EX-99.1 2 d45859exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
(TEMPLEINLAND LOGO)
         
NEWS
        
RELEASE
        
 
 
 
 		   
FOR IMMEDIATE RELEASE
CONTACT: Chris L. Nines
                     (512) 434-5587
TEMPLE-INLAND INC. REPORTS FIRST QUARTER 2007 RESULTS
     AUSTIN, TEXAS, April 25, 2007—Temple-Inland Inc. today reported first quarter 2007 net income of $38 million, or $0.35 per diluted share, compared with first quarter 2006 net income of $79 million, or $0.70 per diluted share, and fourth quarter 2006 net income of $103 million, or $0.96 per diluted share.
     Results for first quarter 2007 include a net after-tax special charge of $9 million, or $0.08 per share, related to costs for the Transformation Plan and an increase in litigation reserves after a recent California Supreme Court decision resulted in a longer limitation statute applying to certain claims in California regarding meal break laws. As reflected in the table below, net income per diluted share, excluding special items, for first quarter 2007 is $0.43 per share, compared with $0.72 per share in first quarter 2006, and $0.72 per share in fourth quarter 2006.
                         
    First Quarter     Fourth Quarter  
    2007     2006*     2006*  
Net income per dil. share as reported
   $ 0.35     $ 0.70     $ 0.96  
 
                        
Adjustment for special items
     0.08       0.02       (0.24 )
 
                  
 
                        
Net income per diluted share, Excluding special items
   $ 0.43     $ 0.72     $ 0.72  
 
                        
Average shares outstanding – diluted (in millions)
     107.7       113.4       107.8  
 
*   Recast to reflect a change in method of accounting for planned major maintenance costs.

 

 

Corrugated Packaging
                         
    1st Qtr.   1st Qtr.   4th Qtr.
Segment Operating Income   2007   2006*   2006*
($ in Millions)
   $ 64     $ 44     $ 72  
 
*   Recast to reflect a change in method of accounting for planned major maintenance.
     Corrugated Packaging operating income improved first quarter 2007 compared with first quarter 2006, principally due to higher corrugated container prices and lower energy costs. Operating income declined in first quarter 2007 compared with fourth quarter 2006 principally due to higher recycled fiber costs. Higher actual corrugated container volumes in first quarter 2007 compared with fourth quarter 2006 offset higher energy costs, planned maintenance at Rome, GA linerboard mill and lower corrugated container prices due to the loss of higher priced agriculture shipments in California and Mexico due to weather.
     Shipments first quarter 2007 were down 5%, on a volume per workday basis, compared with first quarter 2006 primarily due to the sale of Performance Sheets (a sheet feeder plant in City of Industry, California) August 2006. Excluding Performance Sheets, volumes were down 1% in first quarter 2007 compared with first quarter 2006 on a volume per workday basis. Actual shipments of corrugated containers were up 5% in first quarter 2007 compared with fourth quarter 2006. On a volume per workday basis, shipments of corrugated containers were down 1% first quarter 2007 compared with fourth quarter 2006. Additionally, shipments in first quarter 2007 were negatively impacted approximately 10,000 tons by weather conditions in California and Mexico.
     Average prices for corrugated containers first quarter 2007 were up 8% compared with first quarter 2006, but down 1% compared with fourth quarter 2006. First quarter 2007 prices were negatively affected by the loss of higher priced agriculture business in California and Mexico due to weather conditions. The average cost of recycled fiber first quarter 2007 was up 60% compared with first quarter 2006, and up 33% compared with fourth quarter 2006. Freight costs first quarter 2007 were down $1 million compared with first quarter 2006 and fourth quarter 2006. Energy costs were down $6 million first quarter 2007 compared with first quarter 2006, but up $3 million compared with fourth quarter 2006.
Forest Products
                         
    1st Qtr.   1st Qtr.   4th Qtr.
Segment Operating Income   2007   2006   2006
($ in Millions)
   $ 38     $ 82     $ 46  
     Operating income declined first quarter 2007 compared with first quarter 2006 primarily due to lower lumber prices and lower prices and shipments of gypsum. Operating income declined first quarter 2007 compared with fourth quarter 2006 principally due to lower prices and shipments for gypsum.

 

 

     Average lumber prices first quarter 2007 were down 25% compared with first quarter 2006, but up 1% compared with fourth quarter 2006. Gypsum prices were down 7% compared with first quarter 2006, and down 11% compared with fourth quarter 2006. Particleboard prices were up 22% compared with first quarter 2006, but down 4% compared with fourth quarter 2006.
     Shipments of lumber and particleboard were down in first quarter 2007 compared with first quarter 2006, but up compared with fourth quarter 2006. Shipments for gypsum were down in first quarter 2007 compared with first quarter 2006 and fourth quarter 2006.
Real Estate
                         
    1st Qtr.   1st Qtr.   4th Qtr.
Segment Operating Income   2007   2006   2006
($ in Millions)
   $ 3     $ 26     $ 12  
     Real estate reported operating income of $3 million in first quarter 2007, reflecting a slowdown in residential activity. First quarter 2006 segment operating income included a gain of $8 million on the sale of five acres of land for commercial use.
     During first quarter 2007, 268 acres of high-value land not suitable for development were sold at an average price of approximately $5,600 per acre.
     Residential activity for wholly-owned and joint venture projects during first quarter 2007 included the sale of 441 lots at an average price of approximately $56,400 per lot.
     Commercial activity during first quarter 2007, principally related to joint venture projects, included the sale of 30 acres at an average price of $294,000 per acre.
Financial Services
                         
    1st Qtr.   1st Qtr.   4th Qtr.
Segment Operating Income   2007   2006   2006
($ in Millions)
   $ 49     $ 49     $ 53  
     Financial Services operating income first quarter 2007 was flat compared with first quarter 2006. Operating income declined first quarter 2007 compared with fourth quarter 2006 principally due to lower average earning assets.
Comments
     In announcing first quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc. said, “Our Corrugated Packaging operation continues to benefit from strategic initiatives of full integration and increasing asset utilization. During first quarter 2007, our containerboard mills achieved record production levels despite planned maintenance downtime at Rome, GA. In addition, converting costs declined in first quarter 2007 compared with fourth quarter 2006 as asset utilization continued to increase.

 

 

     “Despite challenging market conditions, Forest Products positive results reflect our continued focus on low-cost, efficient converting operations and our mix of products.
     “Our real estate operation continues to focus on creating long-term value. During first quarter 2007 we transferred five projects with 1,470 acres into entitlement process. Real Estate operating income in first quarter 2007 was negatively impacted by a slowdown in residential lot sales activity.
     “Financial Services continues to focus on asset growth and lowering costs. Credit conditions remain favorable, and we continue to benefit from our decision to avoid subprime lending. In addition, diversification of our loan portfolio has been important as new loan activity in non-single family products has increased. Additionally, we have experienced deposit growth through our bank branches which are located in Texas and California, the two largest markets in the U.S.
Transformation Plan
     “February 26, 2007 we announced a Transformation Plan to maximize shareholder value by separating Temple-Inland into three focused, stand-alone public companies and selling our strategic timberland. During first quarter 2007, substantial progress has been made regarding each component of the transformation plan and we are on target to complete the process by year end. The three companies resulting from the plan — Temple-Inland, Guaranty Financial and Forestar — have exciting futures, and will be well positioned to continue to maximize value for shareholders going forward.”
     The Company will host a conference call on April 25, 2007 at 10:00 am EDT to discuss results of first quarter 2007. 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 44024155.
     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. Temple-Inland’s address on the World Wide Web is www.templeinland.com.
This release contains “forward-looking statements” within the meaning of the federal securities laws. These statements reflect management’s current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements. Factors and uncertainties that might cause such differences include, but are not limited to: general economic, market, or business conditions; the opportunities (or lack thereof) that may be presented to us and that we may pursue; fluctuations in costs and expenses including the costs

 

 

of raw materials, purchased energy, and freight; demand for new housing; accuracy of accounting assumptions related to pension and postretirement costs, impaired assets, and the allowance for credit losses; competitive actions by other companies; changes in laws or regulations and actions or restrictions of regulatory agencies; our ability to execute certain strategic and business improvement initiatives, including the Transformation Plan; and other factors, many of which are beyond our control.

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

 

 

TEMPLE-INLAND INC. AND SUBSIDIARIES
UNAUDITED
Business Segments
                 
    First Quarter
    2007   2006
    ($ In millions,
    except per share)
Revenues
                
Corrugated packaging
   $ 761     $ 721  
Forest products
     246       333  
Real estate
     30       47  
Financial services
     284       283  
     
Total revenues
   $ 1,321     $ 1,384  
     
 
                
Income
                
Corrugated packaging
   $ 64     $ 44  
Forest products
     38       82  
Real estate
     3       26  
Financial services
     49       49  
     
Total segment operating income
     154       201  
Expenses not allocated to segments
                
General and administrative
     (25 )     (23 )
Share-based compensation
     (23 )     (16 )
Other operating income (expense)
     (14 )     (3 )
Other non-operating income (expense)
     —       —  
Parent company interest
     (31 )     (33 )
     
Income before taxes
     61       126  
Income taxes
     (23 )     (47 )
     
Income from continuing operations
     38       79  
Discontinued operations
     —       —  
     
Net income
   $ 38     $ 79  
     
 
                
Diluted earnings per share:
                
Income from continuing operations
   $ 0.35     $ 0.70  
Discontinued operations
     —       —  
     
Net income
   $ 0.35     $ 0.70  
     
 
                
Average diluted shares outstanding
     107.7       113.4  
     
In January 2007 we changed our method of accounting for planned major maintenance costs from the previously accepted method of allocating the cost over interim periods within the year in which they were incurred to the expense as incurred method. As required by generally accepted accounting principles, we have retrospectively applied the expense as incurred method to our 2006 income statements and segment operating results, the effect of which is summarized as follows:
                                                 
    Corrugated Packaging              
    Segment     Income from Continuing        
    Operating Income     Operations     Per Diluted Share  
    As     Retrospective     As     Retrospective     As     Retrospective  
    Reported     Application     Reported     Application     Reported     Application  
2006
1st qtr
   $ 40     $ 44     $ 76     $ 79     $ .67     $ .70  
2nd qtr
     67       66       192       191       1.71       1.70  
3rd qtr
     74       73       96       95       .87       .86  
4th qtr
     74       72       105       104       .98       .97  
 
                                    
Year
   $ 255     $ 255     $ 469     $ 469     $ 4.23     $ 4.23  

 

 

Non-GAAP Financial Measure
     Net income excluding special items and net income per diluted share excluding special items are important measures for us and investors because they allow useful and consistent comparisons of on-going operations by excluding gains and losses that management believes are not indicative of our ongoing operating results.
     We define special items to include discontinued operations, effects of accounting changes, and other items such as gains or losses on sales of non-strategic assets; asset impairments; and unusual income, expenses, and tax benefits or charges. The most comparable GAAP measures are net income and net income per diluted share.
     Despite their importance to us, net income excluding special items and net income per diluted share excluding special items are non-GAAP financial measures that have no standardized definitions and as a result may not be comparable with other companies’ measures using the same or similar terms. This lack of comparability may limit the usefulness of these measures to us and investors. There may be other limits in the usefulness of these measures to investors. As a result, we encourage you to read our financial information in its entirety and not to rely on any single financial measure.
Calculation of Non-GAAP Financial Measure
                         
                    Fourth
    First Quarter   Quarter
    2007   2006   2006
    (In millions, except per share)
Net income determined in accordance with GAAP
   $ 38     $ 79     $ 103  
Special items, after-tax, per diluted share
                        
Closure and sale of converting and production facilities and sale of non-strategic assets
     —       —       5  
Hurricane related insurance proceeds
     —       —       (1 )
Litigation and other
     6       —       2  
Transformation Plan
     3       —       —  
Softwood Lumber Agreement
     —       —       (27 )
Financial Services repositioning activities
     —       2       (1 )
One-time tax benefit
    —       —       (4 )
     
Total special items, after-tax
     9       2       (26 )
     
 
                        
Net income excluding special items as defined
   $ 47     $ 81     $ 77  
     
 
                        
Average diluted shares outstanding
     107.7       113.4       107.8  
     
 
                        
Net income per diluted share determined in accordance with GAAP
   $ 0.35     $ 0.70     $ 0.96  
Special items, after-tax, per diluted share
                        
Closure and sales of converting and production facilities and sale of non-strategic assets
     —       —       0.05  
Hurricane related insurance proceeds
     —       —       (0.01 )
Litigation and other
     0.06       —       0.02  
Transformation Plan
     0.02       —       —  
Softwood Lumber Agreement
     —       —       (0.25 )
Financial Services repositioning activities
     —       0.02       (0.01 )
One-time tax benefit
    —       —       (0.04 )
     
Total special items, per diluted share
     0.08       0.02       (0.24 )
     
 
                        
Net income per diluted share excluding special items as defined
   $ 0.43     $ 0.72     $ 0.72  
     

 

 

TEMPLE-INLAND INC. AND SUBSIDIARIES
UNAUDITED
Revenues and unit sales of manufacturing subsidiaries, excluding joint venture operations follows:
                 
    First Quarter  
    2007     2006  
   
($ in Millions)
Revenues
                
Corrugated Packaging
                
Corrugated Packaging
  $ 717     $ 698  
Linerboard
     44       23  
 
            
Total Corrugated Packaging
   $ 761     $ 721  
 
            
Forest Products
                
Pine lumber
   $ 59     $ 84  
Gypsum wallboard
     70       112  
Particleboard
     52       49  
Medium density fiberboard
     17       16  
Fiberboard
     14       21  
Mineral and hunting leases
     9       14  
Fiber and other
     25       37  
 
            
Total Forest Products
   $ 246     $ 333  
 
            
 
                
Unit sales
                
Corrugated Packaging
                
Corrugated Packaging, thousands of tons
     830       869  
Linerboard, thousands of tons
     100       60  
 
            
Total, thousands of tons
     930       929  
 
            
 
                
Forest Products
                
Pine lumber, mbf
     203       218  
Gypsum wallboard, msf
     382       563  
Particleboard, msf
     143       165  
Medium density fiberboard, msf
     37       39  
Fiberboard, msf
     74       102  
Supplemental Financial Information:
Supplemental Financial Information for Temple-Inland and its manufacturing and real estate subsidiaries follows:
                 
    First Quarter
    2007   2006
Cash Balance (at qtr. end)
   $ 24     $ 11  
Total Debt (at qtr. end)
   $ 1,734     $ 1,843  
Capital Expenditures (including reforestation)
   $ 42     $ 32  

 

 

A summary of projects in the entitlement process(a) at first quarter-end 2007 follows:
             
        Project  
Project   County   Acres(b)  
California
            
 
            
Hidden Creek Estates
   Los Angeles     700  
Terrace at Hidden Hills
   Los Angeles     30  
 
            
Georgia
            
Ballground
   Cherokee     500  
Bay Springs
   Carroll     400  
Birch House Farms
   Bartow     140  
Crossing
   Coweta     230  
Dunaway Gardens
   Coweta     200  
Euharlee II West
   Bartow     360  
Fincher Road
   Cherokee     950  
Four Seasons
   Coweta     800  
Friendship Road
   Cherokee     110  
Garland Mountain
   Cherokee/Bartow     350  
Gold Creek
   Dawson/Lumpkin     1,090  
Grove Park
   Coweta     160  
Happy Valley Farm
   Coweta     750  
Jackson Park
   Jackson     690  
Lithia Springs
   Haralson     260  
Mill Creek
   Coweta     780  
Overlook
   Cherokee     510  
Pickens School
   Pickens     420  
Whitfield Estates
   Jackson     180  
Wolf Creek
   Carroll     12,180  
Yellow Creek
   Cherokee     1,100  
 
            
Texas
            
Lake Houston
   Harris/Liberty     3,630  
Entrada (c)
   Travis     240  
Woodlake Village (c)
   Montgomery     620  
 
          
 
            
Total
         27,380  
 
          
 
(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.
 
(c)   We own a 50% interest in these projects.

 

 

A summary of activity within our entitled,(a) developed and under development projects at first quarter-end 2007 follows:
                                         
            Residential Lots     Commercial Acres (c)  
            Lots Sold             Acres Sold        
        Interest   Since             Since     Acres  
Project   County   Owned(b)   Inception     Lots Remaining     Inception     Remaining  
Projects we own
                                       
 
                                        
Colorado
                                        
Buffalo Highlands
   Weld   100%     —       645       —       —  
Johnstown Farms
   Weld   100%     115       699       —       —  
Pinery West
   Douglas   100%     —       —       —       115  
Stonebraker
   Weld   100%     —       600       —       —  
 
                                        
Texas
                                        
Arrowhead Ranch
   Hays   100%     —       232       —       5  
Caruth Lakes
   Rockwell   100%     245       629       —       —  
Cibolo Canyons
   Bexar   100%     428       1,321       64       81  
Harbor Lakes
   Hood   100%     177       401       —       13  
Harbor Mist
   Calhoun   100%     —       1,393       —       36  
Hunter’s Crossing
   Bastrop   100%     250       327       19       95  
Katy Freeway
   Harris   100%     —       —       —       40  
La Conterra
   Williamson   100%     —       509       —       60  
Maxwell Creek
   Collin   100%     546       477       —       —  
Oakcreek Estates
   Comal   100%     —       630       —       —  
The Colony
   Bastrop   100%     340       1,085       22       50  
The Gables at North Hill
   Collin   100%     182       100       —       —  
The Preserve at Pecan Creek
   Denton   100%     73       746       —       9  
The Ridge at Ribelin Ranch
   Travis   100%     —       —       126       77  
Other Texas Projects (6)
   Various   100%     2,170       129       62       39  
 
                                        
Georgia
                                        
Other projects (6)
   Various   100%     —       3,540       —       161  
Missouri and Utah
                                        
Other Projects (3)
   Various   100%     746       271       —       —  
 
                                
 
             5,272       13,734       293       781  
 
                                        
Projects in entities we consolidate                                
 
                                        
Texas
                                        
City Park
   Harris   75%     609       692       36       129  
Lantana (d)
   Denton   55%     216       2,134       —       —  
Light Ranch
   Collin   75%     —       2,496       —       —  
Other Texas Projects (6)
   Various   Various     273       308       5       60  
 
                                
 
             1,098       5,630       41       189  
 
Total owned and consolidated     6,370       19,364       334       970  
 
                                        
Projects in ventures that we account for using the equity method                                
 
                                        
Georgia
                                        
Seven Hills
   Paulding   50%     566       514       26       —  
The Georgian
   Paulding   38%     283       1,102       —       —  
Other Georgia projects (5)
   Various   Various     1,842       250       —       —  
 
                                        
Texas
                                        
Bar C Ranch
   Tarrant   50%     148       1,033       —       —  
Fannin Farms West
   Tarrant   50%     224       219       —       —  
Lantana (d)
   Denton   Various     1,675       173       1       79  
Long Meadow Farms
   Fort Bend   19%     535       1,649       20       190  
Southern Trails
   Brazoria   40%     189       871       —       —  
Stonewall Estates
   Bexar   25%     62       328       —       —  
Summer Creek Ranch
   Tarrant   50%     780       1,708       —       374  
Summer Lakes
   Fort Bend   50%     294       850       42       9  
Village Park
   Collin   50%     311       258       —       5  
Waterford Park
   Fort Bend   50%     —       493       —       37  
Other Texas projects (4)
   Various   Various     251       279       —       37  
 
                                        
Florida
                                        
Other projects (3)
   Various   Various     473       372       —       —  
 
                                
 
                                        
Total in ventures
             7,633       10,099       89       731  
 
                                        
Combined Total
             14,003       29,463       423       1,701  
 
                                

 

 

 
(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. There are some projects that have multiple ownership structures within them. Accordingly, portions of these projects may appear as owned, consolidated and/or accounted for on the equity method.
 
(c)   Commercial acres are net developable acres, and may be fewer than the gross acres available in the project.
 
(d)   The Lantana project consists of a series of 19 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.