10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

_____________________________________

FORM 10-Q

(Mark One)
þ	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended _______October 3, 2009_______
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:  001-08634

Temple-Inland Inc.

(Exact name of registrant as specified in its charter)

Delaware	75-1903917
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1300 MoPac Expressway South, 3rd Floor, Austin, Texas 78746

(Address of Principal Executive Offices, including Zip code)

(512) 434-5800

(Registrant's telephone number, including area code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark 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 such filing requirements for the past 90 days.  þ  Yes¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  ¨  Yes¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ¨  Yesþ  No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class	Number of common shares outstanding as of October 3, 2009
Common Stock (par value $1.00 per share)	106,898,159

Page 1 of 40 The Exhibit Index is page 34.

	Page
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.  Controls and Procedures	30
PART II.  OTHER INFORMATION
Item 1.  Legal Proceedings	31
Item 1A.  Risk Factors	31
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.  Defaults Upon Senior Securities	31
Item 4.  Submission of Matters to a Vote of Security Holders	31
Item 5.  Other Information	31
Item 6.  Exhibits	32
SIGNATURES	33

2

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

TEMPLE-INLAND INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		(Unaudited)Third Quarter-End 2009			Year-End 2008
		(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	42		$	41
Trade receivables, net of allowance for doubtful accounts of $15 in 2009 and $14 in 2008		418			407
Inventories:
Work in process and finished goods		99			104
Raw materials		186			217
Supplies and other		136			137
Total inventories		421			458
Deferred tax asset		70			66
Income taxes receivable		55			57
Prepaid expenses and other		55			44
Total current assets		1,061			1,073
Property and Equipment
Land and buildings		677			671
Machinery and equipment		3,593			3,577
Construction in progress		37			36
Less allowances for depreciation		(2,711	)		(2,620	)
Total property and equipment		1,596			1,664
Financial Assets of Special Purpose Entities		2,475			2,474
Goodwill		394			394
Other Assets		257			264
TOTAL ASSETS	$	5,783		$	5,869
LIABILITIES
Current Liabilities
Accounts payable	$	159		$	162
Accrued employee compensation and benefits		90			84
Accrued interest		15			30
Accrued property taxes		18			12
Other accrued expenses		144			140
Current portion of long-term debt		1			1
Current portion of pension and postretirement benefits		16			17
Total current liabilities		443			446
Long-Term Debt		878			1,191
Nonrecourse Financial Liabilities of Special Purpose Entities		2,140			2,140
Deferred Tax Liability		776			750
Liability for Pension Benefits		158			172
Liability for Postretirement Benefits		99			101
Other Long-Term Liabilities		363			292
TOTAL LIABILITIES		4,857			5,092
SHAREHOLDERS’ EQUITY
Temple-Inland Inc. 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 123,605,344 shares in 2009 and 2008, including shares held in the treasury		124			124
Additional paid-in capital		444			461
Accumulated other comprehensive loss		(182	)		(189	)
Retained earnings		1,072			936
Cost of shares held in the treasury: 16,707,185 shares in 2009 and 17,098,808 shares in 2008		(624	)		(646	)
Total Temple-Inland Inc. shareholders’ equity		834			686
Noncontrolling Interest of Special Purpose Entities		92			91
TOTAL SHAREHOLDERS’ EQUITY		926			777
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,783		$	5,869

Please read the notes to consolidated financial statements.

3

TEMPLE-INLAND INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

		Third Quarter						First Nine Months
		2009			2008			2009			2008
		(Dollars in millions, except per share)
NET REVENUES	$	885		$	976		$	2,732		$	2,911
COSTS AND EXPENSES
Cost of sales		(753	)		(891	)		(2,331	)		(2,660	)
Selling		(27	)		(29	)		(83	)		(86	)
General and administrative		(45	)		(40	)		(132	)		(112	)
Other operating income (expense)		67			––			142			(13	)
		(758	)		(960	)		(2,404	)		(2,871	)
OPERATING INCOME		127			16			328			40
Other non-operating income (expense)		(3	)		(3	)		(2	)		(1	)
Interest income on financial assets of special purpose entities		4			17			23			59
Interest expense on nonrecourse financial liabilities of special purpose entities		(5	)		(18	)		(23	)		(63	)
Interest expense on debt		(14	)		(21	)		(50	)		(58	)
INCOME (LOSS) BEFORE TAXES		109			(9	)		276			(23	)
Income tax (expense) benefit		(42	)		12			(107	)		21
NET INCOME (LOSS)		67			3			169			(2	)
Net income attributable to noncontrolling interest of special    purpose entities		––			––			(1	)		––
NET INCOME (LOSS) ATTRIBUTABLE TO    TEMPLE-INLAND INC.	$	67		$	3		$	168		$	(2	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		106.9			106.7			106.8			106.7
Diluted		108.6			107.6			107.7			107.6
EARNINGS PER SHARE
Basic	$	0.62		$	0.03		$	1.56		$	(0.02	)
Diluted	$	0.61		$	0.03		$	1.55		$	(0.02	)
DIVIDENDS PER SHARE	$	0.10		$	0.10		$	0.30		$	0.30

Please read the notes to consolidated financial statements.

4

TEMPLE-INLAND INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	First Nine Months
	2009			2008
		(In millions)
CASH PROVIDED BY (USED FOR) OPERATIONS
Net income (loss)	$	168		$	(2	)
Noncontrolling interest		1			––
Adjustments
Depreciation and amortization		151			151
Gains related to purchase and retirement of long-term debt		(15	)		––
Write-off of fees related to special purpose entities		17			––
Non-cash share-based and long-term incentive compensation		39			16
Non-cash pension and postretirement expense		37			49
Cash contribution to pension and postretirement plans		(44	)		(73	)
Deferred income taxes		62			4
Other		8			(3	)
Changes in:
Receivables		(11	)		(27	)
Inventories		36			2
Accounts payable and accrued expenses		(3	)		(337	)
Prepaid expenses and other		(6	)		(23	)
		440			(243	)
CASH PROVIDED BY (USED FOR) INVESTING
Capital expenditures		(81	)		(116	)
Acquisition, net of cash acquired		––			(57	)
Sale of non-strategic assets and operations		4			4
Other		(8	)		(10	)
		(85	)		(179	)
CASH PROVIDED BY (USED FOR) FINANCING
Payments of debt		(245	)		(63	)
Borrowings under accounts receivable securitization facility, net		35			229
Borrowings under revolving credit facility, net		(89	)		121
Fees, related to special purpose entities		(19	)		––
Changes in book overdrafts		(7	)		(10	)
Cash dividends paid to shareholders		(32	)		(32	)
Exercise of stock options		2			1
Tax benefit (expense) on share-based compensation		1			(1	)
		(354	)		245
Net change in cash and cash equivalents		1			(177	)
Cash and cash equivalents at beginning of period		41			227
Cash and cash equivalents at end of period	$	42		$	50

Please read the notes to consolidated financial statements.

5

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 – Basis of Presentation

Our consolidated financial statements include the accounts of Temple-Inland Inc. and its subsidiaries and special purpose and variable interest entities of which we are the primary beneficiary.  We account for our investment in other entities in which we have significant influence over operations and financial policies using the equity method.

We prepare our unaudited interim financial statements in accordance with generally accepted accounting principles and Securities and Exchange Commission requirements for interim financial statements.  As a result, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements.  However, in our opinion, all adjustments considered necessary for a fair presentation have been included.  These adjustments are normal recurring accruals, except as noted.  These interim operating results are not necessarily indicative of the results that may be expected for the entire year.  For further information, please read the financial statements included in our Annual Report on Form 10-K for fiscal 2008.

Note 2 – Accounting Pronouncements

New Accounting Pronouncements

Beginning January 2009, we adopted the following new accounting guidance:

●   Business Combinations (Financial Accounting Standards Board Accounting Standards Codification (ASC) 805) – Requires identifiable assets, liabilities, noncontrolling interests, and goodwill acquired in a business combination to be recorded at full fair value.  It also changed the approach to determining the purchase price; the accounting for acquisition cost; and several acquisition related accounting practices.  We had no business combinations in first nine months 2009.

● Noncontrolling Interest in Consolidated Financial Statements (ASC 810-10) – Specifies that noncontrolling interests be reported as part of equity, not as a liability or other item outside of equity.  Upon adoption we reclassified $91 million of noncontrolling interest of special purpose entities to shareholders’ equity.

● Disclosures about Derivative Instruments and Hedging Activities (ASC 815-10) – Requires enhanced disclosures about how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.  Adoption did not have a significant effect on our earnings or financial position because we do not have any significant derivative instruments or hedging activities.

● Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (ASC 260-10) – Specifies that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and should be included in the computation of earnings per share pursuant to the two-class method.  Adoption reduced our earnings per share $.01in third quarter and first nine months 2009.

●   Effective Date of FASB Statement 157 (ASC 820-10) – Delays the effective date of FASB Statement 157, Fair Value Measurements, for certain nonfinancial assets and nonfinancial liabilities.  Adoption did not have a significant effect on our earnings or financial position.

Beginning second quarter 2009, we adopted the following new accounting guidance:

● Recognition and Presentation of Other-Than-Temporary Impairments (ASC 320-10) – Provides a new other-than-temporary model for debt securities.  Adoption did not have a significant effect on our earnings or financial position.

●   Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (ASC 820-10) – Provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying circumstances that indicate a

6

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

transaction is not orderly.  Adoption did not have a significant effect on our earnings or financial position.

●   Interim Disclosures about Fair Value of Financial Instruments (ASC 825-10) – Expands the fair value disclosures required for all financial instruments to interim reporting periods.  We have provided these disclosures in Note 10.

● Subsequent Events (ASC 855) – Establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  Adoption did not have a significant effect on our earnings or financial position.

Beginning third quarter 2009, we adopted the following new accounting guidance:

●   The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles (Statement of Financial Accounting Standards (SFAS) No. 168) – Specifies that The FASB Accounting Standards CodificationTM  is the source of authoritative U.S. generally accepted accounting principles for nongovernmental entities, except for a few standards that will remain authoritative until they are integrated into the codification.  Adoption did not have an impact on our earnings or financial position.  However, our references to accounting literature in these notes have been changed to codification references.

Pending Accounting Pronouncements

At year-end 2009, we will be required to adopt:

● Employers’ Disclosures about Postretirement Benefit Plan Assets (ASC 715-20) – Provides guidance for more detailed disclosures about assets of a defined benefit pension or other postretirement plan.  Adoption of this guidance will not affect our earnings or financial position.

●   Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (Financial Accounting Standards Board Accounting Standards Update (ASU) 2009-12) – Permits a reporting entity to measure the fair value of an investment on the basis of net asset value per share of the investment (or its equivalent).  We are currently evaluating this new guidance.

● Amendments to FASB Interpretations No. 46(R) (SFAS No. 167) – Amends certain requirements of ASC 810-10, Consolidation of Variable Interest Entities, to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements.  We are currently evaluating this new guidance.

7

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

Note 3 – Employee Benefit Plans

Defined benefit and postretirement benefit expense consists of:

		Defined Benefits												Postretirement Benefits
		Qualified				Supplemental				Total
		2009		2008		2009		2008		2009		2008		2009		2008
Third Quarter:		(In millions)
Service costs – benefits earned during the period	$	6	$	6	$	––	$	1	$	6	$	7	$	––	$	––
Interest cost on projected benefit obligation		20		20		––		1		20		21		2		2
Expected return on plan assets		(20	)	(21	)	––		––		(20	)	(21	)	––		––
Amortization of prior service costs		1		1		1		––		2		1		––		––
Amortization of actuarial net loss		3		1		––		––		3		1		––		––
Benefit expense	$	10	$	7	$	1	$	2	$	11	$	9	$	2	$	2
First Nine Months:
Service costs – benefits earned during the period	$	17	$	20	$	1	$	1	$	18	$	21	$	1	$	1
Interest cost on projected benefit obligation		60		60		1		2		61		62		5		6
Expected return on plan assets		(59	)	(63	)	––		––		(59	)	(63	)	––		––
Amortization of prior service costs		2		3		2		2		4		5		(1	)	(1	)
Amortization of actuarial net loss		8		2		––		1		8		3		––		––
Benefit expense	$	28	$	22	$	4	$	6	$	32	$	28	$	5	$	6

In first nine months 2009, we made $30 million in voluntary, discretionary contributions to our qualified defined benefit plan, including $15 million in third quarter 2009.  We made a $15 million voluntary, discretionary contribution in first nine months 2008.

Note 4 – Share-Based and Long-Term Incentive Compensation

We have shareholder approved share-based compensation plans that permit awards to key employees and non-employee directors in the form of restricted or performance units, restricted stock, or options to purchase shares of our common stock.  We also have long-term incentives for key employees in the form of fixed value awards that vest over multiple years.  We generally grant awards annually in February, and we use treasury stock to fulfill awards settled in common stock and stock option exercises.

Share-based and long-term incentive compensation expense consists of:

		Third Quarter				First Nine Months
		2009		2008		2009		2008
		(In millions)
Restricted or performance units	$	11	$	8	$	30	$	7
Restricted stock		––		––		––		1
Stock options		1		2		5		8
Total share-based compensation expense		12		10		35		16
Long-term incentive compensation expense		1		––		4		––
Total share-based and long-term incentive compensation expense	$	13	$	10	$	39	$	16

8

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

Share-based and long-term incentive compensation expense is included in:

		Third Quarter				First Nine Months
		2009		2008		2009		2008
		(In millions)
Cost of sales	$	1	$	1	$	4	$	5
Selling		––		––		2		1
General and administrative		12		9		33		10
Total share-based and long-term incentive compensation expense	$	13	$	10	$	39	$	16

Restricted or performance units

Restricted or performance units generally have a three-year term; vest after three years from the date of grant or the attainment of stated return on investment (ROI) based performance goals, generally measured over a three-year period; and are settled in cash.

A summary of activity for first nine months 2009 follows:

		Shares		Weighted Average Grant Date Fair Value Per Share					Aggregate Current Value
	(In thousands)							(In millions)
Not vested beginning of year		1,871			$	32
Granted		1,395				6
Vested and settled		(483	)			35
Forfeited		(19	)			27
Not vested end of third quarter 2009		2,764				18	$		44

Unrecognized share-based compensation expense related to non-vested restricted or performance units was $27 million at third quarter-end 2009 share price of $16 per share.  It is likely that this cost will be recognized over the next two years.  The fair value of awards settled in cash in first nine months 2009 was $5 million.

Restricted stock

Restricted stock awards generally vest after three to six years and provide for accelerated vesting upon retirement, death, disability, or a change in control.  There were no restricted stock awards granted in first nine months 2009 or first nine months 2008.  There were no restricted stock awards outstanding at third quarter-end 2009.   There were 51,275 restricted stock awards with a fair value of $7 per share that vested in first nine months 2009.

Stock options

Stock options have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability, or if there is a change in control.  Options are granted with an exercise price equal to the market value of our common stock on the date of grant.

9

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

A summary of activity for first nine months 2009 follows:

			Weighted	Weighted Average		Aggregate Intrinsic
			Average Exercise	Remaining		Value (Current value
	Shares		Price Per Share	Contractual Term		Less exercise price)
	(In thousands)			(In years)		(In millions)
Outstanding beginning of year	6,903	$	17
Granted	1,600		6
Exercised	(586)		10
Forfeited	(204)		16
Outstanding end of third quarter 2009	7,713		15	7	$	27
Exercisable end of third quarter 2009	4,067		16	5	$	11

Unrecognized share-based compensation expense related to non-vested stock options awards was $6 million at third quarter-end 2009.  It is likely that this cost will be recognized over the next two years.

We estimated the fair value of our options using the Black-Scholes-Merton option-pricing model and the following assumptions:

	First Nine Months
	2009		2008
Expected dividend yield	3.2	%	2.1	%
Expected stock price volatility	57.5	%	28.2	%
Risk-free interest rate	2.6	%	3.3	%
Expected life of options (in years)	8		8
Weighted average estimated fair value of options at grant date	$2.49		$2.02

Long-term Incentive Compensation

Long-term incentive compensation is related to fixed value awards that were granted to employees in 2009.  These fixed value awards are not tied to our stock price.  The fixed value awards generally vest after three years and provide for accelerated vesting upon retirement, death, disability, or if there is a change in control.  Fixed value awards issued in first nine months 2009 totaled $18 million, of which $4 million has been expensed and the accrued liability is included in other long-term liabilities.

10

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

Note 5 – Other Operating and Non-operating Income (Expense)

		Third Quarter						First Nine Months
		2009			2008			2009			2008
		(In millions)
Other Operating Income (Expense):
Equity in earnings of joint ventures	$	––		$	2		$	2		$		7
Gain (loss) on sale of property and equipment		(1	)		(1	)		1				(4	)
Alternative fuel mixture tax credits, net of costs		69			––			146				––
Litigation and other		––			(1	)		(2	)			4
Facility closures and headcount reductions		(1	)		––			(5	)			––
Transformation costs		––			––			––				(20	)
Other operating income (expense)	$	67		$	––		$	142		$		(13	)
Other Non-operating Income (Expense):
Substitution costs	$	––		$	––		$	(17	)	$		––
Gain (loss) on purchase and retirement of debt		(3	)		––			15				––
Charges related to early repayment of debt		––			(4	)		––				(4	)
Interest and other income		––			1			––				3
Other non-operating income (expense)	$	(3	)	$	(3	)	$	(2	)	$		(1	)

The Internal Revenue Code allows an excise tax credit for alternative fuel mixtures produced for sale or for use in a trade or business.  The IRS approved our registration as an alternative fuel mixer, allowing us to file for the excise tax credit.  Through third quarter-end 2009, we recognized alternative fuel mixture tax credits of $149 million and incurred related costs of $3 million.

We incurred substitution costs of $17 million related to the replacement of a qualified letter of credit issuer. Please read Note 12.  In first nine months 2009, we purchased and retired $245 million of our long-term debt, resulting in a net gain of $15 million.

Note 6 – Income Taxes

In first nine months 2009, we provided for $58 million in unrecognized tax benefits, related to our tax position for alternative fuel mixture tax credits.  Our unrecognized tax benefits totaled $84 million at third quarter-end 2009, of which $73 million would affect our effective tax rate if recognized.  We anticipate that our unrecognized tax benefits may increase $23 million to $28 million over the remainder of 2009.

Note 7 – Comprehensive Income (Loss)

Comprehensive income (loss) consists of:

		Third Quarter						First Nine Months
		2009			2008				2009		2008
		(In millions)
Net income (loss)	$	67		$	3		$		169	$		(2	)
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment		(2	)		(4	)			1			2
Defined benefit plans		2			1				6			13
Other comprehensive income (loss)		––			(3	)			7			15
Comprehensive income (loss)	$	67		$	––		$		176	$		13

Note 8 – Contingencies and Other

We are involved in various legal proceedings that arise from time to time in the ordinary course of doing business and believe that adequate reserves have been established for any probable losses. Expenses related to litigation are included in operating income. We do not believe that the outcome of any of these proceedings would have a significant adverse effect on our financial position, long-term results of operations, or cash flows. It is

11

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

possible, however, that charges related to these matters could be significant to our results or cash flows in any one accounting period.

Note 9 – Earnings Per Share

We computed earnings per share by dividing income by weighted average shares outstanding using the following:

	Third Quarter					First Nine Months
	2009			2008		2009			2008
	(In millions)
Net income (loss)	$	67		$	3	$	169		$	(2	)
Less: Distributed and undistributed amounts allocated to participating securities		(1	)		––		(1	)		––
		66			3		168			(2	)
Less: Net income attributable to noncontrolling interest of special purpose entities		––			––		(1	)		––
Net income (loss) available to common stockholders	$	66		$	3	$	167		$	(2	)
Weighted average common shares outstanding - basic		106.9			106.7		106.8			106.7
Dilutive effect of stock options held by our employees		1.6			0.8		0.9			0.8
Dilutive effect of stock options held by Forestar and Guaranty employees		0.1			0.1		––			0.1
Weighted average shares outstanding - diluted		108.6			107.6		107.7			107.6

At third quarter-end 2009 and 2008, there were 789,804 and 1,175,058 stock options outstanding held by employees of Forestar and Guaranty.  These options were granted prior to the spin-offs of Forestar and Guaranty on December 28, 2007. These stock options will be considered in our dilution calculation until they are exercised, cancelled or expire.

At third quarter-end 2009 and 2008, 4,376,785 and 4,539,455 stock options outstanding held by our employees and 536,774 and 742,552 stock options outstanding held by employees of Forestar and Guaranty were not included in the computation of diluted earnings per share because they were antidilutive.

Note 10 — Fair Values and Fair Value Measurements of Financial Instruments

Fair value measurements are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:

Level 1 — Observable inputs such as quoted prices in active markets.

Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

  Level 3 — Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of the following valuation techniques:

Market approach	—	Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Cost approach	—	Amount that would be required to replace the service capacity of an asset (replacement cost).
Income approach	—	Techniques to convert future amounts to a single present amount based on market expectations (including present-value techniques, option-pricing and excess earning models).

12

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

Carrying value and the estimated fair value and related valuation techniques of our financial instruments are:

	At Third Quarter-End 2009		At Year-End 2008
	Carrying Value	Fair Value	Carrying Value	Fair Value	Valuation Technique
	(In millions)
Financial Liabilities
Fixed rate debt	$582	$591	$841	$680	Level 2 - Market Approach

Differences between carrying value and fair value are primarily due to instruments that provide fixed interest rates or contain fixed interest rate elements. Inherently, such instruments are subject to fluctuations in fair value due to subsequent movements in interest rates. We excluded financial instruments from the table that are either carried at fair value or have fair values that approximate their carrying amount due to their short-term nature or variable interest rates.

At third quarter-end 2009, we had guaranteed joint venture obligations principally related to fixed-rate debt instruments and letters of credit totaling $15 million. The estimated fair value of these guarantees is not significant.

Note 11 – Long-Term Debt

At third-quarter end 2009, our long-term debt (including current maturities of $1 million) was $879 million, which included $72 million of borrowings under bank credit agreements and $225 million under our accounts receivable securitization facility.

Our accounts receivable securitization facility expires in September 2010.  In November 2009, we amended and restated our accounts receivable securitization facility.  The amended facility expires at the end of October 2012.  As a result, we have classified the $225 million of borrowings under this facility as long-term debt.

Note 12 – Financial Assets and Nonrecourse Financial Liabilities of Special Purpose Entities

On April 23, 2009, the credit ratings of SunTrust Bank, one of the banks issuing irrevocable letters of credit securing the notes we received in connection with the sale of our strategic timberland in 2007, were lowered to a level that required the letters of credit issued by SunTrust to be replaced by letters of credit issued by another qualifying financial institution.

On May 21, 2009, Coöperative Centrale Raiffeisen-Boerenleenbank B.A., commonly known as Rabobank, at the request of the timberland buyer, issued substitute letters of credit totaling approximately $500 million in complete replacement of SunTrust as a qualified letter of credit issuer in the transaction.  In connection with the substitution, we paid $3 million in fees to Rabobank, which will be amortized through 2027, the remaining life of the transaction.

As a result of the substitution of SunTrust, we recognized $17 million of other non-operating expense in first nine months 2009, which consisted of $15 million in fees that we paid in connection with the issuance of the SunTrust letters of credit, which were being amortized over the life of the letters of credit, and $2 million of other fees associated with terminating the transaction with SunTrust.

Note 13 – Segment Information

We have two business segments: corrugated packaging and building products. Corrugated packaging manufactures linerboard and corrugating medium (collectively referred to as containerboard), that we convert into corrugated packaging, and lightweight gypsum facing paper.  Building products manufactures a variety of building products, including lumber, gypsum wallboard, particleboard, medium density fiberboard (or MDF), and fiberboard.

We evaluate performance based on operating income before items not included in segments and income taxes. Items not included in segments represent items managed on a company-wide basis and include corporate general and administrative expense, share-based and long-term incentive compensation, other operating and non-operating income (expense), and interest income and expense.  Other operating income (expense) includes gain or loss on sale of assets, asset impairments, and unusual income and expense items.  The accounting policies of the segments are the

13

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

same as those described in the accounting policy notes to the financial statements.  Intersegment sales are recorded at market prices.  Intersegment sales and shared service expense allocations are netted in costs and expenses.

		Corrugated Packaging		Building Products		Items Not Included in Segments and Eliminations		Total
		(In millions)
Third Quarter 2009:
Revenues from external customers	$	734	$	151	$	––	$	885
Depreciation and amortization		36		11		3		50
Equity income from joint ventures		––		––		––		––
Income (loss) before taxes		94		(4	)	19	(a)	109
Capital expenditures		22		6		1		29
First Nine Months 2009 or at Third Quarter-End 2009:
Revenues from external customers	$	2,286	$	446	$	––	$	2,732
Depreciation and amortization		109		34		8		151
Equity income from joint ventures		––		2		––		2
Income (loss) before taxes		290		(9	)	(5	) (a)	276
Total assets		2,284		573		2,926		5,783
Investment in equity method investees and joint ventures		3		27		––		30
Goodwill		265		129		––		394
Capital expenditures		64		15		2		81
Third Quarter 2008:
Revenues from external customers	$	797	$	179	$	––	$	976
Depreciation and amortization		37		11		3		51
Equity income from joint ventures		2		––		––		2
Income (loss) before taxes		50		(6	)	(53	)(a)	(9	)
Capital expenditures		35		5		––		40
First Nine Months 2008 or at Third Quarter-End 2008:
Revenues from external customers	$	2,371	$	540	$	––	$	2,911
Depreciation and amortization		108		35		8		151
Equity income from joint ventures		6		1		––		7
Income (loss) before taxes		157		(26	)	(154	) (a)	(23	)
Total assets		2,430		609		2,832		5,871
Investment in equity method investees and joint ventures		3		24		––		27
Goodwill		264		129		––		393
Capital expenditures		98		15		3		116

14

TEMPLE-INLAND INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

(a) Items not included in segments consist of:

		Third Quarter						First Nine Months
		2009			2008			2009			2008
		(In millions)
General and administrative expense	$	(18	)	$	(17	)	$	(53	)	$	(59	)
Share-based and long-term incentive compensation		(13	)		(10	)		(39	)		(16	)
Other operating income (expense)		68			(1	)		139			(16	)
Other non-operating income (expense)		(3	)		(3	)		(2	)		(1	)
Net interest income (expense) on financial assets and nonrecourse financial liabilities of special purpose entities		(1	)		(1	)		––			(4	)
Interest expense on debt		(14	)		(21	)		(50	)		(58	)
	$	19		$	(53	)	$	(5	)	$	(154	)
Other operating income (expense) applies to:
Corrugated packaging	$	69		$	––		$	143		$	6
Building products		––			––			––			(1	)
Unallocated		(1	)		(1	)		(4	)		(21	)
	$	68		$	(1	)	$	139		$	(16	)

Note 14 – Subsequent Event

On November 6, 2009, our Board of Directors declared a regular quarterly dividend of $0.10 per share payable on December 15, 2009.

We evaluated events through November 10, 2009, the date these financial statements are being filed with the Securities and Exchange Commission.

15

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking statements” within the meaning of the federal securities laws.  These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipate,” “could,” “estimate,” “likely,” “intend,” “may,” “plan,” “expect,” and similar expressions, including references to assumptions.  These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties.  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;

●   current conditions in financial markets could adversely affect our ability to finance our operations;

●   demand for new housing;

●   accuracy of accounting assumptions related to impaired assets, pension and postretirement costs, contingency reserves, and income taxes;

●   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 acquired operations; and

●   other factors, many of which are beyond our control.

Our actual results, performance, or achievement probably will differ from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition.  In view of these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements.  Except as required by law, we expressly disclaim any obligation to publicly revise any forward-looking statements contained in this report to reflect the occurrence of events after the date of this report.

Non-GAAP Financial Measures

Return on investment (ROI) is an important internal measure for us because it is a key component of our evaluation of overall performance and the performance of our business segments.  Studies have shown that there is a direct correlation between shareholder value and ROI and that shareholder value is created when ROI exceeds the cost of capital.  ROI allows us to evaluate our performance on a consistent basis as the amount we earn relative to the amount invested in our business segments.  A significant portion of senior management’s compensation is based on achieving ROI targets.

In evaluating overall performance, we define ROI as total segment operating income, less general and administrative expenses and share-based and long-term incentive compensation not included in segments, divided by total assets, less certain assets and certain current liabilities.  We do not believe there is a comparable GAAP financial measure to our definition of ROI.  The reconciliation of our ROI calculation to amounts reported under GAAP is included in a later section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Despite its importance to us, ROI is a non-GAAP financial measure that has no standardized definition and as a result may not be comparable with other companies’ measures using the same or similar terms.  Also there may be limits in the usefulness of ROI to investors.  As a result, we encourage you to read our consolidated financial statements in their entirety and not to rely on any single financial measure.

16

Accounting Policies

Critical Accounting Estimates

In first nine months 2009, there were no changes in our critical accounting estimates from those we disclosed in our Annual Report on Form 10-K for fiscal 2008.

New Accounting Pronouncements

In first nine months 2009, we adopted several new accounting pronouncements none of which had a significant effect on our earnings or financial position.  Please read Note 2 to the Consolidated Financial Statements for further information.

Results of Operations for Third Quarter and First Nine Months 2009 and 2008

Summary

We manage our operations through two business segments: corrugated packaging and building products.  A summary of the results of operations by business segment follows:

		Third Quarter						First Nine Months
		2009			2008			2009			2008
		(In millions, except per share)
Revenues
Corrugated packaging	$	734		$	797		$	2,286		$	2,371
Building products		151			179			446			540
Total revenues	$	885		$	976		$	2,732		$	2,911
Segment operating income
Corrugated packaging	$	94		$	50		$	290		$	157
Building products		(4	)		(6	)		(9	)		(26	)
Total segment operating income		90			44			281			131
Items not included in segments
General and administrative expense		(18	)		(17	)		(53	)		(59	)
Share-based and long-term incentive compensation		(13	)		(10	)		(39	)		(16	)
Other operating income (expense)		68			(1	)		139			(16	)
Other non-operating income (expense)		(3	)		(3	)		(2	)		(1	)
Net interest income (expense) on financial assets and nonrecourse financial liabilities of special purpose entities		(1	)		(1	)		––			(4	)
Interest expense on debt		(14	)		(21	)		(50	)		(58	)
Income (loss) before taxes		109			(9	)		276			(23	)
Income tax (expense) benefit		(42	)		12			(107	)		21
Net income (loss)		67			3			169			(2	)
Net income attributable to noncontrolling interest of special purpose entities		––			––			(1	)		––
Net income (loss) attributable to Temple-Inland Inc.	$	67		$	3		$	168		$	(2	)
Average basic shares outstanding		106.9			106.7			106.8			106.7
Average diluted shares outstanding		108.6			107.6			107.7			107.6
Earnings per basic share	$	0.62		$	0.03		$	1.56		$	(0.02	)
Earnings per diluted share	$	0.61		$	0.03		$	1.55		$	(0.02	)
ROI, annualized								9.1	%		3.0	%

17

In first nine months 2009, significant items affecting net income included:

●   We experienced lower prices and volumes for our corrugated packaging products compared with first nine months 2008.

●   We experienced lower prices and volumes for our building products, except for gypsum for which volumes increased, compared with first nine months 2008.

●   We benefited from a decline in most key input costs compared with first nine months 2008 and from our continuing initiatives to lower costs, improve asset utilization, and increase operating efficiencies.

●   Share-based and long-term incentive compensation increased $23 million compared with first nine months 2008 primarily due to the impact of the increase in our share price during the period on our cash-settled awards.

●   We recognized other operating income of $146 million related to alternative fuel mixture tax credits, net of related costs.

●   We incurred $7 million of other operating expense primarily associated with 2008 facility closures and severance related to headcount reductions.

●   We recognized a net gain of $15 million in connection with the purchase and retirement of $245 million of our long-term debt.

●   We recognized $17 million of non-operating expense associated with the replacement of an issuer of irrevocable letters of credit securing the notes we received in connection with the 2007 sale of our strategic timberland.

In first nine months 2008, significant items affecting net income (loss) included:

●   We experienced lower volumes and higher pricing for our corrugated packaging products, lower volumes for most of our building products and lower pricing for gypsum wallboard compared with first nine months 2007.

●   While we continued to see the benefits from our initiative to lower costs, improve asset utilization, and increase operating efficiencies; the increased cost of energy, freight, chemicals, and fiber compared with first nine months 2007 more than offset these benefits.

●   Share-based compensation decreased compared with first nine months 2007 due to the impact of the decrease in our share price during the period on our cash-settled awards.

●   We incurred $20 million of costs associated with our transformation plan, of which $15 million was related to the settlement of supplemental retirement benefits.  We also decreased litigation reserves by $5 million due to the settlement of the remaining claim related to our antitrust litigation.

●   Interest expense decreased primarily due to the December 2007 early pay-off of $286 million of 6.75% Senior Notes and $213 million of 7.875% Senior Notes.

●   In July 2008, we purchased the remaining 50 percent interest in Premier Boxboard Limited LLC for $62 million.  Subsequent to the purchase we incurred a penalty of $4 million from the prepayment of $50 million in joint venture debt.

Our operations are affected to varying degrees by supply and demand factors and economic conditions including changes in energy costs, interest rates, new housing starts, home repair and remodeling activities, and the strength of the U.S. dollar.  Given the commodity nature of our manufactured products, we have little control over market pricing or market demand.

18

Corrugated Packaging

We manufacture linerboard and corrugating medium (collectively referred to as containerboard) that we convert into corrugated packaging.  In July 2008, we purchased our partner’s 50 percent interest in Premier Boxboard Limited LLC (PBL), a joint venture that manufactured containerboard and lightweight gypsum facing paper at a mill in Newport, Indiana.  We have integrated the PBL operations into our corrugated packaging system.  Late in 2008, we began producing white-top linerboard at the Newport mill.  Our corrugated packaging segment revenues are principally derived from the sale of corrugated packaging products and, to a lesser degree, from the sale of containerboard and lightweight gypsum facing paper (collectively referred to as paperboard).

A summary of our corrugated packaging results follows:

		Third Quarter						First Nine Months
		2009			2008			2009			2008
		(Dollars in millions)
Revenues	$	734		$	797		$	2,286		$	2,371
Costs and expenses		(640	)		(747	)		(1,996	)		(2,214	)
Segment operating income	$	94		$	50		$	290		$	157
Segment ROI								18.3	%		10.5	%

Corrugated packaging results for first nine months 2008 would not have been materially different from those reported assuming the purchase of PBL had occurred at the beginning of 2008.

Fluctuations in corrugated packaging pricing (which includes freight and is net of discounts) and shipments are set forth below:

	Third Quarter 2009 versus Third Quarter 2008		First Nine Months 2009 versus First Nine Months 2008
	Increase/(Decrease)
Corrugated packaging
Average prices	(6	)%	(1	)%
Shipments, average week	0	%	(2	)%
Industry shipments, average week(a)	(8	)%	(9	)%
Paperboard
Average prices	(20	)%	(14	)%
Shipments, in thousand tons	(61	)	(40	)

(a)   Source: Fibre Box Association

The decrease in third quarter and first nine months 2009 paperboard shipments to third parties was primarily due to a decrease in containerboard shipments offset by an increase in shipments of lightweight gypsum facing paper.

Compared with second quarter 2009, average corrugated packaging weekly shipments were down four percent, principally due to normal seasonal fluctuations, and average prices were down three percent, while average paperboard shipments were up 3,000 tons and prices were down seven percent.

Costs and expenses in third quarter 2009, which includes the Newport mill that we acquired in July 2008, were down 14 percent compared with third quarter 2008, and down five percent compared with second quarter 2009. These decreased costs were primarily the result of lower prices for wood fiber, recycled fiber, energy, and freight; lower converting costs; and reduced outside purchases of white-top linerboard and medium due to the integration of the Newport mill.

19

Fluctuations in our significant cost and expense components included:

	Third Quarter 2009 versus Third Quarter 2008				First Nine Months 2009 versus First Nine Months 2008
	Increase/(Decrease) (In millions)
Wood fiber	$	(5	)	$		(28	)
Recycled fiber		(4	)			(38	)
Energy, principally natural gas		(27	)			(47	)
Freight		(10	)			(21	)
Chemicals		(4	)			(3	)
Depreciation		(1	)			1

The costs of wood and recycled fiber, energy, chemicals, and freight fluctuate based on the market prices we pay for these commodities.  It is likely that these costs will continue to fluctuate for the remainder of 2009.

Information about our converting facilities and mills follows:

	Third Quarter				First Nine Months
	2009		2008		2009		2008
Number of converting facilities (at quarter-end)	63		64		63		64
Corrugated packaging shipments, in thousand tons	825		810		2,490		2,504
Paperboard production, in thousand tons	1,012		947		2,927		2,775
Percent containerboard production used internally	93	%	86	%	93	%	90	%
Percent total fiber requirements sourced from recycled fiber	42	%	41	%	44	%	37	%

Third quarter and first nine months 2009 paperboard production includes production from our Newport mill that we acquired in July 2008.  In first nine months 2009, we reduced our production of containerboard to match our demand.  In third quarter 2008, we lost production of 38,000 tons of containerboard due to hurricanes Gustav and Ike.

Building Products

We manufacture lumber, gypsum wallboard, particleboard, medium density fiberboard (MDF), and fiberboard. Our building products segment revenues are principally derived from sales of these products.  We also own a 50 percent interest in Del-Tin Fiber LLC, a joint venture that produces MDF at a facility in El Dorado, Arkansas.

A summary of our building products results follows:

		Third Quarter						First Nine Months
		2009			2008			2009			2008
		(Dollars in millions)
Revenues	$	151		$	179		$	446		$	540
Costs and expenses		(155	)		(185	)		(455	)		(566	)
Segment operating income (loss)	$	(4	)	$	(6	)	$	(9	)	$	(26	)
Segment ROI								(2.2	)%		(6.2	)%

20

Fluctuations in product pricing (which includes freight and is net of discounts) and shipments are set forth below:

	Third Quarter 2009 versus Third Quarter 2008			First Nine Months 2009 versus First Nine Months 2008
	Increase/(Decrease)
Lumber:
Average prices		(18	)%		(16	)%
Shipments		(3	)%		(6	)%
Gypsum wallboard:
Average prices		(12	)%		1	%
Shipments		29	%		7	%
Particleboard:
Average prices		(10	)%		(5	)%
Shipments		(12	)%		(17	)%
MDF:
Average prices		(5	)%		––	%
Shipments		(9	)%		(13	)%

Pricing and demand for most of our building products were down compared with first nine months 2008 due to continued deteriorating conditions in the housing industry.  It is likely these conditions will continue for the remainder of 2009.

Compared with second quarter 2009, average prices were up seven percent for lumber, flat for MDF, down one percent for particleboard, and down nine percent for gypsum wallboard.  Shipments were up four percent for particleboard, down one percent for lumber, up 27 percent for gypsum wallboard, and flat for MDF.

Costs and expenses were down 20 percent in first nine months 2009 compared with first nine months 2008.  The decrease in costs is primarily attributable to curtailment of production to match demand for our products and headcount reductions.  In addition, in first nine months 2009, we recognized a $3 million gain from a sale in lieu of condemnation of land near our lumber mill in Rome, Georgia, and we incurred costs of about $1 million related to an indefinite shutdown of our lumber mill in Buna, Texas.  In first nine months 2008, we incurred $3 million in severance charges for headcount reductions.

Fluctuations in our significant cost and expense components included:

	Third Quarter 2009  versus Third Quarter 2008				First Nine Months 2009  versus First Nine Months 2008
	Increase/(Decrease) (In millions)
Wood fiber	$	(9	)	$		(26	)
Energy, principally natural gas		(9	)			(23	)
Chemicals		(8	)			(21	)
Freight		(3	)			(13	)

  The costs of our fiber, energy, chemicals, and freight fluctuate based on the market prices we pay for these commodities.  It is likely that these costs will continue to fluctuate for the remainder of 2009.

21

Information about our converting and manufacturing facilities follows:

	Third Quarter				First Nine Months
	2009		2008		2009		2008
Number of converting and manufacturing facilities (at quarter-end)	16		16		16		16
Operating rates for:
Lumber	67	%	76	%	71	%	93	%
Gypsum wallboard	60	%	51	%	55	%	52	%
Particleboard	57	%	71	%	60	%	70	%
MDF	86	%	98	%	92	%	101	%

The number of converting and manufacturing facilities and the operating rates include our lumber mill in Buna, Texas, which was indefinitely shutdown in second quarter 2009. The lower average operating rates in first nine months 2009 resulted from the curtailment of production to match demand for our products.

Items Not Included in Segments

Items not included in segments are income and expenses that are managed on a company-wide basis and include corporate general and administrative expense, share-based and long-term incentive compensation, other operating and non-operating income (expense), and interest income and expense.

The change in share-based and long-term incentive compensation was principally due to the effect on our cash-settled awards from our share price being higher at end of the period compared with our share price at year-end 2008.  Please read Note 4 to the Consolidated Financial Statements for further information.

Other operating income not included in business segments totaled $139 million in first nine months 2009 and included income of $146 million related to alternative fuel mixture tax credits, net of related costs, and charges of $7 million primarily associated with 2008 facility closures and severance related to headcount reductions.  Other operating expense was $16 million in first nine months 2008, principally related to the lump-sum settlements of supplemental pension benefits made as part of our 2007 transformation plan.

We are continuing our efforts to enhance return on investment by lowering costs, improving operating efficiencies and increasing asset utilization.  As a result, we will continue to review operations that are unable to meet return objectives and determine appropriate courses of action, including possibly consolidating and closing converting facilities and selling under-performing assets.

Other non-operating income (expense) for first nine months 2009 includes costs of $17 million associated with the replacement of SunTrust Bank as an issuer of irrevocable letters of credit securing the notes we received in connection with the sale of our strategic timberland in 2007.  The $17 million consists of $15 million in fees that we paid in connection with the issuance of the SunTrust letters of credit, which was being amortized over the life of the letters of credit, and $2 million in other fees associated with terminating the transaction with SunTrust.  Other non-operating income (expense) also includes net gains of $15 million in connection with the purchase and retirement of $90 million of our 7.875% Senior Notes due in 2012, $136 million of our 6.375% Senior Notes due in 2016, and $19 million of our 6.625% Senior Notes due in 2018. Other non-operating expense totaled $1 million in first nine months 2008, which is comprised of a $4 million penalty associated with the prepayment of the $50 million PBL joint venture debt, offset by $3 million in interest and other income.

Net interest income (expense) on financial assets and nonrecourse liabilities of special purpose entities relates to interest income on the $2.38 billion of notes received from the sale of our timberland in 2007 and interest expense on the $2.14 billion of borrowings secured by a pledge of the notes received.  The notes receivable were contributed to and the borrowings were made by two wholly-owned, bankruptcy-remote, special purpose entities, which we consolidate.  The borrowings are nonrecourse beyond these two entities.  At third quarter-end 2009 and 2008, the interest rate on our financial assets was 0.52 and 2.84 percent and the interest rate on our nonrecourse financial liabilities was 0.87 and 3.36 percent, respectively.  These interest rates are variable and are based on different indices and, therefore, may not always reflect the same spread.

22

The change in interest expense in first nine months 2009 compared with first nine months 2008 was due to lower levels of debt outstanding as a result of our debt purchases and retirements, and to a lesser degree low interest rates on our variable-rate debt.

Goodwill

Our goodwill totals $394 million of which $265 million is allocated to our corrugated packaging segment and $129 million to the gypsum wallboard component of our building products segment.  Substantially all our goodwill is deductible for income tax purposes.  We do not believe our goodwill is impaired at third quarter-end 2009.

Goodwill was tested for impairment at the beginning of fourth quarter 2008 in conjunction with our annual test and again as of year-end 2008 in conjunction with an interim test due in part to the decline in our market capitalization.  Both tests indicated that our goodwill was not impaired and that the estimated fair value of the reporting units substantially exceeded their carrying value.  In performing these tests, we estimated fair value based on discounted cash flow models, which included estimates of amounts and timing of future cash flows, discount rates, product pricing and shipments, and input costs.  We used discount rates between 9.5 percent and 13 percent to discount the estimated future cash flow estimates.

Since year-end 2008 there have been no changes in the composition of our reporting units and our analysis of first nine months 2009 events and operations, including the improvement in our market capitalization, did not indicate it was likely that there had been any significant deterioration in the estimated fair value of our reporting units.  As a result, we did not perform an interim test for goodwill impairment in first nine months 2009.  If economic and market conditions are depressed for a prolonged period, it is possible that in future periods our goodwill could become impaired, and we would be required to recognize impairment charges, which could possibly be significant.

Income Taxes

Our effective tax rate was 39 percent in third quarter and first nine months 2009.  Our effective tax rate was 89 percent in first nine months 2008.  Differences between the effective tax rate and the statutory rate are due to state income taxes, nondeductible items, and deferred taxes on unremitted foreign income.

Average Shares Outstanding

The increase in average diluted shares outstanding in third quarter 2009 was due to the increase in the dilutive effect of stock options as a result of our higher share price.

Capital Resources and Liquidity for First Nine Months 2009

Sources and Uses of Cash

We operate in cyclical industries and our operating cash flows vary accordingly.  Our principal operating cash requirements are for compensation, wood and recycled fiber, energy, interest, and taxes.  Pricing and shipments decreased for our corrugated packaging and most of our building products in first nine months 2009.  Working capital is subject to cyclical operating needs, the timing of collection of receivables and the payment of payables and expenses and, to a lesser extent, to seasonal fluctuations in our operations.

23

		First Nine Months
		2009			2008
		(In millions)
Cash received from:
Operations (including payments related to our 2007 transformation plan of $50 million in first nine months 2008)	$	424	(a) (b)	$	142	(a)
Working capital (including payments related to our 2007 transformation plan of $297 million in first nine months 2008)		16			(385	)
Cash from operations		440			(243	)
Sale of non-strategic assets and operations		4			4
Borrowings, net		––			287
Total sources		444			48
Cash used to:
Reduce borrowings, net		(299	)		––
Return to shareholders through dividends		(32	)		(32	)
Reinvest in the business through:
Capital expenditures		(81	)		(116	)
Acquisition of PBL, net of cash acquired		––			(57	)
Joint ventures and other		(31	)		(20	)
Total uses		(443	)		(225	)
Change in cash and cash equivalents	$	1		$	(177	)

_____________

(a)      Includes voluntary, discretionary contributions to our qualified defined benefit plan of $30 million in 2009 and $15 million in 2008.

(b)      Includes $121 million of alternative fuel mixture tax credits, net of related costs and tax payments.

 We issued 391,623 and 368,555 shares of common stock in first nine months 2009 and 2008 to employees exercising options and for vesting of share-settled units.  We paid cash dividends to shareholders of $0.30 per share in first nine months 2009 and 2008.  On November 6, 2009, our Board of Directors declared a regular quarterly dividend of $0.10 per share payable on December 15, 2009.

Capital expenditures are expected to be about $130 million in 2009 or about 65 percent of expected 2009 depreciation and amortization.  The expected reduction of capital expenditures in 2009 is primarily the result of the completion of the majority of our box plant transformation to increase efficiencies in our corrugated packaging operations.

In July 2008, we purchased our partner’s 50 percent interest in the PBL joint venture for $62 million.  The joint venture had $50 million in debt, of which $25 million was related to the purchased interest.  We had previously guaranteed the $50 million in joint venture debt.  Subsequent to the purchase we incurred a penalty of $4 million related to the prepayment of the $50 million in joint venture debt.  We funded this transaction with borrowings under our existing credit agreements.

Liquidity

Credit Agreements

Our sources of short-term funding are our operating cash flows and borrowings under our credit agreements and accounts receivable securitization facility. At third quarter-end 2009, we had $745 million of unused borrowing capacity under our committed credit agreements and accounts receivable securitization facility.

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		Committed Credit Agreements			Accounts Receivable Securitization Facility			Total
		(In millions)
Committed	$	825		$	250		$	1,075
Less: Borrowings and commitments		(105	)		(225	)		(330	)
Unused borrowing capacity at third quarter-end 2009	$	720		$	25		$	745

Our committed credit agreements include a $750 million revolving credit facility that expires in 2011.  Of the remaining $75 million, $25 million matures in 2011; $10 million expiring in 2009 and $15 million expiring in 2010 have term-out agreements that do not require outstanding borrowings to be repaid until 2011 and 2012, respectively; and $25 million expires in July 2010.

Our accounts receivable securitization facility expires in September 2010.  In November 2009, we amended and restated our accounts receivable securitization facility.  The amended facility expires at the end of October 2012.  As a result, we have classified the $225 million of borrowings under this facility as long-term debt.

Our debt agreements, accounts receivable securitization facility, and credit agreements contain terms, conditions, and financial covenants customary for such agreements, including minimum levels of interest coverage and limitations on leverage.  We are currently in compliance with these covenants and do not currently anticipate any change in circumstances that would impair our ability to continue to comply with these covenants.

We believe the amount available under these credit facilities along with our existing cash and cash equivalents and expected cash flows from operations will provide us sufficient funds to meet our operating needs for the foreseeable future.  In light of the current conditions in financial markets, we closely monitor the banks in our credit facilities.  To date, we have experienced no difficulty in borrowing under the facilities and have not received any indications that any of the participating banks would not be able to honor their commitments under these facilities.

Financial Assets and Nonrecourse Financial Liabilities of Special Purpose Entities

On April 23, 2009, the credit ratings of SunTrust Bank, one of the banks issuing irrevocable letters of credit securing the notes we received in connection with the sale of our strategic timberland in 2007, were lowered to a level that required the letters of credit issued by SunTrust to be replaced by letters of credit issued by another qualifying financial institution.

On May 21, 2009, Coöperative Centrale Raiffeisen-Boerenleenbank B.A., commonly known as Rabobank, at the request of the timberland buyer, issued substitute letters of credit totaling approximately $500 million in complete replacement of SunTrust as a qualified letter of credit issuer in the transaction.  In connection with the substitution, we paid approximately $3 million in fees to Rabobank, which will be amortized through 2027, the remaining life of the transaction.

As a result of the substitution of SunTrust, we recognized $17 million of other non-operating expense in first nine months 2009, which consisted of $15 million in fees that we paid in connection with the issuance of the SunTrust letters of credit, which was being amortized over the life of the letters of credit, and $2 million of other fees associated with terminating the transaction with SunTrust.

Off-Balance Sheet Arrangements

At third quarter-end 2009, there were no significant changes in off-balance sheet arrangements from that disclosed in our Annual Report on Form 10-K for fiscal 2008.

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Pension and Postretirement Matters

We have no minimum funding requirement under ERISA in 2009.  We made $30 million in voluntary, discretionary contributions to our qualified defined benefit pension plan in first nine months 2009.

Energy

Energy costs, which include energy consumed at the Newport mill that we acquired in July 2008, were $205 million in first nine months 2009 compared with $275 million in first nine months 2008.  Our energy costs fluctuate based on the market prices we pay for these commodities and on the amount and mix of fuels we may use.  We continue to reduce our dependency on natural gas by utilizing biomass fuels.  We hedge very little of our energy needs.  It is likely that these costs will continue to fluctuate for the remainder of 2009.

The Internal Revenue Code allows a refundable tax credit for alternative fuel mixtures produced for sale or for use in a trade or business.  The application of the alternative fuel mixture tax credit to the alternative fuel used in the paper industry is a complicated issue that continues to receive significant attention from the U.S. Congress and the Internal Revenue Service.  The credit is scheduled to expire on December 31, 2009.

The IRS approved our registration as an alternative fuel mixer, allowing us to file for the alternative fuel mixture tax credit.  Through third quarter-end 2009, we recognized credits of $149 million and incurred related costs of $3 million, primarily related to equipment used in the mixing process and the purchase of diesel fuel mixed with the alternative fuel.

For income tax purposes we believe the alternative fuel mixture tax credits are not taxable but may be subject to alternative minimum tax.  However, we were required under generally accepted accounting principles to establish a $58 million liability for unrecognized tax benefits related to the tax position taken regarding these credits.

As a result of the political environment and the uncertainties surrounding the alternative fuel mixture tax credit, the sustainability of any potential future credits is not assured and could result in changes in the recognition of the alternative fuel mixture tax credits in future periods.

Litigation and Related Matters

We are involved in various legal proceedings that arise from time to time in the ordinary course of doing business, and we believe that adequate reserves have been established for any probable losses.  We do not believe that the outcome of any of these proceedings would have a material adverse effect on our financial position or long-term results of operations or cash flows.  It is possible, however, that charges related to these matters could be significant to results of operations or cash flows in any single accounting period.

In third quarter 2009, there were no material developments in pending legal proceedings.

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Calculation of Non-GAAP Financial Measure

					Corrugated			Building
		Consolidated			Packaging			Products
		(In millions)
First Nine Months 2009
Return:
Segment operating income determined in accordance with GAAP	$	281		$	290		$	(9	)
Items not included in segments:
General and administrative expense		(53	)		N/A			N/A
Share-based and long-term incentive compensation		(39	)		N/A			N/A
	$	189		$	290		$	(9	)
Investment:
Beginning of year total assets or segment assets determined in
accordance with GAAP	$	5,869		$	2,366		$	580
Adjustments:
Current liabilities (excluding current portion of long-term debt)		(445	)		(257	)		(45	)
Financial assets of special purpose entities		(2,474	)		N/A			N/A
Municipal bonds related to capital leases included in other assets		(188	)		N/A			N/A
	$	2,762		$	2,109		$	535
ROI, annualized		9.1	%		18.3	%		(2.2	)%
First Nine Months 2008
Return:
Segment operating income determined in accordance with GAAP	$	131		$	157		$	(26	)
Items not included in segments:
General and administrative expense		(59	)		N/A			N/A
Share-based compensation		(16	)		N/A			N/A
	$	56		$	157		$	(26	)
Investment:
Beginning of year total assets or segment assets determined in
accordance with GAAP	$	5,942		$	2,301		$	623
Adjustments:
Current liabilities (excluding current portion of long-term debt)		(887	)		(311	)		(63	)
Financial assets of special purpose entities		(2,383	)		N/A			N/A
Municipal bonds related to capital leases included in other assets		(188	)		N/A			N/A
	$	2,484		$	1,990		$	560
ROI, annualized		3.0	%		10.5	%		(6.2	)%

ROI annualized is not necessarily indicative of the ROI that may be expected for the entire year.

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STATISTICAL AND OTHER DATA

Revenues and unit sales, excluding joint venture operations, follows:

		Third Quarter				First Nine Months
		2009		2008		2009		2008
		(Dollars in millions)
Revenues
Corrugated Packaging
Corrugated packaging	$	699	$	729	$	2,177	$	2,231
Paperboard (a) (b)		35		68		109		140
	$	734	$	797	$	2,286	$	2,371
Building Products
Lumber	$	48	$	60	$	139	$	177
Particleboard		35		46		108		138
Gypsum wallboard		38		33		109		101
Medium density fiberboard		16		18		49		56
Fiberboard		8		11		18		33
Other		6		11		23		35
	$	151	$	179	$	446	$	540
Unit sales
Corrugated Packaging
Corrugated packaging, thousands of tons		825		810		2,490		2,504
Paperboard, thousands of tons (a) (b)		89		150		264		304
		914		960		2,754		2,808
Building Products
Lumber, million board feet		183		189		555		593
Particleboard, million square feet		103		117		309		372
Gypsum wallboard, million square feet		328		255		870		813
Medium density fiberboard, million square feet		31		34		96		110
Fiberboard, million square feet		41		52		95		170

_______

(a)  Paperboard includes containerboard and lightweight gypsum facing paper.

(b)  Comparison of revenue and unit sales of paperboard are affected by the July 25, 2008 purchase of our partner’s interest in Premier Boxboard Limited LLC.  The effects on revenues and unit sales for the periods presented are not material.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our interest rate exposure is primarily related to our variable-rate, long-term debt and to the financial assets and nonrecourse financial liabilities of special purpose entities.  This exposure is the result of changes in interest rates and also the use of different base rates and the timing of the quarterly interest rate resets on the financial assets and nonrecourse financial liabilities of special purpose entities.  As discussed below, the net effect on our pre-tax income of a one percent change in interest rates is $1 million.

Our variable-rate debt was $297 million at third quarter-end 2009 and $351 million at year-end 2008.  A one percent change in interest rates would change our annual interest expense on variable-rate debt by $2 million.

Our $2.47 billion of financial assets of special purpose entities require quarterly interest payments based on variable rates that reset quarterly.  A one percent change in interest rates would change the annual interest income on these assets $24 million.

Our $2.14 billion of nonrecourse financial liabilities of special purpose entities require quarterly interest payments based on variable interest rates.  The interest rates on these liabilities reflect the lenders’ pooled commercial paper issuance rates plus a margin.  A one percent change in interest rates would change the annual interest expense on these borrowings $21 million.

The following table illustrates the estimated effect on our pre-tax income of immediate, parallel, and sustained shifts in interest rates for the next 12 months at third quarter-end 2009 on our variable-rate debt and our net financial assets and nonrecourse financial liabilities of special purpose entities, with comparative year-end 2008 information.

		Increase (Decrease)
		Third Quarter-End 2009						Year-End 2008
		Variable Rate		Special Purpose				Variable Rate		Special Purpose
		Debt		Entities - Net		Total		Debt		Entities - Net		Total
		(In millions)
Change in Interest Rates
+2%	$	(5)	$	5	$	–	$	(7)	$	5	$	(2)
+1%		(2)		3		1		(3)		2		(1)
-1%		N/A		N/A		N/A		3		(2)		1
-2%		N/A		N/A		N/A		7		(5)		2

The down interest rate scenarios are not applicable at third quarter-end 2009 due to the current low interest rate environment.

Foreign Currency Risk

In first nine months 2009, there were no significant changes in foreign currency risk from that disclosed in our Annual Report on Form 10-K for fiscal 2008.

Commodity Price Risk

In first nine months 2009, there were no significant changes in commodity price risk from that disclosed in our Annual Report on Form 10-K for fiscal 2008.

29

Item 4.  Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report.  Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

Since we filed our Annual Report on Form 10-K for fiscal 2008, there have been no material developments in pending legal proceedings.

Item 1A. Risk Factors

Since we filed our Annual Report on Form 10-k for fiscal 2008, there have been no material changes in risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities (1)

Period	Total Number of Shares Purchased (2)		Average Price Paid per Share	Total Number of Shares Purchased as Part of  Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
Month 1 (7/1/2009 –7/31/2009)	25,874	$	15.44	––	6,650,000
Month 2 (8/1/2009 –8/30/2009)	2,921		16.20	––	6,650,000
Month 3 (9/1/2009 –9/30/2009)	34,584		17.75	––	6,650,000
Total	63,379			––	6,650,000

____________

(1)  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.  We have purchased 4,350,000 shares under this authorization, which has no expiration date.  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.  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.

(2)  All shares purchased during the period represent shares purchased from employees to pay taxes related to stock option exercises.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

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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.

32

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)
Dated: November 10, 2009	By:	/s/ Randall D. Levy
		Name:  Randall D. Levy
		Title:    Chief Financial Officer
	By:	/s/ Troy L. Hester
		Name:  Troy L. Hester
		Title:    Corporate Controller and             Principal Accounting Officer

33

INDEX TO EXHIBITS

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	35
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	37
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	39
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	40

34

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I,  Doyle R. Simons, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Temple-Inland Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

35

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 10, 2009	/s/ Doyle R. Simons
	Doyle R. Simons
	Chief Executive Officer

36

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Randall  D.  Levy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Temple-Inland Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

37

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 10, 2009	/s/ Randall D. Levy
	Randall D. Levy
	Chief Financial Officer

38

EX-32.1

                                                     Exhibit 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

I, Doyle R. Simons, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that this Quarterly Report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Temple-Inland Inc.

/s/ Doyle R. Simons

Doyle R. Simons

Chief Executive Officer

November 10, 2009

39

EX-32.2

Exhibit 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

I, Randall D. Levy, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that this Quarterly Report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Temple-Inland Inc.

/s/ Randall D. Levy

Randall D. Levy

Chief Financial Officer

November 10, 2009

40