EX-99 2 tin8kex99120080730.htm 2ND Q 2008 EARNINGS RELEASE


 

NEWS

RELEASE___________________________________________________

 

FOR IMMEDIATE RELEASE

CONTACT: Chris Mathis

(512) 434-3766

 

 

TEMPLE-INLAND INC. REPORTS SECOND QUARTER 2008 RESULTS

 

AUSTIN, TEXAS, July 30, 2008--Temple-Inland Inc. today reported second quarter 2008 net income of $8 million, or $0.07 per diluted share, compared with second quarter 2007 net income of $66 million, or $0.62 per diluted share, and first quarter 2008 net loss of $13 million, or $0.12 per basic share.

 

 

 

Second Quarter

First Quarter

 

 

 

 

 

 

 

 

 

 

2008

 

2007

 

2008

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

$0.07

 

$0.62

 

($0.12)

 

 

Adjustment for special items

 

$0.00

 

($0.44)

 

$0.07

 

 

Net income (loss) per share,

Excluding special items

 

 

$0.07

 

 

$0.18

 

 

($0.05)

 

 

 

Corrugated Packaging

 

 

 

Second Quarter

First Quarter

 

 

 

 

 

 

 

 

 

 

2008

 

2007

 

2008

 

 

 

 

 

 

 

 

 

Segment Operating Income ($ in Millions)

 

$52

 

$78

 

$55

 

 

 

Corrugated packaging operating income declined second quarter 2008 compared with second quarter 2007 as higher box prices were more than offset by increased costs for energy, fiber and freight. Operating income declined second quarter 2008 compared with first quarter 2008 principally due to higher energy, freight and fiber costs.

 

4

 

 

Building Products

 

 

 

Second Quarter

First Quarter

 

 

 

 

 

 

 

 

 

 

2008

 

2007

 

2008

 

 

 

 

 

 

 

 

 

Segment Operating Income ($ in Millions)

 

$1

 

$11

 

($21)

 

 

Building products operating income declined second quarter 2008 compared with second quarter 2007 principally due to lower gypsum prices and volumes. Operating income improved second quarter 2008 compared with first quarter 2008 principally due to higher lumber prices and initiatives to reduce costs implemented in first quarter 2008.

 

Comments

 

Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, “While cost inflation and tough conditions in the housing industry continue to present significant challenges for our company, we were pleased with our improved earnings in second quarter 2008 compared with first quarter 2008.

 

“Corrugated packaging continued to experience significant cost inflation in the quarter. We remain very focused on implementing the current price increase, which will more than offset cost inflation experienced during the year. The mill system ran well during the quarter and we completed our scheduled maintenance at our Bogalusa, LA mill. We continue to make progress on our strategic initiative of lowering costs at our converting facilities through improved asset utilization, and we will see the benefit from these efforts in the second half of 2008 and into 2009.

 

“Building products returned to profitability in the quarter, benefiting from seasonal improvement in lumber pricing and our initiatives to lower cost and match our production to our demand. We continue to believe building products markets will remain very difficult for the balance of 2008, but are determined to control costs and minimize losses for the year.

 

“We are pleased with our acquisition of the remaining 50% interest in Premier Boxboard Limited and are confident in our ability to quickly realize planned synergies.”

 

Temple-Inland will host a conference call on July 30, 2008 at 9:30 am EDT to discuss results of second quarter 2008. To access the conference call, listeners calling from the United States should dial 1-866-394-6665 at least 15 minutes prior to the start of the call. Those wishing to access the call from outside the United States should dial 1-706-634-1667. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-800-642-1687 in the United States and at 1-706-645-9291 outside the United States.

 

Temple-Inland Inc. is a manufacturing company focused on corrugated packaging and building products. The fully integrated corrugated packaging operation consists of 7 mills and 64

 

5

 

 

converting facilities. The building products operation manufactures a diverse line of building products for new home construction, commercial and repair and remodeling markets. Temple-Inland's address on the World Wide Web is www.templeinland.com.

 

This release contains “forward-looking statements” within the meaning of the federal securities laws. These statements reflect management’s current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements. Factors and uncertainties that might cause such differences include, but are not limited to: 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; changes in interest rates; demand for new housing; accuracy of accounting assumptions related to impaired assets, pension and postretirement costs and contingency reserves; competitive actions by other companies; changes in laws or regulations; our ability to execute certain strategic and business improvement initiatives; the accuracy of certain judgments and estimates concerning the integration of PBL into our operations; and other factors, many of which are beyond our control.

 

This release includes non-GAAP financial measures. The required reconciliations to GAAP financial measures are included in this release.

 

6

 

 

TEMPLE-INLAND INC. AND SUBSIDIARIES

CONSOLIDATED EARNINGS AND SEGMENT RESULTS

(Preliminary and Unaudited)

 

 

 

Second Quarter

 

 

First Six Months

 

 

 

2008

 

 

2007

 

 

2008

 

 

2007

 

 

 

(In millions, except per share)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated packaging

$

798

 

$

779

 

$

1,574

 

$

1,540

 

Building products

 

193

 

 

224

 

 

361

 

 

447

 

Timber and timberlands (a)

 

––

 

 

20

 

 

––

 

 

39

 

Total revenues

$

991

 

$

1,023

 

$

1,935

 

$

2,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated packaging

$

52

 

$

78

 

$

107

 

$

142

 

Building products

 

1

 

 

11

 

 

(20

)

 

27

 

Timber and timberlands (a)

 

––

 

 

16

 

 

––

 

 

35

 

Total segment operating income

 

53

 

 

105

 

 

87

 

 

204

 

Expenses not included in segments:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

(21

)

 

(27

)

 

(42

)

 

(52

)

Share-based compensation

 

(2

)

 

(13

)

 

(6

)

 

(32

)

Other operating income (expense)

 

––

 

 

4

 

 

(15

)

 

(10

)

Other non-operating income (expense)

 

1

 

 

1

 

 

2

 

 

1

 

Interest income on financial assets of special purpose entities

 

18

 

 

––

 

 

42

 

 

––

 

Interest expense on nonrecourse financial liabilities of special purpose entities

 

(18

)

 

––

 

 

(45

)

 

––

 

Interest expense on debt

 

(20

)

 

(28

)

 

(37

)

 

(57

)

Income (loss) before taxes

 

11

 

 

42

 

 

(14

)

 

54

 

Income tax (expense) benefit

 

(3

)

 

(16

)

 

9

 

 

(21

)

Income (loss) from continuing operations

 

8

 

 

26

 

 

(5

)

 

33

 

Discontinued operations

 

––

 

 

40

 

 

––

 

 

71

 

Net income (loss)

$

8

 

$

66

 

$

(5

)

$

104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average basic shares outstanding

 

106.6

 

 

106.0

 

 

106.7

 

 

105.8

 

Average diluted shares outstanding

 

107.4

 

 

108.1

 

 

107.6

 

 

107.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

0.07

 

$

0.24

 

$

(0.05

)

$

0.31

 

Discontinued operations

 

––

 

 

0.39

 

 

––

 

 

0.68

 

Net income (loss)

$

0.07

 

$

0.63

 

$

(0.05

)

$

0.99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – Diluted (b):

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

0.07

 

$

0.24

 

$

N/A

 

$

0.31

 

Discontinued operations

 

––

 

 

0.38

 

 

N/A

 

 

0.66

 

Net income

$

0.07

 

$

0.62

 

$

N/A

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.10

 

$

0.28

 

$

0.20

 

$

0.56

 

____________

(a)

We no longer have a timber and timberland segment as a result of the fourth quarter 2007 sale of our timberland.

(b)

Earnings per diluted share not applicable for first six months 2008 due to our year-to-date net loss.

 

 

 

7

 

 

TEMPLE-INLAND INC. AND SUBSIDIARIES

SUMMARIZED CONSOLIDATED BALANCE SHEETS

(Preliminary and Unaudited)

 

 

 

Second

Quarter-End 2008

 

 

Year-End 2007

 

ASSETS

 

(Dollars in millions)

 

Current Assets

$

1,119

 

$

1,277

 

Property and Equipment

 

1,611

 

 

1,632

 

Financial Assets of Special Purpose Entities

 

2,383

 

 

2,383

 

Goodwill

 

365

 

 

365

 

Other Assets

 

280

 

 

285

 

TOTAL ASSETS

$

5,758

 

$

5,942

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current Liabilities

$

528

 

$

890

 

Long-Term Debt

 

1,073

 

 

852

 

Nonrecourse Financial Liabilities of Special Purpose Entities

 

2,140

 

 

2,140

 

Deferred Tax Liability

 

746

 

 

762

 

Liability for Pension Benefits

 

69

 

 

71

 

Liability for Postretirement Benefits

 

119

 

 

123

 

Other Long-Term Liabilities

 

307

 

 

324

 

TOTAL LIABILITIES

 

4,982

 

 

5,162

 

SHAREHOLDERS’ EQUITY

 

776

 

 

780

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

5,758

 

$

5,942

 

 

SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Preliminary and Unaudited)

 

 

Second Quarter

 

 

First Quarter

 

 

First Six Months

 

 

 

2008

 

 

2008

 

 

2008

 

CASH PROVIDED BY (USED FOR) OPERATIONS

 

(Dollars in millions)

 

Operations (including payments related to our 2007

transformation plan of $39 million in first quarter)

$

57

(a)

$

19

 

$

76

 

Working capital (including payments related to our

2007 transformation plan of $1 million in second

quarter and $276 million in first quarter)

 

(7

)

 

(358

)

 

(365

)

 

 

50

 

 

(339

)

 

(289

)

CASH PROVIDED BY (USED FOR) INVESTING

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(42

)

 

(34

)

 

(76

)

Other

 

(3

)

 

(1

)

 

(4

)

 

 

(45

)

 

(35

)

 

(80

)

CASH PROVIDED BY (USED FOR) FINANCING

 

 

 

 

 

 

 

 

 

Cash dividends to shareholders

 

(10

)

 

(11

)

 

(21

)

Net change in debt

 

15

 

 

204

 

 

219

 

Other

 

(4

)

 

(8

)

 

(12

)

 

 

1

 

 

185

 

 

186

 

Net increase (decrease) in cash and cash equivalents

 

6

 

 

(189

)

 

(183

)

Cash and cash equivalents at beginning of period

 

38

 

 

227

 

 

227

 

Cash and cash equivalents at end of period

$

44

 

$

38

 

$

44

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION

 

 

 

 

 

 

 

 

 

Depreciation and amortization

$

50

 

$

50

 

$

100

 

____________

(a)

Includes a $15 million voluntary, discretionary contribution to our defined benefit plan.

 

 

8

 

 

TEMPLE-INLAND INC. AND SUBSIDIARIES

REVENUES AND UNIT SALES, EXCLUDING JOINT VENTURE OPERATIONS

(Preliminary and Unaudited)

 

 

 

 

Second Quarter

 

 

First Six Months

 

 

 

2008

 

 

2007

 

 

2008

 

 

2007

 

 

 

(Dollars in millions)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated packaging

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated packaging

$

765

 

$

744

 

$

1,502

 

$

1,461

 

Linerboard

 

33

 

 

35

 

 

72

 

 

79

 

Total corrugated packaging

$

798

 

$

779

 

$

1,574

 

$

1,540

 

Building products

 

 

 

 

 

 

 

 

 

 

 

 

Pine lumber

$

64

 

$

67

 

$

117

 

$

126

 

Particleboard

 

49

 

 

49

 

 

92

 

 

101

 

Gypsum wallboard

 

34

 

 

67

 

 

68

 

 

137

 

Medium density fiberboard

 

19

 

 

17

 

 

38

 

 

34

 

Fiberboard

 

13

 

 

14

 

 

22

 

 

28

 

Other

 

14

 

 

10

 

 

24

 

 

21

 

Total building products

$

193

 

$

224

 

$

361

 

$

447

 

Timber and Timberlands (a)

 

 

 

 

 

 

 

 

 

 

 

 

Fiber and other

 

N/A

 

$

20

 

 

N/A

 

$

39

 

 

Unit Sales

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated packaging

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated packaging, thousands of tons

 

867

 

 

866

 

 

1,694

 

 

1,696

 

Linerboard, thousands of tons

 

72

 

 

76

 

 

154

 

 

176

 

Total, thousands of tons

 

939

 

 

942

 

 

1,848

 

 

1,872

 

Building products

 

 

 

 

 

 

 

 

 

 

 

 

Pine lumber, mbf

 

204

 

 

222

 

 

404

 

 

425

 

Particleboard, msf

 

135

 

 

134

 

 

255

 

 

277

 

Gypsum wallboard, msf

 

278

 

 

414

 

 

558

 

 

796

 

Medium density fiberboard, msf

 

38

 

 

37

 

 

76

 

 

74

 

Fiberboard, msf

 

68

 

 

79

 

 

118

 

 

153

 

____________

(a)

We no longer have a timber and timberland segment as a result of the fourth quarter 2007 sale of our timberland.

 

 

 

 

 

 

 

 

 

 

9

 

 

TEMPLE-INLAND INC. AND SUBSIDIARIES

CALCULATION OF NON-GAAP FINANCIAL MEASURES

(Preliminary and Unaudited)

 

 

 

 

Second Quarter

 

 

First Quarter

 

 

 

2008

 

 

2007

 

 

2008

 

NET INCOME (LOSS) EXCLUDING SPECIAL ITEMS

 

 

Net income (loss) in accordance with GAAP

$

8

 

$

66

 

$

(13

)

Special items, after-tax:

 

 

 

 

 

 

 

 

 

Transformation plan:

 

 

 

 

 

 

 

 

 

Pension settlement expense

 

––

 

 

––

 

 

(8

)

Other transformation costs

 

––

 

 

2

 

 

(3

)

Discontinued operations

 

––

 

 

(40

)

 

––

 

 

 

––

 

 

(38

)

 

(11

)

Other:

 

 

 

 

 

 

 

 

 

Closure and sale of converting and production facilities and sale of non-strategic assets

 

––

 

 

(5

)

 

––

 

Litigation and other

 

––

 

 

––

 

 

3

 

One-time tax benefit

 

––

 

 

(3

)

 

––

 

 

 

––

 

 

(8

)

 

3

 

Total special items, after-tax

 

––

 

 

(46

)

 

(8

)

Net income (loss), excluding special items, as defined

$

8

 

$

20

 

$

(5

)

 

 

 

 

 

 

 

 

 

 

Net income (loss), per share, in accordance with GAAP(a)

$

0.07

 

$

0.62

 

$

(0.12

)

Special items, after-tax, per diluted share:

 

 

 

 

 

 

 

 

 

Transformation plan:

 

 

 

 

 

 

 

 

 

Pension settlement expense

 

––

 

 

––

 

 

(0.07

)

Other transformation costs

 

––

 

 

0.02

 

 

(0.03

)

Discontinued operations

 

––

 

 

(0.38

)

 

––

 

 

 

––

 

 

(0.36

)

 

(0.10

)

Other:

 

 

 

 

 

 

 

 

 

Closure and sale of converting and production facilities and sale of non-strategic assets

 

––

 

 

(0.05

)

 

––

 

Litigation and other

 

––

 

 

––

 

 

0.03

 

One-time tax benefit

 

––

 

 

(0.03

)

 

––

 

 

 

––

 

 

(0.08

)

 

0.03

 

Total special items, after-tax

 

––

 

 

(0.44

)

 

(0.07

)

Net income (loss), per share, excluding special items, as defined

$

0.07

 

$

0.18

 

$

(0.05

)

 

 

 

 

 

 

 

 

 

 

Average basic shares outstanding

 

106.6

 

 

106.0

 

 

106.7

 

Average diluted shares outstanding

 

107.4

 

 

108.1

 

 

107.6

 

____________

(a) Based on average basic shares outstanding for first quarter 2008 due to our loss from continuing operations and average diluted shares outstanding for second quarter 2008.

 

 

10