##### 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 September 29, 2007
 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 o
 o þ
  Number of common shares outstandingClass
    
    as of September 29, 2007Common Stock (par value $1.00 per share)
    
    106,071,167
 Page 1 of 60
    
    The Exhibit Index is page 54.




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##### 



PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsTemple-Inland Inc. and Subsidiaries
    
    
    3Consolidated Balance SheetsConsolidated Statements of IncomeConsolidated Statements of Cash FlowsParent Company (Temple-Inland Inc. and its manufacturing and real estate 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
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    48Item 4. Controls and Procedures
    
    
    49PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    49Item 1A. Risk Factors
    
    
    50Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    52Item 3. Defaults Upon Senior Securities
    
    
    52Item 4. Submission of Matters to a Vote of Security Holders
    
    
    52Item 5. Other Information
    
    
    52Item 6. Exhibits
    
    
    52SIGNATURES
    
    
    53Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
 
 Parent
    
    
    FinancialCompany
    
    
    Services
    
    
    Consolidated(In millions)ASSETSCash and cash equivalents
    
    $
    41
    
    
    $
    197
    
    
    $
    238Trade receivables, net of allowance for doubtful accounts of $15
    
    
    446
    
    
    
    
    
    
    
    446Inventories
    
    
    417
    
    
    
    
    
    
    
    417Assets held-for-sale
    
    
    309
    
    
    
    
    
    
    
    309Timber and timberland
    
    
    51
    
    
    
    
    
    
    
    51Real estate
    
    
    613
    
    
    
    
    
    
    
    613Loans held for sale
    
    
    
    
    
    
    19
    
    
    
    19Loans, net of allowance for losses of $91
    
    
    
    
    
    
    9,561
    
    
    
    9,561Securities available-for-sale
    
    
    
    
    
    
    1,970
    
    
    
    1,970Securities held-to-maturity
    
    
    
    
    
    
    3,851
    
    
    
    3,851Investment in Federal Home Loan Bank stock
    
    
    
    
    
    
    224
    
    
    
    224Property and equipment, net
    
    
    1,626
    
    
    
    222
    
    
    
    1,848Goodwill
    
    
    365
    
    
    
    144
    
    
    
    509Other intangible assets
    
    
    
    
    
    
    27
    
    
    
    27Prepaid expenses and other assets
    
    
    392
    
    
    
    269
    
    
    
    609Investment in financial services
    
    
    1,045
    
    
    
    
    
    
    
    TOTAL ASSETS
    
    $
    5,305
    
    
    $
    16,484
    
    
    $
    20,692LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable, accrued expenses, and other liabilities
    
    $
    869
    
    
    $
    140
    
    
    $
    1,001Long-term debt and other borrowings
    
    
    1,625
    
    
    
    101
    
    
    
    1,726Deposits
    
    
    
    
    
    
    9,374
    
    
    
    9,370Federal Home Loan Bank borrowings
    
    
    
    
    
    
    5,075
    
    
    
    5,075Obligations to settle trade date securities
    
    
    
    
    
    
    435
    
    
    
    435Deferred income taxes
    
    
    198
    
    
    
    
    
    
    
    158Liability for pension benefits
    
    
    199
    
    
    
    
    
    
    
    199Liability for postretirement benefits
    
    
    134
    
    
    
    
    
    
    
    134Subordinated notes payable to trust
    
    
    
    
    
    
    314
    
    
    
    314TOTAL LIABILITIES
    
    
    3,025
    
    
    
    15,439
    
    
    
    18,412SHAREHOLDERS 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
    
    
    
    
    
    
    
    
    
    
    468Accumulated other comprehensive loss, net
    
    
    
    
    
    
    
    
    
    
    (196
    )Retained earnings
    
    
    
    
    
    
    
    
    
    
    2,5522,948Cost of shares held in the treasury: 17,534,177 shares
    
    
    
    
    
    
    
    
    
    
    (668
    )TOTAL SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    
    2,280TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    $
    20,692
  3




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##### Table of Contents



Parent
    
    
    FinancialCompany
    
    
    Services
    
    
    Consolidated(In millions)ASSETSCash and cash equivalents
    
    $
    38
    
    
    $
    372
    
    
    $
    405Trade receivables, net of allowance for doubtful accounts of $14
    
    
    452
    
    
    
    
    
    
    
    452Inventories
    
    
    435
    
    
    
    
    
    
    
    435Timber and timberland
    
    
    358
    
    
    
    
    
    
    
    358Real estate
    
    
    512
    
    
    
    
    
    
    
    512Loans held for sale
    
    
    
    
    
    
    23
    
    
    
    23Loans, net of allowance for losses of $65
    
    
    
    
    
    
    9,617
    
    
    
    9,617Securities available-for-sale
    
    
    
    
    
    
    529
    
    
    
    529Securities held-to-maturity
    
    
    
    
    
    
    4,853
    
    
    
    4,853Investment in Federal Home Loan Bank stock
    
    
    
    
    
    
    262
    
    
    
    262Property and equipment, net
    
    
    1,639
    
    
    
    214
    
    
    
    1,853Goodwill
    
    
    365
    
    
    
    141
    
    
    
    506Other intangible assets
    
    
    
    
    
    
    26
    
    
    
    26Prepaid expenses and other assets
    
    
    403
    
    
    
    214
    
    
    
    582Investment in financial services
    
    
    1,015
    
    
    
    
    
    
    
    TOTAL ASSETS
    
    $
    5,217
    
    
    $
    16,251
    
    
    $
    20,413LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable, accrued expenses, and other liabilities
    
    $
    836
    
    
    $
    126
    
    
    $
    953Long-term debt and other borrowings
    
    
    1,628
    
    
    
    101
    
    
    
    1,729Deposits
    
    
    
    
    
    
    9,486
    
    
    
    9,479Federal Home Loan Bank borrowings
    
    
    
    
    
    
    5,076
    
    
    
    5,076Deferred income taxes
    
    
    198
    
    
    
    
    
    
    
    174Liability for pension benefits
    
    
    231
    
    
    
    
    
    
    
    231Liability for postretirement benefits
    
    
    135
    
    
    
    
    
    
    
    135Subordinated notes payable to trust
    
    
    
    
    
    
    142
    
    
    
    142Preferred stock issued by subsidiaries
    
    
    
    
    
    
    305
    
    
    
    305TOTAL LIABILITIES
    
    
    3,028
    
    
    
    15,236
    
    
    
    18,224SHAREHOLDERS 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
    
    
    
    
    
    
    
    
    
    
    468Accumulated other comprehensive loss, net
    
    
    
    
    
    
    
    
    
    
    (191
    )Retained earnings
    
    
    
    
    
    
    
    
    
    
    2,5012,902Cost of shares held in the treasury: 18,754,907 shares
    
    
    
    
    
    
    
    
    
    
    (713
    )TOTAL SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    
    2,189TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    
    
    
    
    
    
    
    $
    20,413
  4




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##### Table of Contents



Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions, except per share amounts)REVENUESManufacturing and real estate
    
    $
    1,004
    
    
    $
    1,115
    
    
    $
    3,112
    
    
    $
    3,350Financial services
    
    
    295
    
    
    
    294
    
    
    
    866
    
    
    
    8761,299
    
    
    
    1,409
    
    
    
    3,978
    
    
    
    4,226COSTS AND EXPENSESManufacturing and real estate
    
    
    (934
    )
    
    
    (988
    )
    
    
    (2,903
    )
    
    
    (2,969
    )Financial services
    
    
    (259
    )
    
    
    (238
    )
    
    
    (742
    )
    
    
    (719
    )(1,193
    )
    
    
    (1,226
    )
    
    
    (3,645
    )
    
    
    (3,688
    )OPERATING INCOME
    
    
    106
    
    
    
    183
    
    
    
    333
    
    
    
    538Parent company interest
    
    
    (31
    )
    
    
    (31
    )
    
    
    (93
    )
    
    
    (98
    )Other non-operating income (expense)
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    92INCOME BEFORE INCOME TAXES
    
    
    76
    
    
    
    153
    
    
    
    242
    
    
    
    532Income tax expense
    
    
    (32
    )
    
    
    (58
    )
    
    
    (94
    )
    
    
    (167
    )INCOME FROM CONTINUING OPERATIONS
    
    
    44
    
    
    
    95
    
    
    
    148
    
    
    
    365Discontinued operations
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )
    
    
    NET INCOME
    
    $
    36
    
    
    $
    95
    
    
    $
    140
    
    
    $
    365WEIGHTED AVERAGE COMMON SHARES
OUTSTANDINGBasic
    
    
    106.2
    
    
    
    108.3
    
    
    
    105.9
    
    
    
    109.8Diluted
    
    
    107.8
    
    
    
    110.3
    
    
    
    107.9
    
    
    
    111.8EARNINGS PER SHAREBasic:Income from continuing operations
    
    $
    0.42
    
    
    $
    0.87
    
    
    $
    1.41
    
    
    $
    3.32Discontinued operations
    
    
    (0.08
    )
    
    
    
    
    
    
    (0.08
    )
    
    
    Net income
    
    $
    0.34
    
    
    $
    0.87
    
    
    $
    1.33
    
    
    $
    3.32Diluted:Income from continuing operations
    
    $
    0.41
    
    
    $
    0.86
    
    
    $
    1.38
    
    
    $
    3.26Discontinued operations
    
    
    (0.08
    )
    
    
    
    
    
    
    (0.08
    )
    
    
    Net income
    
    $
    0.33
    
    
    $
    0.86
    
    
    $
    1.30
    
    
    $
    3.26DIVIDENDS PAID PER SHARE OF COMMON STOCK
    
    $
    0.28
    
    
    $
    0.25
    
    
    $
    0.84
    
    
    $
    0.75
  5




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##### Table of Contents



First Nine Months2007
    
    
    2006(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income
    
    $
    140
    
    
    $
    365Adjustments:Depreciation and amortization
    
    
    189
    
    
    
    192Amortization and accretion of financial instrument discounts and
premiums and deferred loan fees and origination costs, net
    
    
    12
    
    
    
    18Provision for credit losses
    
    
    17
    
    
    
    1Deferred income taxes
    
    
    (3
    )
    
    
    31Non-cash real estate cost of sales
    
    
    40
    
    
    
    55Real estate development expenditures
    
    
    (115
    )
    
    
    (84
    )Other
    
    
    38
    
    
    
    11Changes in:Receivables
    
    
    6
    
    
    
    (51
    )Inventories
    
    
    18
    
    
    
    (5
    )Accounts payable and accrued expenses
    
    
    (1
    )
    
    
    12Prepaid expenses and other
    
    
    (37
    )
    
    
    34Loans held for sale  originations
    
    
    (67
    )
    
    
    (146
    )Loans held for sale  sales
    
    
    71
    
    
    
    397308
    
    
    
    830CASH PROVIDED BY (USED FOR) INVESTINGCapital expenditures
    
    
    (172
    )
    
    
    (164
    )Reforestation and acquisition of timber and timberland
    
    
    (9
    )
    
    
    (12
    )Sale of non-strategic assets and operations
    
    
    15
    
    
    
    45Securities available-for-sale, net
    
    
    (1,028
    )
    
    
    96Securities held-to-maturity, net
    
    
    984
    
    
    
    497Net redemption of Federal Home Loan Bank stock
    
    
    48
    
    
    
    31Loans originated or acquired, net of collections
    
    
    35
    
    
    
    19Proceeds from sale of loans
    
    
    
    
    
    
    303Acquisitions, net of cash acquired, and investment in joint ventures
    
    
    (17
    )
    
    
    (136
    )Other
    
    
    
    
    
    
    (1
    )(144
    )
    
    
    678CASH PROVIDED BY (USED FOR) FINANCINGPayments of debt
    
    
    (864
    )
    
    
    (411
    )Borrowings under accounts receivable securitization facility, net
    
    
    66
    
    
    
    114Borrowings under revolving credit facility, net
    
    
    (13
    )
    
    
    (133
    )Changes in book overdrafts
    
    
    (6
    )
    
    
    Other additions to debt
    
    
    478
    
    
    
    13Deposits, net
    
    
    (136
    )
    
    
    87Repurchase agreements and short-term borrowings, net
    
    
    351
    
    
    
    (1,081
    )Issuance of subordinated notes payable to trust
    
    
    172
    
    
    
    60Redemption of preferred stock issued by subsidiaries
    
    
    (305
    )
    
    
    Cash dividends paid to shareholders
    
    
    (88
    )
    
    
    (82
    )Repurchase of common stock
    
    
    (24
    )
    
    
    (226
    )Exercise of stock options
    
    
    19
    
    
    
    45Tax benefit on stock options exercised
    
    
    11
    
    
    
    8Other
    
    
    
    
    
    
    (1
    )(339
    )
    
    
    (1,607
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    Discontinued operations, primarily operating activities
    
    
    8
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    (167
    )
    
    
    (99
    )Cash and cash equivalents at beginning of period
    
    
    405
    
    
    
    441Cash and cash equivalents at end of period
    
    $
    238
    
    
    $
    342
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##### Table of Contents



(Unaudited)ThirdQuarter-End
    
    
    Year-End2007
    
    
    2006(In millions)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    41
    
    
    $
    38Trade receivables, net of allowance for doubtful accounts of
$15 in 2007 and $14 in 2006
    
    
    446
    
    
    
    452Inventories:Work in process and finished goods
    
    
    108
    
    
    
    109Raw materials
    
    
    188
    
    
    
    211Supplies and other
    
    
    121
    
    
    
    115Total inventories
    
    
    417
    
    
    
    435Prepaid expenses and other
    
    
    106
    
    
    
    72Assets held-for-sale
    
    
    309
    
    
    
    Total current assets
    
    
    1,319
    
    
    
    997Investment in Financial Services
    
    
    1,045
    
    
    
    1,015Timber and Timberland
    
    
    51
    
    
    
    358Real Estate
    
    
    613
    
    
    
    512Property and EquipmentLand and buildings
    
    
    649
    
    
    
    648Machinery and equipment
    
    
    3,426
    
    
    
    3,402Construction in progress
    
    
    96
    
    
    
    82Less allowances for depreciation
    
    
    (2,545
    )
    
    
    (2,493
    )Total property and equipment, net
    
    
    1,626
    
    
    
    1,639Goodwill
    
    
    365
    
    
    
    365Assets Held-for-Sale
    
    
    
    
    
    
    20Other Assets
    
    
    286
    
    
    
    311TOTAL ASSETS
    
    $
    5,305
    
    
    $
    5,217LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    207
    
    
    $
    230Accrued employee compensation and benefits
    
    
    99
    
    
    
    128Accrued interest
    
    
    28
    
    
    
    32Accrued property taxes
    
    
    31
    
    
    
    23Other accrued expenses
    
    
    167
    
    
    
    141Current portion of long-term debt
    
    
    43
    
    
    
    19Current portion of pension and postretirement benefits
    
    
    55
    
    
    
    15Total current liabilities
    
    
    630
    
    
    
    588Long-Term Debt
    
    
    1,625
    
    
    
    1,628Deferred Income Taxes
    
    
    198
    
    
    
    198Liability for Pension Benefits
    
    
    157
    
    
    
    229Liability for Postretirement Benefits
    
    
    121
    
    
    
    122Other Long-Term Liabilities
    
    
    294
    
    
    
    263TOTAL LIABILITIES
    
    
    3,025
    
    
    
    3,028Shareholders Equity
    
    
    2,280
    
    
    
    2,189TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    5,305
    
    
    $
    5,217
  7




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##### Table of Contents



Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)NET REVENUES
    
    $
    1,004
    
    
    $
    1,115
    
    
    $
    3,112
    
    
    $
    3,350COSTS AND EXPENSESCost of sales
    
    
    (848
    )
    
    
    (896
    )
    
    
    (2,611
    )
    
    
    (2,713
    )Selling
    
    
    (37
    )
    
    
    (35
    )
    
    
    (117
    )
    
    
    (103
    )General and administrative
    
    
    (45
    )
    
    
    (52
    )
    
    
    (165
    )
    
    
    (166
    )Other operating income (expense)
    
    
    (4
    )
    
    
    (5
    )
    
    
    (10
    )
    
    
    13(934
    )
    
    
    (988
    )
    
    
    (2,903
    )
    
    
    (2,969
    )70
    
    
    
    127
    
    
    
    209
    
    
    
    381FINANCIAL SERVICES PRE-TAX EARNINGS
    
    
    36
    
    
    
    56
    
    
    
    124
    
    
    
    157OPERATING INCOME
    
    
    106
    
    
    
    183
    
    
    
    333
    
    
    
    538Interest expense
    
    
    (31
    )
    
    
    (31
    )
    
    
    (93
    )
    
    
    (98
    )Other non-operating income (expense)
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    92INCOME FROM CONTINUING OPERATIONSBEFORE INCOME TAXES
    
    
    76
    
    
    
    153
    
    
    
    242
    
    
    
    532Income tax expense
    
    
    (32
    )
    
    
    (58
    )
    
    
    (94
    )
    
    
    (167
    )INCOME FROM CONTINUING OPERATIONS
    
    
    44
    
    
    
    95
    
    
    
    148
    
    
    
    365Discontinued operations
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )
    
    
    NET INCOME
    
    $
    36
    
    
    $
    95
    
    
    $
    140
    
    
    $
    365
  8




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##### Table of Contents



First Nine Months2007
    
    
    2006(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income
    
    $
    140
    
    
    $
    365Adjustments:Depreciation and amortization
    
    
    167
    
    
    
    171Non-cash share-based compensation
    
    
    36
    
    
    
    32Non-cash pension and postretirement expense
    
    
    33
    
    
    
    42Cash contribution to pension and postretirement plans
    
    
    (62
    )
    
    
    (57
    )Deferred income taxes
    
    
    5
    
    
    
    26Net earnings of financial services
    
    
    (78
    )
    
    
    (98
    )Dividends from financial services
    
    
    35
    
    
    
    135Earnings of joint ventures
    
    
    (8
    )
    
    
    (25
    )Dividends from joint ventures
    
    
    5
    
    
    
    12Non-cash real estate cost of sales
    
    
    40
    
    
    
    55Real estate development expenditures
    
    
    (115
    )
    
    
    (84
    )Other
    
    
    33
    
    
    
    8Changes in:Receivables
    
    
    6
    
    
    
    (51
    )Inventories
    
    
    18
    
    
    
    (5
    )Accounts payable and accrued expenses
    
    
    (1
    )
    
    
    12Prepaid expenses and other
    
    
    (37
    )
    
    
    34217
    
    
    
    572CASH PROVIDED BY (USED FOR) INVESTINGCapital expenditures
    
    
    (143
    )
    
    
    (130
    )Reforestation and acquisition of timber and timberland
    
    
    (9
    )
    
    
    (12
    )Sales of non-strategic assets and operations and proceeds from the
sale of property and equipment
    
    
    15
    
    
    
    45Acquisitions, net of cash acquired, and investment in joint ventures
    
    
    (10
    )
    
    
    (136
    )Other
    
    
    (1
    )
    
    
    (148
    )
    
    
    (233
    )CASH PROVIDED BY (USED FOR) FINANCINGPayments of debt
    
    
    (67
    )
    
    
    (35
    )Borrowings under accounts receivable securitization facility, net
    
    
    66
    
    
    
    114Borrowings under revolving credit facility, net
    
    
    (13
    )
    
    
    (133
    )Change in book overdrafts
    
    
    (11
    )
    
    
    Other additions to debt
    
    
    33
    
    
    
    13Cash dividends paid to shareholders
    
    
    (88
    )
    
    
    (82
    )Repurchase of common stock
    
    
    (24
    )
    
    
    (226
    )Exercise of stock options
    
    
    19
    
    
    
    45Tax benefit on stock options exercised
    
    
    11
    
    
    
    8Other
    
    
    
    
    
    
    (8
    )(74
    )
    
    
    (304
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    Discontinued operations, primarily operating activities
    
    
    8
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    3
    
    
    
    35Cash and cash equivalents at beginning of period
    
    
    38
    
    
    
    13Cash and cash equivalents at end of period
    
    $
    41
    
    
    $
    48
  9




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##### Table of Contents



(Unaudited)ThirdQuarter-End
    
    
    Year-End2007
    
    
    2006(In millions)ASSETSCash and cash equivalents
    
    $
    197
    
    
    $
    372Loans held for sale
    
    
    19
    
    
    
    23Loans, net of allowance for losses of $91 in 2007 and $65 in 2006
    
    
    9,561
    
    
    
    9,617Securities available-for-sale
    
    
    1,970
    
    
    
    529Securities held-to-maturity
    
    
    3,851
    
    
    
    4,853Investment in Federal Home Loan Bank stock
    
    
    224
    
    
    
    262Property and equipment, net
    
    
    222
    
    
    
    214Accounts, notes, and accrued interest receivable
    
    
    107
    
    
    
    104Goodwill
    
    
    144
    
    
    
    141Other intangible assets
    
    
    27
    
    
    
    26Other assets
    
    
    162
    
    
    
    110TOTAL ASSETS
    
    $
    16,484
    
    
    $
    16,251LIABILITIES AND SHAREHOLDERS EQUITYDeposits
    
    $
    9,374
    
    
    $
    9,486Federal Home Loan Bank borrowings
    
    
    5,075
    
    
    
    5,076Obligations to settle trade date securities
    
    
    435
    
    
    
    Other liabilities
    
    
    140
    
    
    
    126Other borrowings
    
    
    101
    
    
    
    101Subordinated notes payable to trust
    
    
    314
    
    
    
    142Preferred stock issued by subsidiaries
    
    
    
    
    
    
    305Total Liabilities
    
    
    15,439
    
    
    
    15,236Shareholders Equity
    
    
    1,045
    
    
    
    1,015TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    16,484
    
    
    $
    16,251
  10




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##### Table of Contents



Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)INTEREST INCOMELoans and loans held for sale
    
    $
    179
    
    
    $
    174
    
    
    $
    525
    
    
    $
    516Securities available-for-sale
    
    
    16
    
    
    
    8
    
    
    
    34
    
    
    
    24Securities held-to-maturity
    
    
    53
    
    
    
    61
    
    
    
    170
    
    
    
    187Other earning assets
    
    
    3
    
    
    
    6
    
    
    
    12
    
    
    
    16Total interest income
    
    
    251
    
    
    
    249
    
    
    
    741
    
    
    
    743INTEREST EXPENSEDeposits
    
    
    (88
    )
    
    
    (74
    )
    
    
    (257
    )
    
    
    (202
    )Borrowed funds
    
    
    (64
    )
    
    
    (75
    )
    
    
    (195
    )
    
    
    (230
    )Total interest expense
    
    
    (152
    )
    
    
    (149
    )
    
    
    (452
    )
    
    
    (432
    )NET INTEREST INCOME
    
    
    99
    
    
    
    100
    
    
    
    289
    
    
    
    311Provision for credit losses
    
    
    (19
    )
    
    
    (1
    )
    
    
    (17
    )
    
    
    (1
    )NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES
    
    
    80
    
    
    
    99
    
    
    
    272
    
    
    
    310NONINTEREST INCOMEInsurance commissions and fees
    
    
    18
    
    
    
    17
    
    
    
    50
    
    
    
    53Service charges on deposits
    
    
    14
    
    
    
    13
    
    
    
    39
    
    
    
    37Operating lease income
    
    
    1
    
    
    
    2
    
    
    
    5
    
    
    
    6Loan origination and sale of loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Other
    
    
    11
    
    
    
    13
    
    
    
    31
    
    
    
    35Total noninterest income
    
    
    44
    
    
    
    45
    
    
    
    125
    
    
    
    133NONINTEREST EXPENSECompensation and benefits
    
    
    (45
    )
    
    
    (42
    )
    
    
    (136
    )
    
    
    (136
    )Insurance operations, other than compensation
    
    
    (5
    )
    
    
    (5
    )
    
    
    (13
    )
    
    
    (15
    )Occupancy
    
    
    (6
    )
    
    
    (7
    )
    
    
    (18
    )
    
    
    (19
    )Information systems and technology
    
    
    (3
    )
    
    
    (3
    )
    
    
    (10
    )
    
    
    (10
    )Charges related to asset impairments and severance
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (12
    )Other
    
    
    (29
    )
    
    
    (29
    )
    
    
    (96
    )
    
    
    (94
    )Total noninterest expense
    
    
    (88
    )
    
    
    (88
    )
    
    
    (273
    )
    
    
    (286
    )INCOME BEFORE TAXES
    
    
    36
    
    
    
    56
    
    
    
    124
    
    
    
    157Income tax expense
    
    
    (13
    )
    
    
    (21
    )
    
    
    (46
    )
    
    
    (59
    )NET INCOME
    
    $
    23
    
    
    $
    35
    
    
    $
    78
    
    
    $
    98
  11




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##### Table of Contents



First Nine Months2007
    
    
    2006(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income
    
    $
    78
    
    
    $
    98Adjustments:Depreciation and amortization
    
    
    13
    
    
    
    12Depreciation of assets leased to others
    
    
    5
    
    
    
    5Amortization of core deposit and other intangible assets
    
    
    4
    
    
    
    4Amortization and accretion of financial instrument discounts
and premiums and deferred loan fees and origination costs, net
    
    
    12
    
    
    
    18Provision for credit losses
    
    
    17
    
    
    
    1Deferred income taxes
    
    
    (8
    )
    
    
    5Changes in:Loans held for sale:Originations
    
    
    (67
    )
    
    
    (146
    )Sales
    
    
    71
    
    
    
    397Other
    
    
    1
    
    
    
    (1
    )126
    
    
    
    393CASH PROVIDED BY (USED FOR) INVESTINGSecurities available-for-sale:Purchases
    
    
    (1,128
    )
    
    
    (2
    )Principal payments and maturities
    
    
    100
    
    
    
    98Securities held-to-maturity:Purchases
    
    
    (142
    )
    
    
    (597
    )Principal payments and maturities
    
    
    1,126
    
    
    
    1,094Federal Home Loan Bank stock:Purchases
    
    
    (21
    )
    
    
    Redemption
    
    
    69
    
    
    
    31Loans originated or acquired, net of collections
    
    
    35
    
    
    
    19Sale of loans
    
    
    
    
    
    
    303Acquisitions, net of cash acquired
    
    
    (7
    )
    
    
    Capital expenditures
    
    
    (29
    )
    
    
    (34
    )Other
    
    
    1
    
    
    
    (1
    )4
    
    
    
    911CASH PROVIDED BY (USED FOR) FINANCINGDeposits, net
    
    
    (136
    )
    
    
    87Repurchase agreements and short-term borrowings, net
    
    
    351
    
    
    
    (1,081
    )Long-term Federal Home Loan Bank and other borrowings:Additions
    
    
    445
    
    
    
    Payments
    
    
    (797
    )
    
    
    (375
    )Issuance of subordinated notes payable to trust
    
    
    172
    
    
    
    60Dividends paid to parent company
    
    
    (35
    )
    
    
    (135
    )Redemption of preferred stock issued by subsidiaries
    
    
    (305
    )
    
    
    Other
    
    
    
    
    
    
    3(305
    )
    
    
    (1,441
    )Net increase (decrease) in cash and cash equivalents
    
    
    (175
    )
    
    
    (137
    )Cash and cash equivalents at beginning of period
    
    
    372
    
    
    
    431Cash and cash equivalents at end of period
    
    $
    197
    
    
    $
    294
  12




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##### Table of Contents



Note 1  Basis of Presentation
    Note 2  Transformation
   
    
    retaining our manufacturing operations  corrugated packaging and building products,
    
    spinning off our financial services segment to our shareholders,
    
    spinning off our real estate segment to our shareholders, and
    
    selling our strategic timberland.
    13




---



##### Table of Contents



Note 3  New Accounting Pronouncements
  Accounting for Uncertainty
in Income Taxes
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plan Employers
Accounting for Pensions
 Accounting for Planned Major Maintenance Activities Interim Financial Reporting
 14




---



##### Table of Contents



FullFirst
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    YearQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    2006(in millions, except per share data)Income from Continuing Operations:As originally reported
    
    $
    76
    
    
    $
    192
    
    
    $
    96
    
    
    $
    105
    
    
    $
    469Effects of AUG AIR-1
    
    
    3
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    As recast
    
    $
    79
    
    
    $
    191
    
    
    $
    95
    
    
    $
    104
    
    
    $
    469Net Income:As originally reported
    
    $
    76
    
    
    $
    192
    
    
    $
    96
    
    
    $
    104
    
    
    $
    468Effects of AUG AIR-1
    
    
    3
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    As recast
    
    $
    79
    
    
    $
    191
    
    
    $
    95
    
    
    $
    103
    
    
    $
    468Earnings Per Share (Diluted):Income from continuing operations:As originally reported
    
    $
    0.67
    
    
    $
    1.71
    
    
    $
    0.87
    
    
    $
    0.98
    
    
    $
    4.23Effects of AUG AIR-1
    
    
    0.03
    
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    As recast
    
    $
    0.70
    
    
    $
    1.70
    
    
    $
    0.86
    
    
    $
    0.97
    
    
    $
    4.23Net Income:As originally reported
    
    $
    0.67
    
    
    $
    1.71
    
    
    $
    0.87
    
    
    $
    0.97
    
    
    $
    4.22Effects of AUG AIR-1
    
    
    0.03
    
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    As recast
    
    $
    0.70
    
    
    $
    1.70
    
    
    $
    0.86
    
    
    $
    0.96
    
    
    $
    4.22
  2006 ending shareholders equity
    
    $
    2,189Adoption of accounting for uncertainty in income taxes
    
    
    5Net periodic benefit cost related to transition of defined
benefit and postretirement benefit plan measurement date
from September 30 to our fiscal year-end, net of tax
    
    
    (5
    )Adoption of expense as incurred method of accounting for
planned major maintenance activities
    
    
    2007 beginning shareholders equity
    
    $
    2,189
 Pending Accounting Pronouncements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 15




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##### Table of Contents



Note 4  Employee Benefit Plans
  Defined Benefits
    
    
    PostretirementQualified
    
    
    Supplemental
    
    
    Total
    
    
    Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)
    
    
    
    
    
    
    
    
    
    
    (In millions)For Third Quarter:Service costs  benefits earned
in the period
    
    $
    6
    
    
    $
    7
    
    
    $
    1
    
    
    $
    
    
    
    $
    7
    
    
    $
    7
    
    
    $
    
    
    
    $
    1Interest cost on projected
benefit obligation
    
    
    19
    
    
    
    17
    
    
    
    1
    
    
    
    1
    
    
    
    20
    
    
    
    18
    
    
    
    2
    
    
    
    2Expected return on plan assets
    
    
    (21
    )
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    (21
    )
    
    
    (20
    )
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (1
    )Amortization of actuarial net loss
    
    
    2
    
    
    
    5
    
    
    
    1
    
    
    
    1
    
    
    
    3
    
    
    
    6
    
    
    
    
    
    
    
    $
    6
    
    
    $
    10
    
    
    $
    3
    
    
    $
    2
    
    
    $
    9
    
    
    $
    12
    
    
    $
    2
    
    
    $
    2For First Nine Months:Service costs  benefits earned
in the period
    
    $
    20
    
    
    $
    21
    
    
    $
    1
    
    
    $
    1
    
    
    $
    21
    
    
    $
    21
    
    
    $
    
    
    
    $
    3Interest cost on projected
benefit obligation
    
    
    57
    
    
    
    53
    
    
    
    2
    
    
    
    
    
    
    
    59
    
    
    
    54
    
    
    
    6
    
    
    
    6Expected return on plan assets
    
    
    (63
    )
    
    
    (60
    )
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    (60
    )
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    (3
    )Amortization of actuarial net loss
    
    
    8
    
    
    
    15
    
    
    
    3
    
    
    
    3
    
    
    
    11
    
    
    
    18
    
    
    
    
    
    
    
    $
    22
    
    
    $
    32
    
    
    $
    6
    
    
    $
    4
    
    
    $
    28
    
    
    $
    36
    
    
    $
    6
    
    
    $
    6
  Note 5  Share-Based Compensation
   Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)Restricted or performance units
    
    $
    1
    
    
    $
    6
    
    
    $
    30
    
    
    $
    19Restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Stock options
    
    
    2
    
    
    
    2
    
    
    
    11
    
    
    
    11Total pre-tax share-based
compensation expense
    
    $
    3
    
    
    $
    8
    
    
    $
    41
    
    
    $
    32
  16




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##### Table of Contents



Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)Parent CompanyCost of sales
    
    $
    1
    
    
    $
    1
    
    
    $
    6
    
    
    $
    5Selling
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    1General and administrative
    
    
    1
    
    
    
    7
    
    
    
    28
    
    
    
    26Total Parent Company
    
    
    2
    
    
    
    8
    
    
    
    36
    
    
    
    32Financial Services
    
    
    1
    
    
    
    
    
    
    
    5
    
    
    
    Total pre-tax share-based
compensation expense
    
    $
    3
    
    
    $
    8
    
    
    $
    41
    
    
    $
    32
 Note 6  Earnings Per Share
  Third Quarter
    
    First Nine Months2007
    
    2006
    
    2007
    
    2006(In millions)Weighted average common shares outstanding  basic
    
    
    106.2
    
    
    
    108.3
    
    
    
    105.9
    
    
    
    109.8Dilutive effect of stock options
    
    
    1.6
    
    
    
    2.0
    
    
    
    2.0
    
    
    
    2.0Weighted average shares outstanding  diluted
    
    
    107.8
    
    
    
    110.3
    
    
    
    107.9
    
    
    
    111.8
 Note 7  Comprehensive Income
  Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)Net income
    
    $
    36
    
    
    $
    95
    
    
    $
    140
    
    
    $
    365Other comprehensive income (loss), net
of taxes:Unrealized gains (losses) on:Available-for-sale securities
    
    
    (13
    )
    
    
    (1
    )
    
    
    (14
    )
    
    
    (1
    )Derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency translation adjustments
    
    
    (1
    )
    
    
    3
    
    
    
    
    
    
    
    (4
    )Defined benefit plans
    
    
    3
    
    
    
    
    
    
    
    9
    
    
    
    (1
    )Other comprehensive income (loss)
    
    
    (11
    )
    
    
    2
    
    
    
    (5
    )
    
    
    (6
    )Comprehensive income
    
    $
    25
    
    
    $
    97
    
    
    $
    135
    
    
    $
    359
   17




---



##### Table of Contents



Note 8  Contingencies
      Note 9  Segment Information
  18




---



##### Table of Contents



Expenses NotAllocated toCorrugated
    
    Forest
    
    Real
    
    Financial
    
    Segments andPackaging
    
    Products
    
    Estate
    
    Services
    
    Eliminations
    
    Total(In millions)For Third Quarter 2007Revenues from external customers
    
    $
    748
    
    
    $
    223
    
    
    $
    33
    
    
    $
    295
    
    
    $
    
    
    
    $
    1,299Depreciation and amortization
    
    
    35
    
    
    
    14
    
    
    
    1
    
    
    
    7
    
    
    
    5
    
    
    
    62Segment operating income or
income (loss) before taxes
    
    
    70
    
    
    
    21
    
    
    
    10
    
    
    
    37
    
    
    
    (62
    )(a)
    
    
    76Financial services,
net interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    99Capital expenditures and
reforestation
    
    
    40
    
    
    
    14
    
    
    
    1
    
    
    
    6
    
    
    
    3
    
    
    
    64For First Nine Months 2007 or
at Third Quarter-End 2007Revenues from external customers
    
    $
    2,288
    
    
    $
    718
    
    
    $
    106
    
    
    $
    866
    
    
    $
    
    
    
    $
    3,978Depreciation and amortization
    
    
    107
    
    
    
    46
    
    
    
    2
    
    
    
    22
    
    
    
    12
    
    
    
    189Segment operating income or
income (loss) before taxes
    
    
    212
    
    
    
    92
    
    
    
    32
    
    
    
    134
    
    
    
    (228
    )(a)
    
    
    242Financial services,
net interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    289Total assets
    
    
    2,242
    
    
    
    982
    
    
    
    624
    
    
    
    16,484
    
    
    
    360
    
    
    
    20,692Investment in equity method
investees and joint ventures
    
    
    13
    
    
    
    22
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    135Capital expenditures and
reforestation
    
    
    99
    
    
    
    40
    
    
    
    2
    
    
    
    29
    
    
    
    11
    
    
    
    181Goodwill
    
    
    236
    
    
    
    129
    
    
    
    
    
    
    
    144
    
    
    
    
    
    
    
    509For Third Quarter 2006Revenues from external customers
    
    $
    746
    
    
    $
    310
    
    
    $
    59
    
    
    $
    294
    
    
    $
    
    
    
    $
    1,409Depreciation and amortization
    
    
    39
    
    
    
    15
    
    
    
    1
    
    
    
    7
    
    
    
    3
    
    
    
    65Segment operating income or
income (loss) before taxes
    
    
    73
    
    
    
    83
    
    
    
    15
    
    
    
    58
    
    
    
    (76
    )(a)
    
    
    153Financial services,
net interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100Capital expenditures and
reforestation
    
    
    30
    
    
    
    18
    
    
    
    1
    
    
    
    13
    
    
    
    14
    
    
    
    76For First Nine Months 2006 or
at Third Quarter-End 2006Revenues from external customers
    
    $
    2,225
    
    
    $
    984
    
    
    $
    141
    
    
    $
    876
    
    
    $
    
    
    
    $
    4,226Depreciation and amortization
    
    
    116
    
    
    
    43
    
    
    
    2
    
    
    
    21
    
    
    
    10
    
    
    
    192Segment operating income or
income (loss) before taxes
    
    
    183
    
    
    
    266
    
    
    
    50
    
    
    
    169
    
    
    
    (136
    )(a)
    
    
    532Financial services,
net interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311
    
    
    
    
    
    
    
    311Total assets
    
    
    2,298
    
    
    
    1,020
    
    
    
    502
    
    
    
    16,321
    
    
    
    376
    
    
    
    20,517Investment in equity method
investees and joint ventures
    
    
    10
    
    
    
    23
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    110Capital expenditures and
reforestation
    
    
    77
    
    
    
    44
    
    
    
    1
    
    
    
    34
    
    
    
    20
    
    
    
    176Goodwill
    
    
    236
    
    
    
    129
    
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    506
 19




---



##### Table of Contents



(a)
    
    Expenses not allocated to segments consist of: Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)General and administrative
    
    $
    (23
    )
    
    $
    (28
    )
    
    $
    (75
    )
    
    $
    (77
    )Share-based compensation
    
    
    (3
    )
    
    
    (8
    )
    
    
    (41
    )
    
    
    (32
    )Other operating income (expense)
    
    
    (6
    )
    
    
    (10
    )
    
    
    (21
    )
    
    
    (21
    )Other non-operating income (expense)
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    92Parent company interest
    
    
    (31
    )
    
    
    (31
    )
    
    
    (93
    )
    
    
    (98
    )$
    (62
    )
    
    $
    (76
    )
    
    $
    (228
    )
    
    $
    (136
    )Other operating income (expense) applies to:Corrugated packaging
    
    $
    (4
    )
    
    $
    (4
    )
    
    $
    (14
    )
    
    $
    (8
    )Forest products
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    1Real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financial services
    
    
    
    
    
    
    (2
    )
    
    
    (5
    )
    
    
    (12
    )Unallocated
    
    
    (2
    )
    
    
    (4
    )
    
    
    (10
    )
    
    
    (2
    )$
    (6
    )
    
    $
    (10
    )
    
    $
    (21
    )
    
    $
    (21
    )
 Note 10  Real Estate
  ThirdQuarter-
    
    
    Year-EndEnd 2007
    
    
    2006(In millions)Entitled, developed, and under development land
    
    $
    334
    
    
    $
    255Land held for investment or future development
    
    
    155
    
    
    
    142Investment in real estate ventures
    
    
    100
    
    
    
    90Income producing properties, net of accumulated depreciation
    
    
    24
    
    
    
    25$
    613
    
    
    $
    512
    20




---



##### Table of Contents



Third
    
    
    Year-Quarter-
    
    
    EndEnd 2007
    
    
    2006(In millions)Real estate
    
    $
    242
    
    
    $
    186Total assets
    
    
    299
    
    
    
    281Borrowings, principally non-recourse
    
    
    69
    
    
    
    66Total liabilities
    
    
    92
    
    
    
    84Equity
    
    
    207
    
    
    
    197Our investment in real estate ventures:Our share of their equity
    
    $
    108
    
    
    $
    97Unrecognized deferred gain(a)
    
    
    (8
    )
    
    
    (7
    )Investment in real estate ventures
    
    $
    100
    
    
    $
    90
 
 (a)
    
    We recognize the deferred gain from our sale of real estate to the venture as
the venture sells the real estate to third parties. Third Quarter
    
    First Nine Months2007
    
    2006
    
    2007
    
    2006(In millions)Revenues
    
    $
    7
    
    
    $
    32
    
    
    $
    23
    
    
    $
    107Earnings
    
    
    1
    
    
    
    3
    
    
    
    6
    
    
    
    30Our equity in their earnings
    
    
    1
    
    
    
    2
    
    
    
    4
    
    
    
    15
   Note 11  Assets Held-For-Sale
  21




---



##### Table of Contents



Note 12  Other Operating Income (Expense)
 Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)Equity in earnings of manufacturing joint ventures
    
    $
    2
    
    
    $
    4
    
    
    $
    4
    
    
    $
    10Equity in earnings of real estate ventures
    
    
    1
    
    
    
    2
    
    
    
    4
    
    
    
    15Closure and sale of converting and production facilities
    
    
    (1
    )
    
    
    (4
    )
    
    
    (1
    )
    
    
    (5
    )Litigation
    
    
    
    
    
    
    (4
    )
    
    
    (10
    )
    
    
    (4
    )Transformation plan legal and other advisory fees
    
    
    (2
    )
    
    
    
    
    
    
    (10
    )
    
    
    Gain on sale of non-strategic timber leases
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    Other
    
    
    (4
    )
    
    
    (3
    )
    
    
    (5
    )
    
    
    (3
    )$
    (4
    )
    
    $
    (5
    )
    
    $
    (10
    )
    
    $
    13
  Beginning
    
    
    
    
    
    
    Cash
    
    
    End ofof Period
    
    
    Additions
    
    
    Payments
    
    
    Period(In millions)Involuntary employee terminations
    
    $
    1
    
    
    $
    
    
    
    $
    (1
    )
    
    $
    Demolition and environmental remediation
    
    
    8
    
    
    
    1
    
    
    
    (6
    )
    
    
    3$
    9
    
    
    $
    1
    
    
    $
    (7
    )
    
    $
    3
 Note 13  Preferred Stock Issued by Subsidiaries and Subordinated Notes Payable to Trust
  Note 14  Discontinued Operations
   22




---



##### Table of Contents



Note 15  Income Taxes
   23




---



##### 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;
    
    fluctuations in costs and expenses including the costs of raw materials, purchased
energy, and freight;
    
    demand for new housing;
    
    accuracy of accounting assumptions related to pension and postretirement costs,
impaired assets, and allowance for credit losses;
    
    competitive actions by other companies;
    
    changes in laws or regulations and actions or restrictions of regulatory agencies;
    
    our ability to execute certain strategic and business improvement initiatives,
including our transformation plan; and
    
    other factors, many of which are beyond our control.
  Non-GAAP Financial Measure
    24




---



##### Table of Contents



Accounting Policies
 Critical Accounting Estimates
  New and Pending Accounting Pronouncements
 Accounting for Planned Major Maintenance Activities; Accounting for Uncertainty in Income Taxes Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans. Note 3 to the Consolidated
Financial Statements
 Transformation
  
    
    retaining our manufacturing operations  corrugated packaging and building products,
    
    spinning off our financial services segment to our shareholders,
    
    spinning off our real estate segment to our shareholders, and
    
    selling our strategic timberland.
      25




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##### Table of Contents



Results of Operations for Third Quarter 2007 and 2006
 Summary
  Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions, except per share)RevenuesCorrugated packaging
    
    $
    748
    
    
    $
    746
    
    
    $
    2,288
    
    
    $
    2,225Forest products
    
    
    223
    
    
    
    310
    
    
    
    718
    
    
    
    984Real estate
    
    
    33
    
    
    
    59
    
    
    
    106
    
    
    
    141Financial services
    
    
    295
    
    
    
    294
    
    
    
    866
    
    
    
    876Total revenues
    
    $
    1,299
    
    
    $
    1,409
    
    
    $
    3,978
    
    
    $
    4,226Segment Operating IncomeCorrugated packaging
    
    $
    70
    
    
    $
    73
    
    
    $
    212
    
    
    $
    183Forest products
    
    
    21
    
    
    
    83
    
    
    
    92
    
    
    
    266Real estate
    
    
    10
    
    
    
    15
    
    
    
    32
    
    
    
    50Financial services
    
    
    37
    
    
    
    58
    
    
    
    134
    
    
    
    169Total segment operating income
    
    
    138
    
    
    
    229
    
    
    
    470
    
    
    
    668Expenses not allocated to segmentsGeneral and administrative
    
    
    (23
    )
    
    
    (28
    )
    
    
    (75
    )
    
    
    (77
    )Share-based compensation
    
    
    (3
    )
    
    
    (8
    )
    
    
    (41
    )
    
    
    (32
    )Other operating income (expense)
    
    
    (6
    )
    
    
    (10
    )
    
    
    (21
    )
    
    
    (21
    )Other non-operating income (expense)
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    92Parent company interest
    
    
    (31
    )
    
    
    (31
    )
    
    
    (93
    )
    
    
    (98
    )Income before income taxes
    
    
    76
    
    
    
    153
    
    
    
    242
    
    
    
    532Income taxes
    
    
    (32
    )
    
    
    (58
    )
    
    
    (94
    )
    
    
    (167
    )Income from continuing operations
    
    
    44
    
    
    
    95
    
    
    
    148
    
    
    
    365Discontinued operations
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )
    
    
    Net income
    
    $
    36
    
    
    $
    95
    
    
    $
    140
    
    
    $
    365Average diluted shares outstanding
    
    
    107.8
    
    
    
    110.3
    
    
    
    107.9
    
    
    
    111.8Income from continuing operations, per diluted share
    
    $
    0.33
    
    
    $
    0.86
    
    
    $
    1.30
    
    
    $
    3.26ROI, annualized
    
    
    
    
    
    
    
    
    
    
    10.0
    %
    
    
    16.0
    %
  
    
    We experienced higher prices for our corrugated packaging products.
    
    While we continue to see the benefit in our corrugated manufacturing operations from
our initiatives to lower costs, improve asset utilization, and increase operating
efficiencies, the cost of recycled fiber used at our containerboard mills offset some
of the benefits.
    
    We experienced lower pricing and volumes for our forest products, principally lumber
and gypsum wallboard resulting from the overall slowdown in the housing industry.
    
    We recognized an $8 million gain on sale of non-strategic timber leases.
    
    Our real estate operations experienced a decline in lot sales resulting from the
overall slowdown in the housing industry.
    
    Real estate operations benefited from a $14 million gain on the sale of land held
for commercial use.
 26




---



##### Table of Contents




    
    Our financial services operations experienced a $22 million decrease in net interest
income, primarily due to a decrease in earning assets in the early part of 2007, offset
in part by a reduction in noninterest expense.
    
    Our financial services operations recorded credit loss provisions of $17 million
related principally to homebuilder and mortgage finance related commercial loans.
    
    We increased litigation reserves by $15 million as a result of a recent California
Supreme Court decision and charges related to the mortgage business we exited.
    
    We incurred $10 million of costs associated with our transformation plan, primarily
legal and other advisory fees, most of which is not deductible for income tax purposes.
   
    
    We experienced improved markets for our corrugated packaging and forest products,
principally gypsum wallboard and particleboard, and we benefited from the acquisition
of our partners 50 percent interest in Standard Gypsum LP.
    
    While we continued to see the benefit in our corrugated manufacturing operations
from our initiatives to lower costs, improve asset utilization and increase operating
efficiencies, costs, principally energy and freight, offset some of the benefit.
    
    Real estate operations benefited from a $14 million gain on sale of land held for
commercial use.
    
    Financial services operations were affected by lower average earning assets and a
change in the mix of earning assets.
    
    Actions taken to lower costs in our financial services operation associated with the
elimination of our wholesale mortgage and asset-based lending operations resulted in
charges of $6 million and goodwill impairment of $6 million.
    
    We recognized an $89 million net pre-tax gain resulting from a tax litigation
settlement, most of which was non-taxable.
  Corrugated Packaging
  27




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##### Table of Contents



Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(Dollars in millions)Revenues
    
    $
    748
    
    
    $
    746
    
    
    $
    2,288
    
    
    $
    2,225Costs and expenses
    
    
    (678
    )
    
    
    (673
    )
    
    
    (2,076
    )
    
    
    (2,042
    )Segment operating income
    
    $
    70
    
    
    $
    73
    
    
    $
    212
    
    
    $
    183Segment ROI
    
    
    
    
    
    
    
    
    
    
    14.0
    %
    
    
    11.9
    %
  Third Quarter 2007
    
    First Nine Monthsversus Third
    
    2007 versus FirstQuarter 2006
    
    Nine Months 2006Increase (Decrease)Corrugated packagingAverage prices
    
    
    (1
    )%
    
    
    3
    %Shipments, average week
    
    
    1
    %
    
    
    (2
    )%Industry shipments, average week (a)
    
    
    (2
    )%
    
    
    (2
    )%LinerboardAverage prices
    
    
    
    %
    
    
    7
    %Shipments, in thousands of tons
    
    
    (3
    )
    
    
    66
 
 (a)
    
    Source: Fibre Box Association    28




---



##### Table of Contents



Third Quarter 2007
    
    First Nine Monthsversus Third
    
    2007 versus FirstQuarter 2006
    
    Nine Months 2006Increase (Decrease)(In millions)Wood fiber
    
    $
    3
    
    
    $
    9Recycled fiber
    
    
    17
    
    
    
    54Freight
    
    
    3
    
    
    
    Energy, principally natural gas
    
    
    
    
    
    
    (3
    )Depreciation
    
    
    (4
    )
    
    
    (9
    )Pension and postretirement
    
    
    (3
    )
    
    
    (9
    )
   Third Quarter
    
    First Nine Months2007
    
    2006
    
    2007
    
    2006Number of converting facilities (at quarter-end)
    
    
    64
    
    
    
    64
    
    
    
    64
    
    
    
    64Mill capacity, in thousand tons
    
    
    900
    
    
    
    892
    
    
    
    2,700
    
    
    
    2,675Mill production, in thousand tons
    
    
    909
    
    
    
    890
    
    
    
    2,712
    
    
    
    2,662Percent mill production used internally
    
    
    93
    %
    
    
    92
    %
    
    
    91
    %
    
    
    93
    %Percent of total fiber requirements sourced from recycled fiber
    
    
    36
    %
    
    
    34
    %
    
    
    37
    %
    
    
    34
    %Corrugating medium purchases from our Premier Boxboard LimitedLLC joint venture, in thousand tons
    
    
    7
    
    
    
    28
    
    
    
    42
    
    
    
    65
 Forest Products
    Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(Dollars in millions)Revenues
    
    $
    223
    
    
    $
    310
    
    
    $
    718
    
    
    $
    984Costs and expenses
    
    
    (202
    )
    
    
    (227
    )
    
    
    (626
    )
    
    
    (718
    )Segment operating income
    
    $
    21
    
    
    $
    83
    
    
    $
    92
    
    
    $
    266Segment ROI
    
    
    
    
    
    
    
    
    
    
    13.3
    %
    
    
    36.0
    %
 29




---



##### Table of Contents



Third Quarter 2007
    
    First Nine Monthsversus Third
    
    2007 versus FirstQuarter 2006
    
    Nine Months 2006Increase (Decrease)Lumber:Average prices
    
    
    (1
    )%
    
    
    (15
    )%Shipments
    
    
    4
    %
    
    
    
    %Gypsum wallboard:Average prices
    
    
    (38
    )%
    
    
    (24
    )%Shipments
    
    
    (19
    )%
    
    
    (25
    )%Particleboard:Average prices
    
    
    (8
    )%
    
    
    5
    %Shipments
    
    
    (27
    )%
    
    
    (19
    )%MDF:Average prices
    
    
    (7
    )%
    
    
    2
    %Shipments
    
    
    (9
    )%
    
    
    (8
    )%
      Third Quarter 2007
    
    First Nine Monthsversus Third
    
    2007 versus FirstQuarter 2006
    
    Nine Months 2006Increase (Decrease)(In millions)Wood fiber
    
    $
    (7
    )
    
    $
    (26
    )Energy, principally natural gas
    
    
    (9
    )
    
    
    (26
    )Freight
    
    
    (3
    )
    
    
    (10
    )Chemical
    
    
    (3
    )
    
    
    (5
    )Depreciation
    
    
    (1
    )
    
    
    3
  30




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##### Table of Contents



Third Quarter
    
    First Nine Months2007
    
    2006
    
    2007
    
    2006Timber harvest, in million tons:Sawtimber
    
    
    0.7
    
    
    
    0.7
    
    
    
    1.9
    
    
    
    1.9Pulpwood
    
    
    0.9
    
    
    
    1.0
    
    
    
    2.5
    
    
    
    2.51.6
    
    
    
    1.7
    
    
    
    4.4
    
    
    
    4.4Number of converting and manufacturing facilities (at quarter-end)
    
    
    17
    
    
    
    17
    
    
    
    17
    
    
    
    17Average operating rates for all product lines
excluding sold or closed facilities:High
    
    
    104
    %
    
    
    99
    %
    
    
    102
    %
    
    
    108
    %Low
    
    
    47
    %
    
    
    88
    %
    
    
    59
    %
    
    
    91
    %Average
    
    
    76
    %
    
    
    92
    %
    
    
    80
    %
    
    
    97
    %Gypsum facing paper purchases from our
Premier Boxboard Limited LLC joint venture, in thousand tons
    
    
    10
    
    
    
    17
    
    
    
    34
    
    
    
    54Percent of gypsum facing paper supplied by our
Premier Boxboard Limited LLC joint venture
    
    
    
    
    
    
    
    
    
    
    68
    %
    
    
    77
    %
  Real Estate
   Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(Dollars in millions)Revenues
    
    $
    33
    
    
    $
    59
    
    
    $
    106
    
    
    $
    141Costs and expenses
    
    
    (24
    )
    
    
    (46
    )
    
    
    (78
    )
    
    
    (106
    )Our share of real estate ventures income
    
    
    1
    
    
    
    2
    
    
    
    4
    
    
    
    15Segment operating income
    
    $
    10
    
    
    $
    15
    
    
    $
    32
    
    
    $
    50Segment ROI
    
    
    
    
    
    
    
    
    
    
    8.0
    %
    
    
    16.2
    %
   31




---



##### Table of Contents



Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(Dollars in millions)Residential real estate
    
    $
    7
    
    
    $
    18
    
    
    $
    41
    
    
    $
    54Lots sold
    
    
    182
    
    
    
    344
    
    
    
    748
    
    
    
    1,149Commercial real estate
    
    $
    14
    
    
    $
    26
    
    
    $
    32
    
    
    $
    44Acres sold
    
    
    69
    
    
    
    137
    
    
    
    125
    
    
    
    181Land held for investment or
future development
    
    $
    5
    
    
    $
    5
    
    
    $
    13
    
    
    $
    18Acres sold
    
    
    770
    
    
    
    621
    
    
    
    1,924
    
    
    
    2,389Income producing properties,
timber and other
    
    $
    7
    
    
    $
    10
    
    
    $
    20
    
    
    $
    25$
    33
    
    
    $
    59
    
    
    $
    106
    
    
    $
    141
 32




---



##### Table of Contents



Third Quarter-End2007
    
    2006Owned and consolidated ventures:Entitled, developed, and under development landNumber of projects
    
    
    45
    
    
    
    33Residential lots remaining
    
    
    19,968
    
    
    
    11,784Commercial acres remaining
    
    
    868
    
    
    
    637Land held for investment or future developmentNumber of projects
    
    
    22
    
    
    
    21Acres in entitlement process
    
    
    25,890
    
    
    
    26,150Acres undeveloped
    
    
    186,049
    
    
    
    191,344Ventures accounted for using the equity method:Ventures lot sales (for first nine months)Lots sold
    
    
    533
    
    
    
    1,418
    (a)Revenue per lot sold
    
    $
    55,755
    
    
    $
    53,737Ventures entitled, developed, and under development landNumber of projects
    
    
    22
    
    
    
    22Residential lots remaining
    
    
    9,558
    
    
    
    11,210Commercial acres remaining
    
    
    720
    
    
    
    675Ventures land held for investment or future developmentNumber of projects
    
    
    2
    
    
    
    1Acres in entitlement process
    
    
    860
    
    
    
    620Acres sold (for first nine months)
    
    
    126
    
    
    
    114Acres undeveloped
    
    
    6,258
    
    
    
    6,480
 
 (a)
    
    The elimination of the previously discussed one-month reporting lag resulted in a
one-time increase in the number of lots sold of 122 lots. Financial Services
   Third Quarter
    
    First Nine Months2007
    
    2006
    
    2007
    
    2006(Dollars in millions)Net interest income
    
    $
    99
    
    
    $
    100
    
    
    $
    289
    
    
    $
    311Segment operating income (a)
    
    
    37
    
    
    
    58
    
    
    
    134
    
    
    
    169Segment ROI
    
    
    
    
    
    
    
    
    
    
    17.6
    %
    
    
    22.2
    %
 
 (a)
    
    Segment operating income excludes share-based compensation, charges related to
asset impairments and severance, and litigation charges related to the mortgage business we
exited, all of which are reported in financial services summarized financial statements.
 33




---



##### Table of Contents



Net Interest Income and Earning Assets and Deposits
  Third Quarter
    
    First Nine Months2007
    
    2006
    
    2007
    
    2006Average
    
    Yield/
    
    Average
    
    Yield/
    
    Average
    
    Yield/
    
    Average
    
    Yield/Balance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    Rate(Dollars in millions)Earning assets
    
    $
    14,899
    
    
    
    6.74
    %
    
    $
    15,605
    
    
    
    6.37
    %
    
    $
    14,900
    
    
    
    6.63
    %
    
    $
    16,181
    
    
    
    6.12
    %Interest-bearing liabilities
    
    
    13,819
    
    
    
    (4.41
    )%
    
    
    14,415
    
    
    
    (4.13
    )%
    
    
    13,804
    
    
    
    (4.36
    )%
    
    
    14,987
    
    
    
    (3.84
    )%Impact of noninterest-bearing funds
    
    
    
    
    
    
    0.33
    %
    
    
    
    
    
    
    0.31
    %
    
    
    
    
    
    
    0.32
    %
    
    
    
    
    
    
    0.28
    %Net interest margin
    
    
    
    
    
    
    2.66
    %
    
    
    
    
    
    
    2.55
    %
    
    
    
    
    
    
    2.59
    %
    
    
    
    
    
    
    2.56
    %
  Part I, Item 3,
Quantitative and Qualitative Disclosures About Market Risk ,
  Third Quarter-End2007
    
    
    2006(Dollars in millions)Residential housing assets:Loans held for sale
    
    $
    19
    
    
    $
    29Loans
    
    
    5,402
    
    
    
    6,521Securities
    
    
    6,045
    
    
    
    5,87511,466
    
    
    
    12,425Other earning assets
    
    
    4,299
    
    
    
    3,227Total earning assets
    
    $
    15,765
    
    
    $
    15,652Residential housing assets as a percentage of earning assets
    
    
    73
    %
    
    
    79
    %Noninterest-bearing deposit accounts
    
    $
    724
    
    
    $
    815Interest-bearing deposit accounts
    
    
    3,820
    
    
    
    3,562Certificates of deposit
    
    
    4,830
    
    
    
    4,911Total deposits
    
    $
    9,374
    
    
    $
    9,288
  34




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##### Table of Contents



Asset Quality and Allowance for Credit Losses
  Third Quarter-End
    
    
    Year-End2007
    
    
    2006
    
    
    2006(Dollars in millions)Non-performing loans
    
    $
    121
    
    
    $
    27
    
    
    $
    26Foreclosed real estate
    
    
    9
    
    
    
    3
    
    
    
    5Non-performing assets
    
    $
    130
    
    
    $
    30
    
    
    $
    31Non-performing loans as a percentage of total loans
    
    
    1.25
    %
    
    
    0.27
    %
    
    
    0.27
    %Non-performing assets ratio
    
    
    1.35
    %
    
    
    0.31
    %
    
    
    0.32
    %Allowance for loan losses as a percentage of non-performing loans
    
    
    75
    %
    
    
    241
    %
    
    
    253
    %Allowance for loan losses as a percentage of total loans
    
    
    0.94
    %
    
    
    0.66
    %
    
    
    0.68
    %Net charge-offs as a percentage of average loans outstanding
    
    
    
    %
    
    
    0.30
    %
    
    
    0.10
    %
 35




---



##### Table of Contents



Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)Balance at beginning of period
    
    $
    79
    
    
    $
    78
    
    
    $
    72
    
    
    $
    81Provision for credit losses
    
    
    19
    
    
    
    1
    
    
    
    17
    
    
    
    1Net (charge-offs) recoveries
    
    
    
    
    
    
    (8
    )
    
    
    9
    
    
    
    (11
    )Balance at end of period
    
    $
    98
    
    
    $
    71
    
    
    $
    98
    
    
    $
    71Allowance for credit losses:Loan
    
    $
    91
    
    
    $
    64
    
    
    $
    91
    
    
    $
    64Commitment-related
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    7Combined allowance for credit losses
    
    $
    98
    
    
    $
    71
    
    
    $
    98
    
    
    $
    71
     Noninterest Income and Noninterest Expense
  36




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##### Table of Contents



Expenses Not Allocated to Segments
    Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)Transformation cost
    
    $
    2
    
    
    $
    
    
    
    $
    10
    
    
    $
    Gain on sale of non-strategic timber leases
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    Closure of converting and production facilities
and sale of non-strategic assets
    
    
    1
    
    
    
    4
    
    
    
    1
    
    
    
    5Goodwill impairment and severance related to
the sale of the asset-based lending operation
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    9Litigation
    
    
    
    
    
    
    4
    
    
    
    15
    
    
    
    4Elimination of wholesale mortgage origination
network
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Environmental remediation
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    Other
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    6
    
    
    $
    10
    
    
    $
    21
    
    
    $
    21
    Income Taxes
  37




---



##### Table of Contents



Average Shares Outstanding
  Capital Resources and Liquidity for First Nine Months 2007
  Sources and Uses of Cash
  38




---



##### Table of Contents



Parent Company Sources and Uses of Cash
 First Nine Months2007
    
    
    2006(In millions)We received cash from:Operations
    
    $
    271
    
    
    $
    387Dividends from financial services (a)
    
    
    35
    
    
    
    135Proceeds from tax litigation settlement, net
    
    
    
    
    
    
    89Real estate development expenditures, net of non-cash cost of sales
    
    
    (75
    )
    
    
    (29
    )Working capital changes
    
    
    (14
    )
    
    
    (10
    )From operations
    
    
    217
    
    
    
    572Sale of assets and other
    
    
    15
    
    
    
    45Exercise of options and related tax benefits
    
    
    30
    
    
    
    53Borrowings, net
    
    
    19
    
    
    
    (41
    )Total sources
    
    
    281
    
    
    
    629We used cash to:Return to shareholders through:Dividends
    
    
    (88
    )
    
    
    (82
    )Repurchase of common stock
    
    
    (24
    )
    
    
    (226
    )Reinvest in the business through:Capital expenditures
    
    
    (152
    )
    
    
    (142
    )Acquisition, joint ventures, and other
    
    
    (22
    )
    
    
    (144
    )Total uses
    
    
    (286
    )
    
    
    (594
    )(5
    )
    
    
    35Discontinued operations, net
    
    
    8
    
    
    
    Change in cash and cash equivalents
    
    $
    3
    
    
    $
    35
 
 (a)
    
    Dividends received from financial services are eliminated in the consolidated
statements of cash flows.      39




---



##### Table of Contents



Financial Services Sources and Uses of Cash
 First Nine Months2007
    
    
    2006(In millions)We received cash from:Operations
    
    $
    121
    
    
    $
    143Changes in loans held for sale and other
    
    
    5
    
    
    
    250From operations
    
    
    126
    
    
    
    393Net repayments on loans and securities
    
    
    
    
    
    
    612Sale of asset-based operations
    
    
    
    
    
    
    303Net redemption of Federal Home Loan Bank stock
    
    
    48
    
    
    
    31Increase in deposits and borrowings
    
    
    35
    
    
    
    Total sources
    
    
    209
    
    
    
    1,339We used cash to:Pay dividends to the parent company (a)
    
    
    (35
    )
    
    
    (135
    )Fund decreases in deposits and borrowings
    
    
    
    
    
    
    (1,309
    )Fund loans and securities purchases, net
    
    
    (9
    )
    
    
    Redeem preferred stock issued by subsidiaries
    
    
    (305
    )
    
    
    Reinvest in the business through
capital expenditures, acquisitions and other
    
    
    (35
    )
    
    
    (32
    )Total uses
    
    
    (384
    )
    
    
    (1,476
    )Change in cash and cash equivalents
    
    $
    (175
    )
    
    $
    (137
    )
 
 (a)
    
    Dividends we pay to the parent company are eliminated in the consolidated
statements of cash flows.     Liquidity
  40




---



##### Table of Contents



Parent Company Liquidity
  AccountsCommitted
    
    
    ReceivableCredit
    
    
    SecuritizationAgreements
    
    
    Facility
    
    
    Total(In millions)Committed
    
    $
    850
    
    
    $
    250
    
    
    $
    1,100Less: borrowings and commitments
    
    
    (3
    )
    
    
    (230
    )
    
    
    (233
    )Unused borrowing capacity at third quarter-end 2007
    
    $
    847
    
    
    $
    20
    
    
    $
    867
     Financial Services Liquidity
   41




---



##### Table of Contents



Contractual Obligations and Off-Balance Sheet Arrangements
 Parent Company
    Financial Services
  ThirdQuarter-End
    
    
    Year-End2007
    
    
    2006(In millions)Single-family mortgage loans
    
    $
    95
    
    
    $
    91Unused lines of credit
    
    
    1,997
    
    
    
    2,109Unfunded portion of credit commitments
    
    
    4,441
    
    
    
    4,421Commitments to originate commercial loans
    
    
    627
    
    
    
    655Letters of credit
    
    
    350
    
    
    
    386$
    7,510
    
    
    $
    7,662
 Capital Adequacy and Other Regulatory Matters
   Regulatory
    
    For Categorization asActual
    
    Minimum
    
    Well CapitalizedRegulatory capital ratios:Tangible capital
    
    
    7.79
    %
    
    
    32.00
    %
    
    
    N/ALeverage capital
    
    
    7.79
    %
    
    
    34.00
    %
    
    
    35.00
    %Risk-based capital
    
    
    10.68
    %
    
    
    38.00
    %
    
    
    310.00
    %
 42




---



##### Table of Contents



Pension and Postretirement Matters
   Energy
  Litigation and Related Matters
   43




---



##### Table of Contents



Calculation of Non-GAAP Financial Measure
 Parent
    
    
    Corrugated
    
    
    Forest
    
    
    Real
    
    
    FinancialCompany
    
    
    Packaging
    
    
    Products
    
    
    Estate
    
    
    Services(Dollars in millions)First Nine Months 2007Return:Operating income or segment operating income
determined in accordance with GAAP
    
    $
    333
    (a)
    
    $
    212
    
    
    $
    92
    
    
    $
    32
    
    
    $
    134Adjustments for significant unusual items
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A$
    333
    
    
    $
    212
    
    
    $
    92
    
    
    $
    32
    
    
    $
    134Investment:Beginning of year total assets, segment assets
or investment in financial services determined
in accordance with GAAP
    
    $
    5,217
    
    
    $
    2,284
    
    
    $
    1,011
    
    
    $
    544
    
    
    $
    1,015Adjustments:Current liabilities
(excluding current
portion of long-term
debt)
    
    
    (554
    )
    
    
    (271
    )
    
    
    (87
    )
    
    
    (11
    )
    
    
    N/AAssets held-for-sale
    
    
    (20
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AMunicipal bonds
related to capital
leases included in
other assets
    
    
    (188
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A$
    4,455
    
    
    $
    2,013
    
    
    $
    924
    
    
    $
    533
    
    
    $
    1,015ROI, annualized
    
    
    10.0
    %
    
    
    14.0
    %
    
    
    13.3
    %
    
    
    8.0
    %
    
    
    17.6
    %First Nine Months 2006Return:Operating income or segment operating income
determined in accordance with GAAP
    
    $
    538
    (a)
    
    $
    183
    
    
    $
    266
    
    
    $
    50
    
    
    $
    169Adjustments for significant unusual items
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A$
    538
    
    
    $
    183
    
    
    $
    266
    
    
    $
    50
    
    
    $
    169Investment:Beginning of year total assets, segment assets
or investment in financial services determined
in accordance with GAAP
    
    $
    5,001
    
    
    $
    2,318
    
    
    $
    866
    
    
    $
    422
    
    
    $
    1,017Adjustments:Current liabilities
(excluding current
portion of long-term
debt)
    
    
    (492
    )
    
    
    (269
    )
    
    
    (76
    )
    
    
    (11
    )
    
    
    N/AAssets held-for-sale
    
    
    (34
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AMunicipal bonds
related to capital
leases included in
other assets
    
    
    (188
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AAcquisition of
Standard Gypsum, LP
in January 2006
    
    
    196
    
    
    
    N/A
    
    
    
    196
    
    
    
    N/A
    
    
    
    N/A$
    4,483
    
    
    $
    2,049
    
    
    $
    986
    
    
    $
    411
    
    
    $
    1,017ROI, annualized
    
    
    16.0
    %
    
    
    11.9
    %
    
    
    36.0
    %
    
    
    16.2
    %
    
    
    22.2
    %
 
 (a)
    
    Net of expenses not allocated to segments of $137 million in 2007 and $130 million
in 2006.  44




---



##### Table of Contents



STATISTICAL AND OTHER DATA
 Parent Company
   Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006(Dollars in millions)RevenuesCorrugated PackagingCorrugated packaging
    
    $
    717
    
    
    $
    713
    
    
    $
    2,178
    
    
    $
    2,148Linerboard
    
    
    31
    
    
    
    33
    
    
    
    110
    
    
    
    77Total
    
    $
    748
    
    
    $
    746
    
    
    $
    2,288
    
    
    $
    2,225Forest ProductsPine lumber
    
    $
    64
    
    
    $
    64
    
    
    $
    190
    
    
    $
    224Gypsum wallboard
    
    
    52
    
    
    
    102
    
    
    
    189
    
    
    
    330Particleboard
    
    
    42
    
    
    
    62
    
    
    
    143
    
    
    
    169Medium density fiberboard
    
    
    15
    
    
    
    17
    
    
    
    49
    
    
    
    52Fiberboard
    
    
    13
    
    
    
    16
    
    
    
    41
    
    
    
    59Hunting, mineral, and recreational leases
    
    
    12
    
    
    
    10
    
    
    
    31
    
    
    
    38Fiber and other
    
    
    25
    
    
    
    39
    
    
    
    75
    
    
    
    112Total
    
    $
    223
    
    
    $
    310
    
    
    $
    718
    
    
    $
    984Unit salesCorrugated PackagingCorrugated packaging, thousands of tons
    
    
    839
    
    
    
    829
    
    
    
    2,535
    
    
    
    2,582Linerboard, thousands of tons
    
    
    67
    
    
    
    70
    
    
    
    243
    
    
    
    177Total, thousands of tons
    
    
    906
    
    
    
    899
    
    
    
    2,778
    
    
    
    2,759Forest ProductsPine lumber, million board feet
    
    
    215
    
    
    
    207
    
    
    
    640
    
    
    
    641Gypsum wallboard, million square feet
    
    
    368
    
    
    
    453
    
    
    
    1,164
    
    
    
    1,553Particleboard, million square feet
    
    
    119
    
    
    
    162
    
    
    
    396
    
    
    
    491Medium density fiberboard, million square feet
    
    
    32
    
    
    
    35
    
    
    
    106
    
    
    
    115Fiberboard, million square feet
    
    
    75
    
    
    
    89
    
    
    
    228
    
    
    
    297
 45




---



##### Table of Contents



(a)
 Project
    
    County
    
    Project Acres(b)CaliforniaHidden Creek Estates
    
    Los Angeles
    
    
    700Terrace at Hidden Hills
    
    Los Angeles
    
    
    30GeorgiaBall Ground
    
    Cherokee
    
    
    500Burt Creek
    
    Dawson
    
    
    990Cedar Creek Preserve
    
    Coweta
    
    
    200Corinth Landing
    
    Coweta
    
    
    800Crossing
    
    Coweta
    
    
    230Fincher Road
    
    Cherokee
    
    
    950Friendship Road
    
    Cherokee
    
    
    110Garland Mountain
    
    Cherokee/Bartow
    
    
    350Genesee
    
    Coweta
    
    
    750Grove Park
    
    Coweta
    
    
    160Jackson Park
    
    Jackson
    
    
    690Lithia Springs
    
    Haralson
    
    
    260Mill Creek
    
    Coweta
    
    
    780Overlook
    
    Cherokee
    
    
    510Pickens School
    
    Pickens
    
    
    420Serenity
    
    Carroll
    
    
    400Waleska
    
    Cherokee
    
    
    150Wolf Creek
    
    Carroll
    
    
    12,180Yellow Creek
    
    Cherokee
    
    
    1,100TexasLake Houston
    
    Harris/Liberty
    
    
    3,630Entrada(c)
    
    Travis
    
    
    240Woodlake Village(c)
    
    Montgomery
    
    
    620Total
    
    
    
    
    26,750
 
 (a)
    
    A project is deemed to be in the entitlement process when customary steps
necessary for the preparation and submittal of an application, like conducting
pre-application meetings or similar discussions with governmental officials, have
commenced, or an application has been filed. Projects listed may have significant
steps remaining, and there is no assurance that entitlements ultimately will be
received.(b)
    
    Project acres, which are the total for the project regardless of our ownership
interest, are approximate. The actual number of acres entitled may vary.(c)
    
    We own a 50 percent interest in these projects. 46




---



##### Table of Contents



(a)
 Residential Lots(c)
    
    
    Commercial Acres(d)Lots Sold
    
    
    
    
    
    
    Acres SoldInterest
    
    
    Since
    
    
    Lots
    
    
    Since
    
    
    AcresProject
    
    County
    
    Owned(b)
    
    
    Inception
    
    
    Remaining
    
    
    Inception
    
    
    RemainingProjects we ownColoradoBuffalo Highlands
    
    Weld
    
    
    100
    %
    
    
    
    
    
    
    645
    
    
    
    
    
    
    
    Johnstown Farms
    
    Weld
    
    
    100
    %
    
    
    115
    
    
    
    699
    
    
    
    
    
    
    
    Pinery West
    
    Douglas
    
    
    100
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115Stonebraker
    
    Weld
    
    
    100
    %
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    TexasArrowhead Ranch
    
    Hays
    
    
    100
    %
    
    
    
    
    
    
    232
    
    
    
    
    
    
    
    5Caruth Lakes
    
    Rockwall
    
    
    100
    %
    
    
    245
    
    
    
    629
    
    
    
    
    
    
    
    Cibolo Canyons
    
    Bexar
    
    
    100
    %
    
    
    464
    
    
    
    1,285
    
    
    
    64
    
    
    
    81Harbor Lakes
    
    Hood
    
    
    100
    %
    
    
    196
    
    
    
    256
    
    
    
    
    
    
    
    14Harbor Mist
    
    Calhoun
    
    
    100
    %
    
    
    
    
    
    
    1,393
    
    
    
    
    
    
    
    36Hunters Crossing
    
    Bastrop
    
    
    100
    %
    
    
    268
    
    
    
    309
    
    
    
    19
    
    
    
    95Katy Freeway
    
    Harris
    
    
    100
    %
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    La Conterra
    
    Williamson
    
    
    100
    %
    
    
    
    
    
    
    509
    
    
    
    
    
    
    
    60Maxwell Creek
    
    Collin
    
    
    100
    %
    
    
    580
    
    
    
    443
    
    
    
    
    
    
    
    Oak Creek Estates
    
    Comal
    
    
    100
    %
    
    
    
    
    
    
    648
    
    
    
    13
    
    
    
    The Colony
    
    Bastrop
    
    
    100
    %
    
    
    347
    
    
    
    1,078
    
    
    
    22
    
    
    
    50The Gables at North Hill
    
    Collin
    
    
    100
    %
    
    
    193
    
    
    
    89
    
    
    
    
    
    
    
    The Preserve at Pecan Creek
    
    Denton
    
    
    100
    %
    
    
    138
    
    
    
    681
    
    
    
    
    
    
    
    9The Ridge at Ribelin Ranch
    
    Travis
    
    
    100
    %
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    40Other projects (6)
    
    Various
    
    
    100
    %
    
    
    2,173
    
    
    
    125
    
    
    
    68
    
    
    
    33GeorgiaTowne West
    
    Bartow
    
    
    100
    %
    
    
    
    
    
    
    2,550
    
    
    
    
    
    
    
    121Other projects (8)
    
    Various
    
    
    100
    %
    
    
    
    
    
    
    1,485
    
    
    
    
    
    
    
    40Missouri and UtahOther projects (3)
    
    Various
    
    
    100
    %
    
    
    775
    
    
    
    242
    
    
    
    
    
    
    
    5,494
    
    
    
    13,898
    
    
    
    385
    
    
    
    699Projects in entities we consolidateTexasCity Park
    
    Harris
    
    
    75
    %
    
    
    754
    
    
    
    557
    
    
    
    50
    
    
    
    115Lantana
    
    Denton
    
    
    55
    % (e)
    
    
    329
    
    
    
    2,021
    
    
    
    
    
    
    
    Light Farms
    
    Collin
    
    
    65
    %
    
    
    
    
    
    
    2,501
    
    
    
    
    
    
    
    Timber Creek
    
    Collin
    
    
    88
    %
    
    
    
    
    
    
    654
    
    
    
    
    
    
    
    Other projects (5)
    
    Various
    
    Various
    
    
    
    292
    
    
    
    337
    
    
    
    13
    
    
    
    541,375
    
    
    
    6,070
    
    
    
    63
    
    
    
    169Total owned and consolidated
    
    
    
    
    
    
    
    
    6,869
    
    
    
    19,968
    
    
    
    448
    
    
    
    868Projects in ventures that we account for using the equity methodGeorgiaSeven Hills
    
    Paulding
    
    
    50
    %
    
    
    620
    
    
    
    460
    
    
    
    26
    
    
    
    The Georgian
    
    Paulding
    
    
    38
    %
    
    
    285
    
    
    
    1,100
    
    
    
    
    
    
    
    Other projects (5)
    
    Various
    
    Various
    
    
    
    1,844
    
    
    
    187
    
    
    
    3
    
    
    
    TexasBar C Ranch
    
    Tarrant
    
    
    50
    %
    
    
    173
    
    
    
    1,008
    
    
    
    
    
    
    
    Fannin Farms West
    
    Tarrant
    
    
    50
    %
    
    
    224
    
    
    
    219
    
    
    
    
    
    
    
    Lantana
    
    Denton
    
    Various
    (e)
    
    
    1,755
    
    
    
    93
    
    
    
    2
    
    
    
    78Long Meadow Farms
    
    Fort Bend
    
    
    19
    %
    
    
    594
    
    
    
    1,590
    
    
    
    24
    
    
    
    186Southern Trails
    
    Brazoria
    
    
    40
    %
    
    
    232
    
    
    
    830
    
    
    
    
    
    
    
    Stonewall Estates
    
    Bexar
    
    
    25
    %
    
    
    97
    
    
    
    154
    
    
    
    
    
    
    
    Summer Creek Ranch
    
    Tarrant
    
    
    50
    %
    
    
    793
    
    
    
    1,695
    
    
    
    
    
    
    
    374Summer Lakes
    
    Fort Bend
    
    
    50
    %
    
    
    294
    
    
    
    850
    
    
    
    48
    
    
    
    3Village Park
    
    Collin
    
    
    50
    %
    
    
    313
    
    
    
    256
    
    
    
    
    
    
    
    5Waterford Park
    
    Fort Bend
    
    
    50
    %
    
    
    
    
    
    
    493
    
    
    
    
    
    
    
    37Other projects (3)
    
    Various
    
    Various
    
    
    
    278
    
    
    
    251
    
    
    
    
    
    
    
    37FloridaOther projects (3)
    
    Various
    
    Various
    
    
    
    473
    
    
    
    372
    
    
    
    
    
    
    
    Total in ventures
    
    
    
    
    
    
    
    
    7,975
    
    
    
    9,558
    
    
    
    103
    
    
    
    720Combined Total
    
    
    
    
    
    
    
    
    14,844
    
    
    
    29,526
    
    
    
    551
    
    
    
    1,588
 
 (a)
    
    A project is deemed entitled when all major discretionary land-use approvals have
been received. Some projects may require additional permits for development.(b)
    
    Interest owned reflects our net equity interest in the project, whether owned
directly or indirectly. There are some projects that have multiple ownership structures
within them. Accordingly, portions of these projects may appear as owned, consolidated,
and/or accounted for on the equity method.(c)
    
    Lots are for the total project, regardless of our ownership interest.(d)
    
    Commercial acres are for the total project, regardless of our ownership interest,
and are net developable acres, which may be fewer than the gross acres available in the
project.(e)
    
    The Lantana project consists of a series of 21 partnerships in which our voting
interests range from 25 percent to 55 percent. We account for eight of these partnerships
using the equity method and we consolidate the remaining partnerships. 47




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##### Table of Contents



Financial Services
  Third Quarter-End
    
    
    Year-End2007
    
    
    2006
    
    
    2006(In millions)Single-family mortgage
    
    $
    1,783
    
    
    $
    2,542
    
    
    $
    2,323Single-family mortgage warehouse
    
    
    496
    
    
    
    715
    
    
    
    795Single-family construction
    
    
    1,785
    
    
    
    2,001
    
    
    
    1,782Multifamily and senior housing
    
    
    1,338
    
    
    
    1,263
    
    
    
    1,270Total residential housing
    
    
    5,402
    
    
    
    6,521
    
    
    
    6,170Commercial real estate
    
    
    1,647
    
    
    
    1,047
    
    
    
    1,227Commercial and business
    
    
    1,158
    
    
    
    967
    
    
    
    1,012Energy lending
    
    
    1,316
    
    
    
    918
    
    
    
    1,117Consumer and other
    
    
    129
    
    
    
    146
    
    
    
    156Total loans
    
    
    9,652
    
    
    
    9,599
    
    
    
    9,682Less allowance for loan losses
    
    
    (91
    )
    
    
    (64
    )
    
    
    (65
    )Loans, net
    
    $
    9,561
    
    
    $
    9,535
    
    
    $
    9,617
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Increase (Decrease) in Income Before TaxesThird Quarter-End 2007
    
    Year-End 2006Parent
    
    Financial
    
    Parent
    
    FinancialCompany
    
    Services
    
    Company
    
    Services(In millions)Change in Interest Rates+2%
    
    $
    (4
    )
    
    $
    (22
    )
    
    $
    (2
    )
    
    $
    (45
    )+1%
    
    
    (2
    )
    
    
    (6
    )
    
    
    (1
    )
    
    
    (17
    )-1%
    
    
    2
    
    
    
    (15
    )
    
    
    1
    
    
    
    (18
    )-2%
    
    
    4
    
    
    
    (33
    )
    
    
    2
    
    
    
    (38
    )
   48




---



##### Table of Contents



Foreign Currency Risk
  Commodity Price Risk
  
 Item 4. Controls and Procedures
     
 PART II. OTHER INFORMATION
 
 Item 1 . Legal Proceedings
    49




---



##### Table of Contents



Item 1A. Risk Factors
  Recent volatility in the credit markets could limit the ability of our financial services segment
to grow earning assets and could increase credit losses.
   Risks Relating to the Transformation Plan
 The cost to complete the transactions contemplated by the transformation plan could be significant.
  We may be unable to complete the transactions.
  
    
    changes in business, political, and economic conditions;
    
    changes in governmental regulations and policies and actions of regulatory bodies;
    
    changes in our operating performance;
    
    required changes to existing financings, factors that could influence establishing
the appropriate capital structure for each company, and changes in credit ratings,
including those that may result from the transformation plan;
    
    the ability to complete the transactions related to the sale of our strategic
timberland; and
 50




---



##### Table of Contents




    
    our ability to satisfy certain conditions precedent, including final approval by
our Board of Directors, receipt of certain tax rulings, necessary opinions of
counsel, and the filing and effectiveness of registration statements with the SEC.
 Increased demands on our management team as a result of the transformation plan could distract
managements attention from operating our business.
  Each of the independent companies resulting from the completion of the transformation plan may be
unable to achieve some or all of the benefits that we expect will be achieved from the separation
transactions.
  If certain internal restructuring transactions and the distribution relating to the transformation
plan are determined to be taxable for U.S. federal income tax purposes, we and our stockholders
that are subject to U.S. federal income tax could incur significant U.S. federal income tax
liabilities.
  
 Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
 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 (7/1/2007  7/31/2007)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    6,650,000Month 2 (8/1/2007  8/31/2007)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    6,650,000Month 3 (9/1/2007  9/30/2007)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    6,650,000Total
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    6,650,000
 51




---



##### Table of Contents



(a)
    
    On August 4, 2006, we announced that our Board of Directors
authorized the repurchase of up to 6,000,000 shares of our
common stock, of which 1,650,000 remain to be purchased.
On February 2, 2007, we announced that our Board of
Directors authorized the purchase of up to an additional
5,000,000 shares of our common stock, increasing the
maximum number of shares yet to be purchased under our
repurchase plans to 6,650,000 shares. The August 4, 2006
and February 2, 2007 plans have no expiration dates. We
have no plans or programs that expired in the period
covered by the table above and no plans or programs that we
intend to terminate prior to expiration or under which we
no longer intend to make further purchases. 
 Item 3 . Defaults Upon Senior Securities
  
 Item 4 . Submission of Matters to a Vote of Security Holders
  
 Item 5 . Other Information
  
 Item 6 . Exhibits
 Exhibits
 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 2002.31.2
    
     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 2002.32.1
    
     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 2002.32.2
    
     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.
 52




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##### Table of Contents



SIGNATURES
  TEMPLE-INLAND INC.
(Registrant)Dated:  November 6, 2007
    By
    /s/ Randall D. LevyRandall D. LevyChief Financial Officer By
    /s/ Troy L. HesterTroy L. HesterCorporate Controller and
Principal Accounting Officer 53




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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
    
    
    5531.2
    
    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
    
    
    5732.1
    
    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
    
    
    5932.2
    
    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
    
    
    60
 54