Temple-Inland Inc. Reports Fourth Quarter and Full Year 2004 Results

Business Wire, Feb 7, 2005

AUSTIN, Texas -- Temple-Inland Inc. (NYSE:TIN) today reported fourth quarter 2004 net income of $55 million, or $0.97 per diluted share, compared with a fourth quarter 2003 net loss of $39 million, or $0.71 per diluted share, and third quarter 2004 net income of $41 million, or $0.73 per diluted share.

Results for fourth quarter 2004 include (i) an after-tax charge of $8 million, or $0.14 per share, for asset write-downs, severance, and costs related to the repositioning of mortgage origination activities and the sale of the third-party mortgage servicing portfolio, (ii) an after-tax charge of $7 million, or $0.12 per share, primarily associated with converting facility closures and Project TIP consolidation and supply-chain initiatives, and (iii) a one-time tax benefit of $20 million, or $0.34 per share, resulting from the conclusion of an IRS examination of tax returns for the years 1997-2000 and resolution of several state tax returns. As reflected in the table below, net income per diluted share, excluding special items, for fourth quarter 2004 is $0.89 per share.

Fourth Quarter   Third Quarter
                                      ----------------- --------------
                                        2004     2003        2004
                                      -------- -------- --------------
Net income per dil. share as reported   $0.97   ($0.71)     $0.73

Special items                           (0.08)    1.11       0.26
                                      -------- -------- --------------
Net income per diluted share,
 excluding special items                $0.89    $0.40      $0.99

For the year, the Company reported net income of $165 million, or $2.92 per diluted share, compared with 2003 net income of $96 million, or $1.77 per diluted share. The table below reflects 2004 and 2003 net income per diluted share, excluding special items.

Year
                                                 ---------------------
                                                    2004       2003
                                                 ---------- ----------
Net income per dil. share as reported                $2.92      $1.77

Special items                                         0.45      (1.14)
                                                 ---------- ----------
Net income per diluted share, excluding special
 items                                               $3.37      $0.63

Corrugated Packaging

The corrugated packaging operation reported income of $27 million in fourth quarter 2004 compared with a loss of $5 million in fourth quarter 2003 and income of $42 million in third quarter 2004. For full year 2004, the corrugated packaging operation reported income of $105 million compared with $11 million in 2003.

Despite fewer shipping days, and higher energy and recycled fiber costs, earnings improved in fourth quarter 2004 compared with fourth quarter 2003 due to higher pricing, lower converting costs, and reduced outside purchases of containerboard.

Compared with third quarter 2004, earnings were negatively affected by $15 million from major mill maintenance outages and incremental costs associated with the optimization of capital projects implemented during the outages, $8 million from lower volumes attributable to a slower seasonal period and three less shipping days, and $12 million from higher costs, principally related to energy and health care.

Average prices for corrugated containers in fourth quarter 2004 were up 8% compared with fourth quarter 2003 and up 3% compared with third quarter 2004. The average cost of recycled fiber in fourth quarter 2004 was up 23% compared with fourth quarter 2003 and down 4% compared with third quarter 2004.

Despite the closure of five box plants in 2004, on a volume per workday basis, shipments of corrugated containers were up 5% in fourth quarter 2004 compared with fourth quarter 2003 and up 1% compared with third quarter 2004. As a result of three less shipping days in fourth quarter 2004, actual shipments were down 4% in fourth quarter 2004 compared with third quarter 2004.

Forest Products

The forest products operation reported record fourth quarter income of $50 million, compared with $35 million in fourth quarter 2003 and $68 million in third quarter 2004. Full year 2004 operating income for forest products was a record $215 million, compared with $67 million in 2003.

Operating income for fourth quarter 2004 included $7 million from high-value land sales compared with $4 million in fourth quarter 2003 and $3 million in third quarter 2004. The average sales price per acre of high-value land in fourth quarter 2004 was approximately $7,500 per acre.

Average lumber prices in fourth quarter 2004 were up 3% compared with fourth quarter 2003, but down 8% compared with third quarter 2004. Particleboard prices were up 31% compared with fourth quarter 2003, but down 6% compared with third quarter 2004. Medium density fiberboard (MDF) prices were up 20% compared with fourth quarter 2003, but down 2% compared with third quarter 2004. Gypsum prices were up 17% compared with fourth quarter 2003, but down 2% compared with third quarter 2004.