EX-99.1 2 d48425exv99w1.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 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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