-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LY+V5ypbCLbkm0qhMIu5l0E5bDINjXJ/PRx9uUp7wprIkHn2FzokCBKb6FtwL+8W imMXlhB/cmiQNVzxD3Ri/w== 0000731939-94-000016.txt : 19940817 0000731939-94-000016.hdr.sgml : 19940817 ACCESSION NUMBER: 0000731939-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940702 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLE INLAND INC CENTRAL INDEX KEY: 0000731939 STANDARD INDUSTRIAL CLASSIFICATION: 2631 IRS NUMBER: 751903917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-87570 FILM NUMBER: 94543262 BUSINESS ADDRESS: STREET 1: 303 S TEMPLE DR STREET 2: PO DRAWER N CITY: DIBOLL STATE: TX ZIP: 75941 BUSINESS PHONE: 4098292211 MAIL ADDRESS: STREET 1: 303 SOUTH TEMPLE DIRVE CITY: DIBOLL STATE: TX ZIP: 75941 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended July 2, 1994 OR 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 1-8634 Temple-Inland Inc. (Exact name of registrant as specified in its charter) Delaware 75-1903917 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 303 South Temple Drive, Diboll, Texas 75941 (Address of principal executive offices) (Zip Code) (409) 829-2211 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report.) Indicate whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes X No_____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Number of common shares outstanding Class as of July 2, 1994 Common Stock (par value $1.00 per share) 55,725,454 The Exhibit Index appears on page 19 of this report. 2 PART I. FINANCIAL INFORMATION FINANCIAL STATEMENTS Summarized Statements of Income Parent Company (Temple-Inland Inc.) Unaudited Second Quarter First Six Months 1994 1993 1994 1993 (in millions) Revenues Net sales $ 573.5 $ 543.7 $ 1,115.3 $ 1,080.4 Financial services earnings 14.4 18.5 31.4 35.5 587.9 562.2 1,146.7 1,115.9 Costs and Expenses Cost of sales 483.7 467.1 945.7 916.2 Selling and administrative 49.9 48.6 97.3 96.2 533.6 515.7 1,043.0 1,012.4 Operating Income 54.3 46.5 103.7 103.5 Interest - net ( 16.3) ( 17.7) ( 32.2) ( 35.2) Other 1.1 1.1 1.3 1.6 Income Before Taxes and Accounting Changes 39.1 29.9 72.8 69.9 Taxes on income 12.5 9.0 23.3 21.0 Income Before Accounting Changes 26.6 20.9 49.5 48.9 Cumulative effect of accounting changes - - - 50.0 Net Income $ 26.6 $ 20.9 $ 49.5 $ 98.9 See notes to consolidated financial statements. 3 Summarized Balance Sheets Parent Company (Temple-Inland Inc.) Unaudited July 2, January 1, 1994 1994 (in millions) ASSETS Current Assets Cash and cash equivalents $ 11.3 $ 8.6 Receivables, less allowances of $7.9 million in 1994 and $7.4 million in 1993 244.2 198.5 Inventories: Work in process and finished goods 78.7 77.7 Raw materials 181.7 180.4 260.4 258.1 Prepaid expenses 22.4 12.5 Total current assets 538.3 477.7 Investment in Financial Services 566.6 487.6 Property and Equipment Buildings 383.8 376.3 Machinery and equipment 2,818.7 2,723.3 Less allowances for depreciation and amortization (1,516.4) (1,437.0) 1,686.1 1,662.6 Construction in progress 395.2 238.7 2,081.3 1,901.3 Timber and timberlands--less depletion 426.1 411.0 Land 33.9 33.8 Total property and equipment 2,541.3 2,346.1 Other Assets 100.3 92.4 Total Assets $ 3,746.5 $ 3,403.8 See notes to consolidated financial statements. 4 Summarized Balance Sheets - Continued Parent Company (Temple-Inland Inc.) Unaudited July 2, January 1, 1994 1994 (in millions) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 300.8 $ 244.8 Federal income taxes payable - 43.9 Employee compensation and benefits 19.5 19.5 Short-term borrowings 3.0 3.3 Current portion of long-term debt 29.2 24.1 Total current liabilities 352.5 335.6 Long-Term Debt 1,317.0 1,044.8 Deferred Income Taxes 203.5 175.9 Postretirement Benefits 124.2 122.0 Other Liabilities 19.5 25.3 Shareholders' Equity 1,729.8 1,700.2 Total Liabilities and Shareholders' Equity $ 3,746.5 $ 3,403.8 See notes to consolidated financial statements. 5 Summarized Statements of Cash Flows Parent Company (Temple-Inland Inc.) Unaudited First Six Months 1994 1993 (in millions) Cash Provided by (Used for) Operations Net income $ 49.5 $ 98.9 Adjustments to reconcile net income to net cash: Cumulative effect of accounting changes - ( 50.0) Depreciation and depletion 98.4 95.9 Deferred taxes 6.6 ( 3.2) Unremitted earnings of affiliates ( 22.0) ( 26.2) Receivables ( 46.2) ( 21.8) Inventories ( 1.8) ( 7.2) Prepaid expenses ( 9.9) ( 1.8) Accounts payable and accrued expenses ( 22.7) ( 4.9) Other ( 11.7) 5.9 40.2 85.6 Cash Provided by (Used for) Investments Capital expenditures ( 226.0) ( 174.0) Sale of property and equipment, net 3.2 3.0 Manufacturing acquisitions, net ( 64.1) - Investment in Financial Services - 18.0 ( 286.9) ( 153.0) Cash Provided by (Used for) Financing Change in debt 269.6 89.0 Construction funds held by trustee - 6.1 Issuance of common stock for stock plans 7.9 2.2 Purchase of stock for treasury ( .3) ( 1.3) Cash dividends paid to shareholders ( 27.8) ( 27.6) 249.4 68.4 Net increase (decrease) in cash and cash equivalents 2.7 1.0 Cash and cash equivalents at beginning of period 8.6 7.1 Cash and cash equivalents at end of period $ 11.3 $ 8.1 See notes to consolidated financial statements. 6 Summarized Statements of Income Temple-Inland Financial Services Unaudited Second Quarter First Six Months 1994 1993 1994 1993 (in millions) Interest income Mortgage-backed and investment securities $ 47.3 $ 63.2 $ 96.0 $ 130.8 Loans receivable and mortgage loans held for sale 55.3 40.8 110.7 77.5 Assisted assets 7.4 5.3 16.0 12.5 Other earning assets 6.0 12.5 20.8 18.5 Total interest income 116.0 121.8 243.5 239.3 Interest expense Deposits 60.1 58.7 119.4 119.9 Borrowed funds 17.7 25.1 43.3 43.6 Total interest expense 77.8 83.8 162.7 163.5 Net interest income 38.2 38.0 80.8 75.8 Provision for loan losses .5 1.1 1.4 1.6 Net interest income after provision for loan losses 37.7 36.9 79.4 74.2 Noninterest income Loan servicing fees 7.6 6.8 15.4 13.7 Loan origination and marketing 5.0 12.1 12.9 19.2 Other 23.0 18.2 44.3 32.8 35.6 37.1 72.6 65.7 Noninterest expense Compensation and benefits 28.2 28.1 58.7 51.2 Other 30.7 27.4 61.9 53.2 Total noninterest expense 58.9 55.5 120.6 104.4 Income before taxes and accounting changes 14.4 18.5 31.4 35.5 Taxes on income 4.6 4.9 9.4 9.3 Income before accounting changes 9.8 13.6 22.0 26.2 Cumulative effect of accounting changes - - - 52.3 Net income $ 9.8 $ 13.6 $ 22.0 $ 78.5 See notes to consolidated financial statements. 7 Summarized Balance Sheets Temple-Inland Financial Services Unaudited June 30, December 31, 1994 1993 (in millions) ASSETS Cash and cash equivalents $ 677.8 $ 156.3 Mortgage loans held for sale 245.8 630.1 Mortgage-backed and investment securities 4,167.3 4,407.3 Loans receivable 2,916.7 2,755.3 Covered assets 521.8 664.3 Other assets 455.1 520.0 TOTAL ASSETS $ 8,984.5 $ 9,133.3 LIABILITIES Deposits $ 6,646.6 $ 6,362.3 Securities sold under repurchase agreements 1,224.3 1,570.7 Federal Home Loan Bank advances 154.3 154.1 Other borrowings 60.8 76.2 Other liabilities 343.8 458.3 TOTAL LIABILITIES 8,429.8 8,621.6 SHAREHOLDER'S EQUITY 554.7 511.7 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,984.5 $ 9,133.3 See notes to consolidated financial statements. 8 Summarized Statements of Cash Flows Temple-Inland Financial Services Unaudited First Six Months 1994 1993 (in millions) Cash Provided by (Used for) Operations Net income $ 22.0 $ 78.5 Adjustments to reconcile net income to net cash: Cumulative effect of accounting changes - ( 52.3) Amortization, accretion and depreciation 8.8 11.2 Provision for loan losses 1.4 1.6 Receivable from FSLIC 39.1 ( 1.2) Mortgage loans held for sale 384.3 ( 151.3) Gain on sale of investments ( .4) ( .9) Other ( 120.2) 130.9 335.0 16.5 Cash Provided by (Used for) Investments Maturities of mortgage-backed and investment securities 468.1 542.5 Purchase of mortgage-backed and investment securities ( 235.3) ( 268.8) Loans originated net of principal collected ( 58.7) ( 313.8) Proceeds from sales of loans and mortgage- backed securities .6 11.6 Reduction in covered assets 141.3 44.5 Savings bank acquisition 200.2 - Other 9.3 ( 10.0) 525.5 6.0 Cash Provided by (Used for) Financing Net decrease in deposits ( 47.1) ( 211.6) Net increase (decrease) in securities sold under repurchase agreements and short-term borrowings ( 346.4) 604.5 Additions to long-term debt - 48.0 Payments of debt ( 15.5) ( 66.4) Contributions from (dividend paid to) Parent - ( 18.0) Other 70.0 35.2 ( 339.0) 391.7 Net increase in cash and cash equivalents 521.5 414.2 Cash and cash equivalents at beginning of period 156.3 117.6 Cash and cash equivalents at end of period $ 677.8 $ 531.8 See notes to consolidated financial statements. 9 Consolidated Statements of Income Temple-Inland Inc. and Subsidiaries Unaudited Second Quarter First Six Months 1994 1993 1994 1993 (In millions, except for per share data) Revenues Manufacturing net sales $ 573.5 $ 543.7 $ 1,115.3 $ 1,080.4 Financial Services revenues 151.6 158.9 316.1 305.0 725.1 702.6 1,431.4 1,385.4 Costs and Expenses Manufacturing costs and expenses 533.6 515.7 1,043.0 1,012.4 Financial Services expenses 137.2 140.4 284.7 269.5 670.8 656.1 1,327.7 1,281.9 Operating Income 54.3 46.5 103.7 103.5 Parent Company Interest - net ( 16.3) ( 17.7) ( 32.2) ( 35.2) Other 1.1 1.1 1.3 1.6 Income Before Taxes and Accounting Changes 39.1 29.9 72.8 69.9 Taxes on Income 12.5 9.0 23.3 21.0 Income Before Accounting Changes 26.6 20.9 49.5 48.9 Cumulative effect of accounting changes - - - 50.0 Net Income $ 26.6 $ 20.9 $ 49.5 $ 98.9 Earnings per share: Before accounting changes $ .48 $ .38 $ .89 $ .88 Effect of accounting changes - - - .90 Earnings per share $ .48 $ .38 $ .89 $1.78 Dividends Paid Per Share of Common Stock $ .25 $ .25 $ .50 $ .50 Weighted Average Shares Outstanding 55.8 55.6 55.8 55.6 See notes to consolidated financial statements. 10 Consolidated Balance Sheets Temple-Inland Inc. and Subsidiaries July 2, 1994 Unaudited Parent Financial Company Services Consolidated (in millions) ASSETS Cash and cash equivalents $ 11.3 $ 677.8 $ 689.1 Investments - 4,167.3 4,167.3 Loans receivable - 2,916.7 2,916.7 Covered assets - 521.8 521.8 Receivable from FSLIC - ( 4.9) ( 4.9) Trade and other receivables 244.2 - 244.2 Inventories 260.4 245.8 506.2 Property & equipment 2,541.3 40.8 2,582.1 Other assets 122.7 419.2 470.7 Investment in affiliates 566.6 - - TOTAL ASSETS $ 3,746.5 $ 8,984.5 $12,093.2 LIABILITIES Deposits $ - $ 6,646.6 $ 6,646.6 Securities sold under repurchase agreements and Federal Home Loan Bank advances - 1,378.6 1,378.6 Advances from borrowers for taxes and insurance - 131.5 131.5 Other liabilities 372.0 212.3 572.4 Long-term debt 1,317.0 60.8 1,377.8 Deferred income taxes 203.5 - 132.3 Postretirement benefits 124.2 - 124.2 TOTAL LIABILITIES $ 2,016.7 $ 8,429.8 10,363.4 SHAREHOLDERS' EQUITY Preferred 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 61,389,552 shares including shares held in the treasury 61.4 Additional paid-in capital 299.9 Retained earnings 1,503.8 1,865.1 Cost of shares held in the treasury: 5,664.098 shares ( 135.3) TOTAL SHAREHOLDERS' EQUITY 1,729.8 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,093.2 See the notes to the consolidated financial statements. 11 Consolidated Balance Sheets Temple-Inland Inc. and Subsidiaries January 1, 1994 Unaudited Parent Financial Company Services Consolidated (in millions) ASSETS Cash $ 8.6 $ 156.3 $ 164.9 Investments - 4,407.3 4,407.3 Loans receivable - 2,755.3 2,755.3 Covered assets - 664.3 664.3 Receivable from FSLIC - 34.2 34.2 Trade and other receivables 198.5 - 198.5 Inventories 258.1 630.1 888.2 Property & equipment 2,346.1 37.4 2,383.5 Other assets 104.9 448.4 463.1 Investment in affiliates 487.6 - - TOTAL ASSETS $ 3,403.8 $ 9,133.3 $11,959.3 LIABILITIES Deposits $ - $ 6,362.3 $ 6,362.3 Securities sold under repurchase agreements and Federal Home Loan Bank advances - 1,724.8 1,724.8 Advances from borrowers for taxes and insurance - 59.2 59.2 Other liabilities 360.9 399.1 753.0 Long-term debt 1,044.8 76.2 1,121.0 Deferred income taxes 175.9 - 116.8 Postretirement benefits 122.0 - 122.0 TOTAL LIABILITIES $ 1,703.6 $ 8,621.6 10,259.1 SHAREHOLDERS' EQUITY Preferred 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 61,389,552 shares including shares held in the treasury 61.4 Additional paid-in capital 296.9 Retained earnings 1,482.1 1,840.4 Cost of shares held in the treasury: 5,908,173 shares ( 140.2) TOTAL SHAREHOLDERS' EQUITY 1,700.2 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $11,959.3 See the notes to the consolidated financial statements. 12 Consolidated Statements of Cash Flows Temple-Inland Inc. and Subsidiaries Unaudited First Six Months 1994 1993 (in millions) Cash Provided by (Used for) Operations Net income $ 49.5 $ 98.9 Adjustments to reconcile net income to net cash: Cumulative effect of accounting changes - ( 50.0) Depreciation and depletion 102.3 98.5 Amortization and accretion 4.9 8.6 Deferred taxes 15.9 ( 3.2) Receivable from FSLIC 39.1 ( 1.2) Trade and other receivables ( 46.2) ( 21.8) Inventories 382.5 ( 158.5) Other ( 172.8) 130.8 375.2 102.1 Cash Provided by (Used for) Investments Capital expenditures ( 233.5) ( 180.9) Sale of property and equipment, net 3.4 3.0 Purchase of investments ( 235.3) ( 268.8) Maturities of investments 468.1 542.5 Proceeds from sale of loans and investments .6 11.6 Loans originated net of principal collected ( 58.7) ( 313.8) Reduction in covered assets 141.3 44.5 Manufacturing acquisitions ( 64.1) - Savings bank acquisition 200.2 - Other 16.6 ( 3.1) 238.6 ( 165.0) Cash Provided by (Used for) Financing Additions to debt 272.3 146.5 Payments of debt ( 18.2) ( 75.9) Net increase (decrease) in securities sold under repurchase agreements and short-term borrowings ( 346.4) 604.5 Cash dividends paid to shareholders ( 27.8) ( 27.6) Net decrease in deposits ( 47.1) ( 211.6) Other 77.6 42.2 ( 89.6) 478.1 Net increase (decrease) in cash 524.2 415.2 Cash at beginning of period 164.9 124.7 Cash at end of period $ 689.1 $ 539.9 See notes to consolidated financial statements. 13 TEMPLE-INLAND INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, because certain assets and liabilities are in separate corporate entities, the consolidated assets are not available to satisfy all consolidated liabilities. In the opinion of management, all adjustments (consisting only of normal accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes included in, or incorporated into, Temple-Inland Inc.'s (the "Company") Annual Report on Form 10-K for the fiscal year ended January 1, 1994. The consolidated financial statements include the accounts of Temple-Inland Inc. and all subsidiaries in which the Company has more than a 50 percent equity ownership. All material intercompany amounts and transactions have been eliminated. Included as an integral part of the consolidated financial statements are separate summarized financial statements for the Company's primary business groups. The Parent Company (Temple-Inland Inc.) summarized financial statements include the accounts of Temple-Inland Inc. and its manufacturing subsidiaries with the Financial Services subsidiaries and the 20 percent to 50 percent owned companies being reflected in the financial statements on the equity basis. The Temple-Inland Financial Services Group summarized financial statements include savings bank, mortgage banking and real estate development activities and insurance operations. NOTE B - CONTINGENCIES There are pending against the Company and its subsidiaries lawsuits and claims arising in the regular course of business. In the opinion of management, recoveries, if any, by plaintiffs or claimants that may result from the foregoing litigation and claims will not be material in relation to the consolidated financial position of the Company and its subsidiaries. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations Results of operations, including information regarding the Company's principal business segments, are shown below: Second Quarter First Six Months 1994 1993 1994 1993 (in millions) Revenues Corrugated container $ 353.8 $ 319.6 $ 680.7 $ 638.1 Bleached paperboard 76.0 86.9 145.7 175.7 Building products 137.6 118.7 277.2 236.7 Other activities 6.1 18.5 11.7 29.9 Manufacturing net sales 573.5 543.7 1,115.3 1,080.4 Financial services 151.6 158.9 316.1 305.0 Total revenues $ 725.1 $ 702.6 $ 1,431.4 $ 1,385.4 Income Corrugated container $ 17.2 $ 11.0 $ 26.3 $ 27.5 Bleached paperboard ( 8.2) - ( 18.4) .1 Building products 33.4 22.7 69.6 49.1 Other activities .8 ( 3.0) 1.2 ( 3.0) Operating profit 43.2 30.7 78.7 73.7 Financial services 14.4 18.5 31.4 35.5 57.6 49.2 110.1 109.2 Corporate expenses ( 3.3) ( 2.7) ( 6.4) ( 5.7) Parent company interest - net ( 16.3) ( 17.7) ( 32.2) ( 35.2) Other - net 1.1 1.1 1.3 1.6 Income before taxes and accounting changes 39.1 29.9 72.8 69.9 Taxes on income 12.5 9.0 23.3 21.0 Income before accounting changes 26.6 20.9 49.5 48.9 Cumulative effect of accounting changes - - - 50.0 Net income $ 26.6 $ 20.9 $ 49.5 $ 98.9 15 Second Quarter 1994 vs. Second Quarter 1993 Second quarter earnings for 1994 totaled $26.6 million, or $.48 per share compared with earnings of $20.9 million, or $.38 per share in the second quarter of last year. Revenues slightly increased for this year's quarter to $725.1 million. The corrugated container group earned $17.2 million in the quarter, up from $11.0 million earned in the second quarter of 1993. Demand for corrugated boxes and containerboard remains strong, with shipments of boxes up 6.9 percent for the quarter from the second quarter of last year. While selling prices for boxes and containerboard have begun to recover, much of the improvement is being offset by dramatic increases in the cost of old corrugated containers ("OCC"), a significant percentage of the raw material used in the Company's containerboard mills. Demand for product in the bleached paperboard group increased in the second quarter, allowing the mill to operate more efficiently. Pricing also began to recover in certain product categories. The group lost $8.2 million, less than the $10.2 million lost in the first quarter, and compared with break-even in the second quarter last year. The building products group earned $33.4 million in the quarter, up from $22.7 million in the second quarter last year. While earnings were down slightly from the first quarter, it was the second best quarter ever for this group. Selling prices for solid wood products remained above levels for the second quarter of 1993, but were below first quarter realizations. Demand for panel products remained stronger than solid wood and selling prices continued to recover. Temple-Inland Financial Services earned $14.4 million in the quarter, down $4.1 million from the second quarter last year. The unfavorable variance is partially due to the decrease in income from our mortgage unit, whose level of originations has declined as the refinancing activity has subsided. Net interest expense decreased to $16.3 million in the second quarter of 1994 compared with $17.7 million in the second quarter of last year. Although interest expense increased due to higher levels of debt outstanding, that increase was more than offset by an increase in capitalized interest due to the Company's continuing spending for the bleached paperboard group's modernization projects which are expected to be operational in mid-1995. 16 First Half of 1994 vs. First Half of 1993 Earnings for the first six months of 1994 before the effect of accounting changes were $49.5 million, or $.89 per share compared with $48.9 million, or $.88 per share for the first half of last year. Revenues of $1.43 billion were slightly up from the 1993 first half. The corrugated container group's earnings of $26.3 million were down 4.3 percent from last year. Demand for all of our products remains strong with shipments of boxes up 5.8 percent from last year. Earnings are lower compared to last year due primarily to substantial increases in the cost of old corrugated containers, a primary raw material. The bleached paperboard group operated at a loss of $18.4 million compared with break-even earnings in the first half of 1993. Demand for paperboard's products strengthened during the latter part of the second quarter but remained below last year's level. The building products group earned $69.6 million in the first half of 1994 compared with $49.1 million last year due to increased demand and improved price levels for most of our product lines. Earnings for the financial services group were $31.4 million for the period compared with $35.5 million for last year's comparable period due to the decrease in income from our mortgage unit, whose level of originations has declined as the refinancing activity has subsided. Also, margin compression continued to adversely affect earnings as our interest costs on deposits increased. Financial Condition The Company's financial condition continues to be sound. Internally generated funds, existing credit facilities and the capacity to issue long-term debt are sufficient to fund projected capital expenditures, to service existing debt, to pay dividends and to meet normal working capital requirements. During the first half of 1994, the Company's debt increased $270 million mainly through issuance of commercial paper and bank debt to fund planned capital projects for our bleached paperboard group and a purchase of a specialty corrugated business by our corrugated container group. Our savings bank continues to meet all three regulatory requirement formulae set out under the Financial Institution Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). 17 PART II. OTHER INFORMATION Item 1. Legal Proceedings. The information set forth in Note B to Notes to Consolidated Financial Statements in Part I of this report is incorporated by reference thereto. Item 2. Changes in Securities. Not Applicable. Item 3. Defaults Upon Senior Securities. Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable Item 5. Other Information. Not Applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Regulation S-K Exhibit Number (11) Statement re computation of per share earnings. (b) Reports on Form 8-K. During the three months ended July 2, 1994, the Company did not file any reports on Form 8-K. 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TEMPLE-INLAND INC. (Registrant) Date: August 5, 1994 By /s/ David H. Dolben David H. Dolben Vice President and Chief Accounting Officer 19 EXHIBIT INDEX The following is an index of the exhibits filed herewith. The page reference set forth opposite the description of exhibits included in such index refer to the pages under the sequential numbering system prescribed by Rule 0-3(b) under the Securities Exchange Act of 1934. Regulation S-K Exhibit Sequential Number Page Number (11) Statement re computation of 20 per share earnings. 20 EXHIBIT (11) TEMPLE-INLAND INC. AND SUBSIDIARIES STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (in thousands, except for per share data)
Second Quarter First Six Months 1994 1993 1994 1993 Primary Average common shares outstanding 55,692 55,303 55,639 55,289 Net effect of dilutive stock options based on treasury stock method using average market price 145 268 175 306 Weighted average shares outstanding 55,837 55,571 55,814 55,595 Net income: Income before accounting changes $ 26,618 $ 20,923 $ 49,532 $ 48,929 Cumulative effect of accounting changes - - - 50,000 Net income $ 26,618 $ 20,923 $ 49,532 $ 98,929 Earnings per share: Before accounting changes $ .48 $ .38 $ .89 $ .88 Effect of accounting changes - - - .90 Earnings per share $ .48 $ .38 $ .89 $ 1.78 Fully Diluted Average common shares outstanding 55,692 55,303 55,639 55,289 Net effect of dilutive stock options based on treasury stock method using the closing market price, if higher than average market price 145 268 175 306 Weighted average shares outstanding 55,837 55,571 55,814 55,595 Net income: Income before accounting changes $ 26,618 $ 20,923 $ 49,532 $ 48,929 Cumulative effect of accounting changes - - - 50,000 Net income $ 26,618 $ 20,923 $ 49,532 $ 98,929 Earnings per share: Before accounting changes $ .48 $ .38 $ .89 $ .88 Effect of accounting changes - - - .90 Earnings per share $ .48 $ .38 $ .89 $ 1.78
-----END PRIVACY-ENHANCED MESSAGE-----