EX-99.1 2 d38094exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
(TEMPLE-INLAND LOGO)
NEWS
RELEASE
 
FOR IMMEDIATE RELEASE
     
CONTACT:
  Chris L. Nines
 
  (512) 434-5587
TEMPLE-INLAND INC. REPORTS SECOND QUARTER 2006 RESULTS
     AUSTIN, TEXAS, July 25, 2006—Temple-Inland Inc. today reported second quarter 2006 net income of $192 million, or $1.71 per diluted share, compared with second quarter 2005 net income of $69 million, or $0.60 per diluted share, and first quarter 2006 net income of $76 million, or $0.67 per diluted share.
     Results for second quarter 2006 include (i) an after-tax benefit of $87 million, or $0.78 per share, primarily associated with previously announced settlement of tax litigation and (ii) an after-tax special charge of $5 million, or $0.05 per share, primarily associated with the planned disposition of the asset-based lending operation in Financial Services. As reflected in the table below, net income per diluted share, excluding special items, for second quarter 2006 is $0.98 per share.
                         
    Second Quarter     First Quarter  
                   
    2006     2005     2006  
Net income per dil. share as reported
   $ 1.71     $ 0.60     $ 0.67  
 
                        
Adjustment for special items
     (0.73 )     —       0.02  
 
                  
 
                        
Net income per diluted share,
Excluding special items
   $ 0.98     $ 0.60     $ 0.69  
 
                        
Average shares outstanding – diluted
     111.8       115.0       113.4  

 

 

Corrugated Packaging
                         
    2nd Qtr.   2nd Qtr.   1st Qtr.
Segment Operating Income   2006   2005   2006
 
                        
($ in Millions)
   $ 67     $ 58     $ 40  
     Despite higher freight and energy costs, corrugated packaging earnings improved in second quarter 2006 compared with second quarter 2005 due to higher corrugated container prices and lower converting costs. Earnings improved in second quarter 2006 compared with first quarter 2006 due to higher corrugated container prices and lower energy costs, offsetting increased recycled fiber costs.
     On a volume per workday basis, shipments of corrugated containers were up 1.5% in second quarter 2006 compared with second quarter 2005 and up 3.4% compared with first quarter 2006. Four box plants have been closed since beginning of second quarter 2005.
     Average prices for corrugated containers in second quarter 2006 were up 4% compared with second quarter 2005 and compared with first quarter 2006. The average cost of recycled fiber in second quarter 2006 was down 9% compared with second quarter 2005, but up 21% compared with first quarter 2006. Freight costs were up $11 million compared with second quarter 2005 and up $3 million compared with first quarter 2006. Energy costs were up $3 million in second quarter 2006 compared with second quarter 2005, but down $11 million compared with first quarter 2006.
Forest Products
                         
    2nd Qtr.   2nd Qtr.   1st Qtr.
Segment Operating Income   2006   2005   2006
 
                        
($ in Millions)
   $ 101     $ 55     $ 82  
     Forest products reported record quarterly income of $101 million in second quarter 2006. Earnings improved in second quarter 2006 compared with second quarter 2005 due to higher pricing and volumes and the acquisition of our partner’s interest in Standard Gypsum. Earnings increased in second quarter 2006 compared with first quarter 2006 due to improved pricing for gypsum and particleboard and lower energy costs.
     Average lumber prices in second quarter 2006 were down 15% compared with second quarter 2005 and down 7% compared with first quarter 2006. Gypsum prices were up 37% compared with second quarter 2005 and up 9% compared with first quarter 2006. Particleboard prices were up 13% compared with second quarter 2005 and up 16% compared with first quarter 2006.
     Shipments of lumber, gypsum and particleboard were up in second quarter 2006 compared with second quarter 2005, but down compared with first quarter 2006.

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Real Estate
                         
    2nd Qtr.   2nd Qtr.   1st Qtr.
Segment Operating Income   2006   2005   2006
 
                        
($ in Millions)
   $ 9     $ 9     $ 26  
     Real estate earnings in second quarter 2006 were $9 million. During second quarter 2006, 920 acres of high-value land were sold at an average sales price of approximately $6,600 per acre, resulting in a gain of $5 million.
     Residential development activity for all wholly and partially-owned projects during second quarter 2006 included the sale of 866 lots at an average price of approximately $46,000 per lot.
     Commercial activity for all wholly and partially-owned projects during second quarter 2006 included the sale of 36 acres at an average price of $77,000 per acre.
Financial Services
                         
    2nd Qtr.   2nd Qtr.   1st Qtr.
Segment Operating Income   2006   2005   2006
 
                        
($ in Millions)
   $ 62     $ 47     $ 49  
     Financial services earnings improved in second quarter 2006 compared with second quarter 2005 due to higher net interest income driven by an increase in earning assets, principally mortgage-backed securities, and improved credit conditions. Earnings improved in second quarter 2006 compared with first quarter 2006 due to higher net interest income, improved credit conditions, and lower net non-interest expense.
Comments
     In announcing second quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc. said, “Second quarter 2006 was a record quarter for Temple-Inland. Our results reflect continued focus on cost reduction initiatives and favorable market conditions. We repurchased 2.0 million shares in the quarter, completing our current share repurchase authorization, and reduced debt by $91 million.
     “Corrugated packaging continued to benefit from strategic initiatives of integration, increased asset utilization and volume growth. In addition, market conditions are improving.
     “Results in our forest products operation reflect favorable market conditions for gypsum and particleboard, driven by strength in commercial construction as well as repair and remodeling markets. Additionally, we continue to benefit from our focus on fiber integration.

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     “Real estate earnings in second quarter 2006 were $9 million, and we remain on target for earnings to be in the range of $50-60 million for the year.
     “Financial services benefited from low cost and improved credit conditions. We have entered into an agreement to sell our asset-based lending operation, which will further reduce costs.”
     The Company will host a conference call on July 26, 2006 at 10:00 am EDT to discuss results of the second quarter. The meeting may be accessed through webcast or by conference call. The webcast may be accessed through Temple-Inland’s Internet site at www.templeinland.com. To access the conference call, listeners calling from North America should dial 1-800-901-5217 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-786-2964. The password is templeinland. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-888-286-8010 in North America and at 1-617-801-6888 outside North America. The password for the replay is 71581264.
     Temple-Inland Inc. operates four business segments: corrugated packaging, forest products, real estate and financial services. The Company’s 2.0 million acres of forestland are certified as managed in compliance with ISO 14001 and in accordance with the Sustainable Forestry Initiative® (SFI) Standard of the Sustainable Forestry Board to ensure forest management is conducted in a scientifically sound and environmentally sensitive manner. Temple-Inland’s common stock (TIN) is traded on the New York Stock Exchange and NYSE Arca Inc. Temple-Inland’s address on the World Wide Web is www.templeinland.com.
This press release contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements reflect management’s current views with respect to future events and are subject to risks and uncertainties. Factors and uncertainties that could cause our actual results to differ significantly from the results discussed in the forward-looking statements 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; the availability and price of raw materials we use; fluctuations in the cost of purchased energy; fluctuations in the costs we incur to transport the raw materials we use and the products we manufacture; assumptions related to pension and post-retirement costs; assumptions related to accounting for impaired assets; the collectibility of loans and accounts receivable and related provisions for losses; competitive actions by other companies; changes in laws or regulations and actions or restrictions of regulatory agencies; the accuracy of certain judgments and estimates concerning our integration of acquired operations; our ability to execute certain strategic and business improvement initiatives; and other factors, many of which are beyond our control. Our actual results, performance, or achievement could differ materially 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. We expressly disclaim any obligation to publicly revise any forward-looking statements contained in this release to reflect the occurrence of events after the date of this release.

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Business Segments
                                 
    Second Quarter   Year to Date
    2006   2005   2006(a)   2005
     
    (Dollars in millions)
Revenues
                                
Corrugated packaging
   $ 758     $ 740     $ 1,479     $ 1,459  
Forest products
     341       270       674       521  
Real estate
     35       25       82       54  
Financial services
     299       239       582       461  
         
Total revenues
   $ 1,433     $ 1,274     $ 2,817     $ 2,495  
         
 
                                
Income
                                
Corrugated packaging
   $ 67     $ 58     $ 107     $ 108  
Forest products
     101       55       183       106  
Real estate
     9       9       35       18  
Financial services
     62       47       111       89  
         
Total segment operating income
     239       169       436       321  
Expenses not allocated to segments
                                
General and administrative
     (26 )     (22 )     (49 )     (42 )
Share-based compensation (a)
     (8 )     (6 )     (24 )     (12 )
Other operating income (expense)
     (8 )     (29 )     (11 )     (53 )
Other non-operating income (expense)
     91       1       91       2  
Parent company interest
     (34 )     (29 )     (67 )     (58 )
         
Income before taxes
     254       84       376       158  
Income (taxes) benefit
     (62 )     (16 )     (108 )     (45 )
         
Income from continuing operations
     192       68       268       113  
Discontinued operations
     —       1       —       1  
         
Net income
   $ 192     $ 69     $ 268     $ 114  
         
 
                                
Diluted earnings per share:
                                
 
                                
Income from continuing operations
   $ 1.71     $ 0.59     $ 2.38     $ 0.98  
 
                                
Discontinued operations
     —       0.01       —       0.01  
         
 
                                
Net income
   $ 1.71     $ 0.60     $ 2.38     $ 0.99  
         
 
                                
Average diluted shares outstanding
     111.8       115.0       112.6       115.4  
         
    We have recast prior period results to reflect the classification of the new business segment, real estate.
 
(a)   The adoption of SFAS 123(R) for 2006 stock awards resulted in the acceleration of $7 million in pre-tax share-based compensation expense ($0.04 per after-tax) into first quarter 2006.

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TEMPLE-INLAND INC. AND SUBSIDIARIES
(UNAUDITED)
Revenues and unit sales of manufacturing subsidiaries, excluding joint venture operations follows:
                                 
    Second Quarter     Year to Date  
    2006     2005(a)     2006     2005(a)  
            (Dollars in millions)          
Revenues
                                
Corrugated Packaging
                                
Corrugated packaging
  $ 737     $ 715     $ 1,435     $ 1,406  
Linerboard
     21       25       44       53  
 
                        
Total Corrugated Packaging
   $ 758     $ 740     $ 1,479     $ 1,459  
 
                        
Forest Products
                                
Pine lumber
   $ 76     $ 84     $ 160     $ 159  
Gypsum wallboard (b)
     116       34       228       65  
Particleboard
     58       50       107       104  
Medium density fiberboard (b)
     19       26       35       57  
Fiberboard
     22       21       43       41  
Hunting, mineral and recreational leases
     14       11       28       17  
Fiber and other
     36       44       73       78  
 
                        
Total Forest Products
   $ 341     $ 270     $ 674     $ 521  
 
                        
 
                                
Unit sales
                                
Corrugated Packaging
                                
Corrugated packaging, thousands of tons
     884       886       1,753       1,743  
Linerboard, thousands of tons
     47       63       107       132  
 
                        
Total, thousands of tons
     931       949       1,860       1,875  
 
                        
Forest Products
                                
Pine lumber, mbf
     216       200       434       393  
Gypsum wallboard, msf (b)
     537       211       1,100       418  
Particleboard, msf
     164       162       329       335  
Medium density fiberboard, msf (b)
     41       61       80       130  
Fiberboard, msf
     106       109       208       216  
(a)   We have recast 2005 revenues to include gross real estate sales that had previously been reported net and certain other ancillary revenues previously reflected as a reduction of cost of sales.
 
(b)   Comparisons of revenue and unit sales of gypsum wallboard are affected by the January 2006 acquisition of our partner’s interest in Standard Gypsum L.P. Comparisons for MDF are affected by the sale of the Pembroke facility in second quarter 2005.
Supplemental Financial Information for the Parent Company and its manufacturing subsidiaries follows:
                                 
    Second Quarter   Year to Date
    2006   2005   2006   2005
Cash Balance (at qtr. end)
   $ 25     $ 16                  
Long-Term Debt (at qtr. end)
   $ 1,744     $ 1,598                  
Capital Expenditures
   $ 47     $ 57     $ 79     $ 113  

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A summary of projects we own in the entitlement process(a) at second quarter-end 2006:
             
Project   County   Project
        Acres(b)
California
            
 
            
Hidden Creek Estates
   Chatsworth     700  
Terrace at Hidden Hills
   Calabasas     30  
 
            
Georgia
            
 
            
Bay Springs
   Carroll     440  
Dry Pond
   Cherokee     950  
Fox Hall
   Coweta     350  
Friendship Road
   Cherokee     110  
Garland Mountain
   Cherokee     350  
Gold Creek
   Dawson     1,090  
Grove Park
   Coweta     160  
Happy Valley
   Coweta     750  
Jackson Park
   Jackson     690  
Legion Lake
   Carroll     210  
Lithia Springs
   Haralson     260  
Mill Creek
   Coweta     770  
Pickens School
   Pickens     420  
The Overlook at Waleska
   Cherokee     510  
Town West
   Bartow     1,110  
Triple C Road
   Bartow     180  
Wolf Creek
   Carroll     11,810  
Yellow Creek
   Cherokee     1,060  
 
            
 
            
Total
         21,950  
(a)   A project is deemed to be in the entitlement process when customary steps necessary for the preparation and submittal of an application, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining and there is no assurance that entitlements ultimately will be received.
 
(b)   Project acres are approximate. The actual number of acres entitled may vary.

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     A summary of activity within our entitled(a), developed and under development projects at second quarter-end 2006:
                                         
            Residential Lots   Commercial Acres
            Lots Sold   Estimated   Acres Sold   Estimated
        Interest   Since   Lots   Since   Acres
Project   County   Owned(b)   Inception   Remaining   Inception   Remaining
 
                                        
Projects we own
                                        
 
                                        
Colorado
                                        
Buffalo Highlands
   Weld   100%     —       645       —       —  
Johnstown Farms
   Weld   100%     115       699       —       —  
Stonebraker
   Weld   100%     —       600       —       —  
 
                                        
Texas
                                        
Caruth Lakes
   Rockwell   100%     245       629       —       —  
Cibolo Canyons
   Bexar   100%     226       1,523       32       113  
Harbor Lakes
   Hood   100%     177       401       —       13  
Hunter’s Crossing
   Bastrop   100%     192       385       19       95  
Mawell Creek
   Collin   100%     494       529       —       —  
Oakcreek Estates
   Comal   100%     —       630       —       —  
The Colony
   Bastrop   100%     332       1,093       22       50  
The Gables at North Hill
   Collin   100%     156       126       —       —  
The Preserve at Pecan Creek
   Denton   100%     —       819       —       9  
The Ridge at Ribelin Ranch
   Travis   100%     —       —       —       189  
Other Texas Projects (8)
   Various   100%     2,463       208       107       61  
 
                                        
Missouri, Tennessee and Utah
                                        
Other Projects (4)
   Various   100%     829       375       —       —  
 
                                        
 
             5,229       8,662       180       530  
 
                                        
Projects in entities we consolidate
                                        
 
                                        
Texas
                                        
City Park
   Harris   75%     513       788       36       129  
Lantana (c)
   Denton   55%     75       2,260       —       —  
Other Texas Projects (4)
   Various   Various     213       241       2       63  
 
                                        
 
             801       3,289       38       192  
 
                                        
Total owned and consolidated
             6,030       11,951       218       722  
 
                                        
Projects in ventures that we account for using the equity method
                                
 
                                        
Georgia
                                        
Seven Hills
   Paulding   50%     474       605       5       14  
The Georgian
   Paulding   38%     274       1,112       —       —  
Other Georgia projects (6)
   Various   Various     2,061       656       —       —  
 
                                        
Texas
                                        
Bar C Ranch
   Tarrant   50%     94       1,087       —       —  
Fannin Farms West
   Tarrant   50%     224       220       —       —  
Lantana (c)
   Denton   Various     1,569       296       1       79  
Long Meadow Farms
   Fort Bend   19%     342       2,370       —       134  
Southern Trails
   Brazoria   40%     162       897       —       —  
Stonewall Estates
   Bexar   25%     —       386       —       —  
Summer Creek
   Fort Bend   50%     —       525       —       37  
Summer Creek Ranch
   Tarrant   50%     742       1,703       —       374  
Summer Lakes
   Fort Bend   50%     294       850       42       9  
Village Park
   Collin   30%     242       327       —       7  
Other Texas projects (5)
   Various   Various     752       359       —       15  
 
                                        
Florida
                                        
Other projects (3)
   Various   Various     449       396       —       —  
 
                                        
 
                                        
Total in ventures
             7,679       11,789       48       669  
 
                                        
Combined Total
   Various   Various     13,709       23,740       266       1,391  
 
                                        
    (a) A project is deemed entitled when all major discretionary land-use approvals have been received. Some projects may require additional permits for development.
 
    (b) Interest owned reflects our equity interest in the project, whether owned directly or indirectly.
 
    (c) The Lantana project consists of a series of 17 partnerships in which our interests range from 25% to 55%. We account for eight of these partnerships in which our interests range from 25% to 50% using the equity method and we consolidate the remaining partnerships.

8