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. -0- 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 $11 million compared with first quarter 2006. -0- Forest Products Segment Operating Income 2nd Qtr. 2nd Qtr. 1st Qtr. 2006 2005 2006 ------------------------ -------- -------- -------- ($ in Millions) $101 $55 $82
Forest products reported record quarterly income of $101 million in second quarter 2006. Earnings improved in second quarter 2006 compared with second quarter 2005 due to higher pricing and volumes and the acquisition of our partner's interest in Standard Gypsum. Earnings increased in second quarter 2006 compared with first quarter 2006 due to improved pricing for gypsum and particleboard and lower energy costs.
Average lumber prices in second quarter 2006 were down 15% compared with second quarter 2005 and down 7% compared with first quarter 2006. Gypsum prices were up 37% compared with second quarter 2005 and up 9% compared with first quarter 2006. Particleboard prices were up 13% compared with second quarter 2005 and up 16% compared with first quarter 2006.
Shipments of lumber, gypsum and particleboard were up in second quarter 2006 compared with second quarter 2005, but down compared with first quarter 2006. -0- Real Estate Segment Operating Income 2nd Qtr. 2nd Qtr. 1st Qtr. 2006 2005 2006 ------------------------ -------- -------- -------- ($ 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 $77,000 per acre. -0- Financial Services 2nd Qtr. 2nd Qtr. 1st Qtr. Segment Operating Income 2006 2005 2006 ------------------------ -------- -------- -------- ($ in Millions) $62 $47 $49
Financial services earnings improved in second quarter 2006 compared with second quarter 2005 due to higher net interest income driven by an increase in earning assets, principally mortgage-backed securities, and improved credit conditions. Earnings improved in second quarter 2006 compared with first quarter 2006 due to higher net interest income, improved credit conditions, and lower net non-interest expense.
Comments
In announcing second quarter results, Kenneth M. Jastrow II, chairman and chief executive officer of Temple-Inland Inc., said, "Second quarter 2006 was a record quarter for Temple-Inland. Our results reflect continued focus on cost reduction initiatives and favorable market conditions. We repurchased 2.0 million shares in the quarter, completing our current share repurchase authorization, and reduced debt by $91 million.
"Corrugated packaging continued to benefit from strategic initiatives of integration, increased asset utilization and volume growth. In addition, market conditions are improving.
"Results in our forest products operation reflect favorable market conditions for gypsum and particleboard, driven by strength in commercial construction as well as repair and remodeling markets. Additionally, we continue to benefit from our focus on fiber integration.
"Real estate earnings in second quarter 2006 were $9 million, and we remain on target for earnings to be in the range of $50-60 million for the year.
"Financial services benefited from low cost and improved credit conditions. We have entered into an agreement to sell our asset-based lending operation, which will further reduce costs."
The Company will host a conference call on July 26, 2006 at 10:00 am EDT to discuss results of the second quarter. The meeting may be accessed through webcast or by conference call. The webcast may be accessed through Temple-Inland's Internet site at www.templeinland.com. To access the conference call, listeners calling from North America should dial 1-800-901-5217 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-786-2964. The password is templeinland. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-888-286-8010 in North America and at 1-617-801-6888 outside North America. The password for the replay is 71581264.
Temple-Inland Inc. operates four business segments: corrugated packaging, forest products, real estate and financial services. The Company's 2.0 million acres of forestland are certified as managed in compliance with ISO 14001 and in accordance with the Sustainable Forestry Initiative(R) (SFI) Standard of the Sustainable Forestry Board to ensure forest management is conducted in a scientifically sound and environmentally sensitive manner. Temple-Inland's common stock (TIN) is traded on the New York Stock Exchange and NYSE Arca Inc. Temple-Inland's address on the World Wide Web is www.templeinland.com. -0- This press release contains "forward-looking statements" within the meaning of the federal securities laws. These forward-looking statements reflect management's current views with respect to future events and are subject to risks and uncertainties. Factors and uncertainties that could cause our actual results to differ significantly from the results discussed in the forward-looking statements include, but are not limited to: general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to us and that we may pursue; the availability and price of raw materials we use; fluctuations in the cost of purchased energy; fluctuations in the costs we incur to transport the raw materials we use and the products we manufacture; assumptions related to pension and post-retirement costs; assumptions related to accounting for impaired assets; the collectibility of loans and accounts receivable and related provisions for losses; competitive actions by other companies; changes in laws or regulations and actions or restrictions of regulatory agencies; the accuracy of certain judgments and estimates concerning our integration of acquired operations; our ability to execute certain strategic and business improvement initiatives; and other factors, many of which are beyond our control. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition. We expressly disclaim any obligation to publicly revise any forward-looking statements contained in this release to reflect the occurrence of events after the date of this release. Business Segments ----------------- Second Quarter Year to Date ---------------- ---------------- 2006 2005 2006(a) 2005 ---------------- ---------------- (Dollars in (Dollars in millions) millions) Revenues -------- Corrugated packaging $ 758 $ 740 $ 1,479 $ 1,459 Forest products 341 270 674 521 Real estate 35 25 82 54 Financial services 299 239 582 461 ---------------- ---------------- Total revenues $ 1,433 $ 1,274 $ 2,817 $ 2,495 ================ ================ Income ------ Corrugated packaging $ 67 $ 58 $ 107 $ 108 Forest products 101 55 183 106 Real estate 9 9 35 18 Financial services 62 47 111 89 ---------------- ---------------- Total segment operating income 239 169 436 321 Expenses not allocated to segments General and administrative (26) (22) (49) (42) Share-based compensation (a) (8) (6) (24) (12) Other operating income (expense) (8) (29) (11) (53) Other non-operating income (expense) 91 1 91 2 Parent company interest (34) (29) (67) (58) ---------------- ---------------- Income before taxes 254 84 376 158 Income (taxes) benefit (62) (16) (108) (45) ---------------- ---------------- Income from continuing operations 192 68 268 113 Discontinued operations -- 1 -- 1 ---------------- ---------------- Net income $ 192 $ 69 $ 268 $ 114 ================ ================ Diluted earnings per share: --------------------------- Income from continuing operations $ 1.71 $ 0.59 $ 2.38 $ 0.98 Discontinued operations -- 0.01 -- 0.01 ---------------- --------------- Net income $ 1.71 $ 0.60 $ 2.38 $ 0.99 ================ =============== Average diluted shares outstanding 111.8 115.0 112.6 115.4 ================ =============== We have recast prior period results to reflect the classification of the new business segment, real estate. (a) The adoption of SFAS 123(R) for 2006 stock awards resulted in the acceleration of $7 million in pre-tax share-based compensation expense ($0.04 per after-tax) into first quarter 2006. TEMPLE-INLAND INC. AND SUBSIDIARIES (UNAUDITED) Revenues and unit sales of manufacturing subsidiaries, excluding joint venture operations follows: Second Quarter Year to Date ---------------- ---------------- 2006 2005(a) 2006 2005(a) ------- ------- ------- ------- Dollars in millions Revenues Corrugated Packaging Corrugated packaging $ 737 $ 715 $ 1,435 $ 1,406 Linerboard 21 25 44 53 ------- ------- ------- ------- Total Corrugated Packaging $ 758 $ 740 $ 1,479 $ 1,459 ======= ======= ======= ======= Forest Products Pine lumber $ 76 $ 84 $ 160 $ 159 Gypsum wallboard (b) 116 34 228 65 Particleboard 58 50 107 104 Medium density fiberboard (b) 19 26 35 57 Fiberboard 22 21 43 41 Hunting, mineral and recreational leases 14 11 28 17 Fiber and other 36 44 73 78 ------- ------- ------- ------- Total Forest Products $ 341 $ 270 $ 674 $ 521 ======= ======= ======= ======= Unit sales Corrugated Packaging Corrugated packaging, thousands of tons 884 886 1,753 1,743 Linerboard, thousands of tons 47 63 107 132 ------- ------- ------- ------- Total, thousands of tons 931 949 1,860 1,875 ======= ======= ======= ======= Forest Products Pine lumber, mbf 216 200 434 393 Gypsum wallboard, msf (b) 537 211 1,100 418 Particleboard, msf 164 162 329 335 Medium density fiberboard, msf (b) 41 61 80 130 Fiberboard, msf 106 109 208 216 (a) We have recast 2005 revenues to include gross real estate sales that had previously been reported net and certain other ancillary revenues previously reflected as a reduction of cost of sales. (b) Comparisons of revenue and unit sales of gypsum wallboard are affected by the January 2006 acquisition of our partner's interest in Standard Gypsum L.P. Comparisons for MDF are affected by the sale of the Pembroke facility in second quarter 2005. Supplemental Financial Information for the Parent Company and its manufacturing subsidiaries follows: Second Quarter Year to Date -------------- ------------ 2006 2005 2006 2005 ---- ---- ---- ---- Cash Balance (at qtr. end) $ 25 $ 16 Long-Term Debt (at qtr. end) $ 1,744 $ 1,598 Capital Expenditures $ 47 $ 57 $ 79 $ 113 A summary of projects we own in the entitlement process(a) at second quarter-end 2006: Project County Project ------- ------ Acres(b) ------- California ---------- Hidden Creek Estates Chatsworth 700 Terrace at Hidden Hills Calabasas 30 Georgia ------- Bay Springs Carroll 440 Dry Pond Cherokee 950 Fox Hall Coweta 350 Friendship Road Cherokee 110 Garland Mountain Cherokee 350 Gold Creek Dawson 1,090 Grove Park Coweta 160 Happy Valley Coweta 750 Jackson Park Jackson 690 Legion Lake Carroll 210 Lithia Springs Haralson 260 Mill Creek Coweta 770 Pickens School Pickens 420 The Overlook at Waleska Cherokee 510 Town West Bartow 1,110 Triple C Road Bartow 180 Wolf Creek Carroll 11,810 Yellow Creek Cherokee 1,060 ------ Total 21,950 (a) A project is deemed to be in the entitlement process when customary steps necessary for the preparation and submittal of an application, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining and there is no assurance that entitlements ultimately will be received. (b) Project acres are approximate. The actual number of acres entitled may vary. A summary of activity within our entitled(a), developed and under development projects at second quarter-end 2006: Residential Lots -------------------- Lots Sold Estimated Interest Since Lots Project County Owned(b) Inception Remaining ------- ------ --------- --------- ---------- Projects we own Colorado -------- Buffalo Highlands Weld 100% -- 645 Johnstown Farms Weld 100% 115 699 Stonebraker Weld 100% -- 600 Texas ----- Caruth Lakes Rockwell 100% 245 629 Cibolo Canyons Bexar 100% 226 1,523 Harbor Lakes Hood 100% 177 401 Hunter's Crossing Bastrop 100% 192 385 Mawell Creek Collin 100% 494 529 Oakcreek Estates Comal 100% -- 630 The Colony Bastrop 100% 332 1,093 The Gables at North Hill Collin 100% 156 126 The Preserve at Pecan Creek Denton 100% -- 819 The Ridge at Ribelin Ranch Travis 100% -- -- Other Texas Projects (8) Various 100% 2,463 208 Missouri, Tennessee and Utah ----- Other Projects (4) Various 100% 829 375 -------- --------- 5,229 8,662 Projects in entities we consolidate Texas ----- City Park Harris 75% 513 788 Lantana (c) Denton 55% 75 2,260 Other Texas Projects (4) Various Various 213 241 --------- ---------- 801 3,289 Total owned and consolidated 6,030 11,951 Projects in ventures that we account for using the equity method Georgia ------- Seven Hills Paulding 50% 474 605 The Georgian Paulding 38% 274 1,112 Other Georgia projects (6) Various Various 2,061 656 Texas ----- Bar C Ranch Tarrant 50% 94 1,087 Fannin Farms West Tarrant 50% 224 220 Lantana (c) Denton Various 1,569 296 Long Meadow Farms Fort Bend 19% 342 2,370 Southern Trails Brazoria 40% 162 897 Stonewall Estates Bexar 25% -- 386 Summer Creek Fort Bend 50% -- 525 Summer Creek Ranch Tarrant 50% 742 1,703 Summer Lakes Fort Bend 50% 294 850 Village Park Collin 30% 242 327 Other Texas projects (5) Various Various 752 359 Florida ------- Other projects (3) Various Various 449 396 -------- --------- Total in ventures 7,679 11,789 Combined Total Various Various 13,709 23,740 ======== ========= Commercial Acres ---------------- Acres Sold Estimated Acres Project Since Inception Remaining ------- ----------------- --------------- Projects we own Colorado -------- Buffalo Highlands -- -- Johnstown Farms -- -- Stonebraker -- -- Texas ----- Caruth Lakes -- -- Cibolo Canyons 32 113 Harbor Lakes -- 13 Hunter's Crossing 19 95 Mawell Creek -- -- Oakcreek Estates -- -- The Colony 22 50 The Gables at North Hill -- -- The Preserve at Pecan Creek -- 9 The Ridge at Ribelin Ranch -- 189 Other Texas Projects (8) 107 61 Missouri, Tennessee and Utah ----- Other Projects (4) -- -- ----------------- --------------- 180 530 Projects in entities we consolidate Texas ------------------------- City Park 36 129 Lantana (c) -- -- Other Texas Projects (4) 2 63 ----------------- --------------- 38 192 Total owned and consolidated 218 722 Projects in ventures that we account for using the equity method Georgia ------- Seven Hills 5 14 The Georgian -- -- Other Georgia projects (6) -- -- Texas ----- Bar C Ranch -- -- Fannin Farms West -- -- Lantana (c) 1 79 Long Meadow Farms -- 134 Southern Trails -- -- Stonewall Estates -- -- Summer Creek -- 37 Summer Creek Ranch -- 374 Summer Lakes 42 9 Village Park -- 7 Other Texas projects (5) -- 15 Florida ------- Other projects (3) -- -- ----------------- --------------- Total in ventures 48 669 Combined Total 266 1,391 ================= =============== (a) A project is deemed entitled when all major discretionary land-use approvals have been received. Some projects may require additional permits for development. (b) Interest owned reflects our equity interest in the project, whether owned directly or indirectly. (c) The Lantana project consists of a series of 17 partnerships in which our interests range from 25% to 55%. We account for eight of these partnerships in which our interests range from 25% to 50% using the equity method and we consolidate the remaining partnerships.
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. -0- 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 $11 million compared with first quarter 2006. -0- Forest Products Segment Operating Income 2nd Qtr. 2nd Qtr. 1st Qtr. 2006 2005 2006 ------------------------ -------- -------- -------- ($ in Millions) $101 $55 $82
Forest products reported record quarterly income of $101 million in second quarter 2006. Earnings improved in second quarter 2006 compared with second quarter 2005 due to higher pricing and volumes and the acquisition of our partner's interest in Standard Gypsum. Earnings increased in second quarter 2006 compared with first quarter 2006 due to improved pricing for gypsum and particleboard and lower energy costs.
Average lumber prices in second quarter 2006 were down 15% compared with second quarter 2005 and down 7% compared with first quarter 2006. Gypsum prices were up 37% compared with second quarter 2005 and up 9% compared with first quarter 2006. Particleboard prices were up 13% compared with second quarter 2005 and up 16% compared with first quarter 2006.
Shipments of lumber, gypsum and particleboard were up in second quarter 2006 compared with second quarter 2005, but down compared with first quarter 2006. -0- Real Estate Segment Operating Income 2nd Qtr. 2nd Qtr. 1st Qtr. 2006 2005 2006 ------------------------ -------- -------- -------- ($ 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 $77,000 per acre. -0- Financial Services 2nd Qtr. 2nd Qtr. 1st Qtr. Segment Operating Income 2006 2005 2006 ------------------------ -------- -------- -------- ($ in Millions) $62 $47 $49
Financial services earnings improved in second quarter 2006 compared with second quarter 2005 due to higher net interest income driven by an increase in earning assets, principally mortgage-backed securities, and improved credit conditions. Earnings improved in second quarter 2006 compared with first quarter 2006 due to higher net interest income, improved credit conditions, and lower net non-interest expense.
Comments
In announcing second quarter results, Kenneth M. Jastrow II, chairman and chief executive officer of Temple-Inland Inc., said, "Second quarter 2006 was a record quarter for Temple-Inland. Our results reflect continued focus on cost reduction initiatives and favorable market conditions. We repurchased 2.0 million shares in the quarter, completing our current share repurchase authorization, and reduced debt by $91 million.
"Corrugated packaging continued to benefit from strategic initiatives of integration, increased asset utilization and volume growth. In addition, market conditions are improving.
"Results in our forest products operation reflect favorable market conditions for gypsum and particleboard, driven by strength in commercial construction as well as repair and remodeling markets. Additionally, we continue to benefit from our focus on fiber integration.
"Real estate earnings in second quarter 2006 were $9 million, and we remain on target for earnings to be in the range of $50-60 million for the year.
"Financial services benefited from low cost and improved credit conditions. We have entered into an agreement to sell our asset-based lending operation, which will further reduce costs."
The Company will host a conference call on July 26, 2006 at 10:00 am EDT to discuss results of the second quarter. The meeting may be accessed through webcast or by conference call. The webcast may be accessed through Temple-Inland's Internet site at www.templeinland.com. To access the conference call, listeners calling from North America should dial 1-800-901-5217 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-786-2964. The password is templeinland. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-888-286-8010 in North America and at 1-617-801-6888 outside North America. The password for the replay is 71581264.
Temple-Inland Inc. operates four business segments: corrugated packaging, forest products, real estate and financial services. The Company's 2.0 million acres of forestland are certified as managed in compliance with ISO 14001 and in accordance with the Sustainable Forestry Initiative(R) (SFI) Standard of the Sustainable Forestry Board to ensure forest management is conducted in a scientifically sound and environmentally sensitive manner. Temple-Inland's common stock (TIN) is traded on the New York Stock Exchange and NYSE Arca Inc. Temple-Inland's address on the World Wide Web is www.templeinland.com. -0- This press release contains "forward-looking statements" within the meaning of the federal securities laws. These forward-looking statements reflect management's current views with respect to future events and are subject to risks and uncertainties. Factors and uncertainties that could cause our actual results to differ significantly from the results discussed in the forward-looking statements include, but are not limited to: general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to us and that we may pursue; the availability and price of raw materials we use; fluctuations in the cost of purchased energy; fluctuations in the costs we incur to transport the raw materials we use and the products we manufacture; assumptions related to pension and post-retirement costs; assumptions related to accounting for impaired assets; the collectibility of loans and accounts receivable and related provisions for losses; competitive actions by other companies; changes in laws or regulations and actions or restrictions of regulatory agencies; the accuracy of certain judgments and estimates concerning our integration of acquired operations; our ability to execute certain strategic and business improvement initiatives; and other factors, many of which are beyond our control. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition. We expressly disclaim any obligation to publicly revise any forward-looking statements contained in this release to reflect the occurrence of events after the date of this release. Business Segments ----------------- Second Quarter Year to Date ---------------- ---------------- 2006 2005 2006(a) 2005 ---------------- ---------------- (Dollars in (Dollars in millions) millions) Revenues -------- Corrugated packaging $ 758 $ 740 $ 1,479 $ 1,459 Forest products 341 270 674 521 Real estate 35 25 82 54 Financial services 299 239 582 461 ---------------- ---------------- Total revenues $ 1,433 $ 1,274 $ 2,817 $ 2,495 ================ ================ Income ------ Corrugated packaging $ 67 $ 58 $ 107 $ 108 Forest products 101 55 183 106 Real estate 9 9 35 18 Financial services 62 47 111 89 ---------------- ---------------- Total segment operating income 239 169 436 321 Expenses not allocated to segments General and administrative (26) (22) (49) (42) Share-based compensation (a) (8) (6) (24) (12) Other operating income (expense) (8) (29) (11) (53) Other non-operating income (expense) 91 1 91 2 Parent company interest (34) (29) (67) (58) ---------------- ---------------- Income before taxes 254 84 376 158 Income (taxes) benefit (62) (16) (108) (45) ---------------- ---------------- Income from continuing operations 192 68 268 113 Discontinued operations -- 1 -- 1 ---------------- ---------------- Net income $ 192 $ 69 $ 268 $ 114 ================ ================ Diluted earnings per share: --------------------------- Income from continuing operations $ 1.71 $ 0.59 $ 2.38 $ 0.98 Discontinued operations -- 0.01 -- 0.01 ---------------- --------------- Net income $ 1.71 $ 0.60 $ 2.38 $ 0.99 ================ =============== Average diluted shares outstanding 111.8 115.0 112.6 115.4 ================ =============== We have recast prior period results to reflect the classification of the new business segment, real estate. (a) The adoption of SFAS 123(R) for 2006 stock awards resulted in the acceleration of $7 million in pre-tax share-based compensation expense ($0.04 per after-tax) into first quarter 2006. TEMPLE-INLAND INC. AND SUBSIDIARIES (UNAUDITED) Revenues and unit sales of manufacturing subsidiaries, excluding joint venture operations follows: Second Quarter Year to Date ---------------- ---------------- 2006 2005(a) 2006 2005(a) ------- ------- ------- ------- Dollars in millions Revenues Corrugated Packaging Corrugated packaging $ 737 $ 715 $ 1,435 $ 1,406 Linerboard 21 25 44 53 ------- ------- ------- ------- Total Corrugated Packaging $ 758 $ 740 $ 1,479 $ 1,459 ======= ======= ======= ======= Forest Products Pine lumber $ 76 $ 84 $ 160 $ 159 Gypsum wallboard (b) 116 34 228 65 Particleboard 58 50 107 104 Medium density fiberboard (b) 19 26 35 57 Fiberboard 22 21 43 41 Hunting, mineral and recreational leases 14 11 28 17 Fiber and other 36 44 73 78 ------- ------- ------- ------- Total Forest Products $ 341 $ 270 $ 674 $ 521 ======= ======= ======= ======= Unit sales Corrugated Packaging Corrugated packaging, thousands of tons 884 886 1,753 1,743 Linerboard, thousands of tons 47 63 107 132 ------- ------- ------- ------- Total, thousands of tons 931 949 1,860 1,875 ======= ======= ======= ======= Forest Products Pine lumber, mbf 216 200 434 393 Gypsum wallboard, msf (b) 537 211 1,100 418 Particleboard, msf 164 162 329 335 Medium density fiberboard, msf (b) 41 61 80 130 Fiberboard, msf 106 109 208 216 (a) We have recast 2005 revenues to include gross real estate sales that had previously been reported net and certain other ancillary revenues previously reflected as a reduction of cost of sales. (b) Comparisons of revenue and unit sales of gypsum wallboard are affected by the January 2006 acquisition of our partner's interest in Standard Gypsum L.P. Comparisons for MDF are affected by the sale of the Pembroke facility in second quarter 2005. Supplemental Financial Information for the Parent Company and its manufacturing subsidiaries follows: Second Quarter Year to Date -------------- ------------ 2006 2005 2006 2005 ---- ---- ---- ---- Cash Balance (at qtr. end) $ 25 $ 16 Long-Term Debt (at qtr. end) $ 1,744 $ 1,598 Capital Expenditures $ 47 $ 57 $ 79 $ 113 A summary of projects we own in the entitlement process(a) at second quarter-end 2006: Project County Project ------- ------ Acres(b) ------- California ---------- Hidden Creek Estates Chatsworth 700 Terrace at Hidden Hills Calabasas 30 Georgia ------- Bay Springs Carroll 440 Dry Pond Cherokee 950 Fox Hall Coweta 350 Friendship Road Cherokee 110 Garland Mountain Cherokee 350 Gold Creek Dawson 1,090 Grove Park Coweta 160 Happy Valley Coweta 750 Jackson Park Jackson 690 Legion Lake Carroll 210 Lithia Springs Haralson 260 Mill Creek Coweta 770 Pickens School Pickens 420 The Overlook at Waleska Cherokee 510 Town West Bartow 1,110 Triple C Road Bartow 180 Wolf Creek Carroll 11,810 Yellow Creek Cherokee 1,060 ------ Total 21,950 (a) A project is deemed to be in the entitlement process when customary steps necessary for the preparation and submittal of an application, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining and there is no assurance that entitlements ultimately will be received. (b) Project acres are approximate. The actual number of acres entitled may vary. A summary of activity within our entitled(a), developed and under development projects at second quarter-end 2006: Residential Lots -------------------- Lots Sold Estimated Interest Since Lots Project County Owned(b) Inception Remaining ------- ------ --------- --------- ---------- Projects we own Colorado -------- Buffalo Highlands Weld 100% -- 645 Johnstown Farms Weld 100% 115 699 Stonebraker Weld 100% -- 600 Texas ----- Caruth Lakes Rockwell 100% 245 629 Cibolo Canyons Bexar 100% 226 1,523 Harbor Lakes Hood 100% 177 401 Hunter's Crossing Bastrop 100% 192 385 Mawell Creek Collin 100% 494 529 Oakcreek Estates Comal 100% -- 630 The Colony Bastrop 100% 332 1,093 The Gables at North Hill Collin 100% 156 126 The Preserve at Pecan Creek Denton 100% -- 819 The Ridge at Ribelin Ranch Travis 100% -- -- Other Texas Projects (8) Various 100% 2,463 208 Missouri, Tennessee and Utah ----- Other Projects (4) Various 100% 829 375 -------- --------- 5,229 8,662 Projects in entities we consolidate Texas ----- City Park Harris 75% 513 788 Lantana (c) Denton 55% 75 2,260 Other Texas Projects (4) Various Various 213 241 --------- ---------- 801 3,289 Total owned and consolidated 6,030 11,951 Projects in ventures that we account for using the equity method Georgia ------- Seven Hills Paulding 50% 474 605 The Georgian Paulding 38% 274 1,112 Other Georgia projects (6) Various Various 2,061 656 Texas ----- Bar C Ranch Tarrant 50% 94 1,087 Fannin Farms West Tarrant 50% 224 220 Lantana (c) Denton Various 1,569 296 Long Meadow Farms Fort Bend 19% 342 2,370 Southern Trails Brazoria 40% 162 897 Stonewall Estates Bexar 25% -- 386 Summer Creek Fort Bend 50% -- 525 Summer Creek Ranch Tarrant 50% 742 1,703 Summer Lakes Fort Bend 50% 294 850 Village Park Collin 30% 242 327 Other Texas projects (5) Various Various 752 359 Florida ------- Other projects (3) Various Various 449 396 -------- --------- Total in ventures 7,679 11,789 Combined Total Various Various 13,709 23,740 ======== ========= Commercial Acres ---------------- Acres Sold Estimated Acres Project Since Inception Remaining ------- ----------------- --------------- Projects we own Colorado -------- Buffalo Highlands -- -- Johnstown Farms -- -- Stonebraker -- -- Texas ----- Caruth Lakes -- -- Cibolo Canyons 32 113 Harbor Lakes -- 13 Hunter's Crossing 19 95 Mawell Creek -- -- Oakcreek Estates -- -- The Colony 22 50 The Gables at North Hill -- -- The Preserve at Pecan Creek -- 9 The Ridge at Ribelin Ranch -- 189 Other Texas Projects (8) 107 61 Missouri, Tennessee and Utah ----- Other Projects (4) -- -- ----------------- --------------- 180 530 Projects in entities we consolidate Texas ------------------------- City Park 36 129 Lantana (c) -- -- Other Texas Projects (4) 2 63 ----------------- --------------- 38 192 Total owned and consolidated 218 722 Projects in ventures that we account for using the equity method Georgia ------- Seven Hills 5 14 The Georgian -- -- Other Georgia projects (6) -- -- Texas ----- Bar C Ranch -- -- Fannin Farms West -- -- Lantana (c) 1 79 Long Meadow Farms -- 134 Southern Trails -- -- Stonewall Estates -- -- Summer Creek -- 37 Summer Creek Ranch -- 374 Summer Lakes 42 9 Village Park -- 7 Other Texas projects (5) -- 15 Florida ------- Other projects (3) -- -- ----------------- --------------- Total in ventures 48 669 Combined Total 266 1,391 ================= =============== (a) A project is deemed entitled when all major discretionary land-use approvals have been received. Some projects may require additional permits for development. (b) Interest owned reflects our equity interest in the project, whether owned directly or indirectly. (c) The Lantana project consists of a series of 17 partnerships in which our interests range from 25% to 55%. We account for eight of these partnerships in which our interests range from 25% to 50% using the equity method and we consolidate the remaining partnerships.