tons	1,339		1,276		1,544		1,733		5,892
Pulpwood	1,000 Tons	1,771		1,688		1,952		2,153		7,564
Total Harvest		3,110		2,964		3,496		3,886		13,456
Northern Resources
Sawlog	1,000 Tons	704		581		636		566		2,487
Pulpwood	1,000 Tons	414		209		387		401		1,411
Total Harvest		1,118		790		1,023		967		3,898

Lumber	MBF	30,535		36,770		40,622		37,990		145,917
Plywood	MSF	46,905		48,364		46,709		45,164		187,142
Fiberboard	MSF	52,329		60,273		54,795		46,250		213,647

(1) Represents prices at mill level.

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

LAND SALE STATISTICS

(UNAUDITED)



	2014
	1st Qtr		2nd Qtr ⁽¹⁾		3rd Qtr		4th Qtr		YTD
Acres Sold
Small Non-strategic	3,035		23,640		3,245				29,920
Large Non-strategic	—		—		—				—
Conservation	3,415		11,875		2,455				17,745
HBU/Recreation	4,125		31,530		25,775				61,430
Development Properties	—		—		—				—
Conservation Easements	n/a		n/a		n/a				n/a
	10,575		67,045		31,475		—		109,095
Price per Acre
Small Non-strategic	$	1,325	$	790	$	1,030			$	875
Large Non-strategic	$	—	$	—	$	—			$	—
Conservation	$	1,685	$	635	$	1,230			$	920
HBU/Recreation	$	2,200	$	1,485	$	2,445			$	1,935
Development Properties	$	—	$	—	$	—			$	—
Conservation Easements	$	340	$	300	$	—			$	320

Revenue, ($ millions)
Small Non-strategic	$	4	$	19	$	3			$	26
Large Non-strategic	$	—	$	—	$	—			$	—
Conservation	$	6	$	8	$	3			$	17
HBU/Recreation	$	9	$	46	$	63			$	118
Development Properties	$	—	$	—	$	—			$	—
Conservation Easements	$	4	$	4	$	—			$	8
	$	23	$	77	$	69	$	—	$	169

Basis of Real Estate Sold ⁽²⁾	$	6	$	25	$	29			$	60
	2013
	1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Acres Sold
Small Non-strategic	5,685		17,130		17,300		3,985		44,100
Large Non-strategic ⁽³⁾	36,000		—		15,370		—		51,370
Conservation	970		17,525		1,385		6,125		26,005
HBU/Recreation	7,595		9,825		9,455		20,095		46,970
Development Properties	—		—		—		—		—
Conservation Easements	n/a		n/a		n/a		n/a		n/a
	50,250		44,480		43,510		30,205		168,445
Price per Acre
Small Non-strategic	$	1,230	$	1,185	$	1,280	$	1,290	$	1,235
Large Non-strategic	$	1,475	$	—	$	3,415	$	—	$	2,050
Conservation	$	2,580	$	835	$	1,920	$	1,015	$	1,000
HBU/Recreation	$	2,015	$	1,925	$	1,925	$	2,100	$	2,010
Development Properties	$	—	$	—	$	—	$	—	$	—
Conservation Easements	$	—	$	—	$	—	$	600	$	600

Revenue, ($ millions)
Small Non-strategic	$	7	$	20	$	22	$	5	$	54
Large Non-strategic	$	53	$	—	$	53	$	—	$	106
Conservation	$	3	$	14	$	3	$	6	$	26
HBU/Recreation	$	15	$	19	$	18	$	43	$	95
Development Properties	$	—	$	—	$	—	$	—	$	—
Conservation Easements	$	—	$	—	$	—	$	5	$	5
	$	78	$	53	$	96	$	59	$	286

Basis of Real Estate Sold ⁽²⁾	$	25	$	17	$	26	$	22	$	90

Exhibit 99.2

Plum Creek Timber Company, Inc.

Notes to Land Sale Statistics

(Unaudited)

(1) During the second quarter of 2014, the company sold approximately 49,400 acres in Wisconsin for $45.3 million. The transaction consisted of approximately 22,400 acres of HBU/Recreation property with an estimated value of $28.7 million, approximately 17,000 acres of Small Non-strategic property with an estimated value of $11.6 million, and approximately 10,000 acres of Conservation property with an estimated value of $5.0 million.


(2)	Includes $12 million in the second quarter of 2014 for a 49,400 acre sale located in Wisconsin, $9 million in the third quarter of 2013 for a 15,370 acre Large Non-Strategic sale located in Oregon and $18 million in the first quarter of 2013 from a 36,000 acre Large Non-strategic sale located in Texas and Oklahoma.

(3) During the third quarter of 2013, the company sold 15,370 acres of Large Non-strategic lands located in Oregon for $52.5 million. During the first quarter of 2013, the company sold 36,000 acres of Large Non-strategic lands located in Texas and Oklahoma for $52.7 million.

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

DEBT MATURITIES SCHEDULE

September 30, 2014

(UNAUDITED)



	Borrowings
(In Millions)	Principal		Interest Rate
Annual Maturities through 2017:
2015	$	439	5.875	%

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

MEDIUM DENSITY FIBERBOARD ("MDF") FACILITY FIRE - OPERATING RESULTS IMPACT

September 30, 2014

(UNAUDITED)

On June 10, 2014, we experienced a fire at our MDF facility. Production at the facility resumed on July 10, 2014. The schedule below details the components that impacted second quarter and third quarter 2014 operating income and the estimates that are expected to impact our fourth quarter 2014 operating income.



	2014
(In Millions)	2nd Qtr			3rd Qtr		4th Qtr		Total
Impacts on Operating Results:
Foregone MDF Income	$	(4	)	$	—	$	—	$	(4	)
Business Interruption Recoveries⁽¹⁾	$	—		$	—	$	4	$	4
Loss on Property, Plant and Equipment	$	(2	)	$	—	$	—	$	(2	)
Property Insurance Recoveries⁽¹⁾	$	4		$	5	$	1	$	10
Net Impact on Manufacturing Operating Income	$	(2	)	$	5	$	5	$	8
Impact on Net Income	$	(1	)	$	3	$	3	$	5
Impact on Diluted EPS	$	(0.01	)	$	0.02	$	0.02	$	0.03

(1) The expected insurance recoveries reflect the impact of our cumulative $1 million deductible. Business interruption recoveries will be recorded when the cash payment is received. Property insurance recoveries are recorded when the repair expenditures have been incurred by the company. As of September 30, 2014, $3 million of cash payments from insurance recoveries have been received.

Exhibit 99.2

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 Earnings from the Timberland Venture, and before interest expense (including any gains or losses from extinguishment of debt), taxes, depreciation, depletion, amortization, and basis in real estate sold. In addition to including Equity Earnings from Real Estate Development Ventures in Adjusted EBITDA, we also include, as an add back to Operating Income for the Other Segment, our proportional share of depreciation, depletion, amortization, and basis in real estate sold from this equity method investment. 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.

We present Adjusted EBITDA as a supplemental performance measure because we believe it facilitates operating performance comparisons from period to period, and each business segment’s contribution to that performance, by eliminating non-cash charges to earnings, which can vary significantly by business segment. These non-cash charges include timber depletion, depreciation of fixed assets and the basis in real estate sold. We also use Adjusted EBITDA as a supplemental liquidity measure because we believe it is useful in measuring our ability to generate cash. In addition, we believe Adjusted EBITDA is commonly used by investors, lenders and rating agencies to assess our financial performance.

A reconciliation of Adjusted EBITDA to net income and net cash from operating activities, the most directly comparable U.S. GAAP performance and liquidity measures, is provided in the following schedules:



	Nine Months Ended September 30, 2014

	Operating Income			Depreciation, Depletion and Amortization		Basis of Real Estate Sold		Adjusted EBITDA
By Segment ⁽¹⁾
Northern Resources	$	34		$	21	$	—	$	55
Southern Resources	99			59		—		158
Real Estate	91			1		60		152
Manufacturing	35			12		—		47
Energy and Natural Resources	18			6		—		24
Other	(5		)	1		2		(2		)
Other Costs and Eliminations	(48		)	1		—		(47		)
Other Unallocated Operating Income (Expense), net	2			—		—		2
Total	$	226		$	101	$	62	$	389

Reconciliation to Net Income ⁽²⁾
Equity Earnings from Timberland Venture	48
Interest Expense	(124		)
(Provision) Benefit for Income Taxes	(4		)
Net Income	$	146

Reconciliation to Net Cash Provided By Operating Activities ⁽¹⁾
Net Cash Flows from Operations								$	322
Interest Expense								124
Amortization of Debt Costs								(1		)
Provision / (Benefit) for Income Taxes								4
Distributions from Timberland Venture								(57		)
Equity Earnings, Depletion, Amortization, and Basis of Real Estate Sold from Real Estate Development Ventures								(1		)
Deferred Income Taxes								(2		)
Gain on Sale of Properties and Other Assets								—
Deferred Revenue from Long-Term Gas Leases								4
Timber Deed Acquired								—
Pension Plan Contributions								—
Working Capital Changes								(4		)
Other								—
Adjusted EBITDA								$	389

(1) Includes Equity Loss from Real Estate Development Ventures ($4 million) in Operating Income for the Other Segment, along with our proportional share of depreciation, depletion, amortization ($1 million), and basis in real estate sold ($2 million) from this equity method investment.

(2) Includes reconciling items not allocated to segments for financial reporting purposes.

Exhibit 99.2



	Nine Months Ended September 30, 2013

	Operating Income			Depreciation, Depletion and Amortization ⁽¹⁾		Basis of Real Estate Sold		Adjusted EBITDA
By Segment
Northern Resources	$	24		$	23	$	—	$	47
Southern Resources	74			45		—		119
Real Estate	138			1		69		208
Manufacturing	35			12		—		47
Energy and Natural Resources	14			2		—		16
Other	—			—		—		—
Other Costs and Eliminations	(51		)	1		—		(50		)
Other Unallocated Operating Income (Expense), net	(3		)	—		—		(3		)
Total	$	231		$	84	$	69	$	384

Reconciliation to Net Income ⁽²⁾
Equity Earnings from Timberland Venture	47
Interest Expense	(104		)
(Provision) Benefit for Income Taxes	—
Net Income	$	174

Reconciliation to Net Cash Provided By Operating Activities
Net Cash Flows from Operations								$	320
Interest Expense								104
Amortization of Debt Costs								(2		)
Provision / (Benefit) for Income Taxes								—
Distributions from Timberland Venture								(56		)
Equity Earnings, Depletion, Amortization and Basis of Real Estate Sold from Real Estate Development Ventures								—
Deferred Income Taxes								1
Gain on Sale of Properties and Other Assets								—
Deferred Revenue from Long-Term Gas Leases								6
Timber Deed Acquired								18
Pension Plan Contributions								—
Working Capital Changes								12
Other								(19		)
Adjusted EBITDA								$	384

(1) Includes a $4 million loss due to forest fire damages in the Northern Resources Segment.

(2) Includes reconciling items not allocated to segments for financial reporting purposes.

Exhibit 99.2



	Quarter Ended September 30, 2014

	Operating Income			Depreciation, Depletion and Amortization		Basis of Real Estate Sold		Adjusted EBITDA
By Segment ⁽¹⁾
Northern Resources	$	13		$	7	$	—	$	20
Southern Resources	35			22		—		57
Real Estate	34			1		29		64
Manufacturing	16			3		—		19
Energy and Natural Resources	6			2		—		8
Other	(1		)	—		2		1
Other Costs and Eliminations	(13		)	—		—		(13		)
Other Unallocated Operating Income (Expense), net	—			—		—		—
Total	$	90		$	35	$	31	$	156

Reconciliation to Net Income ⁽²⁾
Equity Earnings from Timberland Venture	16
Interest Expense	(41		)
(Provision) Benefit for Income Taxes	(4		)
Net Income	$	61

Reconciliation to Net Cash Provided By Operating Activities ⁽¹⁾
Net Cash Flows from Operations								$	133
Interest Expense								41
Amortization of Debt Costs								—
Provision / (Benefit) for Income Taxes								4
Distributions from Timberland Venture								(29		)
Equity Earnings, Depletion, Amortization, and Basis of Real Estate Sold from Real Estate Development Ventures								1
Deferred Income Taxes								(2		)
Gain on Sale of Properties and Other Assets								—
Deferred Revenue from Long-Term Gas Leases								2
Timber Deed Acquired								—
Pension Plan Contributions								—
Working Capital Changes								3
Other								3
Adjusted EBITDA								$	156

(1) Includes Equity Loss from Real Estate Development Ventures ($1 million) in Operating Income for the Other Segment, along with our proportional share of depreciation, depletion, amortization ($0 million), and basis in real estate sold ($2 million) from this equity method investment.

(2) Includes reconciling items not allocated to segments for financial reporting purposes.

Exhibit 99.2



	Quarter Ended September 30, 2013

	Operating Income			Depreciation, Depletion and Amortization ⁽¹⁾		Basis of Real Estate Sold		Adjusted EBITDA
By Segment
Northern Resources	$	5		$	11	$	—	$	16
Southern Resources	27			17		—		44
Real Estate	63			1		27		91
Manufacturing	11			4		—		15
Energy and Natural Resources	5			1		—		6
Other	—			—		—		—
Other Costs and Eliminations	(16		)	—		—		(16		)
Other Unallocated Operating Income (Expense), net	(4		)	—		—		(4		)
Total	$	91		$	34	$	27	$	152

Reconciliation to Net Income ⁽²⁾
Equity Earnings from Timberland Venture	16
Interest Expense	(34		)
(Provision) Benefit for Income Taxes	(1		)
Net Income	$	72

Reconciliation to Net Cash Provided By Operating Activities
Net Cash Flows from Operations								$	180
Interest Expense								34
Amortization of Debt Costs								(1		)
Provision / (Benefit) for Income Taxes								1
Distributions from Timberland Venture								(29		)
Equity Earnings, Depletion, Amortization, and Basis of Real Estate Sold from Real Estate Development Ventures								—
Deferred Income Taxes								—
Gain on Sale of Properties and Other Assets								—
Deferred Revenue from Long-Term Gas Leases								2
Timber Deed Acquired								—
Pension Plan Contributions								—
Working Capital Changes								(28		)
Other								(7		)
Adjusted EBITDA								$	152

(1) Includes a $4 million loss due to forest fire damages in the Northern Resources Segment.

(2) Includes reconciling items not allocated to segments for financial reporting purposes.

PLUM CREEK TIMBER CO INC - FORM 8-K - EX-99.2 - SUPPLEMENTAL FINANCIAL INFORMATION - October 27, 2014

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PLUM CREEK TIMBER CO INC Reports