Temple-Inland Inc. Reports Second Quarter 2007 Results

Business Wire, July 25, 2007

AUSTIN, Texas -- Temple-Inland Inc. (NYSE:TIN) 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.

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(*) Second quarter 2006 special items principally relate to tax litigation settlement

Corrugated Packaging

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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

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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 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

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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

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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.