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Temple-Inland Inc. Reports Second Quarter 2008 Results

AUSTIN, Texas-(Business Wire)-July 30, 2008 - Temple-Inland Inc. (NYSE: TIN) today reported second quarter 2008 net income of $8 million, or $0.07 per diluted share, compared with second quarter 2007 net income of $66 million, or $0.62 per diluted share, and first quarter 2008 net loss of $13 million, or $0.12 per basic share. -0- *T Second Quarter First Quarter ——————— ——————- 2008 2007 2008 ——— ——— ——————- Net income (loss) per share $ 0.07 $ 0.62 ($0.12) Adjustment for special items $ 0.00 ($0.44) $ 0.07 ———- ———— ———————- Net income (loss) per share, Excluding special items $ 0.07 $ 0.18 ($0.05) *T -0- *T Corrugated Packaging Second Quarter First Quarter ——————— ——————- 2008 2007 2008 ———— —— ——————- Segment Operating Income ($ in Millions) $ 52 $ 78 $ 55 *T

Corrugated packaging operating income declined second quarter 2008 compared with second quarter 2007 as higher box prices were more than offset by increased costs for energy, fiber and freight. Operating income declined second quarter 2008 compared with first quarter 2008 principally due to higher energy, freight and fiber costs. -0- *T Building Products Second Quarter First Quarter ——————— ——————- 2008 2007 2008 ———— —— ——————- Segment Operating Income ($ in Millions) $ 1 $ 11 ($21) *T

Building products operating income declined second quarter 2008 compared with second quarter 2007 principally due to lower gypsum prices and volumes. Operating income improved second quarter 2008 compared with first quarter 2008 principally due to higher lumber prices and initiatives to reduce costs implemented in first quarter 2008.

Comments

Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, "While cost inflation and tough conditions in the housing industry continue to present significant challenges for our company, we were pleased with our improved earnings in second quarter 2008 compared with first quarter 2008.

"Corrugated packaging continued to experience significant cost inflation in the quarter. We remain very focused on implementing the current price increase, which will more than offset cost inflation experienced during the year. The mill system ran well during the quarter and we completed our scheduled maintenance at our Bogalusa, LA mill. We continue to make progress on our strategic initiative of lowering costs at our converting facilities through improved asset utilization, and we will see the benefit from these efforts in the second half of 2008 and into 2009.

"Building products returned to profitability in the quarter, benefiting from seasonal improvement in lumber pricing and our initiatives to lower cost and match our production to our demand. We continue to believe building products markets will remain very difficult for the balance of 2008, but are determined to control costs and minimize losses for the year.

"We are pleased with our acquisition of the remaining 50% interest in Premier Boxboard Limited and are confident in our ability to quickly realize planned synergies."

Temple-Inland will host a conference call on July 30, 2008 at 9:30 am EDT to discuss results of second quarter 2008. To access the conference call, listeners calling from the United States should dial 1-866-394-6665 at least 15 minutes prior to the start of the call. Those wishing to access the call from outside the United States should dial 1-706-634-1667. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-800-642-1687 in the United States and at 1-706-645-9291 outside the United States.

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 PBL into our 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. -0- *T TEMPLE-INLAND INC. AND SUBSIDIARIES CONSOLIDATED EARNINGS AND SEGMENT RESULTS (Preliminary and Unaudited) Second First Six Quarter Months ——————- ——————- 2008 2007 2008 2007 ——- ——- ——- ——- (In millions, except per share) Revenues ——————————————————— Corrugated packaging $ 798 $ 779 $1,574 $1,540 Building products 193 224 361 447 Timber and timberlands (a) — 20 — 39 ——- ——- ——- ——- Total revenues $ 991 $1,023 $1,935 $2,026 ===== ===== ===== ===== Income ——————————————————— Corrugated packaging $ 52 $ 78 $ 107 $ 142 Building products 1 11 (20) 27 Timber and timberlands (a) — 16 — 35 ——- ——- ——- ——- Total segment operating income 53 105 87 204 Expenses not included in segments: General and administrative (21) (27) (42) (52) Share-based compensation (2) (13) (6) (32) Other operating income (expense) — 4 (15) (10) Other non-operating income (expense) 1 1 2 1 Interest income on financial assets of special purpose entities 18 — 42 — Interest expense on nonrecourse financial liabilities of special purpose entities (18) — (45) — Interest expense on debt (20) (28) (37) (57) ——- ——- ——- ——- Income (loss) before taxes 11 42 (14) 54 Income tax (expense) benefit (3) (16) 9 (21) ——- ——- ——- ——- Income (loss) from continuing operations 8 26 (5) 33 Discontinued operations — 40 — 71 ——- ——- ——- ——- Net income (loss) $ 8 $ 66 $ (5) $ 104 ===== ===== ===== ===== Average basic shares outstanding 106.6 106.0 106.7 105.8 Average diluted shares outstanding 107.4 108.1 107.6 107.8 Earnings per share - Basic: ——————————————————— Income (loss) from continuing operations $ 0.07 $ 0.24 $(0.05) $ 0.31 Discontinued operations — 0.39 — 0.68 ——- ——- ——- ——- Net income (loss) $ 0.07 $ 0.63 $(0.05) $ 0.99 ===== ===== ===== ===== Earnings per share - Diluted (b): ——————————————————— Income from continuing operations $ 0.07 $ 0.24 $ N/A $ 0.31 Discontinued operations — 0.38 N/A 0.66 ——- ——- ——- ——- Net income $ 0.07 $ 0.62 $ N/A $ 0.97 ===== ====== ===== ===== Dividends per share $ 0.10 $ 0.28 $ 0.20 $ 0.56 ===== ===== ===== ===== *T -0- *T (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 six months 2008 due to our year-to-date net loss. *T -0- *T TEMPLE-INLAND INC. AND SUBSIDIARIES SUMMARIZED CONSOLIDATED BALANCE SHEETS (Preliminary and Unaudited) Second Year- Quarter-End End 2008 2007 —————- ——- (Dollars in ASSETS millions) Current Assets $ 1,119 $1,277 Property and Equipment 1,611 1,632 Financial Assets of Special Purpose Entities 2,383 2,383 Goodwill 365 365 Other Assets 280 285 —————- ——- TOTAL ASSETS $ 5,758 $5,942 =========== ===== LIABILITIES Current Liabilities $ 528 $ 890 Long-Term Debt 1,073 852 Nonrecourse Financial Liabilities of Special Purpose Entities 2,140 2,140 Deferred Tax Liability 746 762 Liability for Pension Benefits 69 71 Liability for Postretirement Benefits 119 123 Other Long-Term Liabilities 307 324 —————- ——- TOTAL LIABILITIES 4,982 5,162 SHAREHOLDERS' EQUITY 776 780 —————- ——- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,758 $5,942 =========== ===== *T -0- *T SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS (Preliminary and Unaudited) Second First First Six Quarter Quarter Months 2008 2008 2008 ———- ———- ————- CASH PROVIDED BY (USED FOR) OPERATIONS (Dollars in millions) Operations (including payments related to our 2007 transformation plan of $39 million in first quarter) $ 57(a) $ 19 $ 76 Working capital (including payments related to our 2007 transformation plan of $1 million in second quarter and $276 million in first quarter) (7) (358) (365) ———- ———- ————- 50 (339) (289) ———- ———- ————- CASH PROVIDED BY (USED FOR) INVESTING Capital expenditures (42) (34) (76) Other (3) (1) (4) ———- ———- ————- (45) (35) (80) ———- ———- ————- CASH PROVIDED BY (USED FOR) FINANCING Cash dividends to shareholders (10) (11) (21) Net change in debt 15 204 219 Other (4) (8) (12) ———- ———— ————- 1 185 186 ———- ———— ————- Net increase (decrease) in cash and cash equivalents 6 (189) (183) Cash and cash equivalents at beginning of period 38 227 227 ———- ———- ————- Cash and cash equivalents at end of period $ 44 $ 38 $ 44 ======= ======= ========= SUPPLEMENTAL INFORMATION Depreciation and amortization $ 50 $ 50 $ 100 *T -0- *T (a) Includes a $15 million voluntary, discretionary contribution to our defined benefit plan. *T -0- *T TEMPLE-INLAND INC. AND SUBSIDIARIES REVENUES AND UNIT SALES, EXCLUDING JOINT VENTURE OPERATIONS (Preliminary and Unaudited) Second Quarter First Six Months ——————— ———————— 2008 2007 2008 2007 ———— —— ————- ——- (Dollars in millions) Revenues Corrugated packaging Corrugated packaging $ 765 $ 744 $ 1,502 $1,461 Linerboard 33 35 72 79 ———— —— ————- ——- Total corrugated packaging $ 798 $ 779 $ 1,574 $1,540 ======== ==== ========= ===== Building products Pine lumber $ 64 $ 67 $ 117 $ 126 Particleboard 49 49 92 101 Gypsum wallboard 34 67 68 137 Medium density fiberboard 19 17 38 34 Fiberboard 13 14 22 28 Other 14 10 24 21 ———— —— ————- ——- Total building products $ 193 $ 224 $ 361 $ 447 ======== ==== ========= ===== Timber and Timberlands (a) Fiber and other N/A $ 20 N/A $ 39 ==== ===== Unit Sales Corrugated packaging Corrugated packaging, thousands of tons 867 866 1,694 1,696 Linerboard, thousands of tons 72 76 154 176 ———— —— ————- ——- Total, thousands of tons 939 942 1,848 1,872 ======== ==== ========= ===== Building products Pine lumber, mbf 204 222 404 425 Particleboard, msf 135 134 255 277 Gypsum wallboard, msf 278 414 558 796 Medium density fiberboard, msf 38 37 76 74 Fiberboard, msf 68 79 118 153 *T -0- *T (a) We no longer have a timber and timberland segment as a result of the fourth quarter 2007 sale of our timberland. *T -0- *T TEMPLE-INLAND INC. AND SUBSIDIARIES CALCULATION OF NON-GAAP FINANCIAL MEASURES (Preliminary and Unaudited) First Second Quarter Quarter ——————— ————- 2008 2007 2008 ———- ——- ———— NET INCOME (LOSS) EXCLUDING SPECIAL ITEMS ————————————————————— Net income (loss) in accordance with GAAP $ 8 $ 66 $ (13) ———- ——- ———— Special items, after-tax: Transformation plan: Pension settlement expense — — (8) Other transformation costs — 2 (3) Discontinued operations — (40) — ———- ——- ———— — (38) (11) ———- ——- ———— Other: Closure and sale of converting and production facilities and sale of non-strategic assets — (5) — Litigation and other — — 3 One-time tax benefit — (3) — ———- ——- ———— — (8) 3 ———- ——- ———— Total special items, after-tax — (46) (8) ———- ——- ———— Net income (loss), excluding special items, as defined $ 8 $ 20 $ (5) ======= ===== ======== Net income (loss), per share, in accordance with GAAP(a) $ 0.07 $ 0.62 $ (0.12) ———- ——- ———— Special items, after-tax, per diluted share: Transformation plan: Pension settlement expense — — (0.07) Other transformation costs — 0.02 (0.03) Discontinued operations — (0.38) — ———- ——- ———— — (0.36) (0.10) ———- ——- ———— Other: Closure and sale of converting and production facilities and sale of non-strategic assets — (0.05) — Litigation and other — — 0.03 One-time tax benefit — (0.03) — ———- ——- ———— — (0.08) 0.03 ———- ——- ———— Total special items, after-tax — (0.44) (0.07) ———- ——- ———— Net income (loss), per share, excluding special items, as defined $ 0.07 $ 0.18 $ (0.05) ======= ===== ======== Average basic shares outstanding 106.6 106.0 106.7 Average diluted shares outstanding 107.4 108.1 107.6 *T -0- *T (a) Based on average basic shares outstanding for first quarter 2008 due to our loss from continuing operations and average diluted shares outstanding for second quarter 2008. *T

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