##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 
for the Quarterly Period Ended July 2, 2005
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

for the Transition Period From to
 Commission File Number: 001-08634
 Temple-Inland Inc.
  Delaware
    
    75-1903917(State or other jurisdiction of
    
    (I.R.S. Employer Identification Number)incorporation or organization)
 1300 MoPac Expressway South, Austin, Texas 78746
 (512) 434-5800
 Not Applicable
 þ o
 þ o
  Number of common shares outstandingClass
    
    as of July 2, 2005Common Stock (par value $1.00 per share)
    
    112,982,776
 Page 1 of 47
    
    The Exhibit Index is page 41.




---



PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Temple-Inland Inc. and Subsidiaries
    
    
    3Consolidated Balance SheetsConsolidated Statements of IncomeConsolidated Statements of Cash FlowsParent Company (Temple-Inland Inc. and its manufacturing subsidiaries)
    
    
    7Summarized Balance SheetsSummarized Statements of IncomeSummarized Statements of Cash FlowsFinancial Services
    
    
    10Summarized Balance SheetsSummarized Statements of IncomeSummarized Statements of Cash FlowsNotes to the Consolidated Financial Statements
    
    
    13Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    36Item 4. Controls and Procedures
    
    
    37PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 3. Defaults Upon Senior Securities
    
    
    38Item 4. Submission of Matters to a Vote of Security Holders
    
    
    38Item 5. Other Information
    
    
    38Item 6. Exhibits
    
    
    39SIGNATURES
    
    
    40Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



Parent
    
    FinancialCompany
    
    Services
    
    Consolidated(In millions, except share data)ASSETSCash and cash equivalents
    
    $
    5
    
    
    $
    418
    
    
    $
    423Trade receivables, less allowance of $15
    
    
    471
    
    
    
    
    
    
    
    471Inventories
    
    
    424
    
    
    
    
    
    
    
    424Timber and timberland
    
    
    498
    
    
    
    
    
    
    
    498Loans held for sale
    
    
    
    
    
    
    315
    
    
    
    315Loans, net of allowance for loan losses of $78
    
    
    
    
    
    
    9,954
    
    
    
    9,954Securities available-for-sale
    
    
    
    
    
    
    1,025
    
    
    
    1,025Securities held-to-maturity
    
    
    
    
    
    
    3,506
    
    
    
    3,506Property, premises, and equipment
    
    
    1,683
    
    
    
    174
    
    
    
    1,857Goodwill
    
    
    236
    
    
    
    164
    
    
    
    400Prepaid expenses and other assets
    
    
    423
    
    
    
    587
    
    
    
    960Investment in financial services
    
    
    1,158
    
    
    
    
    
    
    
    TOTAL ASSETS
    
    $
    4,898
    
    
    $
    16,143
    
    
    $
    19,833LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable, accrued expenses, and other liabilities
    
    $
    698
    
    
    $
    185
    
    
    $
    868Long-term debt and other borrowings
    
    
    1,500
    
    
    
    205
    
    
    
    1,705Deposits
    
    
    
    
    
    
    9,027
    
    
    
    9,027Federal Home Loan Bank borrowings
    
    
    
    
    
    
    5,019
    
    
    
    5,019Securities sold under repurchase agreements
    
    
    
    
    
    
    40
    
    
    
    40Obligations to settle trade date securities
    
    
    
    
    
    
    204
    
    
    
    204Deferred income taxes
    
    
    139
    
    
    
    
    
    
    
    104Pension liability
    
    
    283
    
    
    
    
    
    
    
    283Postretirement benefits
    
    
    143
    
    
    
    
    
    
    
    143Preferred stock issued by subsidiaries
    
    
    
    
    
    
    305
    
    
    
    305TOTAL LIABILITIES
    
    
    2,763
    
    
    
    14,985
    
    
    
    17,698SHAREHOLDERS EQUITYPreferred stock  par value $1 per share:authorized 25,000,000 shares; none issued
    
    
    
    
    
    
    
    
    
    
    Common stock  par value $1 per share: authorized 200,000,000 shares;
issued 123,605,344 shares, including shares held in the treasury
    
    
    
    
    
    
    
    
    
    
    124Additional paid-in capital
    
    
    
    
    
    
    
    
    
    
    463Accumulated other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (190
    )Unearned stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (34
    )Retained earnings
    
    
    
    
    
    
    
    
    
    
    2,1292,492Cost of shares held in the treasury: 10,622,568 shares
    
    
    
    
    
    
    
    
    
    
    (357
    )TOTAL SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    
    2,135TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    $
    19,833
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##### Table of Contents



Parent
    
    FinancialCompany
    
    Services
    
    Consolidated(In millions, except share data)ASSETSCash and cash equivalents
    
    $
    9
    
    
    $
    363
    
    
    $
    372Trade receivables, less allowances of $16
    
    
    404
    
    
    
    
    
    
    
    404Inventories
    
    
    427
    
    
    
    
    
    
    
    427Timber and timberland
    
    
    496
    
    
    
    
    
    
    
    496Loans held for sale
    
    
    
    
    
    
    510
    
    
    
    510Loans, net of allowance for loan losses of $85
    
    
    
    
    
    
    9,618
    
    
    
    9,618Securities available-for-sale
    
    
    
    
    
    
    1,118
    
    
    
    1,118Securities held-to-maturity
    
    
    
    
    
    
    3,864
    
    
    
    3,864Property, premises, and equipment
    
    
    1,738
    
    
    
    167
    
    
    
    1,905Goodwill
    
    
    236
    
    
    
    152
    
    
    
    388Prepaid expenses and other assets
    
    
    469
    
    
    
    658
    
    
    
    1,042Investment in financial services
    
    
    1,121
    
    
    
    
    
    
    
    TOTAL ASSETS
    
    $
    4,900
    
    
    $
    16,450
    
    
    $
    20,144LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable, accrued expenses, and other liabilities
    
    $
    740
    
    
    $
    350
    
    
    $
    1,052Long-term debt and other borrowings
    
    
    1,485
    
    
    
    206
    
    
    
    1,691Deposits
    
    
    
    
    
    
    8,964
    
    
    
    8,964Federal Home Loan Bank borrowings
    
    
    
    
    
    
    4,717
    
    
    
    4,717Securities sold under repurchase agreements
    
    
    
    
    
    
    787
    
    
    
    787Deferred income taxes
    
    
    136
    
    
    
    
    
    
    
    89Pension liability
    
    
    289
    
    
    
    
    
    
    
    289Postretirement benefits
    
    
    143
    
    
    
    
    
    
    
    143Preferred stock issued by subsidiaries
    
    
    
    
    
    
    305
    
    
    
    305TOTAL LIABILITIES
    
    
    2,793
    
    
    
    15,329
    
    
    
    18,037SHAREHOLDERS EQUITYPreferred stock  par value $1 per share:authorized 25,000,000 shares; none issued
    
    
    
    
    
    
    
    
    
    
    Common stock  par value $1 per share: authorized 200,000,000 shares;
issued 122,779,104 shares, including shares held in the treasury
    
    
    
    
    
    
    
    
    
    
    123Additional paid-in capital
    
    
    
    
    
    
    
    
    
    
    377Accumulated other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (192
    )Unearned stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (27
    )Retained earnings
    
    
    
    
    
    
    
    
    
    
    2,0672,348Cost of shares held in the treasury: 10,592,914 shares
    
    
    
    
    
    
    
    
    
    
    (241
    )TOTAL SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    
    2,107TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    $
    20,144
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##### Table of Contents



Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions, except share and per share amounts)REVENUESManufacturing
    
    $
    1,003
    
    
    $
    940
    
    
    $
    1,970
    
    
    $
    1,833Financial services
    
    
    252
    
    
    
    278
    
    
    
    488
    
    
    
    5391,255
    
    
    
    1,218
    
    
    
    2,458
    
    
    
    2,372COSTS AND EXPENSESManufacturing
    
    
    (944
    )
    
    
    (875
    )
    
    
    (1,857
    )
    
    
    (1,770
    )Financial services
    
    
    (201
    )
    
    
    (219
    )
    
    
    (390
    )
    
    
    (427
    )(1,145
    )
    
    
    (1,094
    )
    
    
    (2,247
    )
    
    
    (2,197
    )OPERATING INCOME
    
    
    110
    
    
    
    124
    
    
    
    211
    
    
    
    175Parent company interest
    
    
    (27
    )
    
    
    (34
    )
    
    
    (55
    )
    
    
    (66
    )Other non-operating income (expense)
    
    
    1
    
    
    
    (2
    )
    
    
    2
    
    
    
    (2
    )INCOME BEFORE INCOME TAXES
    
    
    84
    
    
    
    88
    
    
    
    158
    
    
    
    107Income tax expense
    
    
    (16
    )
    
    
    (34
    )
    
    
    (45
    )
    
    
    (41
    )INCOME FROM CONTINUING OPERATIONS
    
    
    68
    
    
    
    54
    
    
    
    113
    
    
    
    66Discontinued operations
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1NET INCOME
    
    $
    69
    
    
    $
    55
    
    
    $
    114
    
    
    $
    67WEIGHTED AVERAGE COMMON SHARES
OUTSTANDINGBasic
    
    
    113.7
    
    
    
    111.2
    
    
    
    113.2
    
    
    
    110.6Diluted
    
    
    115.0
    
    
    
    112.4
    
    
    
    115.4
    
    
    
    111.8EARNINGS PER SHAREBasic:Income from continuing operations
    
    $
    0.60
    
    
    $
    0.49
    
    
    $
    1.00
    
    
    $
    0.60Discontinued operations
    
    
    0.01
    
    
    
    0.01
    
    
    
    0.01
    
    
    
    0.01Net income
    
    $
    0.61
    
    
    $
    0.50
    
    
    $
    1.01
    
    
    $
    0.61Diluted:Income from continuing operations
    
    $
    0.59
    
    
    $
    0.48
    
    
    $
    0.98
    
    
    $
    0.59Discontinued operations
    
    
    0.01
    
    
    
    0.01
    
    
    
    0.01
    
    
    
    0.01Net income
    
    $
    0.60
    
    
    $
    0.49
    
    
    $
    0.99
    
    
    $
    0.60DIVIDENDS PAID PER SHARE OF COMMON STOCK
    
    $
    0.22
    1⁄2
    
    $
    0.18
    
    
    $
    0.45
    
    
    $
    0.36
  5




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##### Table of Contents



First Six Months2005
    
    2004(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income
    
    $
    114
    
    
    $
    67Adjustments:Depreciation and amortization
    
    
    125
    
    
    
    127Amortization and accretion of financial instruments
    
    
    7
    
    
    
    9Amortization and impairment of servicing rights
    
    
    
    
    
    
    13Provision for credit losses
    
    
    10
    
    
    
    (4
    )Deferred income taxes
    
    
    13
    
    
    
    32Other non-cash charges and (credits), net
    
    
    59
    
    
    
    60Net assets of discontinued operations
    
    
    
    
    
    
    (9
    )Other
    
    
    (38
    )
    
    
    3Changes in:Trade receivables
    
    
    (72
    )
    
    
    (78
    )Inventories
    
    
    
    
    
    
    2Prepaid expenses and other assets
    
    
    25
    
    
    
    6Accounts payable and accrued expenses
    
    
    (19
    )
    
    
    (14
    )Loans held for sale, originations
    
    
    (1,366
    )
    
    
    (3,932
    )Loans held for sale, sales
    
    
    1,548
    
    
    
    3,902Collections on loans serviced for others, net
    
    
    (119
    )
    
    
    (1
    )287
    
    
    
    183CASH PROVIDED BY (USED FOR) INVESTINGCapital expenditures
    
    
    (127
    )
    
    
    (82
    )Sale of non-strategic assets and operations
    
    
    31
    
    
    
    61Securities available-for-sale, net
    
    
    98
    
    
    
    129Securities held-to-maturity, net
    
    
    614
    
    
    
    267Loans originated or acquired, net of principal collected
    
    
    (392
    )
    
    
    (448
    )Sales of loans and mortgage servicing rights
    
    
    46
    
    
    
    35Acquisitions, net of cash acquired, and joint ventures
    
    
    (22
    )
    
    
    (18
    )Other
    
    
    12
    
    
    
    42260
    
    
    
    (14
    )CASH PROVIDED BY (USED FOR) FINANCINGAdditions to debt
    
    
    6
    
    
    
    183Payments of debt
    
    
    (356
    )
    
    
    (396
    )Borrowings under revolving credit arrangements, net
    
    
    50
    
    
    
    Payments of other long-term liabilities
    
    
    
    
    
    
    (64
    )Deposits, net
    
    
    64
    
    
    
    116Repurchase agreements and short-term borrowings, net
    
    
    (132
    )
    
    
    (8
    )Cash dividends paid to shareholders
    
    
    (52
    )
    
    
    (40
    )Repurchase of common stock
    
    
    (435
    )
    
    
    Exercise of stock options
    
    
    35
    
    
    
    49Settlement of equity purchase contracts
    
    
    345
    
    
    
    Other
    
    
    (21
    )
    
    
    12(496
    )
    
    
    (148
    )Net increase (decrease) in cash and cash equivalents
    
    
    51
    
    
    
    21Cash and cash equivalents at beginning of period
    
    
    372
    
    
    
    399Cash and cash equivalents at end of period
    
    $
    423
    
    
    $
    420
  6




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##### Table of Contents



SecondQuarter-End
    
    Year-End2005
    
    2004(In millions)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    5
    
    
    $
    9Trade receivables, less allowances of $15 in 2005 and $16 in 2004
    
    
    471
    
    
    
    404Inventories:Finished goods and work in process
    
    
    96
    
    
    
    129Raw materials
    
    
    245
    
    
    
    216Supplies
    
    
    83
    
    
    
    82Total inventories
    
    
    424
    
    
    
    427Prepaid expenses and other
    
    
    58
    
    
    
    98Total current assets
    
    
    958
    
    
    
    938Investment in Financial Services
    
    
    1,158
    
    
    
    1,121Timber and Timberland
    
    
    498
    
    
    
    496Property and EquipmentLand and buildings
    
    
    630
    
    
    
    637Machinery and equipment
    
    
    3,300
    
    
    
    3,327Construction in progress
    
    
    124
    
    
    
    86Less allowances for depreciation
    
    
    (2,371
    )
    
    
    (2,312
    )Total property and equipment
    
    
    1,683
    
    
    
    1,738Goodwill
    
    
    236
    
    
    
    236Assets Held for Sale
    
    
    34
    
    
    
    34Other Assets
    
    
    331
    
    
    
    337TOTAL ASSETS
    
    $
    4,898
    
    
    $
    4,900LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    195
    
    
    $
    220Accrued employee compensation and benefits
    
    
    72
    
    
    
    93Accrued interest
    
    
    22
    
    
    
    24Accrued property taxes
    
    
    21
    
    
    
    21Other accrued expenses
    
    
    144
    
    
    
    145Liabilities of discontinued operations
    
    
    7
    
    
    
    7Current portion of long-term debt
    
    
    3
    
    
    
    3Total current liabilities
    
    
    464
    
    
    
    513Long-Term Debt
    
    
    1,500
    
    
    
    1,485Deferred Income Taxes
    
    
    139
    
    
    
    136Pension Liability
    
    
    283
    
    
    
    289Postretirement Benefits
    
    
    143
    
    
    
    143Other Long-Term Liabilities
    
    
    234
    
    
    
    227Total liabilities
    
    
    2,763
    
    
    
    2,793Shareholders Equity
    
    
    2,135
    
    
    
    2,107TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    4,898
    
    
    $
    4,900
  7




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##### Table of Contents



Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)NET REVENUES
    
    $
    1,003
    
    
    $
    940
    
    
    $
    1,970
    
    
    $
    1,833COSTS AND EXPENSESCost of sales
    
    
    (849
    )
    
    
    (811
    )
    
    
    (1,676
    )
    
    
    (1,618
    )Selling
    
    
    (25
    )
    
    
    (24
    )
    
    
    (50
    )
    
    
    (51
    )General and administrative
    
    
    (52
    )
    
    
    (42
    )
    
    
    (97
    )
    
    
    (87
    )Other operating income (expense)
    
    
    (18
    )
    
    
    2
    
    
    
    (34
    )
    
    
    (14
    )(944
    )
    
    
    (875
    )
    
    
    (1,857
    )
    
    
    (1,770
    )59
    
    
    
    65
    
    
    
    113
    
    
    
    63FINANCIAL SERVICES EARNINGS
    
    
    51
    
    
    
    59
    
    
    
    98
    
    
    
    112OPERATING INCOME
    
    
    110
    
    
    
    124
    
    
    
    211
    
    
    
    175Interest expense
    
    
    (27
    )
    
    
    (34
    )
    
    
    (55
    )
    
    
    (66
    )Other non-operating income (expense)
    
    
    1
    
    
    
    (2
    )
    
    
    2
    
    
    
    (2
    )INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
    
    
    84
    
    
    
    88
    
    
    
    158
    
    
    
    107Income tax expense
    
    
    (16
    )
    
    
    (34
    )
    
    
    (45
    )
    
    
    (41
    )INCOME FROM CONTINUING OPERATIONS
    
    
    68
    
    
    
    54
    
    
    
    113
    
    
    
    66Discontinued operations
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1NET INCOME
    
    $
    69
    
    
    $
    55
    
    
    $
    114
    
    
    $
    67
  8




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##### Table of Contents



First Six Months2005
    
    2004(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income
    
    $
    114
    
    
    $
    67Adjustments:Depreciation and amortization
    
    
    111
    
    
    
    111Non-cash stock based compensation
    
    
    16
    
    
    
    19Non-cash pension and postretirement expense
    
    
    29
    
    
    
    30Cash contribution to pension and postretirement plans
    
    
    (34
    )
    
    
    (8
    )Deferred income taxes
    
    
    4
    
    
    
    28Net earnings of financial services
    
    
    (61
    )
    
    
    (70
    )Dividends from financial services
    
    
    25
    
    
    
    70Earnings of joint ventures
    
    
    (19
    )
    
    
    (10
    )Dividends from joint ventures
    
    
    18
    
    
    
    3Other non-cash charges
    
    
    33
    
    
    
    21Net assets of discontinued operations
    
    
    
    
    
    
    (9
    )Other
    
    
    
    
    
    
    (5
    )Changes in:Trade receivables
    
    
    (72
    )
    
    
    (78
    )Inventories
    
    
    
    
    
    
    2Prepaid expenses and other assets
    
    
    25
    
    
    
    6Accounts payable and accrued expenses
    
    
    (19
    )
    
    
    (14
    )170
    
    
    
    163CASH PROVIDED BY (USED FOR) INVESTINGCapital expenditures
    
    
    (114
    )
    
    
    (64
    )Sales of non-strategic assets and operations
    
    
    31
    
    
    
    61Proceeds from sale of property and equipment
    
    
    4
    
    
    
    Acquisitions, net of cash acquired, and joint ventures
    
    
    (3
    )
    
    
    (3
    )(82
    )
    
    
    (6
    )CASH PROVIDED BY (USED FOR) FINANCINGPayments of debt
    
    
    (35
    )
    
    
    (55
    )Borrowings under revolving credit arrangements, net
    
    
    50
    
    
    
    Payments of other long-term liabilities
    
    
    
    
    
    
    (64
    )Cash dividends paid to shareholders
    
    
    (52
    )
    
    
    (40
    )Repurchase of common stock
    
    
    (435
    )
    
    
    Exercise of options
    
    
    35
    
    
    
    49Settlement of equity purchase contracts
    
    
    345
    
    
    
    (92
    )
    
    
    (110
    )Net increase (decrease) in cash and cash equivalents
    
    
    (4
    )
    
    
    47Cash and cash equivalents at beginning of period
    
    
    9
    
    
    
    20Cash and cash equivalents at end of period
    
    $
    5
    
    
    $
    67
  9




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##### Table of Contents



SecondQuarter-
    
    Year-EndEnd 2005
    
    2004(In millions)ASSETSCash and cash equivalents
    
    $
    418
    
    
    $
    363Loans held for sale
    
    
    315
    
    
    
    510Loans, net of allowance for losses of $78 in 2005 and $85 in 2004
    
    
    9,954
    
    
    
    9,618Securities available-for-sale
    
    
    1,025
    
    
    
    1,118Securities held-to-maturity
    
    
    3,506
    
    
    
    3,864Real estate
    
    
    252
    
    
    
    253Premises and equipment, net
    
    
    174
    
    
    
    167Accounts, notes, and accrued interest receivable
    
    
    113
    
    
    
    170Goodwill
    
    
    164
    
    
    
    152Other assets
    
    
    222
    
    
    
    235TOTAL ASSETS
    
    $
    16,143
    
    
    $
    16,450LIABILITIES AND SHAREHOLDERS EQUITYDeposits

    
    $
    9,027
    
    
    $
    8,964Federal Home Loan Bank borrowings
    
    
    5,019
    
    
    
    4,717Securities sold under repurchase agreements
    
    
    40
    
    
    
    787Obligations to settle trade date securities
    
    
    204
    
    
    
    Other liabilities
    
    
    185
    
    
    
    350Other borrowings
    
    
    205
    
    
    
    206Preferred stock issued by subsidiaries
    
    
    305
    
    
    
    305TOTAL LIABILITIES
    
    
    14,985
    
    
    
    15,329Shareholders Equity
    
    
    1,158
    
    
    
    1,121TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    16,143
    
    
    $
    16,450
  10




---



##### Table of Contents



Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)INTEREST INCOMELoans and loans held for sale
    
    $
    142
    
    
    $
    118
    
    
    $
    271
    
    
    $
    232Securities available-for-sale
    
    
    15
    
    
    
    14
    
    
    
    30
    
    
    
    29Securities held-to-maturity
    
    
    30
    
    
    
    43
    
    
    
    64
    
    
    
    89Other earning assets
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    1Total interest income
    
    
    188
    
    
    
    175
    
    
    
    367
    
    
    
    351INTEREST EXPENSEDeposits
    
    
    (45
    )
    
    
    (33
    )
    
    
    (84
    )
    
    
    (67
    )Borrowed funds
    
    
    (48
    )
    
    
    (43
    )
    
    
    (94
    )
    
    
    (85
    )Total interest expense
    
    
    (93
    )
    
    
    (76
    )
    
    
    (178
    )
    
    
    (152
    )NET INTEREST INCOME
    
    
    95
    
    
    
    99
    
    
    
    189
    
    
    
    199(Provision) credit for credit losses
    
    
    (8
    )
    
    
    4
    
    
    
    (10
    )
    
    
    4NET INTEREST INCOME AFTER (PROVISION) CREDIT
FOR CREDIT LOSSES
    
    
    87
    
    
    
    103
    
    
    
    179
    
    
    
    203NONINTEREST INCOMEService charges on deposits
    
    
    11
    
    
    
    11
    
    
    
    21
    
    
    
    20Insurance commissions and fees
    
    
    18
    
    
    
    13
    
    
    
    31
    
    
    
    24Real estate operations
    
    
    14
    
    
    
    20
    
    
    
    28
    
    
    
    35Loan origination and sale of loans
    
    
    8
    
    
    
    46
    
    
    
    14
    
    
    
    83Operating lease income
    
    
    2
    
    
    
    3
    
    
    
    3
    
    
    
    6Loan servicing fees
    
    
    
    
    
    
    8
    
    
    
    1
    
    
    
    16Amortization and impairment of servicing rights
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    (13
    )Other
    
    
    11
    
    
    
    8
    
    
    
    23
    
    
    
    17Total noninterest income
    
    
    64
    
    
    
    103
    
    
    
    121
    
    
    
    188NONINTEREST EXPENSECompensation and benefits
    
    
    (45
    )
    
    
    (74
    )
    
    
    (92
    )
    
    
    (144
    )Insurance operations, other than compensation
    
    
    (2
    )
    
    
    (2
    )
    
    
    (4
    )
    
    
    (3
    )Real estate operations, other than compensation
    
    
    (6
    )
    
    
    (12
    )
    
    
    (12
    )
    
    
    (20
    )Occupancy
    
    
    (7
    )
    
    
    (7
    )
    
    
    (14
    )
    
    
    (15
    )Data processing
    
    
    (4
    )
    
    
    (5
    )
    
    
    (8
    )
    
    
    (9
    )Other
    
    
    (36
    )
    
    
    (47
    )
    
    
    (72
    )
    
    
    (88
    )Total noninterest expense
    
    
    (100
    )
    
    
    (147
    )
    
    
    (202
    )
    
    
    (279
    )INCOME BEFORE INCOME TAXES
    
    
    51
    
    
    
    59
    
    
    
    98
    
    
    
    112Income tax expense
    
    
    (19
    )
    
    
    (22
    )
    
    
    (37
    )
    
    
    (42
    )NET INCOME
    
    $
    32
    
    
    $
    37
    
    
    $
    61
    
    
    $
    70
  11




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##### Table of Contents



First Six Months2005
    
    2004(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income
    
    $
    61
    
    
    $
    70Adjustments:Depreciation
    
    
    11
    
    
    
    12Depreciation of leased assets
    
    
    3
    
    
    
    4Provision (credit) for credit losses
    
    
    10
    
    
    
    (4
    )Amortization and accretion of financial instruments
    
    
    7
    
    
    
    9Deferred income taxes
    
    
    9
    
    
    
    4Amortization and impairment of servicing rights
    
    
    
    
    
    
    13Changes in:Loans held for sale, originations
    
    
    (1,366
    )
    
    
    (3,932
    )Loans held for sale, sales
    
    
    1,548
    
    
    
    3,902Collections on loans serviced for others, net
    
    
    (119
    )
    
    
    (1
    )Other
    
    
    (22
    )
    
    
    13142
    
    
    
    90CASH PROVIDED BY (USED FOR) INVESTINGPurchases of securities available-for-sale
    
    
    
    
    
    
    (28
    )Principal payments and maturities of securities available-for-sale
    
    
    98
    
    
    
    157Purchases of securities held-to-maturity
    
    
    (3
    )
    
    
    (666
    )Principal payments and maturities of securities held-to-maturity
    
    
    617
    
    
    
    933Loans originated or acquired, net of collections
    
    
    (392
    )
    
    
    (448
    )Mortgage servicing rights
    
    
    46
    
    
    
    Sales of loans
    
    
    
    
    
    
    35Acquisitions, net of cash acquired
    
    
    (19
    )
    
    
    (15
    )Capital expenditures
    
    
    (13
    )
    
    
    (18
    )Other
    
    
    8
    
    
    
    42342
    
    
    
    (8
    )CASH PROVIDED BY (USED FOR) FINANCINGDeposits, net
    
    
    64
    
    
    
    116Repurchase agreements and short-term borrowings, net
    
    
    (132
    )
    
    
    (8
    )Additions to debt and long-term FHLB borrowings
    
    
    6
    
    
    
    183Payments of debt and long-term FHLB borrowings
    
    
    (321
    )
    
    
    (341
    )Dividends paid to parent company
    
    
    (25
    )
    
    
    (70
    )Other
    
    
    (21
    )
    
    
    12(429
    )
    
    
    (108
    )Net increase (decrease) in cash and cash equivalents
    
    
    55
    
    
    
    (26
    )Cash and cash equivalents at beginning of period
    
    
    363
    
    
    
    379Cash and cash equivalents at end of period
    
    $
    418
    
    
    $
    353
  12




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##### Table of Contents



Note A  Basis of Presentation
     Note B  Earnings Per Share
  Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Denominator for basic earnings per share,
weighted average common shares
outstanding
    
    
    113.7
    
    
    
    111.2
    
    
    
    113.2
    
    
    
    110.6Dilutive effect of:Equity purchase contracts
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    Stock options
    
    
    1.3
    
    
    
    1.2
    
    
    
    1.5
    
    
    
    1.2Denominator for diluted earnings per share
    
    
    115.0
    
    
    
    112.4
    
    
    
    115.4
    
    
    
    111.8
   13




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##### Table of Contents



Note C  Comprehensive Income
  Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Net income
    
    $
    69
    
    
    $
    55
    
    
    $
    114
    
    
    $
    67Other comprehensive income (loss), net
of taxes:Unrealized gains (losses) on:Available-for-sale securities
    
    
    3
    
    
    
    (1
    )
    
    
    
    
    
    
    (3
    )Derivative instruments
    
    
    (1
    )
    
    
    4
    
    
    
    (1
    )
    
    
    4Foreign currency translation adjustments
    
    
    3
    
    
    
    (1
    )
    
    
    3
    
    
    
    (1
    )Other comprehensive income
    
    
    5
    
    
    
    2
    
    
    
    2
    
    
    
    Comprehensive income
    
    $
    74
    
    
    $
    57
    
    
    $
    116
    
    
    $
    67
   Note D  Segment Information
   14




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##### Table of Contents



UnallocatedCorrugated
    
    Forest
    
    Financial
    
    Expenses andPackaging
    
    Products
    
    Services
    
    Eliminations
    
    TotalFor Second Quarter 2005
    
    
    
    
    
    
    
    
    
    (In millions)Revenues from external customers
    
    $
    738
    
    
    $
    265
    
    
    $
    252
    
    
    $
    
    
    
    $
    1,255Depreciation and amortization
    
    
    39
    
    
    
    13
    
    
    
    7
    
    
    
    4
    
    
    
    63Income (loss) before taxes
    
    
    58
    
    
    
    58
    
    
    
    51
    
    
    
    (83
    )(a)
    
    
    84Financial services, net interest
income
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    95Capital expenditures
    
    
    36
    
    
    
    15
    
    
    
    6
    
    
    
    6
    
    
    
    63For First Six Months 2005 or at
Second Quarter-End 2005Revenues from external customers
    
    $
    1,456
    
    
    $
    514
    
    
    $
    488
    
    
    $
    
    
    
    $
    2,458Depreciation and amortization
    
    
    79
    
    
    
    26
    
    
    
    14
    
    
    
    6
    
    
    
    125Income (loss) before taxes
    
    
    108
    
    
    
    112
    
    
    
    98
    
    
    
    (160
    )(b)
    
    
    158Financial services, net interest
income
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    
    
    
    
    189Total assets
    
    
    2,432
    
    
    
    972
    
    
    
    16,143
    
    
    
    286
    
    
    
    19,833Capital expenditures
    
    
    75
    
    
    
    29
    
    
    
    13
    
    
    
    10
    
    
    
    127Goodwill
    
    
    236
    
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    400For Second Quarter 2004Revenues from external customers
    
    $
    687
    
    
    $
    253
    
    
    $
    278
    
    
    $
    
    
    
    $
    1,218Depreciation and amortization
    
    
    40
    
    
    
    13
    
    
    
    8
    
    
    
    2
    
    
    
    63Income (loss) before taxes
    
    
    24
    
    
    
    65
    
    
    
    59
    
    
    
    (60
    )(c)
    
    
    88Financial services, net interest income
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    99Capital expenditures
    
    
    23
    
    
    
    11
    
    
    
    9
    
    
    
    2
    
    
    
    45For First Six Months 2004 or at
Second Quarter-End 2004Revenues from external customers
    
    $
    1,360
    
    
    $
    473
    
    
    $
    539
    
    
    $
    
    
    
    $
    2,372Depreciation and amortization
    
    
    79
    
    
    
    28
    
    
    
    16
    
    
    
    4
    
    
    
    127Income (loss) before taxes
    
    
    32
    
    
    
    97
    
    
    
    112
    
    
    
    (134
    )(d)
    
    
    107Financial services, net interest
income
    
    
    
    
    
    
    
    
    
    
    199
    
    
    
    
    
    
    
    199Total assets
    
    
    2,337
    
    
    
    1,021
    
    
    
    17,013
    
    
    
    354
    
    
    
    20,725Capital expenditures
    
    
    41
    
    
    
    19
    
    
    
    18
    
    
    
    4
    
    
    
    82Goodwill
    
    
    235
    
    
    
    
    
    
    
    158
    
    
    
    
    
    
    
    393
 
 (a)
    
    Includes other operating expenses for second quarter 2005 of $29 million, which
consists of a $28 million charge associated with converting and production facility closures
or sales and $1 million of other charges. Of these amounts, $2 million applies to corrugated
packaging and $27 million applies to forest products.(b)
    
    Includes other operating expenses for first six months 2005 of $53 million,
which consists of a $39 million charge associated with converting and production facility
closures or sales, an $8 million charge related to antitrust litigation, a $4 million charge
associated with the 2005 proxy contest, and $2 million of other charges. Of these amounts,
$20 million applies to corrugated packaging, $27 million applies to forest products, and $6
million does not apply to a business segment.(c)
    
    Includes other operating expenses for second quarter 2004 of $5 million,
which consists of a $3 million charge associated with converting and production facility
closures, a $1 million charge related to consolidation and supply chain initiatives, and $1
million of other charges. Of these amounts, $4 million applies to corrugated packaging and $1
million does not apply to a business segment.(d)
    
    Includes other operating expenses for first six months 2004 of $24 million,
which consists of a $17 million charge associated with converting and production facility
closures, a $6 million charge related to consolidation and supply chain initiatives, and $1
million of other charges. Of these amounts, $6 million applies to corrugated packaging, $12
million applies to forest products, and $6 million does not apply to a business segment. 15




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##### Table of Contents



Note E  Employee Benefit Plans
  Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Service costs
    
    $
    6
    
    
    $
    6
    
    
    $
    13
    
    
    $
    12Interest cost on projected benefit obligation
    
    
    18
    
    
    
    18
    
    
    
    36
    
    
    
    36Expected return on plan assets
    
    
    (18
    )
    
    
    (17
    )

    
    
    (36
    )
    
    
    (34
    )Amortization of prior service costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss
    
    
    6
    
    
    
    6
    
    
    
    12
    
    
    
    12Net periodic benefit cost
    
    $
    12
    
    
    $
    13
    
    
    $
    25
    
    
    $
    26
   Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Service costs
    
    $
    1
    
    
    $
    1
    
    
    $
    2
    
    
    $
    2Interest cost on projected benefit obligation
    
    
    2
    
    
    
    2
    
    
    
    4
    
    
    
    4Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (2
    )Amortization of net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    2
    
    
    $
    2
    
    
    $
    4
    
    
    $
    4
 Note F  Stock-Based Compensation
 Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB
Statement No. 123
 16




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##### Table of Contents



Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Net income, as reported
    
    $
    69
    
    
    $
    55
    
    
    $
    114
    
    
    $
    67Add: Stock-based
compensation expense,
net of related tax
effects, included in
the determination of
reported net income
    
    
    7
    
    
    
    4
    
    
    
    13
    
    
    
    13Deduct: Total
stock-based
compensation expense,
net of related tax
effects, determined
under the fair value
based method for all
awards
    
    
    (8
    )
    
    
    (7
    )
    
    
    (15
    )
    
    
    (18
    )Pro forma net income
    
    $
    68
    
    
    $
    52
    
    
    $
    112
    
    
    $
    62Earnings per share:Basic, as reported
    
    $
    0.61
    
    
    $
    0.50
    
    
    $
    1.01
    
    
    $
    0.61Basic, pro forma
    
    $
    0.60
    
    
    $
    0.46
    
    
    $
    0.99
    
    
    $
    0.55Diluted, as reported
    
    $
    0.60
    
    
    $
    0.49
    
    
    $
    0.99
    
    
    $
    0.60Diluted, pro forma
    
    $
    0.59
    
    
    $
    0.46
    
    
    $
    0.97
    
    
    $
    0.55
 Note G  Contingencies
  Note H  Assets Held For Sale
    Note I  Other Operating Income (Expense)
 Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Equity in earnings of joint ventures
    
    $
    11
    
    
    $
    7
    
    
    $
    19
    
    
    $
    10Closure and sale of converting and production facilities
    
    
    (28
    )
    
    
    (3
    )
    
    
    (39
    )
    
    
    (17
    )Antitrust litigation
    
    
    (1
    )
    
    
    
    
    
    
    (8
    )
    
    
    Proxy contest
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    Consolidation of administrative functions
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (6
    )Other
    
    
    
    
    
    
    (1
    )
    
    
    (2
    )
    
    
    (1
    )Total
    
    $
    (18
    )
    
    $
    2
    
    
    $
    (34
    )
    
    $
    (14
    )
 17




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##### Table of Contents



Beginning of Period
    
    Additions
    
    Cash Payments
    
    End of Period(In millions)Involuntary employee
terminations
    
    $
    2
    
    
    $
    1
    
    
    $
    (2
    )
    
    $
    1Contract termination penalties
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Environmental compliance
    
    
    5
    
    
    
    2
    
    
    
    (1
    )
    
    
    6Demolition
    
    
    8
    
    
    
    
    
    
    
    (1
    )
    
    
    7Total
    
    $
    21
    
    
    $
    3
    
    
    $
    (4
    )
    
    $
    20
  Note J  Acquisitions and Other Items
  Note K  Change in Method of Accounting and Accounting Pronouncements
 Change in Method of Accounting for Certain Inventories
   18




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##### Table of Contents



Corrugated Packaging
    
    Income from ContinuingSegment Operating Income
    
    Operations
    
    Per Diluted ShareAs
    
    Retrospective
    
    As
    
    Retrospective
    
    As
    
    RetrospectiveReported
    
    Application
    
    Reported
    
    Application
    
    Reported
    
    Application(In millions, except per share)2004First quarter
    
    $
    10
    
    
    $
    8
    
    
    $
    13
    
    
    $
    12
    
    
    $
    0.12
    
    
    $
    0.11Second quarter
    
    
    26
    
    
    
    24
    
    
    
    55
    
    
    
    54
    
    
    
    0.49
    
    
    
    0.48Third quarter
    
    
    42
    
    
    
    40
    
    
    
    40
    
    
    
    39
    
    
    
    0.36
    
    
    
    0.35Fourth quarter
    
    
    27
    
    
    
    24
    
    
    
    54
    
    
    
    52
    
    
    
    0.47
    
    
    
    0.45Year
    
    $
    105
    
    
    $
    96
    
    
    $
    162
    
    
    $
    157
    
    
    $
    1.44
    
    
    $
    1.39
 Pending Accounting Pronouncements
 Share Based Payment
 Accounting for Conditional Asset Retirement Obligations Accounting for Retirement
Obligations,
 
 19




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Forward-Looking Statements
   
    
    general economic, market or business conditions;
    
    the opportunities (or lack thereof) that may be presented to us and that we may pursue;
    
    the availability and price of raw materials we use;
    
    fluctuations in the cost of purchased energy;
    
    fluctuations in the cost we incur to transport the raw materials we use and the
products we manufacture;
    
    assumptions related to pension and postretirement costs;
    
    assumptions related to the accounting for impaired assets;
    
    the collectibility of loans and accounts receivable and related provision for losses;
    
    competitive actions by other companies;
    
    changes in laws or regulations and actions or restrictions of regulatory agencies;
    
    the accuracy of certain judgments and estimates concerning our integration of acquired operations;
    
    our ability to execute certain strategic and business improvement initiatives; and
    
    other factors, many of which are beyond our control.
  Non-GAAP Financial Measure
    20




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##### Table of Contents



Results of Operations for Second Quarter and First Six Months 2005 and 2004
 Summary
  Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions, except per share)RevenuesCorrugated packaging
    
    $
    738
    
    
    $
    687
    
    
    $
    1,456
    
    
    $
    1,360Forest products
    
    
    265
    
    
    
    253
    
    
    
    514
    
    
    
    473Financial services
    
    
    252
    
    
    
    278
    
    
    
    488
    
    
    
    539Total revenues
    
    $
    1,255
    
    
    $
    1,218
    
    
    
    2,458
    
    
    
    2,372Segment Operating IncomeCorrugated packaging
    
    $
    58
    
    
    $
    24
    
    
    $
    108
    
    
    $
    32Forest products
    
    
    58
    
    
    
    65
    
    
    
    112
    
    
    
    97Financial services
    
    
    51
    
    
    
    59
    
    
    
    98
    
    
    
    112Total segment operating income
    
    
    167
    
    
    
    148
    
    
    
    318
    
    
    
    241Expenses not allocated to segmentsGeneral and administrative
    
    
    (28
    )
    
    
    (19
    )
    
    
    (54
    )
    
    
    (42
    )Other operating income (expense)
    
    
    (29
    )
    
    
    (5
    )
    
    
    (53
    )
    
    
    (24
    )Other non-operating income (expense)
    
    
    1
    
    
    
    (2
    )
    
    
    2
    
    
    
    (2
    )Parent company interest
    
    
    (27
    )
    
    
    (34
    )
    
    
    (55
    )
    
    
    (66
    )Income before income taxes
    
    
    84
    
    
    
    88
    
    
    
    158
    
    
    
    107Income taxes
    
    
    (16
    )
    
    
    (34
    )
    
    
    (45
    )
    
    
    (41
    )Income from continuing operations
    
    
    68
    
    
    
    54
    
    
    
    113
    
    
    
    66Discontinued operations
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Net income
    
    $
    69
    
    
    $
    55
    
    
    $
    114
    
    
    $
    67Average diluted shares outstanding
    
    
    115.0
    
    
    
    112.4
    
    
    
    115.4
    
    
    
    111.8Income from continuing operations, per diluted share
    
    $
    0.59
    
    
    $
    0.48
    
    
    $
    0.98
    
    
    $
    0.59ROI, annualized
    
    
    
    
    
    
    
    
    
    
    10.1
    %
    
    
    8.5
    %
  
    
    In 2005, we continued to see the benefits in our manufacturing operations of our
initiatives to lower costs and improve asset utilization and operating efficiencies
despite higher raw material costs. In addition, we experienced higher prices and
shipments for most of our product offerings. Our financial services operations were
negatively impacted by lower net interest income resulting from a decrease in average
earning assets and more normalized credit loss provisions. Actions taken to lower cost
and improve asset utilization and operating efficiencies resulted in charges and
expenses of $53 million, principally related to the closure of our Antioch, California
converting facility and the sale of our Pembroke, Canada MDF facility and charges
associated with antitrust litigation and the 2005 proxy contest. As a result of the
sale of our Pembroke, Canada MDF facility, we recognized a one-time tax benefit of $16
million.
    
    In 2004, actions taken to lower costs and improve asset utilization and operating
efficiencies resulted in charges and expenses of $24 million, principally related to
the closure or sale of converting and production facilities and the consolidation of
administrative functions.
  21




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##### Table of Contents



Business Segments
  
    
    Corrugated packaging,
    
    Forest products, and
    
    Financial services.
  Corrugated Packaging
   Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(Dollars in millions)Revenues
    
    $
    738
    
    
    $
    687
    
    
    $
    1,456
    
    
    $
    1,360Costs and expenses
    
    
    (680
    )
    
    
    (663
    )
    
    
    (1,348
    )
    
    
    (1,328
    )Segment operating income
    
    
    58
    
    
    
    24
    
    
    
    108
    
    
    
    32Segment ROI
    
    
    
    
    
    
    
    
    
    
    10.3
    %
    
    
    3.1
    %
  Second Quarter
    
    First Six Months2005 versus Second
    
    2005 versus First SixQuarter 2004
    
    Months 2004Increase (Decrease)Corrugated packagingAverage prices
    
    
    7
    %
    
    
    8
    %Shipments, average week
    
    
    0
    %
    
    
    2
    %Industry shipments, average week (a)
    
    
    (4
    %)
    
    
    (1
    %)LinerboardAverage prices
    
    
    0
    %
    
    
    13
    %Shipments, tons
    
    
    (10
    %)
    
    
    (27
    %)
 
 (a)
    
    Source: Fibre Box Association    22




---



##### Table of Contents



Second Quarter
    
    First Six Months2005 versus Second
    
    2005 versus FirstQuarter 2004
    
    Six Months 2004Increase (Decrease)(In millions)Wood fiber
    
    $
    7
    
    
    $
    15Recycled fiber
    
    
    (2
    )
    
    
    4Transportation
    
    
    9
    
    
    
    19Energy, principally natural gas
    
    
    1
    
    
    
    5Depreciation
    
    
    (1
    )
    
    
    Pension and postretirement
    
    
    (1
    )
    
    
    (2
    )
   Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Number of converting facilities (at quarter-end)
    
    
    68
    
    
    
    72
    
    
    
    68
    
    
    
    72Mill capacity, in thousand tons
    
    
    859
    
    
    
    827
    
    
    
    1,718
    
    
    
    1,654Mill production, in thousand tons
    
    
    863
    
    
    
    849
    
    
    
    1,738
    
    
    
    1,680Percent mill production used internally
    
    
    93
    %
    
    
    92
    %
    
    
    92
    %
    
    
    89
    %Percent of total fiber requirements sourced from recycled fiber
    
    
    36
    %
    
    
    36
    %
    
    
    36
    %
    
    
    35
    %Corrugating medium purchases from our Premier Boxboard Limited
LLC joint venture, in thousand tons
    
    
    22
    
    
    
    27
    
    
    
    37
    
    
    
    55
 Forest Products
  23




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##### Table of Contents



Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(Dollars in millions)Revenues
    
    $
    265
    
    
    $
    253
    
    
    $
    514
    
    
    $
    473Costs and expenses
    
    
    (207
    )
    
    
    (188
    )
    
    
    (402
    )
    
    
    (376
    )Segment operating income
    
    
    58
    
    
    
    65
    
    
    
    112
    
    
    
    97Segment ROI
    
    
    
    
    
    
    
    
    
    
    24.0
    %
    
    
    19.8
    %
  Second Quarter
    
    First Six Months2005 versus Second
    
    2005 versus FirstQuarter 2004
    
    Six Months 2004Increase (Decrease)Lumber:Average prices
    
    
    3
    %
    
    
    6
    %Shipments
    
    
    3
    %
    
    
    1
    %Particleboard:Average prices
    
    
    1
    %
    
    
    8
    %Shipments
    
    
    1
    %
    
    
    4
    %Gypsum:Average prices
    
    
    10
    %
    
    
    11
    %Shipments
    
    
    7
    %
    
    
    14
    %MDF:Average prices
    
    
    (3
    %)
    
    
    5
    %Shipments
    
    
    (18
    %)
    
    
    (2
    %)
    Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004High-value land:Acres sold
    
    
    511
    
    
    
    912
    
    
    
    959
    
    
    
    1,342Profit included in segment operating income (in millions)
    
    $
    3
    
    
    $
    6
    
    
    $
    7
    
    
    $
    9
  24




---



##### Table of Contents



Second Quarter
    
    First Six Months2005 versus Second
    
    2005 versus FirstQuarter 2004
    
    Six Months 2004Increase (Decrease)(In millions)Wood fiber
    
    $
    7
    
    
    $
    15Energy, principally natural gas
    
    
    3
    
    
    
    6Transportation
    
    
    2
    
    
    
    5Chemical
    
    
    1
    
    
    
    3Depreciation
    
    
    
    
    
    
    (2
    )Pension and postretirement
    
    
    1
    
    
    
    2
   Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004Timber harvest, in million tons:Sawtimber
    
    
    0.6
    
    
    
    0.5
    
    
    
    1.2
    
    
    
    1.0Pulpwood
    
    
    0.9
    
    
    
    0.7
    
    
    
    1.7
    
    
    
    1.5Total
    
    
    1.5
    
    
    
    1.2
    
    
    
    2.9
    
    
    
    2.5Number of converting and manufacturing facilities (at quarter-end)
    
    
    17
    
    
    
    18
    
    
    
    17
    
    
    
    18Average operating rates for all product lines:High
    
    
    110
    %
    
    
    102
    %
    
    
    108
    %
    
    
    91
    %Low
    
    
    62
    %
    
    
    61
    %
    
    
    62
    %
    
    
    59
    %Average operating rates for all product lines excluding sold or closed
facilities:High
    
    
    110

    %
    
    
    104
    %
    
    
    108
    %
    
    
    96
    %Low
    
    
    91
    %
    
    
    88
    %
    
    
    91
    %
    
    
    82
    %
  Financial Services
   Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(Dollars in millions)Net interest income
    
    $
    95
    
    
    $
    99
    
    
    $
    189
    
    
    $
    199Segment operating income
    
    
    51
    
    
    
    59
    
    
    
    98
    
    
    
    112Segment ROI
    
    
    
    
    
    
    
    
    
    
    17.5
    %
    
    
    19.9
    %
 25




---



##### Table of Contents



Net Interest Income and Earning Assets and Deposits
  Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004Average
    
    Yield/
    
    Average
    
    Yield/
    
    Average
    
    Yield/
    
    Average
    
    Yield/Balance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    Rate(Dollars in millions)Earning assets
    
    $
    14,773
    
    
    
    5.10
    %
    
    $
    16,201
    
    
    
    4.32
    %
    
    $
    14,954
    
    
    
    4.91
    %
    
    $
    16,212
    
    
    
    4.33
    %Interest-bearing liabilities
    
    
    13,798
    
    
    
    2.69
    %
    
    
    15,451
    
    
    
    1.97
    %
    
    
    14,005
    
    
    
    2.54
    %
    
    
    15,294
    
    
    
    1.99
    %Interest rate spread
    
    
    
    
    
    
    2.41
    %
    
    
    
    
    
    
    2.35
    %
    
    
    
    
    
    
    2.37
    %
    
    
    
    
    
    
    2.34
    %
   Second Quarter-End2005
    
    2004(Dollars in millions)Residential housing assetsLoans held for sale
    
    $
    315
    
    
    $
    566Loans
    
    
    7,189
    
    
    
    6,730Securities
    
    
    4,531
    
    
    
    5,666Total residential housing assets
    
    
    12,035
    
    
    
    12,962Other earning assets
    
    
    3,108
    
    
    
    2,964Total earning assets
    
    $
    15,143
    
    
    $
    15,926Residential housing assets as a percentage of total earning assets
    
    
    79
    %
    
    
    81
    %Transaction accounts
    
    $
    4,556
    
    
    $
    5,185Certificates of deposit
    
    
    4,471
    
    
    
    3,628Total deposits
    
    $
    9,027
    
    
    $
    8,813
  26




---



##### Table of Contents



Asset Quality and Allowance for Credit Losses
  Second Quarter-End
    
    Year-2005
    
    2004
    
    End 2004(Dollars in millions)Non-performing loans
    
    $
    52
    
    
    $
    72
    
    
    $
    50Restructured operating lease assets
    
    
    
    
    
    
    38
    
    
    
    37Foreclosed real estate
    
    
    3
    
    
    
    25
    
    
    
    4Non-performing assets
    
    $
    55
    
    
    $
    135
    
    
    $
    91Non-performing loans as a percentage of total loans
    
    
    0.52
    %
    
    
    0.76
    %
    
    
    0.51
    %Non-performing assets ratio
    
    
    0.55
    %
    
    
    1.41
    %
    
    
    0.93
    %Allowance for loan losses/non-performing loans
    
    
    150
    %
    
    
    139
    %
    
    
    170
    %Allowance for loan losses/total loans
    
    
    0.78
    %
    
    
    1.05
    %
    
    
    0.88
    %
   Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(Dollars in millions)Loans:Balance at beginning of period
    
    $
    82
    
    
    $
    113
    
    
    $
    85
    
    
    $
    111Provision (credit) for loan losses
    
    
    6
    
    
    
    (4
    )
    
    
    8
    
    
    
    (4
    )Net charge-offs
    
    
    (10
    )
    
    
    (9
    )
    
    
    (15
    )
    
    
    (7
    )Balance at end of period
    
    
    78
    
    
    
    100
    
    
    
    78
    
    
    
    100Unfunded Credit Commitments:Balance at beginning of period
    
    
    6
    
    
    
    
    
    
    
    7
    
    
    
    Provision (credit) for
commitment-related credit losses
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    Net charge-offs
    
    
    (2
    )
    
    
    
    
    
    
    (3
    )
    
    
    Balance at end of period
    
    
    6
    
    
    
    
    
    
    
    6
    
    
    
    Combined allowances for credit losses at period end
    
    $
    84
    
    
    $
    100
    
    
    $
    84
    
    
    $
    100Provision (credit) for:Loan losses
    
    $
    6
    
    
    $
    (4
    )
    
    $
    8
    
    
    $
    (4
    )Commitment-related credit losses
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    Combined provision (credit) for credit losses
    
    $
    8
    
    
    $
    (4
    )
    
    $
    10
    
    
    $
    (4
    )Net charge-offs as a percentage of average loans outstanding
    
    
    0.47
    %
    
    
    0.35
    %
    
    
    0.37
    %
    
    
    0.13
    %
  27




---



##### Table of Contents



Noninterest Income and Noninterest Expense
  Second Quarter
    
    First Six Months2005 versus Second
    
    2005 versus FirstQuarter 2004
    
    Six Months 2004Increase (Decrease)(In millions)Noninterest income:Loan origination and sale of loans
    
    $
    (38
    )
    
    $
    (69
    )Servicing rights amortization and impairment
    
    
    (6
    )
    
    
    (13
    )
   Second Quarter
    
    First Six Months2005 versus Second
    
    2005 versus FirstQuarter 2004
    
    Six Months 2004Increase (Decrease)(In millions)Compensation and benefits
    
    $
    (29
    )
    
    $
    (52
    )
   Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(Dollars in millions)Loans originated and retained
    
    $
    372
    
    
    $
    574
    
    
    $
    580
    
    
    $
    949Loans originated for sale to third parties
    
    
    418
    
    
    
    1,697
    
    
    
    786
    
    
    
    2,954
  Expenses Not Allocated to Segments
   28




---



##### Table of Contents



Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(In millions)Closure and sale of converting and production facilities
    
    $
    (28
    )
    
    $
    (3
    )
    
    $
    (39
    )
    
    $
    (17
    )Litigation
    
    
    (1
    )
    
    
    
    
    
    
    (8
    )
    
    
    Proxy contest
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    Consolidation of administrative functions
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (6
    )Other
    
    
    
    
    
    
    (1
    )
    
    
    (2
    )
    
    
    (1
    )Total
    
    $
    (29
    )
    
    $
    (5
    )
    
    $
    (53
    )
    
    $
    (24
    )
     Income Taxes
  Average Shares Outstanding
  Capital Resources and Liquidity for First Six Months 2005
  29




---



##### Table of Contents



Sources and Uses of Cash
  Parent Company Sources and Uses of Cash
 First Six Months2005
    
    2004(In millions)We received cash fromOperations
    
    $
    211
    
    
    $
    177Dividends from financial services (a)
    
    
    25
    
    
    
    70Working capital changes
    
    
    (66
    )
    
    
    (84
    )From operations
    
    
    170
    
    
    
    163Sale of non-strategic and other assets
    
    
    35
    
    
    
    61Exercise of options and in 2005 the settlement of
equity purchase contracts
    
    
    380
    
    
    
    49Borrowings
    
    
    15
    
    
    
    Total sources
    
    
    600
    
    
    
    273We used cash toReduce debt and other obligations
    
    
    
    
    
    
    (119
    )Pay dividends to shareholders
    
    
    (52
    )
    
    
    (40
    )Repurchase common stock
    
    
    (435
    )
    
    
    Reinvest in the business throughCapital expenditures
    
    
    (114
    )
    
    
    (64
    )Joint ventures
    
    
    (3
    )
    
    
    (3
    )Total uses
    
    
    (604
    )
    
    
    (226
    )Change in cash and cash equivalents
    
    $
    (4
    )
    
    $
    47
 
 (a)
    
    Dividends we receive from financial services are eliminated in the consolidated statements of cash flows.      30




---



##### Table of Contents



Financial Services Sources and Uses of Cash
 First Six Months2005
    
    2004(In millions)We received cash fromOperations
    
    $
    101
    
    
    $
    108Changes in loans held for sale, and other
    
    
    41
    
    
    
    (18
    )From operations
    
    
    142
    
    
    
    90Sale of non-strategic assets and mortgage servicing rights
    
    
    46
    
    
    
    35Total sources
    
    
    188
    
    
    
    125We used cash toPay dividends to the parent company (a)
    
    
    (25
    )
    
    
    (70
    )Change in deposits and borrowings
    
    
    (383
    )
    
    
    (50
    )Reinvest in the business throughLoans and securities, net of payments
    
    
    320
    
    
    
    (52
    )Capital expenditure, acquisitions and other uses
    
    
    (45
    )
    
    
    21Total uses
    
    
    (133
    )
    
    
    (151

    )Change in cash and cash equivalents
    
    $
    55
    
    
    $
    (26
    )
 
 (a)
    
    Dividends we pay to the parent company are eliminated in the consolidated statements of cash flows.    Liquidity
  31




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##### Table of Contents



Parent Company Liquidity
     Financial Services Liquidity
  Off-Balance Sheet Arrangements
 Parent Company
  Financial Services
  SecondQuarter-End
    
    Year-End2005
    
    2004(In millions)Single-family mortgage loans
    
    $
    271
    
    
    $
    290Unused lines of credit
    
    
    1,909
    
    
    
    1,907Unfunded portion of loan commitments
    
    
    3,139
    
    
    
    3,048Other loan commitments
    
    
    703
    
    
    
    579Letters of credit
    
    
    373
    
    
    
    370Total
    
    $
    6,395
    
    
    $
    6,194
 Capital Adequacy and Other Regulatory Matters
  32




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##### Table of Contents



SecondQuarter-End
    
    Year-End2005
    
    2004(In millions)Balance sheet data:Total assets
    
    $
    15,762
    
    
    $
    16,065Total deposits
    
    
    9,027
    
    
    
    8,964Shareholders equity
    
    
    1,030
    
    
    
    997
 Regulatory
    
    For Categorization asActual
    
    Minimum
    
    Well CapitalizedRegulatory capital ratios:Tangible capital
    
    
    7.14
    %
    
    
    2.00
    %
    
    
    N/ALeverage capital
    
    
    7.14
    %
    
    
    4.00
    %
    
    
    5.00
    %Risk-based capital
    
    
    10.77
    %
    
    
    8.00
    %
    
    
    10.00
    %
  Accounting Policies
 Critical Accounting Estimates
   Pension and Postretirement Matters
  Energy and the Effects of Inflation
   Litigation and Related Matters
  33




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##### Table of Contents



Calculation of Non-GAAP Financial Measure
 Parent
    
    Corrugated
    
    Forest
    
    FinancialCompany
    
    Packaging
    
    Products
    
    Services(Dollars in millions)First Six Months 2005ReturnOperating income or segment operating income
determined in accordance with GAAP
    
    $
    211
    (a)
    
    $
    108
    
    
    $
    112
    
    
    $
    98Adjustments for significant unusual items
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AAs defined
    
    $
    211
    
    
    $
    108
    
    
    $
    112
    
    
    $
    98InvestmentBeginning of year total assets, segment assets or
investment in financial services determined in
accordance with GAAP
    
    $
    4,900
    
    
    $
    2,431
    
    
    $
    1,006
    
    
    $
    1,121Adjustments:Current liabilities (excluding current
portion of
long-term debt)
    
    
    (510
    )
    
    
    (326
    )
    
    
    (71
    )
    
    
    N/AAssets held for sale
    
    
    (34
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AMunicipal bonds related to capital leases
included in other assets
    
    
    (188
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AAs defined
    
    $
    4,168
    
    
    $
    2,105
    
    
    $
    935
    
    
    $
    1,121ROI, annualized
    
    
    10.1
    %
    
    
    10.3
    %
    
    
    24.0
    %
    
    
    17.5
    %First Six Months 2004ReturnOperating income or segment operating income
determined in accordance with GAAP
    
    $
    175
    (a)
    
    $
    32
    
    
    $
    97
    
    
    $
    112Adjustments for significant unusual items
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AAs defined
    
    $
    175
    
    
    $
    32
    
    
    $
    97
    
    
    $
    112InvestmentBeginning of year total assets, segment assets or
investment in financial services determined in
accordance with GAAP
    
    $
    4,861
    
    
    $
    2,374
    
    
    $
    1,035
    
    
    $
    1,123Adjustments:Current liabilities (excluding current
portion of
long-term debt)
    
    
    (503
    )
    
    
    (323
    )
    
    
    (57
    )
    
    
    N/AAssets held for sale
    
    
    (50
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AMunicipal bonds related to capital leases
included in other assets
    
    
    (188
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AAs defined
    
    $
    4,120
    
    
    $
    2,051
    
    
    $
    978
    
    
    $
    1,123ROI, annualized
    
    
    8.5
    %
    
    
    3.1
    %
    
    
    19.8
    %
    
    
    19.9
    %
 
 (a)
    
    Net of expenses not allocated to segments of $107 million in 2005 and $66 million in 2004.   34




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##### Table of Contents



STATISTICAL AND OTHER DATA
 Parent Company
  Second Quarter
    
    First Six Months2005
    
    2004
    
    2005
    
    2004(Dollars in millions)RevenuesCorrugated PackagingCorrugated packaging
    
    $
    715
    
    
    $
    661
    
    
    $
    1,406
    
    
    $
    1,298Linerboard
    
    
    23
    
    
    
    26
    
    
    
    50
    
    
    
    62Total
    
    $
    738
    
    
    $
    687
    
    
    $
    1,456
    
    
    $
    1,360Forest ProductsPine lumber
    
    $
    98
    
    
    $
    89
    
    
    $
    187
    
    
    $
    168Particleboard
    
    
    50
    
    
    
    51
    
    
    
    104
    
    
    
    95Medium density fiberboard
    
    
    26
    
    
    
    31
    
    
    
    57
    
    
    
    56Gypsum wallboard
    
    
    33
    
    
    
    28
    
    
    
    64
    
    
    
    51Fiberboard
    
    
    21
    
    
    
    22
    
    
    
    40
    
    
    
    39Other
    
    
    37
    
    
    
    32
    
    
    
    62
    
    
    
    64Total
    
    $
    265
    
    
    $
    253
    
    
    $
    514
    
    
    $
    473Unit salesCorrugated PackagingCorrugated packaging, thousands of tons
    
    
    886
    
    
    
    874
    
    
    
    1,743
    
    
    
    1,715Linerboard, thousands of tons
    
    
    63
    
    
    
    70
    
    
    
    132
    
    
    
    182Total, thousands of tons
    
    
    949
    
    
    
    944
    
    
    
    1,875
    
    
    
    1,897Forest ProductsPine lumber, million board feet
    
    
    241
    
    
    
    234
    
    
    
    476
    
    
    
    470Particleboard, million square feet
    
    
    163
    
    
    
    162
    
    
    
    336
    
    
    
    322Medium density fiberboard, million square feet
    
    
    56
    
    
    
    68
    
    
    
    123
    
    
    
    125Gypsum wallboard, million square feet
    
    
    211
    
    
    
    197
    
    
    
    418
    
    
    
    368Fiberboard, million square feet
    
    
    109
    
    
    
    113
    
    
    
    216
    
    
    
    210
 35




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##### Table of Contents



Financial Services
  Second Quarter-End
    
    Year-End2005
    
    2004
    
    2004(In millions)Single-family mortgage
    
    $
    3,447
    
    
    $
    3,497
    
    
    $
    3,560Single-family mortgage warehouse
    
    
    770
    
    
    
    375
    
    
    
    580Single-family construction
    
    
    1,572
    
    
    
    1,128
    
    
    
    1,303Multifamily and senior housing
    
    
    1,400
    
    
    
    1,730
    
    
    
    1,454Total residential housing
    
    
    7,189
    
    
    
    6,730
    
    
    
    6,897Commercial real estate
    
    
    731
    
    
    
    826
    
    
    
    709Commercial and business
    
    
    817
    
    
    
    653
    
    
    
    746Energy lending
    
    
    683
    
    
    
    640
    
    
    
    717Asset-based lending and leasing
    
    
    419
    
    
    
    472
    
    
    
    428Consumer and other
    
    
    193
    
    
    
    193
    
    
    
    206Total loans
    
    
    10,032
    
    
    
    9,514
    
    
    
    9,703Less allowance for loan losses
    
    
    (78
    )
    
    
    (100
    )
    
    
    (85
    )Loans receivable, net
    
    $
    9,954
    
    
    $
    9,414
    
    
    $
    9,618
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
  Increase (Decrease) in Income Before Income TaxesSecond Quarter-End 2005
    
    Year-End 2004Parent
    
    Financial
    
    Parent
    
    FinancialCompany
    
    Services
    
    Company
    
    Services(In millions)Change in
Interest Rates+2%
    
    $
    
    
    
    $
    (16
    )
    
    $
    1
    
    
    $
    (21
    )+1%
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (1
    )-1%
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    (34
    )-2%
    
    
    
    
    
    
    (77
    )
    
    
    N/A
    
    
    
    N/A
    36




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##### Table of Contents



Foreign Currency Risk
  Commodity Price Risk
  
 ITEM 4. CONTROLS AND PROCEDURES
     
 PART II. OTHER INFORMATION
 
 Item 1 . Legal Proceedings .
      37




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##### Table of Contents



Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds .
 (1)
 MaximumTotal Number
    
    Number ofof Shares
    
    Shares ThatPurchased as
    
    May Yet beAverage
    
    Part of Publicly
    
    PurchasedTotal Number
    
    Price
    
    Announced
    
    Under theof Shares
    
    Paid per
    
    Plans or
    
    PlansPeriod
    
    Purchased
    
    Share
    
    Programs
    
    or ProgramsMonth 1(4/3/2005  4/30/2005)
    
    
    1,200,000
    
    
    $
    36.64
    
    
    
    1,200,000
    
    
    
    8,000,000Month 2(5/1/2005  5/28/2005)
    
    
    3,062,200
    
    
    $
    34.53
    
    
    
    3,062,200
    
    
    
    4,937,800Month 3(5/29/2005  7/2/2005)
    
    
    4,937,800
    
    
    $
    36.71
    
    
    
    4,937,800
    
    
    
    -0-Total
    
    
    9,200,000
    
    
    $
    35.98
    
    
    
    9,200,000
 
 (1)
    
    On February 4, 2005, we announced that the Board of Directors authorized the
repurchase of up to 12,000,000 shares of our common stock. The plan, which has now been completed,
had no scheduled expiration date. At the end of second quarter 2005, we had no other repurchase
plans or programs. At its August 2005 meeting, our Board of Directors authorized the repurchase of
up to an additional 6,000,000 shares of our common stock. This plan has no expiration date. 
 Item 3 . Defaults Upon Senior Securities .
  
 Item 4 . Submission of Matters to a Vote of Security Holders .
  AbstentionsAgainst or
    
    and BrokerMatter
    
    For
    
    Withheld
    
    Non-votes1.
    
    
    Election of three directors(a) Afsaneh M. Beschloss
    
    
    51,611,970
    
    
    
    544,772
    
    
    
    (b) Jeffrey M. Heller
    
    
    50,902,975
    
    
    
    1,253,767
    
    
    
    (c) W. Allen Reed
    
    
    51,619,856
    
    
    
    536,886
    
    
    
    2.
    
    
    Ratification of appointmentOf Ernst & Young LLP
    
    
    51,509,680
    
    
    
    619,585
    
    
    
    27,477
 
 Item 5 . Other Information .
  38




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##### Table of Contents



Item 6 . Exhibits .
 Exhibits
        39




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##### Table of Contents



SIGNATURES
  TEMPLE-INLAND INC.(Registrant)Dated: August 8, 2005
    
    By
    
    /s/ Louis R. BrillLouis R. BrillChief Accounting Officer
 40




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##### Table of Contents



Exhibit No.
    
    Description
    
    Page No.31.1
    
    Certification of Chief Executive Officer
pursuant to Exchange Act Rule 13a-14(a), as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    
    4231.2
    
    Certification of Chief Financial Officer
pursuant to Exchange Act Rule 13a-14(a), as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    
    4432.1
    
    Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    
    4632.2
    
    Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    
    47
 41