-----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, SG794owKwQadLZ8/vUni6zvzFtcgdN8PXfeFnB/+WFrMVgSnMzWuVGhCEHwPs1TY +kaL2o6dci/WYM/JK1o2ZQ== 0000731939-94-000018.txt : 19941117 0000731939-94-000018.hdr.sgml : 19941117 ACCESSION NUMBER: 0000731939-94-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941114 SROS: NYSE SROS: PSE 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: 94559035 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 FORM 10-Q FOR THIRD QUARTER 1994 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 October 1, 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 October 1, 1994 Common Stock (par value $1.00 per share) 55,854,911 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 Third Quarter First Nine Months 1994 1993 1994 1993 (in millions) Revenues Net sales $ 601.2 $ 518.6 $ 1,716.5 $ 1,599.0 Financial services earnings 12.8 16.5 44.2 52.0 614.0 535.1 1,760.7 1,651.0 Costs and Expenses Cost of sales 497.3 453.1 1,443.0 1,369.3 Selling and administrative 52.0 49.4 149.3 145.6 549.3 502.5 1,592.3 1,514.9 Operating Income 64.7 32.6 168.4 136.1 Interest - net (17.1) (16.7) (49.3) (51.9) Other 1.0 .3 2.3 1.9 Income Before Taxes and Accounting Changes 48.6 16.2 121.4 86.1 Taxes on income 15.5 4.8 38.8 25.8 Income Before Accounting Changes 33.1 11.4 82.6 60.3 Cumulative effect of accounting changes - - - 50.0 Net Income $ 33.1 $ 11.4 $ 82.6 $ 110.3 See notes to consolidated financial statements. 3 Summarized Balance Sheets Parent Company (Temple-Inland Inc.) Unaudited October 1, January 1, 1994 1994 (in millions) ASSETS Current Assets Cash and cash equivalents $ 10.7 $ 8.6 Receivables, less allowances of $8.1 million in 1994 and $7.4 million in 1993 265.3 198.5 Inventories: Work in process and finished goods 79.5 77.7 Raw materials 176.1 180.4 255.6 258.1 Prepaid expenses 21.3 12.5 Total current assets 552.9 477.7 Investment in Financial Services 577.5 487.6 Property and Equipment Buildings 396.6 376.3 Machinery and equipment 2,827.2 2,723.3 Less allowances for depreciation and amortization (1,562.6) (1,437.0) 1,661.2 1,662.6 Construction in progress 444.9 238.7 2,106.1 1,901.3 Timber and timberlands--less depletion 429.7 411.0 Land 33.9 33.8 Total property and equipment 2,569.7 2,346.1 Other Assets 130.6 92.4 Total Assets $ 3,830.7 $ 3,403.8 See notes to consolidated financial statements. 4 Summarized Balance Sheets - Continued Parent Company (Temple-Inland Inc.) Unaudited October 1, January 1, 1994 1994 (in millions) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 311.7 $ 244.8 Federal income taxes payable - 43.9 Employee compensation and benefits 22.0 19.5 Short-term borrowings 3.6 3.3 Current portion of long-term debt 34.4 24.1 Total current liabilities 371.7 335.6 Long-Term Debt 1,342.2 1,044.8 Deferred Income Taxes 212.1 175.9 Postretirement Benefits 124.9 122.0 Other Liabilities 26.7 25.3 Shareholders' Equity 1,753.1 1,700.2 Total Liabilities and Shareholders' Equity $ 3,830.7 $ 3,403.8 See notes to consolidated financial statements. 5 Summarized Statements of Cash Flows Parent Company (Temple-Inland Inc.) Unaudited First Nine Months 1994 1993 (in millions) Cash Provided by (Used for) Operations Net income $ 82.6 $ 110.3 Adjustments to reconcile net income to net cash: Cumulative effect of accounting changes - (50.0) Depreciation and depletion 148.6 142.7 Deferred taxes 15.2 (.9) Unremitted earnings of affiliates (32.9) (36.3) Receivables (62.2) (10.9) Inventories 11.8 3.6 Prepaid expenses (8.4) (.2) Accounts payable and accrued expenses (24.8) 21.7 Other (5.6) (6.9) 124.3 173.1 Cash Provided by (Used for) Investments Capital expenditures (336.3) (254.0) Sale of property and equipment, net 3.9 4.5 Manufacturing acquisitions, net (61.5) - Investment in Financial Services - 34.0 (393.9) (215.5) Cash Provided by (Used for) Financing Change in debt 301.9 75.8 Construction funds held by trustee - 7.3 Issuance of common stock for stock plans 12.1 3.8 Purchase of stock for treasury (.5) (1.5) Cash dividends paid to shareholders (41.8) (41.5) 271.7 43.9 Net increase in cash and cash equivalents 2.1 1.5 Cash and cash equivalents at beginning of period 8.6 7.1 Cash and cash equivalents at end of period $ 10.7 $ 8.6 See notes to consolidated financial statements. 6 Summarized Statements of Income Temple-Inland Financial Services Unaudited Third Quarter First Nine Months 1994 1993 1994 1993 (in millions) Interest income Mortgage-backed and investment securities $ 47.4 $ 58.0 $ 143.4 $ 188.8 Loans receivable and mortgage loans held for sale 61.6 43.2 172.3 120.7 Assisted assets 7.0 5.3 23.0 17.8 Other earning assets 3.9 16.4 24.7 34.9 Total interest income 119.9 122.9 363.4 362.2 Interest expense Deposits 65.4 57.5 184.8 177.4 Borrowed funds 16.7 28.2 60.0 71.8 Total interest expense 82.1 85.7 244.8 249.2 Net interest income 37.8 37.2 118.6 113.0 Provision for loan losses 2.7 1.7 4.1 3.3 Net interest income after provision for loan losses 35.1 35.5 114.5 109.7 Noninterest income Loan servicing fees 9.2 7.5 24.6 21.2 Loan origination and marketing 2.7 13.1 15.6 32.3 Other 22.0 19.0 66.3 51.8 33.9 39.6 106.5 105.3 Noninterest expense Compensation and benefits 24.8 29.3 83.5 80.5 Other 31.4 29.3 93.3 82.5 Total noninterest expense 56.2 58.6 176.8 163.0 Income before taxes and accounting changes 12.8 16.5 44.2 52.0 Taxes on income 2.0 6.4 11.4 15.7 Income before accounting changes 10.8 10.1 32.8 36.3 Cumulative effect of accounting changes - - - 52.3 Net income $ 10.8 $ 10.1 $ 32.8 $ 88.6 See notes to consolidated financial statements. 7 Summarized Balance Sheets Temple-Inland Financial Services Unaudited September 30, December 31, 1994 1993 (in millions) ASSETS Cash and cash equivalents $ 454.8 $ 156.3 Mortgage loans held for sale 162.3 630.1 Mortgage-backed and investment securities 3,989.6 4,407.3 Loans receivable 3,334.7 2,755.3 Covered assets 473.8 664.3 Other assets 482.8 520.0 TOTAL ASSETS $ 8,898.0 $ 9,133.3 LIABILITIES Deposits $ 6,660.6 $ 6,362.3 Securities sold under repurchase agreements 1,111.9 1,570.7 Federal Home Loan Bank advances 154.4 154.1 Other borrowings 55.2 76.2 Other liabilities 350.3 458.3 TOTAL LIABILITIES 8,332.4 8,621.6 SHAREHOLDER'S EQUITY 565.6 511.7 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,898.0 $ 9,133.3 See notes to consolidated financial statements. 8 Summarized Statements of Cash Flows Temple-Inland Financial Services Unaudited First Nine Months 1994 1993 (in millions) Cash Provided by (Used for) Operations Net income $ 32.8 $ 88.6 Adjustments to reconcile net income to net cash: Cumulative effect of accounting changes - (52.3) Amortization, accretion and depreciation 15.8 16.3 Receivable from FSLIC 31.8 1.8 Mortgage loans held for sale 467.8 (112.1) Other (156.5) 197.2 391.7 139.5 Cash Provided by (Used for) Investments Maturities of mortgage-backed and investment securities 643.8 808.8 Purchase of mortgage-backed and investment securities (235.6) (293.5) Loans originated net of principal collected (481.6) (477.9) Proceeds from sales of loans and mortgage- backed securities .5 12.1 Reduction in covered assets 188.8 53.2 Savings bank acquisition 204.5 - Other 3.9 (12.5) 324.3 90.2 Cash Provided by (Used for) Financing Net decrease in deposits (31.5) (181.7) Net increase (decrease) in securities sold under repurchase agreements and short-term borrowings (458.8) 807.8 Additions to long-term debt - 48.0 Payments of debt (21.1) (83.1) Contribution from (dividend paid to) Parent Company - (34.0) Net increase in advances from borrowers for taxes and insurance 93.9 62.6 (417.5) 619.6 Net increase in cash and cash equivalents 298.5 849.3 Cash and cash equivalents at beginning of period 156.3 117.6 Cash and cash equivalents at end of period $ 454.8 $ 966.9 See notes to consolidated financial statements. 9 Consolidated Statements of Income Temple-Inland Inc. and Subsidiaries Unaudited Third Quarter First Nine Months 1994 1993 1994 1993 (In millions, except for per share data) Revenues Manufacturing net sales $ 601.2 $ 518.6 $ 1,716.5 $ 1,599.0 Financial Services revenues 153.8 162.4 469.9 467.4 755.0 681.0 2,186.4 2,066.4 Costs and Expenses Manufacturing costs and expenses 549.3 502.5 1,592.3 1,514.9 Financial Services expenses 141.0 145.9 425.7 415.4 690.3 648.4 2,018.0 1,930.3 Operating Income 64.7 32.6 168.4 136.1 Parent Company Interest - net (17.1) (16.7) (49.3) (51.9) Other 1.0 .3 2.3 1.9 Income Before Taxes and Accounting Changes 48.6 16.2 121.4 86.1 Taxes on Income 15.5 4.8 38.8 25.8 Income Before Accounting Changes 33.1 11.4 82.6 60.3 Cumulative effect of accounting changes - - - 50.0 Net Income $ 33.1 $ 11.4 $ 82.6 $ 110.3 Earnings per share: Before accounting changes $ .59 $ .21 $1.48 $1.09 Effect of accounting changes - - - .90 Earnings per share $ .59 $ .21 $1.48 $1.99 Dividends Paid Per Share of Common Stock $ .25 $ .25 $ .75 $ .75 Weighted Average Shares Outstanding 55.9 55.5 55.9 55.5 See notes to consolidated financial statements. 10 Consolidated Balance Sheets Temple-Inland Inc. and Subsidiaries October 1, 1994 Unaudited Parent Financial Company Services Consolidated (in millions) ASSETS Cash and cash equivalents $ 10.7 $ 454.8 $ 465.5 Investments - 3,989.6 3,989.6 Loans receivable - 3,334.7 3,334.7 Covered assets - 473.8 473.8 Receivable from FSLIC - 2.4 2.4 Trade and other receivables 265.3 - 265.3 Inventories 255.6 162.3 417.9 Property & equipment 2,569.7 45.9 2,615.6 Other assets 151.9 434.5 517.1 Investment in affiliates 577.5 - - TOTAL ASSETS $ 3,830.7 $ 8,898.0 $12,081.9 LIABILITIES Deposits $ - $ 6,660.6 $ 6,660.6 Securities sold under repurchase agreements and Federal Home Loan Bank advances - 1,266.3 1,266.3 Advances from borrowers for taxes and insurance - 155.3 155.3 Other liabilities 398.4 195.0 581.5 Long-term debt 1,342.2 55.2 1,397.4 Deferred income taxes 212.1 - 142.8 Postretirement benefits 124.9 - 124.9 TOTAL LIABILITIES $ 2,077.6 $ 8,332.4 10,328.8 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 301.5 Retained earnings 1,522.9 1,885.8 Cost of shares held in the treasury: 5,534,641 shares (132.7) TOTAL SHAREHOLDERS' EQUITY 1,753.1 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,081.9 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 Nine Months 1994 1993 (in millions) Cash Provided by (Used for) Operations Net income $ 82.6 $ 110.3 Adjustments to reconcile net income to net cash: Cumulative effect of accounting changes - (50.0) Depreciation and depletion 154.7 146.7 Amortization and accretion 9.7 12.3 Deferred taxes 26.6 (.9) Receivable from FSLIC 31.8 1.8 Trade and other receivables (62.2) (10.9) Inventories and mortgage loans held for sale 479.6 (108.5) Other (206.8) 211.8 516.0 312.6 Cash Provided by (Used for) Investments Capital expenditures (351.0) (263.9) Sale of property and equipment, net 4.1 4.5 Purchase of investments (235.6) (293.5) Maturities of investments 643.8 808.8 Proceeds from sale of loans and investments .5 12.1 Loans originated net of principal collected (481.6) (477.9) Reduction in covered assets 188.8 53.2 Manufacturing acquisitions (61.5) - Savings bank acquisition 204.5 - Other 18.4 (2.6) (69.6) (159.3) Cash Provided by (Used for) Financing Additions to debt 306.2 127.8 Payments of debt (25.4) (87.1) Net increase (decrease) in securities sold under repurchase agreements and short-term borrowings (458.8) 807.8 Cash dividends paid to shareholders (41.8) (41.5) Net decrease in deposits (31.5) (181.7) Net increase in advances from borrowers for taxes and insurance 93.9 62.6 Other 11.6 9.6 (145.8) 697.5 Net increase in cash and cash equivalents 300.6 850.8 Cash and cash equivalents at beginning of period 164.9 124.7 Cash and cash equivalents at end of period $ 465.5 $ 975.5 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 In addition to the items discussed under Item 1 of Part II of the quarterly report, 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: Third Quarter First Nine Months 1994 1993 1994 1993 (in millions) Revenues Corrugated container $ 371.2 $ 307.8 $ 1,051.9 $ 945.9 Bleached paperboard 79.1 75.6 224.8 251.3 Building products 143.7 119.3 420.9 356.0 Other activities 7.2 15.9 18.9 45.8 Manufacturing net sales 601.2 518.6 1,716.5 1,599.0 Financial services 153.8 162.4 469.9 467.4 Total revenues $ 755.0 $ 681.0 $ 2,186.4 $ 2,066.4 Income Corrugated container $ 23.0 $ 2.6 $ 49.3 $ 30.1 Bleached paperboard (2.4) (6.3) (20.8) (6.2) Building products 34.1 23.0 103.7 72.1 Other activities .3 (.4) 1.5 (3.4) Operating profit 55.0 18.9 133.7 92.6 Financial services 12.8 16.5 44.2 52.0 67.8 35.4 177.9 144.6 Corporate expenses (3.1) (2.8) (9.5) (8.5) Parent company interest - net (17.1) (16.7) (49.3) (51.9) Other - net 1.0 .3 2.3 1.9 Income before taxes and accounting changes 48.6 16.2 121.4 86.1 Taxes on income 15.5 4.8 38.8 25.8 Income before accounting changes 33.1 11.4 82.6 60.3 Cumulative effect of accounting changes - - - 50.0 Net income $ 33.1 $ 11.4 $ 82.6 $ 110.3 15 Third Quarter 1994 vs. Third Quarter 1993 Third quarter earnings for 1994 totaled $33.1 million, or $.59 per share compared with earnings of $11.4 million, or $.21 per share in the third quarter of last year. Revenues for the quarter were $755.0 million, up from $681.0 million in the prior year. The corrugated container group earned $23.0 million, up from $2.6 million earned in last year's third quarter. Demand for corrugated containers and containerboard remains strong, with box shipments up 8.9 percent from third quarter last year. Selling prices for containerboard and boxes continued to recover in the third quarter. Although productivity improvements have offset most cost increases this year, the Company has experienced extremely unfavorable increases in the price of old corrugated containers (OCC), the principal raw material in the Company's recycle operations. These prices rose throughout the year, peaking in July, then moderating by the end of the quarter. The bleached paperboard group lost $2.4 million in the third quarter, significantly better than the loss of $6.3 million in the third quarter last year. The bleached paperboard group continued to improve, with stronger product demand contributing to more efficient mill operations. Although sales prices declined early in the quarter, price improvement had begun by quarter end. Building products earnings for the third quarter were $34.1 million, up from $23.0 million last year. Demand for building products continued to be strong in the third quarter. Prices for all the Company's building materials remained strong, with only lumber experiencing pressure toward the end of the quarter. Earnings for the financial services group were $12.8 million, down from $16.5 million in the third quarter last year. Mortgage banking loan volumes continued to decline below last year's record level, but Guaranty Federal Bank, F.S.B., continued to experience significant growth in its acquisition of adjustable mortgage loans. The discounted interest rates received in the first months of these adjustable mortgage loans are being absorbed in current operating results. Net interest expense increased to $17.1 million in the third quarter of 1994 compared with $16.7 million in the third quarter of last year. Interest expense increased in the third quarter due to higher levels of debt outstanding. Capitalized interest increased significantly compared to the prior year due to continued spending for the bleached paperboard group's modernization projects which are expected to be operational in the second half of 1995. However, this increase in capitalized interest was not enough to offset the increase in interest expense. 16 First Nine Months of 1994 vs. First Nine Months of 1993 Earnings for the first nine months of 1994 were $82.6 million, or $1.48 per share compared with earnings of $60.3 million, or $1.09 per share (before required accounting changes) in the first nine months of 1993. The corrugated container group earned $49.3 million, up 64 percent from the $30.1 million earned in the first nine months of 1993. Demand for corrugated boxes and containerboard remains strong, with the industry operating at record levels. Selling prices for containerboard and boxes have improved significantly. The cost of OCC, the principal raw material, rose throughout the year, peaking in July, then moderating by the end of the third quarter. If the current pricing for OCC prevails, costs in the fourth quarter will be down from the third quarter average. The bleached paperboard group operated at a loss of $20.8 million compared with a loss of $6.2 million in the first nine months of 1993. Demand for paperboard products strengthened during the latter part of the second quarter and continued to improve, contributing to more efficient mill operations. Price improvements had begun by quarter end. The building products group earned $103.7 million in the first nine months of 1994 compared with $72.1 million for the same period last year due to increased demand and improved price levels for most of our product lines. Earnings for the financial services group were $44.2 million for the period compared with $52.0 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 subsided. 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 nine months of 1994, the Company's debt increased $306 million mainly through issuance of commercial paper and private placement debt to fund planned capital projects for our bleached paperboard group and the 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. As last disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, the Company is a defendant in a lawsuit filed in Orange County, Texas, by approximately 250 plaintiffs in which unspecified actual and punitive damages are sought for alleged diminished property values and increased risk of cancer resulting from the discharge of dioxin into the river near the Company's plant at Evadale, Texas. During the quarter ended October 1, 1994, the Company agreed to settlement terms with the plaintiffs. The case against the Company, however, will not be dismissed until a definitive settlement agreement is executed by the parties. While the Company believes that such a definitive settlement agreement will be executed in the near future, its execution is subject to reaching agreement with all parties on a definitive settlement agreement and related documents and the satisfaction of certain conditions precedent. Although the Company is prohibited from disclosing the terms of the settlement, the costs of settlement are significantly under the materiality standard of Item 103 of Regulation S-K. 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. (27) Financial Data Schedule (b) Reports on Form 8-K. During the three months ended October 1, 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: November 11, 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. (27) Financial Data Schedule 21-23 20 EXHIBIT (11) TEMPLE-INLAND INC. AND SUBSIDIARIES STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (in thousands, except for per share data) Third Quarter First Nine Months 1994 1993 1994 1993 Primary Average common shares outstanding 55,809 55,344 55,696 55,307 Net effect of dilutive stock options based on treasury stock method using average market price 127 166 159 221 Weighted average shares outstanding 55,936 55,510 55,855 55,528 Net income: Income before accounting changes $ 33,036 $ 11,350 $ 82,568 $ 60,279 Cumulative effect of accounting changes - - - 50,000 Net income $ 33,036 $ 11,350 $ 82,568 $110,279 Earnings per share: Before accounting changes $ .59 $ .21 $ 1.48 $ 1.09 Effect of accounting changes - - - .90 Earnings per share $ .59 $ .21 $ 1.48 $ 1.99 Fully Diluted Average common shares outstanding 55,809 55,344 55,696 55,307 Net effect of dilutive stock options based on treasury stock method using the closing market price, if higher than average market price 287 166 212 221 Weighted average shares outstanding 56,096 55,510 55,908 55,528 Net income: Income before accounting changes $ 33,036 $ 11,350 $ 82,568 $ 60,279 Cumulative effect of accounting changes - - - 50,000 Net income $ 33,036 $ 11,350 $ 82,568 $110,279 Earnings per share: Before accounting changes $ .59 $ .21 $ 1.48 $ 1.09 Effect of accounting changes - - - .90 Earnings per share $ .59 $ .21 $ 1.48 $ 1.99 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUMMARIZED BALANCE SHEETS AND SUMMARIZED INCOME STATEMENTS FOR THE PARENT COMPANY (TEMPLE-INLAND INC.) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1994 OCT-01-1994 10,700,000 0 265,300,000 8,100,000 255,600,000 552,900,000 2,569,700,000 1,562,600,000 3,830,700,000 371,700,000 1,342,200,000 61,400,000 0 0 1,691,700,000 3,830,700,000 1,716,500,000 1,760,700,000 1,443,000,000 1,592,300,000 2,300,000 0 49,300,000 121,400,000 38,800,000 82,600,000 0 0 0 82,600,000 1.48 1.48
EX-27 3
CT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED INCOME STATEMENTS FOR TEMPLE-INLAND INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1994 OCT-01-1994 12,081,900,000 61,400,000 0 0 1,691,700,000 12,081,900,000 2,186,400,000 38,800,000 82,600,000 0 0 0 82,600,000 1.48 1.48
EX-27 4
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUMMARIZED BALANCE SHEETS AND SUMMARIZED INCOME STATEMENTS FOR TEMPLE- INLAND FINANCIAL SERVICES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1994 OCT-01-1994 454,800,000 0 0 162,300,000 0 3,989,600,000 0 3,334,700,000 0 8,898,000,000 6,660,600,000 1,111,900,000 350,300,000 55,200,000 0 0 0 565,600,000 8,898,000,000 172,300,000 143,400,000 47,700,000 363,400,000 184,800,000 244,800,000 118,600,000 4,100,000 0 176,800,000 44,200,000 44,200,000 0 0 32,800,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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