EX-99 2 ex992q04earnrel.txt 2ND QUARTER 2004 EARNINGS RELEASE [TEMPLE-INLAND INC. LOGO] NEWS RELEASE------------------------------------------------------- FOR IMMEDIATE RELEASE CONTACT: Chris L. Nines (512) 434-5587 TEMPLE-INLAND INC. REPORTS SECOND QUARTER 2004 RESULTS AUSTIN, TEXAS, July 27, 2004--Temple-Inland Inc. today reported second quarter 2004 net income of $56 million, or $0.99 per diluted share, compared with second quarter 2003 net income of $156 million, or $2.87 per diluted share, and first quarter 2004 net income of $13 million, or $0.24 per diluted share. Results for second quarter 2004 include (i) an after-tax charge of $4 million, or $0.07 per share, associated with converting facility closures and prepayment penalties associated with the early redemption of indebtedness, and (ii) after-tax income of $1 million, or $0.01 per share, associated with previously discontinued operations. Results for second quarter 2003 included (i) a one-time tax benefit of $165 million, or $3.05 per share, and (ii) an after-tax charge of $15 million, or $0.28 per share, primarily associated with Project TIP consolidation and supply chain initiatives. As reflected in the table below, the total effect of these special items for second quarter 2004 is $0.06 per share. First Second Quarter Quarter --------------- 2004 2003 2004 ---- ---- ---- Net income (loss) per dil. share as reported $0.99 $2.87 $0.24 Special items 0.06 (2.77) 0.20 ----- ----- ----- Net income per diluted share, excluding special items $1.05 $0.10 $0.44 Corrugated Packaging The corrugated packaging operation reported income of $26 million in second quarter 2004, compared with $7 million in second quarter 2003 and $10 million in first quarter 2004. Despite lower average box prices and higher OCC costs, earnings improved in second quarter 2004 compared with second quarter 2003 2 due to higher volumes and lower unit costs (mill and converting). Earnings improved in second quarter 2004 compared with first quarter 2004 as a result of higher volumes, improved pricing, and lower unit costs. On a volume per workday basis, shipments of corrugated containers were up 7.9% in second quarter 2004 compared with shipments in second quarter 2003 and up 7.0% compared with first quarter 2004. Average prices for corrugated containers in second quarter 2004 were 3% lower than second quarter 2003 but up 1% compared with first quarter 2004. The average cost of OCC in second quarter 2004 was up 22% compared with second quarter 2003 and up 13% compared with first quarter 2004. Energy costs in second quarter 2004 were down $1 million compared with second quarter 2003 and first quarter 2004. Forest Products The forest products operation reported income of $65 million in second quarter 2004, compared with $15 million in second quarter 2003 and $32 million in first quarter 2004. Operating income for second quarter 2004 included $6 million from high- value land sales compared with $5 million in second quarter 2003 and $3 million in first quarter 2004. The average sales price per acre of high-value land in second quarter 2004 was approximately $7,000 per acre. Average lumber prices in second quarter 2004 were up 28% compared with second quarter 2003 and up 14% compared with first quarter 2004. Particleboard prices were up 27% compared with second quarter 2003 and up 16% compared with first quarter 2004. Medium density fiberboard (MDF) prices were up 14% compared with second quarter 2003 and up 10% compared with first quarter 2004. Gypsum prices were up 28% compared with second quarter 2003 and up 8% compared with first quarter 2004. Shipments for lumber were up in second quarter 2004 compared with second quarter 2003, but down compared with first quarter 2004. Shipments for particleboard and gypsum were up in second quarter 2004 compared with second quarter 2003 and first quarter 2004. Excluding the Clarion MDF facility that was sold during second quarter 2004, shipments for MDF were up in second quarter 2004 compared with second quarter 2003 and first quarter 2004. Financial Services The financial services operation reported income of $59 million in second quarter 2004 compared with $44 million in second quarter 2003 and $53 million in first quarter 2004. The improvement in earnings in second quarter 2004 compared with second quarter 2003 was the result of increased spreads, improving credit conditions resulting in a lower loan loss provision, and continued focus on low cost operations. 3 Comments In announcing second quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc. said, "The continued improvement in operating results achieved during second quarter 2004 reflects the significant benefits from our strategic and cost reduction initiatives and improvement in volumes and pricing across our businesses. Forest products and financial services achieved record profit levels for the quarter. During the quarter, debt and other long-term liabilities, including timber leases, were reduced by $117 million and cash increased $36 million. "The strong growth in box shipments during second quarter 2004 was generated with four less box plants in our system. This volume growth results in increased asset utilization rates in our existing converting facilities, which improves operating efficiency and lowers costs. The growth in shipments has continued into the third quarter, and inventories remain at very low levels. Additionally, mill costs improved in second quarter 2004 compared with second quarter 2003. "Forest products results reflect continued strength in the housing and repair and remodeling markets, generating improved pricing and volumes. Operating costs were lower during the quarter. "Financial services continues to benefit from revised asset- allocation targets designed to increase single-family mortgage assets and from continued efforts to lower costs." Commenting on the quarter, Mr. Jastrow said, "During second quarter 2004, we continued to make progress on initiatives to lower costs, improve operational efficiency, increase asset utilization and drive return on investment. Our high level of integration and increased volumes in corrugated packaging allowed the containerboard mills to run full at lower costs. We continue to lower costs in our box plants through consolidation and reduced personnel requirements. In addition to the $20 million in annual savings achieved in first quarter 2004 from the elimination of 300 positions in our converting system, we realized $4 million in savings during the second quarter from previous converting facility closures. During second quarter 2004 we announced the closure of converting facilities in Louisville, Kentucky; Rock Hill, South Carolina; and Mishawaka, Indiana. These facilities will be closed by the end of the third quarter. "Savings associated with Project TIP were $14 million during second quarter 2004, which represents a current annual run rate of $56 million. Annual savings of $60 million from Project TIP consolidation and supply chain initiatives are on schedule to be achieved by the end of 2004." The company will host a conference call on July 27, 2004, at 9:00 a.m. ET to discuss results of the second quarter. The meeting may be accessed through Temple-Inland's Internet site or by conference call. To access through Temple-Inland's internet site, www.templeinland.com, click on "Investor Relations - Conference Call." To access by conference call, listeners calling from North America should dial 1-800-901-5213 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-786- 2962. The passcode is templeinland. Replays of the call will be 4 available for two weeks following the completion of the live call and can be accessed at 1-888-286-8010 in North America and at 1- 617-801-6888 outside North America. The passcode for the replay is 95513428. Temple-Inland Inc. is a major manufacturer of corrugated packaging and building products, with a diversified financial services operation. The Company's 2.0 million acres of forestland are certified as managed in compliance with ISO 14001 and in accordance with the Sustainable Forestry Initiativer (SFI) program of the American Forest & Paper Association to ensure forest management is conducted in a scientifically sound and environmentally sensitive manner. Temple-Inland's common stock (TIN) is traded on the New York Stock Exchange and the Pacific Exchange. Temple-Inland's address on the World Wide Web is www.templeinland.com. This release contains forward-looking statements that involve risks and uncertainties. The actual results of Temple-Inland may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include general economic, market, or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by Temple-Inland; the availability and price of raw materials; competitive actions by other companies; changes in laws or regulations; the accuracy of judgments and estimates concerning the integration of acquired operations and Temple-Inland's consolidation and supply chain initiatives; and other factors, many of which are beyond the control of Temple- Inland. 5 TEMPLE-INLAND INC. AND SUBSIDIARIES (UNAUDITED) (in millions, except per share amounts)
First Six Second Quarter Months -------------- ---------------- 2004 2003 2004 2003 ---- ---- ---- ---- Total revenues $ 1,218 $ 1,182 $ 2,372 $ 2,317 ===== ===== ===== ===== Income from continuing operations $ 55 $ 155 $ 68 $ 138 Effect of accounting change -- -- -- (1) Discontinued operations 1 1 1 1 ----- ----- ----- ----- Net income $ 56 $ 156 $ 69 $ 138 ===== ===== ===== ===== Diluted earnings per share: Income from continuing operations $ 0.98 $ 2.86 $ 1.22 $ 2.55 Effect of accounting change -- -- -- (0.01) Discontinued operations 0.01 0.01 0.01 0.01 ----- ----- ----- ----- Net income $ 0.99 $ 2.87 $ 1.23 $ 2.55 ===== ===== ===== ===== Average shares outstanding - diluted 56.2 54.1 55.9 54.1 Business Segments Revenues Corrugated packaging $ 687 $ 685 $ 1,360 $ 1,352 Forest products 253 192 473 372 Financial services 278 305 539 593 ----- ----- ----- ----- Total revenues $ 1,218 $ 1,182 $ 2,372 $ 2,317 ===== ===== ===== ===== Income Corrugated packaging $ 26 $ 7 $ 36 $ 9 Forest products 65 15 97 8 Financial services 59 44 112 83 ----- ----- ----- ----- Segment operating income 150 66 245 100 Unallocated expenses (19) (20) (42) (39) Other income (expense) (7) (23) (26) (32) Parent company interest (34) (35) (66) (70) ----- ----- ----- ----- Income (loss) before taxes 90 (12) 111 (41) Income (taxes) benefit (35) 167 (43) 179 ----- ----- ----- ----- Income from continuing operations 55 155 68 138 Effect of accounting change -- -- -- (1) Discontinued operations 1 1 1 1 ----- ----- ----- ----- Net income $ 56 $ 156 $ 69 $ 138 ===== ===== ===== ===== 6 As previously announced, as a result of the consolidation of our administrative functions and the adoption of a shared services concept, beginning in first quarter 2004, we changed the way we allocate cost to the business segments. The effect of this change was to increase segment operating income and to increase unallocated expenses by a like amount. Second quarter 2003 and the first six months of 2003 have been reclassified below to reflect this change. Second Quarter 2003 ------------------------- As Originally As Reported Reclassification Reclassified ---------- ---------------- ------------ Corrugated packaging $ 1 $ 6 $ 7 Forest products 12 3 15 Financial services 44 -- 44 ---- ---- ---- Segment operating income 57 9 66 Unallocated expenses (34) (9) (43) ---- ---- ---- Operating income $ 23 $ -- $ 23 ==== ==== ==== First Six Months 2003 --------------------------- As Originally As Reported Reclassification Reclassified ---------- ---------------- ------------ Corrugated packaging $ (3) $ 12 $ 9 Forest products 3 5 8 Financial services 83 -- 83 ---- ---- ---- Segment operating income 83 17 100 Unallocated expenses (54) (17) (71) ---- ---- ---- Operating income $ 29 $ -- $ 29 ==== ==== ==== Includes the effects of a reclassification of $6 million to revenues from noninterest expense related to first quarter 2004. The reclassification had no effect on operating income.
7 TEMPLE-INLAND INC. AND SUBSIDIARIES (UNAUDITED)
First Six Second Quarter Months -------------- ------------- 2004 2003 2004 2003 ---- ---- ---- ---- Dollars in millions Revenues Corrugated Packaging $ 687 $ 685 $ 1,360 $ 1,352 Forest Products Pine lumber $ 89 $ 64 $ 168 120 Particleboard 51 36 95 75 Medium density fiberboard 31 23 56 49 Gypsum wallboard 28 16 51 34 Fiberboard 22 17 39 31 Other 32 36 64 63 ---- ---- ---- ---- Total Forest Products $ 253 $ 192 $ 473 $ 372 ==== ==== ==== ==== Unit sales Corrugated Packaging , thousands of tons 944 956 1,897 1,860 Forest Products Pine lumber, mbf 234 216 470 414 Particleboard, msf 162 140 322 295 Medium density fiberboard, msf 68 57 125 121 Gypsum wallboard, msf 197 146 368 307 Fiberboard, msf 113 102 210 189 Revenues and unit sales do not include joint venture operations. Includes boxes sold and open market sales of linerboard.