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Temple-Inland Inc. Reports Third Quarter 2011 Results

This release includes non-GAAP financial measures. The required reconciliations to GAAP financial measures are included in this release.

TEMPLE-INLAND INC. AND SUBSIDIARIES

CONSOLIDATED EARNINGS AND SEGMENT RESULTS

(Preliminary and Unaudited)
       
Third Quarter First Nine Months
2011 2010 2011 2010
(In millions, except per share)

Revenues
Corrugated packaging $ 808 $ 809 $ 2,474 $ 2,347
Building products   166   157   511   500
Total revenues $ 974 $ 966 $ 2,985 $ 2,847

 

Income
Corrugated packaging $ 84 $ 121 $ 278 $ 230
Building products   (5 )   (10 )   (19 )   (4 )
Total segment operating income 79 111 259 226
Items not included in segments:
General and administrative expense (16 ) (17 ) (50 ) (54 )
Share-based and long-term incentive compensation (12 ) (6 ) (51 ) (20 )
Other operating income (expense) (23 ) (5 ) (38 ) (7 )
Other non-operating income (expense) (1 ) –– (5 ) ––
Net interest income (expense) on financial assets and nonrecourse financial liabilities of special purpose entities (2 ) (3 ) (11 ) (10 )
Interest expense on debt   (11 )   (13 )   (34 )   (39 )
Income before taxes 14 67 70 96
Income tax (expense) benefit   (7 )   59   (29 )   45
Net income 7 126 41 141

Net (income) loss attributable to noncontrolling interest of special purpose entities
  (1 )   (1 )   ––   ––
Net income attributable to Temple-Inland Inc. $ 6 $ 125 $ 41 $ 141
 
Average basic shares outstanding 109.3 107.9 108.7 107.8
Average diluted shares outstanding 111.7 109.4 110.9 109.5
 

Per share information:
Basic earnings $ 0.05 $ 1.15 $ 0.38 $ 1.30
Diluted earnings $ 0.05 $ 1.13 $ 0.37 $ 1.28
Dividends $ 0.13 $ 0.11 $ 0.39 $ 0.33
 
 

TEMPLE-INLAND INC. AND SUBSIDIARIES

SUMMARIZED CONSOLIDATED BALANCE SHEETS

(Preliminary and Unaudited)
   

Third Quarter-End 2011

Year-End 2010
(Dollars in millions)
ASSETS
Current Assets $ 1,195 $ 1,136
Property and Equipment 1,641 1,627
Financial Assets of Special Purpose Entities 2,475 2,475
Goodwill 394 394
Other Assets   262   277
TOTAL ASSETS $ 5,967 $ 5,909
 
LIABILITIES
Current Liabilities $ 543 $ 508
Long-Term Debt 657 718
Nonrecourse Financial Liabilities of Special Purpose Entities 2,140 2,140
Deferred Tax Liability 732 700
Liability for Pension Benefits 330 308
Liability for Postretirement Benefits 109 110
Other Long-Term Liabilities   399   404
TOTAL LIABILITIES 4,910 4,888
SHAREHOLDERS’ EQUITY
Temple-Inland Inc. Shareholders’ Equity 965 929
Noncontrolling Interest of Special Purpose Entities   92   92
TOTAL SHAREHOLDERS’ EQUITY   1,057   1,021
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 5,967 $ 5,909
 
 

TEMPLE-INLAND INC. AND SUBSIDIARIES

SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Preliminary and Unaudited)
 
Third Quarter First Nine Months
2011   2010 2011   2010
(In millions)
CASH PROVIDED BY (USED FOR) OPERATIONS
Operations $ 88 $ 114 (a) $ 299 $ 241 (a)
Working capital   32  

(5

)

 
  (23 )  

(38

)

(b)
  120   109   276   203
CASH PROVIDED BY (USED FOR) INVESTING
Capital expenditures (41 )

(59

)

 
(170 )

(144

)

 
Other   (8 )   2   (10 )   2
  (49 )  

(57

)

 
  (180 )  

(142

)

 
CASH PROVIDED BY (USED FOR) FINANCING
Cash dividends to shareholders (15 )

(12

)

 
(43 )

(35

)

 
Net change in debt (76 )

(36

)

 
(65 )

(1

)

 
Other   28   ––   34  

(10

)

 
  (63 )  

(48

)

 
  (74 )  

(46

)

 
Effect of exchange rate changes on cash and cash equivalents   (4 )   ––   (3 )   1
Net increase in cash and cash equivalents 4 4 19 16
Cash and cash equivalents at beginning of period   43   48   28   36
Cash and cash equivalents at end of period $ 47 $ 52 $ 47 $ 52
 
SUPPLEMENTAL INFORMATION
Depreciation and amortization $ 49 $ 49 $ 146 $ 145
_____________

(a) Includes $15 million of voluntary, discretionary contributions to our defined benefit plan in third quarter 2010 and $30 million in first nine months 2010. (b) Includes $14 million of alternative fuel mixture tax credits that were accrued at year-end 2009.
         
 

TEMPLE-INLAND INC. AND SUBSIDIARIES

SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Preliminary and Unaudited)
 
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
2011 2011 2011 2010 2010
(In millions)
CASH PROVIDED BY (USED FOR) OPERATIONS
Operations $ 88 $ 118 $ 93 $ 93 $ 114 (a)
Working capital   32   3   (58

)
 

(36

)
 

(5

)

 
  120   121   35   57   109
CASH PROVIDED BY (USED FOR) INVESTING
Capital expenditures (41 ) (67 ) (62 ) (89 )

(59

)

 
Other   (8 )   11   (13 )   9   2
  (49 )   (56 )   (75 )   (80 )  

(57

)

 
CASH PROVIDED BY (USED FOR) FINANCING
Cash dividends to shareholders (15 ) (14 ) (14 ) (12 )

(12

)

 
Net change in debt (76 ) (28 ) 39 7

(36

)

 
Other   28   (4 )   10   4   ––
  (63 )   (46 )   35   (1 )  

(48

)

 
Effect of exchange rate changes on cash and cash equivalents   (4 )   ––   1   ––   ––
Net increase (decrease) in cash and cash equivalents 4 19 (4 ) (24 ) 4
Cash and cash equivalents at beginning of period   43   24   28   52   48
Cash and cash equivalents at end of period $ 47 $ 43 $ 24 $ 28 $ 52
 
SUPPLEMENTAL INFORMATION
Depreciation and amortization $ 49 $ 49 $ 48 $ 48 $ 49
_____________

(a) Includes $15 million of voluntary, discretionary contribution to our defined benefit plan in third quarter 2010.
       
 

TEMPLE-INLAND INC. AND SUBSIDIARIES

REVENUES AND UNIT SALES, EXCLUDING JOINT VENTURE OPERATIONS

 (Preliminary and Unaudited)
 
Third Quarter First Nine Months
2011 2010 2011 2010
Revenues (Dollars in millions)
Corrugated packaging
Corrugated packaging $ 751 $ 746 $ 2,311 $ 2,195
Paperboard (a)   57   63   163   152
Total corrugated packaging $ 808 $ 809 $ 2,474 $ 2,347
Building products
Lumber $ 53 $ 51 $ 167 $ 172
Gypsum wallboard 34 42 109 115
Particleboard 40 30 122 104
Medium density fiberboard 18 17 56 56
Fiberboard 7 7 20 23
Other   14   10   37   30
Total building products $ 166 $ 157 $ 511 $ 500
 
Unit Sales
Corrugated packaging
Corrugated packaging, thousands of tons 821 815 2,508 2,499
Paperboard, thousands of tons (a)   103   120   306   306
Total, thousands of tons   924   935   2,814   2,805
Building products
Lumber, mbf 205 197 621 560
Gypsum wallboard, msf 270 347 897 979
Particleboard, msf 112 89 348 306
Medium density fiberboard, msf 30 30 96 101
Fiberboard, msf 33 37 100 116

____________

(a) Paperboard includes linerboard, corrugating medium, white-top linerboard, and light-weight gypsum facing paper.
         
 

TEMPLE-INLAND INC. AND SUBSIDIARIES

CALCULATION OF NON-GAAP FINANCIAL MEASURES

(Preliminary and Unaudited)
 
Third Quarter Second

Quarter
First

Nine Months
2011 2010 2011 2011 2010
($ in millions, except per share)

NET INCOME EXCLUDING SPECIAL ITEMS
Net income in accordance with GAAP $ 6 $ 125 $ 19 $ 41 $ 141
Special items, after-tax:
Costs and asset impairments primarily related to box plant transformation (5 ) (3 ) (4 ) (15 ) (11 )
Pearl River incident costs (3 ) –– –– (3 ) ––
Merger agreement costs (6 ) –– (1 ) (7 ) ––
Litigation –– –– 1 1 ––
Alternative fuel mixture tax credits, net of costs –– –– –– –– 7
Voluntary substitution costs (1 ) –– –– (1 ) ––
Gain (loss) on purchase and retirement of debt –– –– –– (2 ) ––
Tax benefit related to the cellulosic biofuel producer credit –– 83 –– –– 83
One-time tax expense due to the impact of Patient Protection and Affordable Care Act on the Medicare Part D retiree drug subsidy program   ––   ––   ––   ––   (3 )
Total special items, after-tax   (15 )   80   (4 )   (27 )   76
Net income, excluding special items $ 21 $ 45 $ 23 $ 68 $ 65
 
Net income, per share, in accordance with GAAP $ 0.05 $ 1.13 $ 0.17 $ 0.37 $ 1.28
Special items, after-tax, per share:
Costs and asset impairments primarily related to box plant transformation (0.05 ) (0.03 ) (0.04 ) (0.13 ) (0.11 )
Pearl River incident costs (0.02 ) –– –– (0.02 ) ––
Merger agreement costs (0.05 ) –– (0.01 ) (0.07 ) ––
Litigation –– –– 0.01 0.01 ––
Alternative fuel mixture tax credits, net of costs –– –– –– –– 0.07
Voluntary substitution costs (0.01 ) –– –– (0.01 ) ––
Gain (loss) on purchase and retirement of debt –– –– –– (0.02 ) ––
Tax benefit related to the cellulosic biofuel producer credit –– 0.75 –– –– 0.75
One-time tax expense due to the impact of Patient Protection and Affordable Care Act on the Medicare Part D retiree drug subsidy program   ––   ––   ––   ––   (0.03 )
Total special items, after-tax   (0.13 )   0.72   (0.04 )   (0.24 )   0.68
Net income, per share, excluding special items $ 0.18 $ 0.41 $ 0.21 $ 0.61 $ 0.60
Average basic shares outstanding 109.3 107.9 108.6 108.7 107.8
Average diluted shares outstanding 111.7 109.4 110.8 110.9 109.5

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