Temple-Inland Inc. Reports Fourth Quarter and Full Year 2006 Record Results

Business Wire, Feb 5, 2007

AUSTIN, Texas -- Temple-Inland Inc. (NYSE:TIN) today reported fourth quarter 2006 net income of $104 million, or $0.97 per diluted share, compared with fourth quarter 2005 net income of $24 million, or $0.21 per diluted share, and third quarter 2006 net income of $96 million, or $0.87 per diluted share.

Results for fourth quarter 2006 include a net after-tax gain of $26 million, or $0.24 per share, principally related to payments received pursuant to the Softwood Lumber Agreement between the U.S. and Canada. As reflected in the table below, net income per diluted share, excluding special items, for fourth quarter 2006 is $0.73 per share, compared with $0.30 per share in fourth quarter 2005, and $0.93 per share in third quarter 2006.

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For the year, net income was $468 million, or $4.22 per diluted share, compared with 2005 net income of $176 million, or $1.54 per diluted share. Net income per diluted share excluding special items was $3.32 in 2006 compared with $1.90 in 2005, an increase of 75%. At year end 2006, fully diluted outstanding shares were 106.7 million.

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Corrugated Packaging operating income increased to $255 million in 2006 compared with $120 million in 2005.

Corrugated Packaging operating income improved fourth quarter 2006 compared with fourth quarter 2005, principally due to higher corrugated container prices and lower energy costs. Operating income was flat fourth quarter 2006 compared with third quarter 2006 as higher corrugated container prices and lower recycled fiber costs were offset by lower box shipments and higher energy and freight costs.

Shipments fourth quarter 2006 were down 6%, on a volume per workday basis, compared with fourth quarter 2005 primarily due to the previously announced sale of Performance Sheets (a sheet feeder plant in City of Industry, California) August 2006. On a volume per workday basis, shipments of corrugated containers were essentially flat fourth quarter 2006 compared with third quarter 2006.

Average prices for corrugated containers fourth quarter 2006 were up 13% compared with fourth quarter 2005 and up 2% compared with third quarter 2006. The average cost of recycled fiber fourth quarter 2006 was up 10% compared with fourth quarter 2005, but down 16% compared with third quarter 2006. Freight costs were up $2 million compared with fourth quarter 2005 and third quarter 2006. Energy costs were down $16 million fourth quarter 2006 compared with fourth quarter 2005, but up $3 million compared with third quarter 2006.

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Forest Products reported operating income of $312 million in 2006, a record level for the third consecutive year.

Operating income declined fourth quarter 2006 compared with fourth quarter 2005 primarily due to lower lumber pricing. Operating income declined fourth quarter 2006 compared with third quarter 2006 due to lower pricing and shipments. Fourth quarter and full year 2006 operating income reflect the benefit of the acquisition of our partner's interest in Standard Gypsum January 2006.

Average lumber prices fourth quarter 2006 were down 25% compared with fourth quarter 2005 and down 6% compared with third quarter 2006. Gypsum prices were up 13% compared with fourth quarter 2005, but down 9% compared with third quarter 2006. Particleboard prices were up 29% compared with fourth quarter 2005, but down 2% compared with third quarter 2006.

Shipments of lumber, gypsum (adjusted for the acquisition of our partner's interest in Standard Gypsum January 2006) and particleboard were down fourth quarter 2006 compared with fourth quarter 2005 and third quarter 2006.

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Real estate reported operating income of $62 million in 2006.

Real Estate operating income fourth quarter 2006 was $12 million. Including joint-venture activity, 1,150 acres of high-value land were sold at an average sales price of approximately $9,500 per acre fourth quarter 2006, resulting in a gain of $10 million.

Residential development activity for all wholly and partially owned projects during fourth quarter 2006 included the sale of 715 lots at an average price of approximately $49,300 per lot.

Commercial activity for all wholly and partially owned projects during fourth quarter 2006 included the sale of 57 acres at an average price of $123,400 per acre, resulting in a gain of $3 million.

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Financial Services reported operating income of $222 million in 2006, a record level for the third consecutive year.

Financial Services operating income increased fourth quarter 2006 compared with fourth quarter 2005 due to stronger credit conditions and lower costs. Operating income declined fourth quarter 2006 compared with third quarter 2006 principally due to lower noninterest income.

Comments

In announcing fourth quarter and full year results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc. said, "For the year 2006, Temple-Inland achieved record earnings of $3.32 per share, excluding special items, and return on investment of 15.9%, reflecting the benefit of our strategic initiatives and market conditions.