EX-99.1 2 d50705exv99w1.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 THIRD QUARTER 2007 RESULTS
     AUSTIN, TEXAS, October 24, 2007—Temple-Inland Inc. today reported third quarter 2007 net income of $36 million, or $0.33 per diluted share, compared with third quarter 2006 net income of $95 million, or $0.86 per diluted share, and second quarter 2007 net income of $66 million, or $0.62 per diluted share.
          Results for third quarter 2007 include (i) an after-tax special charge of $7 million, or $0.06 per share, principally related to costs associated with our Transformation Plan, and (ii) an $8 million after-tax charge, or $0.08 per share, related to the disposition of our chemical business, a discontinued operation. In total, the effect of these special items on third quarter 2007 was $15 million, or $0.14 per share. As reflected in the table below, net income per diluted share, excluding special items, for third quarter 2007 is $0.47, compared with $0.92 in third quarter 2006, and $0.59 in second quarter 2007.
                         
    Third Quarter     Second Quarter  
    2007     2006     2007  
Net income per dil. share as reported
   $ 0.33     $ 0.86     $ 0.62  
 
                        
Adjustment for special items
     0.14       0.06       (0.03 )
 
                  
 
                        
Net income per diluted share,
   $ 0.47     $ 0.92     $ 0.59  
excluding special items
                        
 
                        
Average shares outstanding – diluted
     107.8       110.3       108.1  
(in millions)
                        

 

 

Corrugated Packaging
             
    3rd Qtr.   3rd Qtr.   2ndQtr.
Segment Operating Income   2007   2006   2007
($ in Millions)
  $70   $73   $78
          Corrugated Packaging reported third quarter 2007 operating income of $70 million. Lower converting costs and volume growth in third quarter 2007 compared with third quarter 2006 offset higher recycled fiber costs. Operating income declined third quarter 2007 compared with second quarter 2007 principally due to lower corrugated container volumes and higher recycled fiber costs.
          Excluding the sale of Performance Sheets (a sheet feeder plant sold August 2006), volume on a per workday basis was up 3% in third quarter 2007 compared with third quarter 2006. On a volume per workday basis, shipments of corrugated containers were down 3% third quarter 2007 compared with second quarter 2007. Year-to-date shipments, on a volume per workday basis, are up 1% compared with 2006.
          Average prices for corrugated containers third quarter 2007 were down approximately 1% compared with third quarter 2006 and second quarter 2007. The average cost of recycled fiber third quarter 2007 was up 41% compared with third quarter 2006, and up 12% compared with second quarter 2007. Freight costs third quarter 2007 were up $3 million compared with third quarter 2006, but flat compared with second quarter 2007. Energy costs were flat third quarter 2007 compared with third quarter 2006, but down $6 million compared with second quarter 2007.
Forest Products
             
    3rd Qtr.   3rd Qtr.   2nd Qtr.
Segment Operating Income   2007   2006   2007
($ in Millions)   $21   $83   $33
          Forest Products operating income declined third quarter 2007 compared with third quarter 2006 primarily due to lower prices and lower shipments. Operating income declined third quarter 2007 compared with second quarter 2007 principally due to lower gypsum prices.
          Average lumber prices third quarter 2007 were down 1% compared with third quarter 2006, and flat compared with second quarter 2007. Gypsum prices third quarter 2007 were down 38% compared with third quarter 2006, and down 13% compared with second quarter 2007. Particleboard prices third quarter 2007 were down 8% compared with third quarter 2006, and down 3% compared with second quarter 2007.
          Shipments of lumber third quarter 2007 were up 4% compared with third quarter 2006, but were down 3% compared with second quarter 2007. Shipments of gypsum were down 19% third quarter 2007 compared with third quarter 2006, and down 11% compared with second quarter 2007. Shipments of particleboard were down 27% third quarter 2007 compared with third quarter 2006, and down 11% compared with second quarter 2007.

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Real Estate
             
    3rd Qtr.   3rd Qtr.   2nd Qtr.
Segment Operating Income   2007   2006   2007
($ in Millions)   $10   $15   $19
          Real Estate reported third quarter 2007 operating income of $10 million, including a $4 million gain from the sale of commercial land.
          Third quarter 2007 high-value land sales totaled 770 acres at an average price of approximately $7,400 per acre.
          Residential activity for wholly-owned and joint venture projects in third quarter 2007 included the sale of 299 lots at an average price of approximately $58,900 per lot.
          Commercial activity for wholly-owned and joint venture projects in third quarter 2007 included the sale of 69 acres at an average price of approximately $206,600 per acre.
Financial Services
             
    3rd Qtr.   3rd Qtr.   2nd Qtr.
Segment Operating Income   2007   2006   2007
($ in Millions)   $37   $58   $48
          Financial Services operating income declined third quarter 2007 compared with third quarter 2006 and second quarter 2007 principally due to a higher loan loss provision.
Comments
          In announcing third quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc. said, “Our Corrugated Packaging operation continues to benefit from improving market conditions and strategic initiatives of full integration and increasing asset utilization. During third quarter 2007 we generated $18 million in additional business improvement compared with third quarter 2006, driven by lower converting costs and volume growth. Market conditions remain favorable and we expect to continue realizing additional business improvement going forward.
          “Forest Products results reflect challenging market conditions. Production in our converting operations is being reduced to match demand for our building products.
          “Real Estate operating income during third quarter 2007 benefited from commercial and high-value land sales activity. Consistent with our focus on value creation, nine projects, representing over 3,000 acres of our high-value land around Atlanta have been entitled over the past year.
          “Financial Services results were negatively impacted by higher loan loss provision during third quarter 2007 reflecting challenging homebuilding and current credit market conditions.
          

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Financial Services continues to focus on asset generation, low cost, and expanding our branch network located in Texas and California, two of the fastest growing deposit 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,” Mr. Jastrow continued. “During third quarter 2007, substantial progress was made regarding each component of the Transformation Plan and we are on track to complete the transformation plan by year end. We announced a definitive agreement with an investment entity affiliated with The Campbell Group, Inc. to sell 1.55 million acres of timberland for $2.38 billion. We expect to use the majority of these proceeds to pay a special dividend, which is currently estimated to be approximately $1.1 billion, or $10.25 per share, to our common stockholders. The remaining approximately $700 million of the cash proceeds will be used to reduce debt.
          “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 October 24, 2007 at 10:00 am EDT to discuss results of third 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 27104318.
          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
                                 
    Third Quarter   First Nine Months
    2007   2006   2007   2006
    (Dollars in millions, except per share)
Revenues
                                
Corrugated packaging
   $ 748     $ 746     $ 2,288     $ 2,225  
Forest products
     223       310       718       984  
Real estate
     33       59       106       141  
Financial services
     295       294       866       876  
             
Total revenues
   $ 1,299     $ 1,409     $ 3,978     $ 4,226  
             
 
                                
Income
                                
Corrugated packaging(a)
   $ 70     $ 73     $ 212     $ 183  
Forest products
     21       83       92       266  
Real estate
     10       15       32       50  
Financial services
     37       58       134       169  
             
Total segment operating income
     138       229       470       668  
Expenses not allocated to segments General and administrative
     (23 )     (28 )     (75 )     (77 )
Share-based compensation
     (3 )     (8 )     (41 )     (32 )
Other operating income (expense)
     (6 )     (10 )     (21 )     (21 )
Other non-operating income (expense)
     1       1       2       92  
Parent company interest
     (31 )     (31 )     (93 )     (98 )
             
Income before taxes
     76       153       242       532  
Income taxes
     (32 )     (58 )     (94 )     (167 )
             
Income from continuing operations(a)
     44       95       148       365  
Discontinued operations
     (8 )     —       (8 )     —  
             
Net income
   $ 36     $ 95     $ 140     $ 365  
             
 
                                
Diluted earnings per share:
                                
Income from continuing operations(a)
   $ 0.41     $ 0.86     $ 1.38     $ 3.26  
Discontinued operations
     (0.08 )     —       (0.08 )     —  
               
Net income
   $ 0.33     $ 0.86     $ 1.30     $ 3.26  
               
 
                                
Average diluted shares outstanding
     107.8       110.3       107.9       111.8  
               
 
(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  
     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

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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
                         
                    Second
    Third Quarter   Quarter
    2007   2006   2007
    (In millions, except per share)
Net income determined in accordance with GAAP
   $ 36     $ 95     $ 66  
Special items, after-tax:
                        
Litigation and other
     3       2       3  
Transformation costs
     4       —       2  
Gain on sale of non-strategic timber leases
     —       —       (5 )
One-time tax benefit
    —       —       (3 )
Asset impairment
     —       3       —  
Financial Services repositioning activities
     —       1       —  
Discontinued operations
     8       —       —  
         
 
                        
Net income excluding special items
   $ 51     $ 101     $ 63  
         
 
                        
Net income per diluted share determined in accordance with GAAP
   $ 0.33     $ 0.86     $ 0.62  
Special items, after-tax, per diluted share:
                        
Litigation and other
     0.02       0.02       0.03  
Transformation costs
     0.04       —       0.02  
Gain on sale of non-strategic timber leases
     —       —       (0.05 )
One-time tax benefit
    —       —       (0.03 )
Asset impairment
     —       0.03       —  
Financial Services repositioning activities
     —       0.01       —  
Discontinued operations
     0.08       —       —  
          -
 
                        
Net income per diluted share excluding special items
   $ 0.47     $ 0.92     $ 0.59  
         
 
                        
Average diluted shares outstanding
     107.8       110.3       108.1  

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TEMPLE-INLAND INC. AND SUBSIDIARIES
UNAUDITED
          Revenues and unit sales of manufacturing subsidiaries, excluding joint venture operations follows:
                                 
    Third Quarter     First Nine Months  
    2007     2006     2007     2006  
    (Dollars in millions)  
Revenues
                                
Corrugated Packaging
                                
Corrugated packaging
  $ 717     $ 713     $ 2,178     $ 2,148  
Linerboard
     31       33       110       77  
 
                        
Total Corrugated Packaging
   $ 748     $ 746     $ 2,288     $ 2,225  
 
                        
Forest Products
                                
Pine lumber
   $ 64     $ 64     $ 190     $ 224  
Gypsum wallboard
     52       102       189       330  
Particleboard
     42       62       143       169  
Medium density fiberboard
     15       17       49       52  
Fiberboard
     13       16       41       59  
Hunting, mineral and recreational leases
     12       10       31       38  
Fiber and other
     25       39       75       112  
 
                        
Total Forest Products
   $ 223     $ 310     $ 718     $ 984  
 
                        
 
                                
Unit sales
                                
Corrugated Packaging
                                
Corrugated packaging, thousands of tons
     839       829       2,535       2,582  
Linerboard, thousands of tons
     67       70       243       177  
 
                        
Total, thousands of tons
     906       899       2,778       2,759  
 
                        
Forest Products
                                
Pine lumber, mbf
     215       207       640       641  
Gypsum wallboard, msf
     368       453       1,164       1,553  
Particleboard, msf
     119       162       396       491  
Medium density fiberboard, msf
     32       35       106       115  
Fiberboard, msf
     75       89       228       297  
Supplemental Financial Information:
Supplemental Financial Information for the Parent Company and its manufacturing subsidiaries follows:
                                 
    Third Quarter   First Nine Months
    2007   2006   2007   2006
    (Dollars in millions)
Cash Balance (at qtr. end)
   $ 41     $ 48                  
Total Debt (at qtr. end)
   $ 1,668     $ 1,628                  
Capital Expenditures (including reforestation)
   $ 58     $ 63     $ 152     $ 142  

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A summary of projects in the entitlement process(a) at third 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  
City of Waleska
   Cherokee     150  
Corinth Landing
   Coweta     800  
Crossing
   Coweta     230  
Fincher Road
   Cherokee     950  
Genesee
   Coweta     750  
Grove Park
   Coweta     160  
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
         25,340  
 
            
 
(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, which are the total for the project regardless of our ownership interest, are 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 third 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%     464       1,285       64       81  
Harbor Lakes
   Hood   100%     196       256       —       14  
Harbor Mist
   Calhoun   100%     —       1,393       —       36  
Hunter’s Crossing
   Bastrop   100%     268       309       19       95  
Katy Freeway
   Harris   100%     —       —       38       —  
La Conterra
   Williamson   100%     —       509       —       60  
Maxwell Creek
   Collin   100%     580       443       —       —  
Oakcreek Estates
   Comal   100%     —       648       13       —  
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%     138       681       —       9  
The Ridge at Ribelin Ranch
   Travis   100%     —       —       161       40  
Other projects (6)
   Various   100%     2,173       125       68       33  
Georgia
                                        
Towne West
   Bartow   100%     —       2,550       —       121  
Other projects (8)
   Various   100%     —       1,485       —       40  
Missouri and Utah
                                        
Other projects (3)
   Various   100%     775       242       —       —  
 
                                        
 
             5,494       13,898       385       699  
 
                                        
Projects in entities we consolidate
                                        
 
                                        
Texas
                                        
City Park
   Harris   75%     754       557       50       115  
Lantana
   Denton   55% (e)     329       2,021       —       —  
Light Farms
   Collin   65%     —       2,501       —       —  
Timber Creek
   Collin   88%     —       654       —       —  
Other projects (5)
   Various   Various     292       337       13       54  
 
                                        
 
             1,375       6,070       63       169  
 
                                        
 
                                        
Total owned and consolidated
             6,869       19,968       448       868  
 
                                        
Projects in ventures that we account for using the equity method                        
 
                                        
Georgia
                                        
Seven Hills
   Paulding   50%     620       460       26       —  
The Georgian
   Paulding   38%     285       1,100       —       —  
Other projects (5)
   Various   Various     1,844       187       3       —  
 
                                        
Texas
                                        
Bar C Ranch
   Tarrant   50%     173       1,008       —       —  
Fannin Farms West
   Tarrant   50%     224       219       —       —  
Lantana
   Denton   Various (e)     1,755       93       2       78  
Long Meadow Farms
   Fort Bend   19%     594       1,590       24       186  
Southern Trails
   Brazoria   40%     232       830       —       —  
Stonewall Estates
   Bexar   25%     97       154       —       —  
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     278       251       —       37  
 
                                        
Florida
                                        
Other projects (3)
   Various   Various     473       372       —       —  
 
                                        
 
                                        
Total in ventures
             7,975       9,558       103       720  
 
                                        
 
                                        
Combined Total
             14,844       29,526       551       1,588  
 
                                        
 
(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.
 
(C)   Lots are for the total project, regardless of our ownership interest.
 
(d)   Commercial acres are for the total project, regardless of our ownership interest and are net developable acres, which may be fewer than the gross acres available in the project.
 
(e)   The Lantana project consists of a series of 21 partnerships in which our voting interests range from 25% to 55%. We account for eight of these partnerships using the equity method and we consolidate the remaining partnerships.

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