Temple-Inland Inc. Reports Third Quarter 2008 Results - KTRE.com | Lufkin and Nacogdoches, Texas

Temple-Inland Inc. Reports Third Quarter 2008 Results

AUSTIN, Texas--(BUSINESS WIRE)--Oct. 28, 2008--Temple-Inland Inc. (NYSE: TIN) today reported third quarter 2008 net income of $3 million, or $0.03 per diluted share, compared with third quarter 2007 net income of $36 million, or $0.33 per diluted share, and second quarter 2008 net income of $8 million, or $0.07 per diluted share.

Results for third quarter 2008 include special items of $0.06 per share, consisting of (i) an after tax benefit of $7 million, or $0.07 per share, resulting from an increase in the estimated 2008 effective tax rate on previously reported special items; and (ii) an after tax charge of $1 million, or $0.01 per share, primarily related to early repayment of Premier Boxboard Limited LLC debt.

                                                           Third Quarter    Second Quarter

                                                               ---------------      --------------

                                                               2008    2007        2008

                                                              ------- -------       --------------

Net income per share                             $0.03   $0.33      $0.07

Adjustment for special items                 ($0.06) ($0.16)     $0.00

                                                               ------- -------      --------------

Net income (loss) per share, excluding  ($0.03)  $0.17      $0.07

 special items

Corrugated Packaging

                                                           Third Quarter      Second Quarter

                                                              -------------         --------------

                                                                2008   2007         2008

                                                                   -------- ----      --------------

Segment Operating Income ($ in Millions)    $50    $70       $52

Corrugated packaging segment operating income declined in third quarter 2008 compared with third quarter 2007 as higher box prices were more than offset by lower box shipments, higher energy, freight, and chemical costs, and 38,000 tons of downtime and expenses associated with Hurricanes Gustav and Ike. The earnings impact from the hurricanes was approximately $13 million in third quarter 2008. Operating income declined in third quarter 2008 compared with second quarter 2008 as higher box prices were more than offset by lower box shipments and hurricane related expenses noted above.

Building Products

                                                          Third Quarter          Second Quarter

                                                            -------------                --------------

                                                              2008   2007              2008

                                                                 -------- ----           --------------

Segment Operating Income ($ in Millions)    ($6)   ($4)               $1

Building products segment operating income declined in third quarter 2008 compared with third quarter 2007 as higher lumber and particleboard prices were more than offset by declining volumes for lumber, gypsum and particleboard, the impact of hurricane-related downtime and expenses, and severance charges. The impact from the hurricanes was approximately $1 million and the severance charges were approximately $1 million. Operating income declined in third quarter 2008 compared with second quarter 2008 principally due to lower volumes for all products, hurricane related downtime and expenses, and severance charges.

Comments

Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, "Third quarter results reflect the negative effect on our operations of Hurricanes Gustav and Ike and the impact of a weakening economy on the demand for our products, especially in the month of September.

"In corrugated packaging, we successfully implemented a box price increase during the third quarter and will realize a full quarter's benefit of the box price increase in the fourth quarter. We continue to make progress on our strategic initiative of lowering costs at our converting facilities through improved asset utilization. We expect to see the benefit from these efforts in fourth quarter 2008 and into 2009.

"In building products, shipments for all of our products declined in the third quarter, reflecting continued difficult market conditions. We remain focused on matching our supply with demand and lowering costs. In the quarter, we further reduced our headcount and incurred $1 million of severance charges.

"We acquired the remaining 50% interest in Premier Boxboard Limited from Caraustar Industries in the third quarter and are pleased with the integration of the mill into our system. We remain confident that we will quickly realize all planned synergies."

Temple-Inland will host a conference call on October 28, 2008 at 9:30 am EDT to discuss results of third quarter 2008. To access the conference call, listeners calling from the United States and Canada should dial 1-866-394-6665 at least 15 minutes prior to the start of the call. The passcode for the conference call is: 68785819. Those wishing to access the call from outside the United States and Canada should dial 1-706-634-1667 and use the same passcode as set forth above. Replays of the call will be available for two weeks following completion of the live call and can be accessed at 1-800-642-1687 in the United States and Canada and at 1-706-645-9291 outside the United States and Canada. The passcode for the replay is: 68785819.

Temple-Inland Inc. is a manufacturing company focused on corrugated packaging and building products. The fully integrated corrugated packaging operation consists of 7 mills and 64 converting facilities. The building products operation manufactures a diverse line of building products for new home construction, commercial and repair and remodeling markets. Temple-Inland's address on the World Wide Web is www.templeinland.com.

This release contains "forward-looking statements" within the meaning of the federal securities laws. These statements reflect management's current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements. Factors and uncertainties that might cause such differences 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; fluctuations in costs and expenses including the costs of raw materials, purchased energy, and freight; changes in interest rates; demand for new housing; accuracy of accounting assumptions related to impaired assets, pension and postretirement costs and contingency reserves; competitive actions by other companies; changes in laws or regulations; our ability to execute certain strategic and business improvement initiatives; the accuracy of certain judgments and estimates concerning the integration of acquired operations; and other factors, many of which are beyond our control.

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

                                     ---------------                        -----------------

                                      2008    2007                      2008     2007

                                     ------- -------                        -------- --------

                                      (In millions, except per share)

Revenues

------------------------------------

Corrugated packaging                 $  797  $  748                $ 2,371  $ 2,288

Building products                       179     195                            540      642

Timber and timberland (a)                --      20                            --       59

                                                   -----   -----                              ------   ------

  Total revenues                     $  976  $  963                       $ 2,911  $ 2,989

                                             =====   =====                   ======   ======

Income

------------------------------------

Corrugated packaging                 $   50  $   70                       $157  $   212

Building products                        (6)     (4)                             (26)      23

Timber and timberland (a)                --      18                           --       53

                                                     -----   -----                              ------   ------

Total segment operating income           44      84                       131      288

Items not included in segments

  General and administrative expense    (17)    (23)                  (59)     (75)

  Share-based compensation              (10)     (2)                      (16)     (34)

  Other operating income (expense)       (1)     (6)                    (16)     (16)

  Other non-operating income

   (expense)                                          (3)     --                         (1)       1

  Net interest income (expense) on

   financial assets and

  nonrecourse financial liabilities

   of special purpose entities           (1)     --                                  (4)      --

  Interest expense on debt              (21)    (29)                           (58)     (86)

                                      -----   -----                                                ------   ------

Income (loss) before taxes               (9)     24                              (23)      78

Income tax (expense) benefit             12     (13)                           21      (34)

                                      -----   -----                                                ------   ------

Income (loss) from continuing

 operations                               3      11                                         (2)      44

Discontinued operations                  --      25                                   --       96

                                      -----   -----                                                ------   ------

    Net income (loss)                $    3  $   36                                   $(2) $   140

                                      =====   =====                                    ======   ======

Average basic shares outstanding      106.7   106.2                     106.7    105.9

Average diluted shares outstanding    107.6   107.8                    107.6    107.9

Earnings per share - Basic

------------------------------------

Income (loss) from continuing

 operations                          $ 0.03  $ 0.11                                   $ (0.02) $  0.41

Discontinued operations                  --    0.23                                        --     0.92

                                      -----   -----                                                      ------   ------

    Net income (loss)                $ 0.03  $ 0.34                                    $ (0.02) $  1.33

                                      =====   =====                                       ======   ======

Earnings per share - Diluted (b)

------------------------------------

Income from continuing operations    $ 0.03  $ 0.11                         $   N/A  $  0.41

Discontinued operations                  --    0.22                                        N/A     0.89

                                                         -----   -----                                   ------   ------

    Net income                                 $ 0.03  $ 0.33                               $N/A  $  1.30

                                                      =====   =====                     ======   ======

Dividends per share                        $ 0.10  $ 0.28                       $  0.30  $  0.84

                                                      =====   =====                      ======   ======

(a) We no longer have a timber and timberland segment as a result of

 the fourth quarter 2007 sale of our timberland.

(b) Earnings per diluted share not applicable for first nine months

 2008 due to our year-to-date loss from continuing operations.

TEMPLE-INLAND INC. AND SUBSIDIARIES

SUMMARIZED CONSOLIDATED BALANCE SHEETS

(Preliminary and Unaudited)

                                                   Third                         Year-

                                                Quarter-End                  End

                                                   2008                          2007

                                                -----------                     ----------

ASSETS                                          (Dollars in millions)

Current Assets                                  $    1,143                      $1,277

Property and Equipment                               1,680                1,632

Financial Assets of Special Purpose Entities         2,383         2,383

Goodwill                                               393                            365

Other Assets                                           272                         285

                                                 ---------   ---------

TOTAL ASSETS                                    $    5,871  $                 5,942

                                                 =========                         =========

LIABILITIES

Current Liabilities                             $      522                         $890

Long-Term Debt                                       1,192                        852

Nonrecourse Financial Liabilities of Special

 Purpose Entities                                    2,140                         2,140

Deferred Tax Liability                                 749                        762

Liability for Pension Benefits                          73                      71

Liability for Postretirement Benefits                  118                 123

Other Long-Term Liabilities                            312                     324

                                                 ---------   ---------

TOTAL LIABILITIES                                    5,106                       5,162

SHAREHOLDERS' EQUITY                                   765                  780

                                                 ---------   ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $    5,871  $    5,942

                                                 =========   =========

SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Preliminary and Unaudited)

                                     Third          Second          First               First Nine

                                    Quarter         Quarter     Quarter           Months

                                     2008            2008           2008                008

                                    -------            -------              -------              ----------

CASH PROVIDED BY (USED FOR)

 OPERATIONS                               (Dollars in millions)

  Operations (including payments

   related to our 2007

  transformation plan of $11

   million in third quarter and

  $39 million in first quarter)     $   66         $57(a)             $19            $142

  Working capital (including

   payments related to our 2007

  transformation plan of      $20

   million in third quarter,      $1

  million in second quarter and

   $276 million in first quarter)         (20)         (7)          (358)                (385)

                                                     -----           ---            -----                 --------

                                                        46             50         (339)               (243)

                                                     -----           ---            -----                 --------

CASH PROVIDED BY (USED FOR)

 INVESTING

  Capital expenditures                      (40)      (42)      (34)      (116)

  Acquisition, net of cash acquired    (57)         --        --        (57)

  Other                                               (2)   (3)       (1)        (6)

                                                          -----   ---     -----   --------

                                                        (99)  (45)      (35)      (179)

                                                        -----   ---     -----   --------

CASH PROVIDED BY (USED FOR)

 FINANCING

  Cash dividends to shareholders       (11)       (10)      (11)       (32)

  Net change in debt                            68          15       204        287

  Other                                                 2            (4)       (8)       (10)

                                                           -----        ---     -----   --------

                                                           59           1       185        245

                                                           -----        ---     -----   --------

Net increase (decrease) in cash and

 cash equivalents                                6             6      (189)      (177)

Cash and cash equivalents at

 beginning of period                           44             38       227        227

                                                         -----            ---     -----   --------

Cash and cash equivalents at end of

 period                                                $   50        $ 44    $   38  $      50

                                                         =====        ==     =====   ========

SUPPLEMENTAL INFORMATION

    Depreciation and amortization      $ 51       $50       $50     $151

(a) Includes a $15 million voluntary, discretionary contribution to

 our defined benefit plan.

TEMPLE-INLAND INC. AND SUBSIDIARIES

REVENUES AND UNIT SALES, EXCLUDING JOINT VENTURE OPERATIONS

(Preliminary and Unaudited)

                                       Third Quarter First Nine Months

                                       ------------- -----------------

                                        2008   2007    2008     2007

                                       ------ ------ -------- --------

                                            (Dollars in millions)

Revenues

Corrugated packaging

  Corrugated packaging    $  729    $ 717        $ 2,231      $  2,178

  Paperboard (a)(b)            68             31            140         110

                                           -----         ----          ------         -------

    Total corrugated packaging   $  797            $ 748           $ 2,371               $  2,288

                                                  =====       ====             ======                 =======

Building products

  Pine lumber                              $   60           $  64         $   177      $    190

  Particleboard                            46                 42          138                  143

  Gypsum wallboard                    33                 52          101                   189

  Medium density fiberboard      18                  15            56                      49

  Fiberboard                                11                  13          33                       41

  Other                                        11                 9               35                      30

                                                    -----          ----                ------                 -------

    Total building products            $  179     $ 195             $   540             $    642

                                                    =====    ====            ======           =======

Timber and Timberland (c)

    Fiber and other                       N/A            $  20              N/A                  $     59

                                                                          ====            =======

Unit Sales

Corrugated packaging

  Corrugated packaging, thousands of

   tons                                                        810    839    2,504     2,535

  Paperboard, thousands of tons (a)(b)    150     67      304       243

                                                                  -----   ----   ------   -------

    Total, thousands of tons                       960    906    2,808     2,778

                                                               ===== ====   ======   =======

Building products

  Pine lumber, mbf                                     189   215      593       640

  Particleboard, msf      &a, mp;a, mp;nbs, p;                             117   119      372       396

  Gypsum wallboard, msf                             255   368      813     1,164

  Medium density fiberboard, msf                   34    32      110       106

  Fiberboard, msf                                             52    75      170       228

(a) Paperboard includes containerboard and light-weight gypsum facing

 paper.

(b) Comparisons of revenue and unit sales of paperboard are affected

 by the July 25, 2008 purchase of our partner's interest in Premier

 Boxboard Limited LLC. The effects on revenues and unit sales for the

 periods presented are not material.

(c) We no longer have a timber and timberland segment as a result of

 the fourth quarter 2007 sale of our timberland.

TEMPLE-INLAND INC. AND SUBSIDIARIES

CALCULATION OF NON-GAAP FINANCIAL MEASURES

(Preliminary and Unaudited)

                                                              Second

                                           Third Quarter      Quarter

                                                    ---------------------

                                              2008       2007      2008

                                            ---------- ---------- ---------

                                       (In millions, except per share)

NET INCOME EXCLUDING SPECIAL ITEMS

--------------------------------------

Net income in accordance with GAAP      $       3         $      36         $       8

                                                               --------            --------           --------

Special items, after-tax:

 Transformation plan:

    Transformation costs                                  --                    4                    --

    Discontinued operations                             --                  (25)                 --

                                                                   --------             --------             --------

                                                                       --                   (21)                  --

                                                                    --------             --------              --------

 Other:

    Charges related to early repayment

     of PBL debt                                            1         --         --

    Litigation and other                                --          3         --

    Effect of increasing the estimated

     annual effective

    tax rate on previously reported

     special items                                             (7)        --         --

                                                                  --------   --------   --------

                                                                     (6)         3         --

                                                                    --------   --------   --------

    Total special items, after-tax                        (6)       (18)        --

                                                                   --------   --------   --------

Net income (loss), excluding special

 items, as defined                                    $      (3)      $      18         $       8

                                                            ========   ========   ========

Net income, per share, in accordance

 with GAAP                                                 $    0.03     $    0.33     $    0.07

                                                                    --------        --------        --------

Special items, after-tax, per diluted

 share:

 Transformation plan:

    Transformation costs                         --       0.04         --

    Discontinued operations                   --      (0.22)        --

                                                          --------   --------   --------

                                                             --      (0.18)        --

                                                         --------   --------   --------

 Other:

    Charges related to early repayment

     of PBL debt                                0.01         --         --

    Litigation and other                      --       0.02         --

    Effect of increasing the estimated

     annual effective

    tax rate on previously reported

     special items                          (0.07)        --         --

                                                    --------   --------   --------

                                                     (0.06)      0.02         --

                                                      -------   --------   --------

    Total special items, after-tax         (0.06)     (0.16)        --

                                                          --------   --------   --------

Net income (loss) per share, excluding

 special items, as defined                       $   (0.03)       $    0.17      $    0.07

                                                            ========   ========   ========

Average basic shares outstanding           106.7      106.2      106.6

Average diluted shares outstanding         107.6      107.8      107.4

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