8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: July 25, 2007
(Date of earliest event reported)

TEMPLE-INLAND INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-08634	75-1903917
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

1300 MoPac Expressway South, 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 or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On July 25, 2007, the Company issued a press release announcing the Company’s earnings for the quarter ended June 30, 2007. A copy of the press release is furnished as exhibit 99.1 of this report.

Item 7.01. Regulation FD Disclosure.

     On July 25, 2007, Kenneth M. Jastrow, II, Chief Executive Officer of Temple-Inland Inc., participated in a conference call discussing the Company’s earnings for the quarter ended June 30, 2007. Copies of the presentation materials used by Mr. Jastrow are furnished as exhibit 99.2 of this report.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press release issued by the Company on July 25, 2007, announcing the Company’s earnings for the quarter ended June 30, 2007.
99.2	Presentation materials of Kenneth M. Jastrow, II, Chief Executive Officer of Temple-Inland Inc., used in Mr. Jastrow’s conference call on July 25, 2007, discussing the Company’s earnings for the quarter ended June 30, 2007.

SIGNATURE

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TEMPLE-INLAND INC.
Date: July 25, 2007	By:	/s/ Doyle R. Simons
		Name:	Doyle R. Simons
		Title:	Executive Vice President

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EXHIBIT INDEX

Exhibit	Description	Page
99.1	Press release issued by the Company on July 25, 2007, announcing the Company’s earnings for the quarter ended June 30, 2007		4
99.2	Presentation materials of Kenneth M. Jastrow, II, Chief Executive Officer of Temple-Inland Inc., used in Mr. Jastrow’s conference call on July 25, 2007, discussing the Company’s earnings for the quarter ended June 30, 2007		14

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EX-99.1

Exhibit 99.1

NEWS
RELEASE

FOR IMMEDIATE RELEASE
CONTACT: Chris L. Nines
                       (512) 434-5587

TEMPLE-INLAND INC. REPORTS SECOND QUARTER 2007 RESULTS

     AUSTIN, TEXAS, July 25, 2007—Temple-Inland Inc. today reported second quarter 2007 net income of $66 million, or $0.62 per diluted share, compared with second quarter 2006 net income of $191 million, or $1.70 per diluted share, and first quarter 2007 net income of $38 million, or $0.35 per diluted share.

     Results for second quarter 2007 include (i) an after-tax gain of $5 million, or $0.05 per share, related to the sale of non-strategic timber leases, (ii) a one-time state tax benefit of $3 million, or $0.03 per share, and (iii) a net after-tax special charge of $5 million, or $0.05 per share, related to costs for our Transformation Plan and an increase in litigation reserves. In total, the effect of these special items on second quarter 2007 was a benefit of $3 million or $0.03 per share. As reflected in the table below, net income per diluted share, excluding special items, for second quarter 2007 is $0.59, compared with $0.97 in second quarter 2006, and $0.43 in first quarter 2007.

	Second Quarter						First Quarter
	2007			2006*			2007
Net income per dil. share as reported	$	0.62		$	1.70		$	0.35
Adjustment for special items		(0.03	)		(0.73	)		0.08
Net income per diluted share, excluding special items	$	0.59		$	0.97		$	0.43
Average shares outstanding – diluted (in millions)		108.1			111.8			107.7

* Second quarter 2006 special items principally relate to tax litigation settlement

Corrugated Packaging

	2nd Qtr.	2nd Qtr.	1st Qtr.
Segment Operating Income	2007	2006	2007
($ in Millions)	$78	$66	$64

     Corrugated Packaging operating income improved second quarter 2007 compared with second quarter 2006, principally due to higher corrugated container prices, business improvement, and a $4 million insurance recovery related to the Ontario mill, partially offset by higher recycled fiber, energy and wood costs. Operating income improved second quarter 2007 compared with first quarter 2007 principally due to higher corrugated container volumes, lower mill and converting costs per ton, and the insurance recovery.

     On a volume per workday basis, shipments of corrugated containers were up 6% second quarter 2007 compared with first quarter 2007. Excluding the sale of Performance Sheets (a sheet feeder plant in City of Industry, California sold in August 2006), volume on a per workday basis was up 1% in second quarter 2007 compared with second quarter 2006.

     Average prices for corrugated containers second quarter 2007 were up 3% compared with second quarter 2006, but down less than 1% compared with first quarter 2007. The average cost of recycled fiber second quarter 2007 was up 36% compared with second quarter 2006, and up 5% compared with first quarter 2007. Freight costs second quarter 2007 were down $2 million compared with second quarter 2006, but up $2 million compared with first quarter 2007. Energy costs were up $2 million second quarter 2007 compared with second quarter 2006, but down $2 million compared with first quarter 2007.

Forest Products

	2nd Qtr.	2nd Qtr.	1st Qtr.
Segment Operating Income	2007	2006	2007
($ in Millions)	$33	$101	$38

     Forest Products operating income declined second quarter 2007 compared with second quarter 2006 primarily due to lower lumber prices and lower prices and shipments of gypsum. Operating income declined second quarter 2007 compared with first quarter 2007 principally due to lower gypsum prices.

     Average lumber prices second quarter 2007 were down 16% compared with second quarter 2006, but up 4% compared with first quarter 2007. Gypsum prices second quarter 2007 were down 25% compared with second quarter 2006, and down 13% compared with first quarter 2007. Particleboard prices second quarter 2007 were up 5% compared with second quarter 2006, but essentially flat compared with first quarter 2007.

     Shipments of lumber were up second quarter 2007 compared with second quarter 2006 and first quarter 2007. Shipments of gypsum were down second quarter 2007 compared with

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second quarter 2006, but up compared with first quarter 2007. Shipments of particleboard were down second quarter 2007 compared with second quarter 2006 and first quarter 2007.

Real Estate

	2nd Qtr.	2nd Qtr.	1st Qtr.
Segment Operating Income	2007	2006	2007
($ in Millions)	$19	$9	$3

     Real Estate reported operating income of $19 million in second quarter 2007, including $11 million from the sale of commercial land.

     During second quarter 2007, high-value land sales totaled 886 acres at an average price of approximately $7,000 per acre.

     Residential activity for wholly-owned and joint venture projects during second quarter 2007 included the sale of 541 lots at an average price of approximately $51,100 per lot.

     Commercial activity for wholly-owned and joint venture projects during second quarter 2007 included the sale of 56 acres at an average price of approximately $299,400 per acre.

Financial Services

	2nd Qtr.	2nd Qtr.	1st Qtr.
Segment Operating Income	2007	2006	2007
($ in Millions)	$48	$62	$49

     Financial Services operating income declined second quarter 2007 compared with second quarter 2006 principally due to lower average earning assets. Operating income second quarter 2007 was essentially flat compared with first quarter 2007.

Comments

     In announcing second quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc. said, “Our Corrugated Packaging operation had a good quarter and continues to benefit from strategic initiatives of full integration and increasing asset utilization. During second quarter 2007 we generated $9 million in additional business improvement, as our containerboard mills achieved record production levels despite planned maintenance downtime at Orange, TX. In addition, converting costs per ton declined in second quarter 2007 compared with first quarter 2007 as asset utilization continues to increase.

     “Despite challenging market conditions Forest Products profitability reflects our focus on customers, location, low-cost, efficient converting operations and our mix of products.

     “Real Estate operating income during second quarter 2007 benefited from commercial sales activity. In addition, during second quarter 2007 we entitled three projects (419 acres) of

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high- value land in Georgia. Over the past twelve months, we have obtained entitlements on 9 projects, representing approximately 2,756 acres, consistent with our focus on value creation.

     “Financial Services continues to experience shrinkage in its mortgage-backed security portfolio due to competitive pricing. Credit conditions remain favorable, and we continue to benefit from our strategy to avoid subprime lending. Additionally, we have experienced deposit growth through our bank branches 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 second quarter 2007, substantial progress was 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 July 25, 2007 at 10:00 am EDT to discuss results of second 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 87747014.

     Temple-Inland Inc. operates four business segments: corrugated packaging, forest products, real estate and financial services. 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.

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TEMPLE-INLAND INC. AND SUBSIDIARIES
UNAUDITED

Business Segments

	Second Quarter						First Six Months
	2007			2006			2007			2006
	(Dollars in millions, except per share)
Revenues
Corrugated packaging	$	779		$	758		$	1,540		$	1,479
Forest products		249			341			495			674
Real estate		43			35			73			82
Financial services		287			299			571			582
Total revenues	$	1,358		$	1,433		$	2,679		$	2,817
Income
Corrugated packaging(a)	$	78		$	66		$	142		$	110
Forest products		33			101			71			183
Real estate		19			9			22			35
Financial services		48			62			97			111
Total segment operating income		178			238			332			439
Expenses not allocated to segments
General and administrative		(27	)		(26	)		(52	)		(49	)
Share-based compensation		(15	)		(8	)		(38	)		(24	)
Other operating income (expense)		(1	)		(8	)		(15	)		(11	)
Other non-operating income (expense)		1			91			1			91
Parent company interest		(31	)		(34	)		(62	)		(67	)
Income before taxes		105			253			166			379
Income taxes		(39	)		(62	)		(62	)		(109	)
Income from continuing operations(a)		66			191			104			270
Discontinued operations		—			—			—			—
Net income	$	66		$	191		$	104		$	270
Diluted earnings per share:
Income from continuing operations(a)	$	0.62		$	1.70		$	0.97		$	2.40
Discontinued operations		—			—			—			—
Net income	$	0.62		$	1.70		$	0.97		$	2.40
Average diluted shares outstanding		108.1			111.8			107.8			112.6

^(a) We have recast prior period results to expense planned major maintenance costs as incurred.

	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

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     Non-GAAP Financial Measures

     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 Measures

							First
	Second Quarter						Quarter
	2007			2006			2007
	(In millions, except per share)
Net income determined in accordance with GAAP	$	66		$	191		$	38
Special items, after-tax:
Litigation and other		3			—			6
Transformation costs		2			—			3
Gain on sale of non-strategic timber leases		(5	)		—			—
One-time tax benefit		(3	)		—			—
Settlement of tax litigation		—			(87	)		—
Financial Services repositioning activities		—			5			—
Total special items, after-tax		(3	)		(82	)		9
Net income excluding special items	$	63		$	109		$	47
Net income per diluted share determined in accordance with GAAP	$	0.62		$	1.70		$	0.35
Special items, after-tax, per diluted share:
Litigation and other		0.03			—			0.06
Transformation costs		0.02			—			0.02
Gain on sale of non-strategic timber leases		(0.05	)		—			—
One-time tax benefit		(0.03	)		—			—
Settlement of tax litigation		—			(0.78	)		—
Financial Services repositioning activities		—			0.05			—
Total special items per diluted share, after-tax		(0.03	)		(0.73	)		0.08
Net income per diluted share excluding special items	$	0.59		$	0.97		$	0.43
Average diluted shares outstanding		108.1			111.8			107.7

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TEMPLE-INLAND INC. AND SUBSIDIARIES
UNAUDITED

     Revenues and unit sales of manufacturing subsidiaries, excluding joint venture operations follows:

	Second Quarter				First Six Months
	2007		2006		2007		2006
	(Dollars in millions)
Revenues
Corrugated Packaging
Corrugated packaging	$	744	$	737	$	1,461	$	1,435
Linerboard		35		21		79		44
Total Corrugated Packaging	$	779	$	758	$	1,540	$	1,479
Forest Products
Pine lumber	$	67	$	76	$	126	$	160
Gypsum wallboard		67		116		137		228
Particleboard		49		58		101		107
Medium density fiberboard		17		19		34		35
Fiberboard		14		22		28		43
Hunting, mineral and recreational leases		10		14		19		28
Fiber and other		25		36		50		73
Total Forest Products	$	249	$	341	$	495	$	674
Unit sales
Corrugated Packaging
Corrugated packaging, thousands of tons		866		884		1,696		1,753
Linerboard, thousands of tons		76		47		176		107
Total, thousands of tons		942		931		1,872		1,860
Forest Products
Pine lumber, mbf		222		216		425		434
Gypsum wallboard, msf		414		537		796		1,100
Particleboard, msf		134		164		277		329
Medium density fiberboard, msf		37		41		74		80
Fiberboard, msf		79		106		153		208

Supplemental Financial Information:

Supplemental Financial Information for the Parent Company and its manufacturing subsidiaries follows:

	Second Quarter				First Six Months
	2007		2006		2007		2006
	(Dollars in millions)
Cash Balance (at qtr. end)	$	26	$	25
Total Debt (at qtr. end)	$	1,665	$	1,752
Capital Expenditures (including reforestation)	$	52	$	47	$	94	$	79

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     A summary of projects in the entitlement process^(a) at second quarter-end 2007 follows:

		Project
Project	County	Acres(b)
California
Hidden Creek Estates	Los Angeles		700
Terrace at Hidden Hills	Los Angeles		30
Georgia
Ball Ground	Cherokee		500
Burt Creek	Dawson/Lumpkin		990
Cedar Creek Preserve	Coweta		200
Corinth Landing	Coweta		800
Crossing	Coweta		230
Euharlee II West	Bartow		360
Fincher Road	Cherokee		950
Friendship Road	Cherokee		110
Garland Mountain	Cherokee/Bartow		350
Genesee	Coweta		750
Grove Park	Coweta		160
Jackson Park	Jackson		690
Lithia Springs	Haralson		260
Mill Creek	Coweta		780
Overlook	Cherokee		510
Pickens School	Pickens		420
Serenity	Carroll		400
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			26,960

(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)	Acreage is for the total project and is approximate. The actual number of acres entitled may vary.
(c)	We own a 50% interest in these projects.

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     A summary of activity within our entitled,^(a) developed and under development projects at second quarter-end 2007 follows:

			Residential Lots (c)				Commercial Acres (d)
			Lots Sold				Acres Sold
		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		—		—
Pinery West	Douglas	100%		—		—		—		115
Stonebraker	Weld	100%		—		600		—		—
Texas
Arrowhead Ranch	Hays	100%		—		232		—		5
Caruth Lakes	Rockwall	100%		245		629		—		—
Cibolo Canyons	Bexar	100%		462		1,287		64		81
Harbor Lakes	Hood	100%		190		388		—		13
Harbor Mist	Calhoun	100%		—		1,393		—		36
Hunter’s Crossing	Bastrop	100%		266		311		19		95
Katy Freeway	Harris	100%		—		—		38		—
La Conterra	Williamson	100%		—		509		—		60
Maxwell Creek	Collin	100%		567		456		—		—
Oakcreek Estates	Comal	100%		—		648		—		—
The Colony	Bastrop	100%		347		1,078		22		50
The Gables at North Hill	Collin	100%		193		89		—		—
The Preserve at Pecan Creek	Denton	100%		111		708		—		9
The Ridge at Ribelin Ranch	Travis	100%		—		—		126		77
Other Projects (6)	Various	100%		2,171		127		62		39
Georgia
Towne West	Bartow	100%		—		2,550		—		121
Other projects (7)	Various	100%		—		1,264		—		40
Missouri and Utah
Other Projects (3)	Various	100%		760		257		—		—
				5,427		13,870		331		741
Projects in entities we consolidate
Texas
City Park	Harris	75%		689		612		36		129
Lantana	Denton	55% (e)		285		2,065		—		—
Light Ranch	Collin	65%		—		2,461		—		—
Timber Creek	Collin	88%		—		654		—		—
Other Projects (5)	Various	Various		286		295		13		52
				1,260		6,087		49		181
Total owned and consolidated				6,687		19,957		380		922
Projects in ventures that we account for using the equity method
Georgia
Seven Hills	Paulding	50%		601		479		26		—
The Georgian	Paulding	38%		284		1,101		—		—
Other Georgia projects (5)	Various	Various		1,843		249		3		—
Texas
Bar C Ranch	Tarrant	50%		170		1,011		—		—
Fannin Farms West	Tarrant	50%		224		219		—		—
Lantana	Denton	Various (e)		1,726		122		1		79
Long Meadow Farms	Fort Bend	19%		583		1,601		24		186
Southern Trails	Brazoria	40%		201		858		—		—
Stonewall Estates	Bexar	25%		85		166		—		—
Summer Creek Ranch	Tarrant	50%		793		1,695		—		374
Summer Lakes	Fort Bend	50%		294		850		48		3
Village Park	Collin	50%		313		256		—		5
Waterford Park	Fort Bend	50%		—		493		—		37
Other projects (3)	Various	Various		268		262		—		37
Florida
Other projects (3)	Various	Various		473		372		—		—
Total in ventures				7,858		9,734		102		721
Combined Total				14,545		29,691		482		1,643

(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 using the equity method.

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(c)	Lots are for the total project
(d)	Commercial acres are net developable acres, and may be fewer than the gross acres available in the project.
(e)	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.

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EX-99.2

Exhibit 99.2

Second Quarter 2007 Results July 25, 2007

2 This presentation 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 presentation includes non-GAAP financial measures. The required reconciliations to GAAP financial measures are included on our website, www.templeinland.com.

Second Quarter 2007 Results ($ in millions, except per share) Net Income $ 66 $ 191 $ 38 Diluted EPS $ 0.62 $ 1.70 $ 0.35 2nd Qtr 2nd Qtr 1st Qtr 2007 2006 2007 TIN 3

Second Quarter 2007 Results (cont'd) Net income per dil. share $ 0.62 $ 1.70 $ 0.35 Special items (0.03) (0.73) 0.08 Net income per dil. share $ 0.59 $ 0.97 $ 0.43 excluding special items 2nd Qtr 2nd Qtr 1st Qtr 2007 2006 2007 4 2nd qtr. 2007 after-tax benefit of $0.03 per share related to: - Gain on sale of non-strategic timber leases, $0.05 per share - One-time state tax benefit, $0.03 per share - Cost of Transformation Plan and litigation reserves, ($0.05) per share 2nd qtr. 2006 after-tax special benefit of $0.73 per share principally related to Settlement of Tax Litigation

Second Quarter Segment Results Operating Income (millions) Corrugated Packaging $ 78 $ 66 $ 64 Forest Products 33 101 38 Real Estate 19 9 3 Financial Services 48 62 49 $178 $238 $154 2nd Qtr 2nd Qtr 1st Qtr 2007 2006 2007 5

Corrugated Packaging 2nd Qtr 2nd Qtr 1st Qtr 2007* 2006 2007 $ 78 $ 66 $ 64 Operating income (millions) 6 Price - 2nd qtr. 2007 avg. box price up $26/ton vs. 2nd qtr. 2006 avg. - 2nd qtr. 2007 avg. box price down $6/ton vs. 1st qtr. 2007 avg. * 2nd qtr. 2007 results include: - 16,000 tons maintenance downtime at Orange, TX linerboard mill - $4 million insurance recovery Ontario, CA linerboard mill

Corrugated Packaging (Cont'd) Box Volumes - Per Workday Basis 7 TIN Industry 2nd qtr. 2007 vs. 1st qtr. 2007 6.0% 4.9% 2nd qtr. 2007 vs. 2nd qtr. 2006 1.4% (1.6%) (Excluding Performance Sheets) 3rd Qtr. 2007 Box Shipments Expect normal seasonal decline in shipments 3rd qtr. 2007 compared with 2nd qtr. 2007; approximately 40,000 tons

Corrugated Packaging (Cont'd) Freight Freight costs down $2 million vs. 2nd qtr. 2006, but up $2 million vs. 1st qtr. 2007 Energy Energy costs up $2 million vs. 2nd qtr. 2006, but down $2 million vs. 1st qtr. 2007 8

Corrugated Packaging (Cont'd) Recycled Fiber Recycled fiber costs up $36/ton vs. 2nd qtr. 2006 and up $6/ton vs. 1st qtr. 2007 Current recycled fiber costs up $18/ton vs. 2nd qtr. 2007 9

Forest Products 2nd Qtr 2nd Qtr 1st Qtr 2007 2006 2007 $ 33 $ 101 $ 38 Operating income (millions) Lumber - - Average price down $56/mbf vs. 2nd qtr. 2006, but up $11/mbf vs. 1st qtr. 2007 - - Volume up 3% vs. 2nd qtr. 2006 and up 9% vs. 1st qtr. 2007 - - Current prices up $10/mbf vs. 2nd qtr. 2007 avg. price 10

Forest Products (Cont'd) Gypsum - - Average price down $55/msf vs. 2nd qtr. 2006, and down $23/msf vs. 1st qtr. 2007 - - Volume down 23% vs. 2nd qtr. 2006, but up 8% vs. 1st qtr. 2007 - - Current prices down $15/msf vs. 2nd qtr. 2007 avg. price 11 Particleboard - - Average price up $16/msf vs. 2nd qtr. 2006, but essentially flat vs. 1st qtr. 2007 - - Volume down 18% vs. 2nd qtr. 2006 and down 6% vs. 1st qtr. 2007 - - Current prices down $5/msf vs. 2nd qtr. 2007 avg. price

Real Estate 2nd Qtr 2nd Qtr 1st Qtr 2007 2006 2007 $ 19 $ 9 $ 3 Operating income (millions) 12

Real Estate - 2nd Qtr. 2007 Sales High-Value Land Sold 886 acres Avg. price per acre - $7,000 Residential* Sold 541 lots Average Revenue Per Lot - $51,100 Average Gross Profit Per Lot - $21,700 Commercial* Sold 56 Acres Average Price Per Acre - $299,400 13 * Includes venture activity

Real Estate - Value Creation Entitlement Activity - Atlanta, GA Entitlement Activity 2nd qtr. 2007 3 projects 419 acres 274 lots Entitlement Activity - Last 12 Months 9 projects 2,756 acres 3,814 lots 161 commercial acres 14

Real Estate Pipeline (Acres) 15 Note: Estimated acres and lots may vary

Financial Services 2nd Qtr 2nd Qtr 1st Qtr 2007 2006 2007 $ 48 $ 62 $ 49 Operating income (millions) 16 2nd qtr. 2007 earnings down compared with 2nd qtr. 2006 principally due to lower average earning assets 2nd qtr. 2007 earnings essentially flat compared with 1st qtr. 2007

Transformation Plan Update 17 Feb. 26, 2007 - Transformation Plan announced - - Three focused, stand-alone, public companies well- positioned to maximize value for shareholders going forward Temple-Inland - Corrugated Packaging & Building Products Guaranty Financial - Financial Services Forestar - Real Estate - - Sale of strategic timberland

Transformation Plan Update 18 Sale of Strategic Timberland Significant interest in Strategic Timberland Anticipate announcement 3rd qtr. 2007 Form 10 - Guaranty & Forestar Anticipate filing 3rd qtr. 2007 On target to complete Transformation Plan by year end 2007