DELAWARE | 1-10239 | 91-1912863 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
601 Union Street, Suite 3100 Seattle, Washington | 98101-1374 | |
(Address of Principal Executive Offices) | (Zip Code) |
(206) 467-3600 |
Registrant's Telephone Number, including area code |
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 240.14.d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description of Exhibits |
23.1 | Consent of PricewaterhouseCoopers LLP |
99.1 | Audited consolidated financial statements of MeadWestvaco Corporation's Community Development and Land Management Business as of and for the fiscal years ended December 31, 2012 and 2011 and the notes thereto and the Unaudited consolidated financial statements as of September 30, 2013 and for the nine-month periods ended September 30, 2013 and 2012 and the notes thereto. |
99.2 | Unaudited pro forma condensed combined financial statements for the fiscal year ended December 31, 2012 and for the nine-months ended September 30, 2013. |
PLUM CREEK TIMBER COMPANY, INC. | ||
By: | /s/ David W. Lambert | |
David W. Lambert | ||
Senior Vice President and Chief Financial Officer |
Exhibit No. | Description of Exhibits |
23.1 | Consent of PricewaterhouseCoopers LLP. |
99.1 | Audited consolidated financial statements of MeadWestvaco Corporation's Community Development and Land Management Business as of and for the fiscal years ended December 31, 2012 and 2011 and the notes thereto and the Unaudited consolidated financial statements as of September 30, 2013 and for the nine-month periods ended September 30, 2013 and 2012 and the notes thereto. |
99.2 | Unaudited pro forma condensed combined financial statements for the fiscal year ended December 31, 2012 and for the nine-months ended September 30, 2013. |
COMBINED FINANCIAL STATEMENTS MWV Community Development and Land Management Business (a business of MeadWestvaco Corporation) Years Ended December 31, 2012 and 2011 and Nine Months Ended September 30, 2013 and 2012 (Unaudited) With Report of Independent Auditors |
December 31 | September 30 | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 75 | $ | 76 | $ | 75 | |||
Accounts receivable | 3,280 | 2,991 | 1,864 | ||||||
Land held for sale | 158 | 13 | 2,486 | ||||||
Other current assets | 900 | 1,573 | 724 | ||||||
4,413 | 4,653 | 5,149 | |||||||
Development assets | 183,201 | 165,066 | 196,062 | ||||||
Timber and timberlands, net | 156,081 | 179,958 | 144,079 | ||||||
Mineral rights, net | 963 | 997 | 944 | ||||||
Property, plant and equipment, net | 13,874 | 17,831 | 13,365 | ||||||
Equity investments | 4,069 | — | 14,631 | ||||||
Build-to-suit asset | — | — | 8,827 | ||||||
Other assets | 5,823 | 8,299 | 6,963 | ||||||
Total assets | $ | 368,424 | $ | 376,804 | $ | 390,020 | |||
Liabilities | |||||||||
Short-term portion of deferred income | $ | 3,194 | $ | 6,776 | $ | 5,885 | |||
Accrued expenses | 2,157 | 2,910 | 4,957 | ||||||
Accrued taxes | 1,947 | 2,168 | 2,559 | ||||||
Trade payables | 1,672 | 1,130 | 2,465 | ||||||
Other current liabilities | 985 | 627 | 1,441 | ||||||
9,955 | 13,611 | 17,307 | |||||||
Build-to-suit liability | — | — | 8,827 | ||||||
Long-term portion of deferred income | 1,170 | 895 | 7,667 | ||||||
Deferred taxes | 49,192 | 55,388 | 38,504 | ||||||
Other liabilities | 12,382 | 9,544 | 11,252 | ||||||
Total liabilities | 72,699 | 79,438 | 83,557 | ||||||
Equity | |||||||||
Net parent investment | 295,725 | 297,366 | 306,463 | ||||||
Total liabilities and equity | $ | 368,424 | $ | 376,804 | $ | 390,020 |
Year Ended | Nine Months Ended | |||||||||||
December 31 | September 30 | |||||||||||
2012 | 2011 | 2013 | 2012 | |||||||||
(Unaudited) | ||||||||||||
Timberland sales | $ | 99,199 | $ | 72,773 | $ | 86,991 | $ | 66,975 | ||||
Timber sales | 71,049 | 70,157 | 48,779 | 53,942 | ||||||||
Mineral and energy sales | 14,839 | 12,383 | 7,804 | 11,064 | ||||||||
Lease revenue | 4,712 | 5,098 | 3,381 | 3,617 | ||||||||
Other revenue | 3,444 | 1,711 | 1,670 | 1,664 | ||||||||
Total revenue | 193,243 | 162,122 | 148,625 | 137,262 | ||||||||
Cost of sales | 93,137 | 90,348 | 66,597 | 71,137 | ||||||||
Selling, general and administrative expenses | 17,422 | 17,267 | 10,114 | 11,930 | ||||||||
Other operating income, net | (400 | ) | (1,447 | ) | (339 | ) | (316 | ) | ||||
Loss (income) from equity method investees | 87 | (9,850 | ) | 968 | 87 | |||||||
Interest expense | 211 | 48 | — | 158 | ||||||||
Income before income taxes | 82,786 | 65,756 | 71,285 | 54,266 | ||||||||
Provision for income taxes | (32,259 | ) | (25,464 | ) | (26,729 | ) | (19,450 | ) | ||||
Net income | $ | 50,527 | $ | 40,292 | $ | 44,556 | $ | 34,816 |
Total | |||
Equity | |||
Balance at December 31, 2010 | $ | 265,200 | |
Net income | 40,292 | ||
Net distributions to parent(1) | (8,126 | ) | |
Balance at December 31, 2011 | 297,366 | ||
Net income | 50,527 | ||
Net distributions to parent(1) | (52,168 | ) | |
Balance at December 31, 2012 | 295,725 | ||
Net income (unaudited) | 44,556 | ||
Net distributions to parent(1) (unaudited) | (33,818 | ) | |
Balance at September 30, 2013 (unaudited) | $ | 306,463 |
Year Ended | Nine Months Ended | |||||||||||
December 31 | September 30 | |||||||||||
2012 | 2011 | 2013 | 2012 | |||||||||
(Unaudited) | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | 50,527 | $ | 40,292 | $ | 44,556 | $ | 34,816 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation, amortization and depletion | 9,447 | 10,855 | 4,120 | 7,140 | ||||||||
Loss (income) from equity method investees | 87 | (9,850 | ) | 968 | 87 | |||||||
Cash effects of changes: | ||||||||||||
Accounts receivable | (288 | ) | (969 | ) | 1,416 | 184 | ||||||
Development assets | (18,225 | ) | (8,895 | ) | (12,907 | ) | (14,248 | ) | ||||
Timberland holdings | 19,410 | (9,312 | ) | 7,285 | 21,989 | |||||||
Short-term portion of deferred income | (3,305 | ) | 2,238 | 9,186 | (1,434 | ) | ||||||
Trade payables and accrued expenses | 4,335 | (6,646 | ) | 1,905 | 3,556 | |||||||
Other | (7,864 | ) | (7,697 | ) | (10,495 | ) | (7,323 | ) | ||||
Net cash provided by operating activities | 54,124 | 10,016 | 46,034 | 44,767 | ||||||||
Cash flows from investing activities | ||||||||||||
Acquisition of property, plant and equipment | (1,090 | ) | (1,945 | ) | (1,180 | ) | (790 | ) | ||||
Collection of note receivable | 4,000 | — | — | — | ||||||||
(Investment in) proceeds from equity method investees | (4,911 | ) | 5 | (11,059 | ) | (842 | ) | |||||
Net cash (used in) provided by investing activities | (2,001 | ) | (1,940 | ) | (12,239 | ) | (1,632 | ) | ||||
Cash flows from financing activities | ||||||||||||
Debt issuance costs | 44 | 9 | 23 | 44 | ||||||||
Distributions to parent, net | (52,168 | ) | (8,126 | ) | (33,818 | ) | (43,180 | ) | ||||
Net cash used in financing activities | (52,124 | ) | (8,117 | ) | (33,795 | ) | (43,136 | ) | ||||
Net decrease in cash and cash equivalents | (1 | ) | (41 | ) | — | (1 | ) | |||||
Cash and cash equivalents | ||||||||||||
Beginning of the period | 76 | 117 | 75 | 76 | ||||||||
End of the period | $ | 75 | $ | 76 | $ | 75 | $ | 75 | ||||
Income taxes paid during the period | $ | 7,671 | $ | 8,391 | $ | 5,697 | $ | 5,455 |
December 31 | September 30 | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Deferred tax asset | $ | 728 | $ | 1,392 | $ | — | |||
Prepaid expenses | 124 | 134 | 681 | ||||||
Inventory | 48 | 47 | 43 | ||||||
$ | 900 | $ | 1,573 | $ | 724 |
December 31 | September 30 | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Merchantable timber | $ | 70,879 | $ | 74,913 | $ | 62,904 | |||
Pre-merchantable timber | 45,522 | 58,953 | 43,370 | ||||||
Rural land | 38,083 | 43,509 | 36,207 | ||||||
Core forestland | 1,567 | 1,566 | 1,577 | ||||||
Other | 30 | 1,017 | 21 | ||||||
$ | 156,081 | $ | 179,958 | $ | 144,079 |
December 31 | September 30 | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Coal | $ | 816 | $ | 841 | $ | 803 | |||
Limestone | 147 | 156 | 141 | ||||||
$ | 963 | $ | 997 | $ | 944 |
December 31 | September 30 | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Infrastructure | $ | 73,690 | $ | 74,220 | $ | 73,123 | |||
Office facilities | 15,332 | 15,510 | 13,447 | ||||||
Software | 2,892 | 2,892 | 2,892 | ||||||
Land improvements | 2,806 | 2,190 | 2,923 | ||||||
Machinery and equipment | 1,839 | 1,845 | 2,022 | ||||||
Furniture and fixtures | 1,452 | 1,700 | 1,265 | ||||||
Tenant improvements | 111 | 246 | 601 | ||||||
98,122 | 98,603 | 96,273 | |||||||
Less: accumulated depreciation | (84,248 | ) | (80,772 | ) | (82,908 | ) | |||
$ | 13,874 | $ | 17,831 | $ | 13,365 |
Year Ended December 31 | ||||||
2012 | 2011 | |||||
Income | $ | 82,786 | $ | 65,756 | ||
Year Ended December 31 | ||||||
2012 | 2011 | |||||
Current: | ||||||
Federal | $ | 32,959 | $ | 28,005 | ||
State and local | 4,768 | 3,908 | ||||
37,727 | 31,913 | |||||
Deferred: | ||||||
Federal | (5,459 | ) | (6,034 | ) | ||
State and local | (9 | ) | (415 | ) | ||
Benefit for deferred income taxes | (5,468 | ) | (6,449 | ) | ||
Income tax provision | $ | 32,259 | $ | 25,464 |
Year Ended December 31 | ||||||
2012 | 2011 | |||||
Income tax provision computed at the federal statutory rate of 35% | $ | 28,975 | $ | 23,015 | ||
State and local income taxes, net of federal benefit | 3,096 | 2,130 | ||||
Other | 188 | 319 | ||||
Income tax provision | $ | 32,259 | $ | 25,464 | ||
Effective tax rate | 39.0 | % | 38.7 | % | ||
December 31 | ||||||
2012 | 2011 | |||||
Deferred tax assets: | ||||||
Partnerships and joint ventures | $ | 1,089 | $ | 1,086 | ||
Section 263A forestry reserve | 6,625 | 4,001 | ||||
Employee benefits | 2,965 | 3,208 | ||||
Other accruals and reserves | 1,062 | 2,308 | ||||
Other | 461 | 205 | ||||
Total deferred tax assets | 12,202 | 10,808 | ||||
Deferred tax liabilities: | ||||||
Depreciation and depletion | (60,666 | ) | (64,804 | ) | ||
Total deferred tax liabilities | (60,666 | ) | (64,804 | ) | ||
Net deferred liability | $ | (48,464 | ) | $ | (53,996 | ) |
Included in the combined balance sheet: | ||||||
Current assets - deferred tax asset | $ | 728 | $ | 1,392 | ||
Noncurrent deferred tax liability | (49,192 | ) | (55,388 | ) | ||
Net deferred liability | $ | (48,464 | ) | $ | (53,996 | ) |
December 31 | September 30 | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Employee benefits | $ | 7,400 | $ | 5,601 | $ | 4,950 | |||
Other long-term liabilities | 4,982 | 3,943 | 6,302 | ||||||
Total other liabilities | $ | 12,382 | $ | 9,544 | $ | 11,252 |
December 31 | September 30, | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Investment in Magnolia | $ | 3,868 | $ | — | $ | 3,986 | |||
December 31 | September 30, | ||||||||
2012 | 2011 | 2013 | |||||||
(Unaudited) | |||||||||
Balance sheet data: | |||||||||
Current assets | $ | — | $ | — | $ | 14 | |||
Non-current assets | 5,557 | — | 6,330 | ||||||
Current liabilities | 390 | — | 650 | ||||||
Non-current liabilities | — | — | — |
December 31 | Nine Months Ended September 30 | |||||||||||
2012 | 2011 | 2013 | 2012 | |||||||||
(Unaudited) | ||||||||||||
Statement of operations data: | ||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | — | ||||
Cost of sales | 312 | — | 684 | — | ||||||||
Operating loss | (358 | ) | — | (684 | ) | — | ||||||
Net loss | (358 | ) | — | (684 | ) | — |
1. | The December 6, 2013 acquisition of the timberland assets, and certain other assets, of the CDLM Group by Plum Creek for $934 million, funded by the issuance of an $860 million installment note payable and $74 million of cash; |
2. | The December 6, 2013 formation of a limited liability company ("MWV-Charleston Land Partners, LLC") by Plum Creek and MeadWestvaco for which Plum Creek made a capital contribution (in cash) of $152 million and MeadWestvaco contributed real estate development properties with an agreed-upon value of $531 million; and |
3. | The November 4, 2013 issuance of common stock by Plum Creek for net proceeds of $606 million and the repayment of certain debt obligations of Plum Creek, totaling $376 million. |
• | $225 million of its $450 million term credit agreement, |
• | $86 million of Senior Notes (Private Debt), consisting of both maturing debt and prepayments, |
• | $25 million of Senior Notes (Public Debt), and |
• | $40 million of outstanding borrowings on the Line of Credit. |
Note 1. | Pro Forma Adjustments (Note 2.) | ||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Plum Creek (Historical) | CDLM Group (Historical) | Assets and Liabilities Not Directly Acquired | Equity Offering and Debt Retirement | Acquisition and Financing Adjustments | Plum Creek Combined Pro Forma | |||||||||||||||||||
Revenues | $ | 1,009 | $ | 149 | $ | (1 | ) | A | $ | — | $ | — | $ | 1,145 | |||||||||||
(12 | ) | B | |||||||||||||||||||||||
Cost of Goods Sold | 687 | 67 | — | A | — | — | F | 743 | |||||||||||||||||
(14 | ) | B | (7 | ) | G | ||||||||||||||||||||
7 | H | ||||||||||||||||||||||||
3 | I | ||||||||||||||||||||||||
Selling, General and Administrative | 89 | 10 | — | A | — | 7 | G | 102 | |||||||||||||||||
(4 | ) | B | |||||||||||||||||||||||
Total Costs and Expenses | 776 | 77 | (18 | ) | — | 10 | 845 | ||||||||||||||||||
Other Operating Income (Expense), net | (2 | ) | — | — | — | — | (2 | ) | |||||||||||||||||
Operating Income | 231 | 72 | 5 | — | (10 | ) | 298 | ||||||||||||||||||
Equity Earnings (Loss) | 47 | (1 | ) | 1 | A | — | (3 | ) | J | 44 | |||||||||||||||
Interest Expense (Debt Obligations to Unrelated Parties) | 61 | — | — | (3 | ) | E | 29 | L | 87 | ||||||||||||||||
Interest Expense (Note Payable to Timberland Venture) | 43 | — | — | — | — | 43 | |||||||||||||||||||
Total Interest Expense, net | 104 | — | — | (3 | ) | 29 | 130 | ||||||||||||||||||
Income before Income Taxes | 174 | 71 | 6 | 3 | (42 | ) | 212 | ||||||||||||||||||
Provision (Benefit) for Income Taxes | — | 27 | (27 | ) | A | — | (1 | ) | K | (1 | ) | ||||||||||||||
Income from Continuing Operations | $ | 174 | $ | 44 | $ | 33 | $ | 3 | $ | (41 | ) | $ | 213 | ||||||||||||
PER SHARE AMOUNTS: | |||||||||||||||||||||||||
Income from Continuing Operations – Basic | $ | 1.06 | $ | 1.21 | D | ||||||||||||||||||||
Income from Continuing Operations – Diluted | $ | 1.06 | $ | 1.20 | D | ||||||||||||||||||||
Weighted-Average Number of Shares Outstanding | |||||||||||||||||||||||||
– Basic | 162.7 | 13.9 | C | 176.6 | |||||||||||||||||||||
– Diluted | 163.2 | 13.9 | C | 177.1 | |||||||||||||||||||||
Note 1. | Pro Forma Adjustments (Note 2.) | ||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Plum Creek (Historical) | CDLM Group (Historical) | Assets and Liabilities Not Directly Acquired | Equity Offering and Debt Retirement | Acquisition and Financing Adjustments | Plum Creek Combined Pro Forma | |||||||||||||||||||
Revenues | $ | 1,339 | $ | 193 | $ | (4 | ) | A | $ | — | $ | — | $ | 1,513 | |||||||||||
(15 | ) | B | |||||||||||||||||||||||
Cost of Goods Sold | 943 | 93 | — | A | — | — | F | 1,023 | |||||||||||||||||
(18 | ) | B | (10 | ) | G | ||||||||||||||||||||
12 | H | ||||||||||||||||||||||||
3 | I | ||||||||||||||||||||||||
Selling, General and Administrative | 116 | 17 | — | A | — | 10 | G | 138 | |||||||||||||||||
(5 | ) | B | |||||||||||||||||||||||
Total Costs and Expenses | 1,059 | 110 | (23 | ) | — | 15 | 1,161 | ||||||||||||||||||
Other Operating Income (Expense), net | 1 | (1 | ) | — | — | — | — | ||||||||||||||||||
Operating Income | 281 | 82 | 4 | — | (15 | ) | 352 | ||||||||||||||||||
Equity Earnings (Loss) | 59 | — | — | A | — | (4 | ) | J | 55 | ||||||||||||||||
Interest Expense (Debt Obligations to Unrelated Parties) | 82 | — | — | (6 | ) | E | 39 | L | 115 | ||||||||||||||||
Interest Expense (Note Payable to Timberland Venture) | 58 | — | — | — | — | 58 | |||||||||||||||||||
Total Interest Expense, net | 140 | — | — | (6 | ) | 39 | 173 | ||||||||||||||||||
Income before Income Taxes | 200 | 82 | 4 | 6 | (58 | ) | 234 | ||||||||||||||||||
Provision (Benefit) for Income Taxes | (3 | ) | 32 | (32 | ) | A | — | (1 | ) | K | (4 | ) | |||||||||||||
Income from Continuing Operations | $ | 203 | $ | 50 | $ | 36 | $ | 6 | $ | (57 | ) | $ | 238 | ||||||||||||
PER SHARE AMOUNTS: | |||||||||||||||||||||||||
Income from Continuing Operations – Basic | $ | 1.25 | $ | 1.36 | D | ||||||||||||||||||||
Income from Continuing Operations – Diluted | $ | 1.25 | $ | 1.35 | D | ||||||||||||||||||||
Weighted-Average Number of Shares Outstanding | |||||||||||||||||||||||||
– Basic | 161.5 | 13.9 | C | 175.4 | |||||||||||||||||||||
– Diluted | 161.9 | 13.9 | C | 175.8 | |||||||||||||||||||||
Note 1. | Pro Forma Adjustments (Note 2.) | |||||||||||||||||||||||
(In Millions) | Plum Creek (Historical) | CDLM Group (Historical) | Assets and Liabilities Not Directly Acquired | Equity Offering and Debt Retirement | Acquisition and Financing Adjustments | Plum Creek Combined Pro Forma | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and Cash Equivalents | $ | 439 | $ | — | $ | — | $ | 606 | N | $ | — | $ | 432 | |||||||||||
(383 | ) | O | (225 | ) | P | |||||||||||||||||||
(5 | ) | P | ||||||||||||||||||||||
Other Current Assets | 151 | 5 | (5 | ) | M | — | — | 151 | ||||||||||||||||
590 | 5 | (5 | ) | 223 | (230 | ) | 583 | |||||||||||||||||
Timber and Timberlands, net | 3,395 | 342 | (217 | ) | M | — | 706 | P | 4,264 | |||||||||||||||
38 | Q | |||||||||||||||||||||||
Minerals and Mineral Rights, net | 242 | 1 | — | — | 56 | P | 299 | |||||||||||||||||
Property, Plant and Equipment, net | 118 | 22 | (13 | ) | M | — | 30 | P | 119 | |||||||||||||||
(38 | ) | Q | ||||||||||||||||||||||
Equity Investments | 195 | 14 | (14 | ) | M | — | 139 | P | 334 | |||||||||||||||
Other Assets | 91 | 6 | (6 | ) | M | (1 | ) | O | 15 | P | 109 | |||||||||||||
4 | P | |||||||||||||||||||||||
Total Assets | $ | 4,631 | $ | 390 | $ | (255 | ) | $ | 222 | $ | 720 | $ | 5,708 | |||||||||||
LIABILITIES | ||||||||||||||||||||||||
Current Portion of Long-Term Debt | $ | 74 | $ | — | $ | — | $ | (74 | ) | O | $ | — | $ | — | ||||||||||
Line of Credit | 507 | — | — | (40 | ) | O | — | 467 | ||||||||||||||||
Other Current Liabilities | 128 | 17 | (17 | ) | M | (4 | ) | O | — | 124 | ||||||||||||||
709 | 17 | (17 | ) | (118 | ) | — | 591 | |||||||||||||||||
Long-Term Debt | 1,815 | — | — | (225 | ) | O | 860 | R | 2,413 | |||||||||||||||
(12 | ) | O | ||||||||||||||||||||||
(25 | ) | O | ||||||||||||||||||||||
Note Payable to Timberland Venture | 783 | — | — | — | — | 783 | ||||||||||||||||||
Other Liabilities | 94 | 67 | (67 | ) | M | — | 94 | |||||||||||||||||
Total Liabilities | 3,401 | 84 | (84 | ) | (380 | ) | 860 | 3,881 | ||||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
Common Stock | 2 | — | — | N | — | 2 | ||||||||||||||||||
Additional Paid-In Capital | 2,330 | 606 | N | — | 2,936 | |||||||||||||||||||
Retained Earnings (Accumulated Deficit) | (135 | ) | (1 | ) | S | (5 | ) | S | (144 | ) | ||||||||||||||
(2 | ) | S | ||||||||||||||||||||||
(1 | ) | S | ||||||||||||||||||||||
Treasury Stock, at Cost, Common Shares | (940 | ) | — | — | — | (940 | ) | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | (27 | ) | — | — | — | (27 | ) | |||||||||||||||||
Parent's Equity | 306 | (171 | ) | M | (135 | ) | P | — | ||||||||||||||||
Total Stockholders’ Equity | 1,230 | 306 | (171 | ) | 602 | (140 | ) | 1,827 | ||||||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 4,631 | $ | 390 | $ | (255 | ) | $ | 222 | $ | 720 | $ | 5,708 | |||||||||||
A. | Reflects the impact to Statement of Operations for assets and liabilities of the CDLM Group that were not directly acquired, including an equity method investment. This adjustment also reflects an adjustment to the Provision for Income Taxes due primarily to Plum Creek's status as a REIT. |
B. | Reflects the impact to Statement of Operations for assets and liabilities of the CDLM Group that were acquired indirectly through an equity ownership interest in MWV-Charleston Land Partners, LLC (see J. below). |
C. | Reflects update for basic and diluted shares outstanding as a result of Plum Creek's issuance of 13,915,000 shares of common stock. On November 4, 2013, Plum Creek issued 13,915,000 shares of common stock at $45.00 per share for net proceeds of $606 million. |
D. | Reflects the recomputed basic and diluted earnings per share after giving effect to all pro forma adjustments impacting Income From Continuing Operations. |
E. | Reflects the decrease in interest expense assuming Plum Creek used approximately $376 million to retire debt obligations in effect at January 1, 2012. For the pro forma adjustments, we assumed a repayment of $25 million of Senior Notes (Public Debt) at terms consistent with actual repayments made in 2013, partial repayment of a $350 million term credit agreement ($257 million), which had an effective interest rate of approximately 0.65%, and repayment of borrowings on our revolving credit facility ($94 million). None of the above assumptions would have resulted in a prepayment penalty. Repayment of $25 million of Senior Notes (Public Debt) at terms consistent with actual repayments would have cost $27 million. The $2 million premium is a nonrecurring charge and would be recorded as a Loss on Debt Extinguishment. In accordance with SEC rules, this charge is not included in the Unaudited Pro Forma Condensed Combined Statements of Operations for the twelve-months ended December 31, 2012. |
F. | For the nine-months ended September 30, 2013, the operating income of the CDLM Group included revenue of $85 million and related costs of sales of $12 million from the sale of approximately 40,000 acres. Additionally, for the year ended December 31, 2012, the operating income of the CDLM Group included revenue of $99 million and related costs of sales of $18 million from the sale of approximately 49,000 acres. There are no pro forma adjustments related to these land sales since the acres sold were not acquired by Plum Creek and were not included in the purchase price allocation. However, the operating margin from future land sales is expected to be substantially lower as a result of allocating a portion of the purchase price to timber and timberlands. |
G. | Reflects the reclassification of CDLM Group Operating Costs to conform to Plum Creek's presentation of Cost of Goods Sold and Selling, General and Administrative Expenses. |
H. | Reflects the impact of computing new depletion rates following acquisition of the CDLM Group timber assets. Depletion rates for Plum Creek are computed by dividing (A) the sum of (1) the original cost of the timber less previously recorded depletion plus (2) estimated future silviculture costs, including the impact of inflation, that are expected to be incurred over the next harvest cycle, by (B) the total timber volume that is estimated to be harvested over the harvest cycle. The CDLM Group depletion rates were computed by dividing (A) undepleted timber costs by (B) current merchantable timber volumes. In addition to conforming depletion to Plum Creek's method of accounting, depletion rates (for pro forma purposes) were based upon Plum Creek's existing cost of timber less previously recorded depletion plus the portion of the purchase price allocated to the acquired timber, approximately $480 million. |
I. | Reflects the impact of computing new mineral depletion rates and new depreciation rates for logging roads based upon the impact of allocating a portion of the purchase price to minerals and logging roads. |
J. | Reflects the impact to Equity Earnings/(Losses) had MWV-Charleston Land Partners, LLC been formed at the beginning of the period. |
K. | Reflects the impact of Equity Earnings/(Losses) that are taxable to Plum Creek (see J. above). |
L. | Reflects the increase in interest expense resulting from the issuance of the $860 million installment note payable (as if issued on January 1, 2012). Plum Creek's estimated effective interest cost is approximately 4.5%. |
M. | Reflects the impact to the Balance Sheet for assets and liabilities of the CDLM Group that were not directly acquired, including assets and liabilities of the CDLM Group that were acquired indirectly through an equity ownership interest in MWV-Charleston Land Partners, LLC (see P. below). |
N. | Reflects the issuance of common stock by Plum Creek. On November 4, 2013, Plum Creek issued 13,915,000 shares of common stock at $45.00 per share for net proceeds of $606 million. |
O. | Reflects the use of proceeds from the issuance of common stock to retire debt obligations (including $4 million of accrued interest and $3 million of premiums and prepayment penalties) in effect at the balance sheet date (in millions): |
Assumed Debt Repayments: | September 30, 2013 | |||
Private Notes | $ | 86 | ||
Public Notes | 25 | |||
Term Credit Agreement | 225 | |||
Line of Credit | 40 | |||
Total Assumed Debt Repayments | $ | 376 | ||
Assumed Payments for Accrued Interest | $ | 4 | ||
Other Debt Repayment Assumptions: | ||||
Prepayment Penalty | $ | 1 | ||
Premium to Repay | 2 | |||
Debt Issuance Costs Written Off (Non-cash charge) | 1 | |||
Total Other Debt Repayments Assumptions | $ | 4 |
P. | Reflects the partial use of equity proceeds to fund the cash portion of the transaction, $225 million (See Introductory Section), along with the change in CDLM Group's assets to fair value in connection with the acquisition by Plum Creek, including the value of Plum Creek's equity investment in the real estate development joint venture and the elimination of the Parent's Equity in the CDLM Group. |
Assets Acquired: | ||||
Timber and Logging Roads, net | $ | 517 | ||
Timberlands | 352 | |||
Minerals and Mineral Rights, net | 57 | |||
Property, Plant and Equipment, net | 1 | |||
Equity Method Investments | 139 | |||
Intangible Assets | 15 | |||
Other Assets | 4 | |||
Total Assets Acquired | $ | 1,085 |
Purchase Accounting Adjustments: | ||||
Total Consideration | $ | 1,085 | ||
Less: Book Value of CDLM Group Net Assets | (135 | ) | ||
Excess Purchase Price to be Allocated | $ | 950 | ||
Fair Value Adjustments: | ||||
Timber, net | $ | 393 | ||
Logging Roads, net | 30 | |||
Timberlands | 313 | |||
Minerals and Mineral Rights | 56 | |||
Property, Plant and Equipment, net | — | |||
Equity Method Investments | 139 | |||
Intangible Assets | 15 | |||
Deferred Tax Assets | 4 | |||
Total Allocations | $ | 950 |
Q. | Reflects the reclassification of logging roads to Timber and Timberlands, net from Property, Plant, and Equipment, net to conform the CDLM Group classification to Plum Creek's presentation. |
R. | Reflects the issuance of the $860 million installment note payable as partial consideration for the acquisition. |
S. | The following table summarizes pro forma adjustments to the September 30, 2013 Retained Earnings (Accumulated Deficit) (in millions): |
Retained Earnings (Accumulated Deficit) Pro Forma Adjustments: | ||||
Plum Creek (Historical) | $ | (135 | ) | |
Cash Acquisition Costs (Expense) | (5 | ) | ||
Prepayment Penalty - Senior Notes (Private) | (1 | ) | ||
Premium to Repay - Senior Notes (Public) | (2 | ) | ||
Write-off Debt Issuance Costs | (1 | ) | ||
Adjusted Plum Creek Retained Earnings (Accumulated Deficit) | $ | (144 | ) |