Temple-Inland Inc. Reports Second Quarter 2006 Results

Business Wire, July 25, 2006

AUSTIN, Texas -- Temple-Inland Inc. (NYSE:TIN) today reported second quarter 2006 net income of $192 million, or $1.71 per diluted share, compared with second quarter 2005 net income of $69 million, or $0.60 per diluted share, and first quarter 2006 net income of $76 million, or $0.67 per diluted share.

Results for second quarter 2006 include (i) an after-tax benefit of $87 million, or $0.78 per share, primarily associated with previously announced settlement of tax litigation and (ii) an after-tax special charge of $5 million, or $0.05 per share, primarily associated with the planned disposition of the asset-based lending operation in Financial Services. As reflected in the table below, net income per diluted share, excluding special items, for second quarter 2006 is $0.98 per share.

Second           First
                                         Quarter         Quarter
                                 --------------------- ------------

                                    2006       2005        2006
                                 ---------- ---------- ------------

Net income per dil. share as
 reported                            $1.71      $0.60        $0.67

Adjustment for special items         (0.73)        --         0.02
                                 ---------- ---------- ------------

Net income per diluted share,
 Excluding special items             $0.98      $0.60        $0.69

Average shares outstanding -
 diluted                             111.8      115.0        113.4


Corrugated Packaging


                                  2nd Qtr.   2nd Qtr.    1st Qtr.
Segment Operating Income           2006        2005        2006
------------------------         ---------   --------    --------
($ in Millions)                     $67        $58         $40

Despite higher freight and energy costs, corrugated packaging earnings improved in second quarter 2006 compared with second quarter 2005 due to higher corrugated container prices and lower converting costs. Earnings improved in second quarter 2006 compared with first quarter 2006 due to higher corrugated container prices and lower energy costs, offsetting increased recycled fiber costs.

On a volume per workday basis, shipments of corrugated containers were up 1.5% in second quarter 2006 compared with second quarter 2005 and up 3.4% compared with first quarter 2006. Four box plants have been closed since beginning of second quarter 2005.

Average prices for corrugated containers in second quarter 2006 were up 4% compared with second quarter 2005 and compared with first quarter 2006. The average cost of recycled fiber in second quarter 2006 was down 9% compared with second quarter 2005, but up 21% compared with first quarter 2006. Freight costs were up $11 million compared with second quarter 2005 and up $3 million compared with first quarter 2006. Energy costs were up $3 million in second quarter 2006 compared with second quarter 2005, but down $11 million compared with first quarter 2006.

Forest Products


Segment Operating Income          2nd Qtr.   2nd Qtr.    1st Qtr.
                                    2006       2005        2006
------------------------          --------   --------    --------
($ in Millions)                     $101       $55         $82

Forest products reported record quarterly income of $101 million in second quarter 2006. Earnings improved in second quarter 2006 compared with second quarter 2005 due to higher pricing and volumes and the acquisition of our partner's interest in Standard Gypsum. Earnings increased in second quarter 2006 compared with first quarter 2006 due to improved pricing for gypsum and particleboard and lower energy costs.

Average lumber prices in second quarter 2006 were down 15% compared with second quarter 2005 and down 7% compared with first quarter 2006. Gypsum prices were up 37% compared with second quarter 2005 and up 9% compared with first quarter 2006. Particleboard prices were up 13% compared with second quarter 2005 and up 16% compared with first quarter 2006.

Shipments of lumber, gypsum and particleboard were up in second quarter 2006 compared with second quarter 2005, but down compared with first quarter 2006.

Real Estate


Segment Operating Income          2nd Qtr.   2nd Qtr.    1st Qtr.
                                    2006       2005        2006
------------------------          --------   --------    --------
($ in Millions)                      $9         $9         $26

Real estate earnings in second quarter 2006 were $9 million. During second quarter 2006, 920 acres of high-value land were sold at an average sales price of approximately $6,600 per acre, resulting in a gain of $5 million.

Residential development activity for all wholly and partially-owned projects during second quarter 2006 included the sale of 866 lots at an average price of approximately $46,000 per lot.

Commercial activity for all wholly and partially-owned projects during second quarter 2006 included the sale of 36 acres at an average price of $77,000 per acre.