SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Quarterly Period
Ended September 28, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Transition Period
From ___________________________ to ____________________________
Commission File Number 1-8634
Temple-Inland Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-1903917
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
303 South Temple Drive, Diboll, Texas 75941
(Address of principal executive offices) (Zip Code)
(409) 829-2211
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days.
Yes X No_____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Number of common shares outstanding
Class as of September 28, 1996
Common Stock (par
value $1.00 per share) 55,418,415
The Exhibit Index appears on page 20 of this report.
<PAGE>2
PART I. FINANCIAL INFORMATION
FINANCIAL STATEMENTS
Summarized Statements of Income
Parent Company (Temple-Inland Inc.)
Unaudited
Third Quarter First Nine Months
1996 1995 1996 1995
(in millions)
Revenues
Net sales $ 646.7 $ 673.7 $ 1,974.9 $ 2,032.0
Financial services earnings (17.6) 24.9 36.8 63.1
629.1 698.6 2,011.7 2,095.1
Costs and Expenses
Cost of sales 550.9 486.2 1,620.3 1,526.5
Selling and administrative 50.6 66.1 185.2 188.3
601.5 552.3 1,805.5 1,714.8
Operating Income 27.6 146.3 206.2 380.3
Interest - net (27.4) (16.7) (81.6) (50.6)
Other 1.6 .8 3.1 2.5
Income Before Taxes 1.8 130.4 127.7 332.2
Settlement of FDIC tax-
sharing (31.5) - (31.5) -
Taxes on income .6 45.6 44.7 116.2
Net Income $ 32.7 $ 84.8 $ 114.5 $ 216.0
See notes to consolidated financial statements.
<PAGE>3
Summarized Balance Sheets
Parent Company (Temple-Inland Inc.)
Unaudited
September 28, December 30,
1996 1995
(in millions)
ASSETS
Current Assets
Cash $ 15 $ 15
Receivables, less allowances of
$10 million in 1996 and $8
million in 1995 315 285
Inventories:
Work in process and finished goods 108 99
Raw materials 215 239
323 338
Prepaid expenses 17 15
Total current assets 670 653
Investment in Financial Services 563 605
Property and Equipment
Buildings 505 469
Machinery and equipment 3,517 3,323
Less allowances for depreciation and
amortization (1,828) (1,702)
2,194 2,090
Construction in progress 109 225
2,303 2,315
Timber and timberlands--less depletion 505 445
Land 31 28
Total property and equipment 2,839 2,788
Other Assets 174 167
Total Assets $ 4,246 $ 4,213
See notes to consolidated financial statements.
<PAGE>4
Summarized Balance Sheets - Continued
Parent Company (Temple-Inland Inc.)
Unaudited
September 28, December 30,
1996 1995
(in millions)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 131 $ 138
Accrued expenses 162 157
Employee compensation and benefits 23 37
Current portion of long-term debt 3 5
Total current liabilities 319 337
Long-Term Debt 1,529 1,489
Deferred Income Taxes 218 259
Postretirement Benefits 136 132
Other Liabilities 31 21
Shareholders' Equity 2,013 1,975
Total Liabilities and Shareholders' Equity $ 4,246 $ 4,213
See notes to consolidated financial statements.
<PAGE>5
Summarized Statements of Cash Flows
Parent Company (Temple-Inland Inc.)
Unaudited
First Nine Months
1996 1995
(in millions)
Cash Provided by Operations
Net income $ 114.5 $ 216.0
Adjustments to reconcile net income to net cash:
Depreciation and depletion 183.0 152.9
Deferred taxes (40.4) 28.3
Unremitted earnings of affiliates (20.1) (39.9)
Receivables (30.8) (74.4)
Inventories 22.2 (79.6)
Accounts payable and accrued expenses (19.1) (31.5)
Other 17.7 (21.4)
227.0 150.4
Cash (Used for) Investments
Capital expenditures (218.5) (286.3)
Investment in joint ventures (21.1) -
Sale of property and equipment 4.0 7.5
Capital contribution to financial services - (35.0)
Dividends from financial services 50.0 -
Other (3.0) (1.6)
(188.6) (315.4)
Cash Provided by (Used for) Financing
Change in debt, net 27.4 213.4
Purchase of stock for treasury (16.3) (4.4)
Cash dividends paid to shareholders (51.0) (47.1)
Other 1.8 3.4
(38.1) 165.3
Effect of exchange rate changes on cash and
cash equivalents - (.3)
Net increase in cash and cash
equivalents .3 -
Cash and cash equivalents at beginning
of period 14.7 13.0
Cash and cash equivalents at end of period $ 15.0 $ 13.0
See notes to consolidated financial statements.
<PAGE>6
Summarized Statements of Income
Temple-Inland Financial Services
Unaudited
Third Quarter First Nine Months
1996 1995 1996 1995
(in millions)
Interest income
Mortgage-backed and investment
securities $ 44.4 $ 52.9 $ 140.8 $ 156.0
Loans receivable and mortgage
loans held for sale 108.3 98.1 315.8 269.6
Assisted assets - 4.2 - 16.4
Other earning assets 5.2 6.2 16.1 17.8
Total interest income 157.9 161.4 472.7 459.8
Interest expense
Deposits 76.5 80.3 232.2 232.9
Borrowed funds 32.8 31.3 93.3 91.6
Total interest expense 109.3 111.6 325.5 324.5
Net interest income 48.6 49.8 147.2 135.3
Provision for loan losses 3.4 1.9 12.5 10.9
Net interest income after
provision for loan losses 45.2 47.9 134.7 124.4
Noninterest income
Loan servicing fees 14.3 11.3 41.8 31.7
Loan origination and marketing 7.8 .6 22.0 3.4
Other 24.4 22.7 71.7 66.5
46.5 34.6 135.5 101.6
Noninterest expense
Compensation and benefits 26.3 23.3 76.9 68.7
Other 83.0 34.3 156.5 94.2
Total noninterest expense 109.3 57.6 233.4 162.9
Income before taxes (17.6) 24.9 36.8 63.1
Taxes on income (4.7) 9.6 16.7 23.2
Net income $ (12.9) $ 15.3 $ 20.1 $ 39.9
See notes to consolidated financial statements.
<PAGE>7
Summarized Balance Sheets
Temple-Inland Financial Services
Unaudited
September 30, December 31,
1996 1995
(in millions)
ASSETS
Cash and cash equivalents $ 421 $ 343
Mortgage loans held for sale 153 106
Loans receivable 5,237 4,764
Mortgage-backed and investment
securities 3,087 3,424
Other assets 664 574
TOTAL ASSETS $ 9,562 $ 9,211
LIABILITIES
Deposits $ 6,218 $ 6,377
Securities sold under repurchase
agreements 2,119 1,604
Federal Home Loan Bank advances 55 155
Other borrowings 136 113
Other liabilities 471 357
TOTAL LIABILITIES 8,999 8,606
SHAREHOLDER'S EQUITY 563 605
TOTAL LIABILITIES AND SHAREHOLDER S
EQUITY $ 9,562 $ 9,211
See notes to consolidated financial statements.
<PAGE>8
Summarized Statements of Cash Flows
Temple-Inland Financial Services
Unaudited
First Nine Months
1996 1995
(in millions)
Cash Provided by Operations
Net income $ 20.1 $ 39.9
Adjustments to reconcile net income
to net cash:
Amortization, accretion and depreciation 24.3 22.2
Provision for loan losses 12.5 10.9
Receivable from FDIC 7.4 (20.3)
Mortgage loans held for sale 3.8 24.6
Collections and remittances on loans
serviced for others, net (5.7) 55.8
Other (35.0) (28.8)
27.4 104.3
Cash (Used for) Investments
Purchases of mortgage-backed and investment
securities held-to-maturity (.1) -
Purchases of mortgage-backed and investment
securities available-for-sale (2.7) (53.7)
Maturities of mortgage-backed and investment
securities held-to-maturity 245.3 299.9
Maturities of mortgage-backed and investment
securities available-for-sale 69.9 11.0
Proceeds from sales of loans and mortgage-
backed and investment securities available-
for-sale 4.3 192.6
Loans originated net of principal collected (492.3) (898.6)
Reduction in covered assets - 117.9
Other (23.2) (42.4)
(198.8) (373.3)
Cash Provided by Financing
Net (decrease) in deposits (157.2) (117.2)
Net increase in securities sold under
repurchase agreements and short-term
borrowings 466.9 361.6
Change in debt, net (80.9) 24.2
Capital contribution from parent - 35.0
Dividends paid to parent (50.0) -
Net increase in advances from borrowers for
taxes and insurance 71.0 77.4
249.8 381.0
Net increase in cash and cash equivalents 78.4 112.0
Cash and cash equivalents at beginning of period 343.1 301.8
Cash and cash equivalents at end of period $ 421.5 $ 413.8
See notes to consolidated financial statements.
<PAGE>9
Consolidated Statements of Income
Temple-Inland Inc. and Subsidiaries
Unaudited
Third Quarter First Nine Months
1996 1995 1996 1995
(In millions, except for per share data)
Revenues
Manufacturing net sales $ 646.7 $ 673.7 $ 1,974.9 $ 2,032.0
Financial services revenues 204.4 196.0 608.2 561.4
851.1 869.7 2,583.1 2,593.4
Costs and Expenses
Manufacturing costs and expenses 601.5 552.3 1,805.5 1,714.8
Financial services expenses 222.0 171.1 571.4 498.3
823.5 723.4 2,376.9 2,213.1
Operating Income 27.6 146.3 206.2 380.3
Parent Company Interest - net (27.4) (16.7) (81.6) (50.6)
Other 1.6 .8 3.1 2.5
Income Before Taxes 1.8 130.4 127.7 332.2
Settlement of FDIC tax-sharing (31.5) - (31.5) -
Taxes on Income .6 45.6 44.7 116.2
Net Income $ 32.7 $ 84.8 $ 114.5 $ 216.0
Earnings per share $ .59 $1.51 $2.06 $3.85
Dividends Paid Per Share of
Common Stock $ .32 $ .30 $ .92 $ .84
Weighted Average Shares
Outstanding 55.5 56.3 55.6 56.2
See notes to consolidated financial statements.
<PAGE>10
Consolidated Balance Sheets
Temple-Inland Inc. and Subsidiaries
September 28, 1996
Unaudited
Parent Financial
Company Services Consolidated
(in millions)
ASSETS
Cash and cash equivalents $ 15 $ 421 $ 436
Mortgage loans held for sale - 153 153
Loans receivable - 5,237 5,237
Mortgage-backed and investment
securities - 3,087 3,087
Trade and other receivables 315 - 312
Inventories 323 - 323
Property & equipment 2,839 78 2,917
Other assets 191 586 730
Investment in affiliates 563 - -
TOTAL ASSETS $ 4,246 $ 9,562 $13,195
LIABILITIES
Deposits $ - $ 6,218 $ 6,218
Securities sold under repurchase
agreements and Federal Home
Loan Bank advances - 2,174 2,174
Other liabilities 350 471 808
Long-term debt 1,529 136 1,665
Deferred income taxes 218 - 181
Postretirement benefits 136 - 136
TOTAL LIABILITIES $ 2,233 $ 8,999 11,182
SHAREHOLDERS' EQUITY
Preferred stock - par value $1 per share:
authorized 25,000,000 shares; none issued -
Common stock - par value $1 per share:
authorized 200,000,000 shares; issued
61,389,552 shares including shares held
in the treasury 61
Additional paid-in capital 304
Translation and other adjustments (26)
Retained earnings 1,837
2,176
Cost of shares held in the treasury:
5,971,137 shares (163)
TOTAL SHAREHOLDERS' EQUITY 2,013
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,195
See the notes to the consolidated financial statements.
<PAGE>11
Consolidated Balance Sheets
Temple-Inland Inc. and Subsidiaries
December 30, 1995
Unaudited
Parent Financial
Company Services Consolidated
(in millions)
ASSETS
Cash and cash equivalents $ 15 $ 343 $ 358
Mortgage loans held for sale - 106 106
Loans receivable - 4,764 4,764
Mortgage-backed and investment
securities - 3,424 3,424
Trade and other receivables 285 - 283
Inventories 338 - 338
Property & equipment 2,788 76 2,864
Other assets 182 498 627
Investment in affiliates 605 - -
TOTAL ASSETS $ 4,213 $ 9,211 $12,764
LIABILITIES
Deposits $ - $ 6,377 $ 6,377
Securities sold under repurchase
agreements and Federal Home
Loan Bank advances - 1,759 1,759
Other liabilities 358 357 702
Long-term debt 1,489 113 1,602
Deferred income taxes 259 - 217
Postretirement benefits 132 - 132
TOTAL LIABILITIES $ 2,238 $ 8,606 10,789
SHAREHOLDERS' EQUITY
Preferred stock - par value $1 per share:
authorized 25,000,000 shares; none issued -
Common stock - par value $1 per share:
authorized 200,000,000 shares; issued
61,389,552 shares including shares held
in the treasury 61
Additional paid-in capital 306
Translation and other adjustments (14)
Retained earnings 1,773
2,126
Cost of shares held in the treasury:
5,731,411 shares (151)
TOTAL SHAREHOLDERS' EQUITY 1,975
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,764
See the notes to the consolidated financial statements.
<PAGE>12
Consolidated Statements of Cash Flows
Temple-Inland Inc. and Subsidiaries
Unaudited
First Nine Months
1996 1995
(in millions)
Cash Provided by Operations
Net income $ 114.5 $ 216.0
Adjustments to reconcile net income to
net cash:
Depreciation and depletion 189.8 158.8
Amortization and accretion 17.5 16.3
Deferred taxes (29.1) 47.5
Receivable from FDIC 7.4 (20.3)
Trade and other receivables (30.8) (74.4)
Accounts payable and accrued expenses (22.6) (31.1)
Inventories 22.2 (79.6)
Mortgage loans held for sale 3.8 24.6
Increase (decrease) in collections and
remittances on loans serviced for
others, net (5.7) 55.8
Other (12.6) (58.9)
254.4 254.7
Cash (Used for) Investments
Capital expenditures (228.5) (310.6)
Purchases of mortgage-backed and investment
securities held-to-maturity (.1) -
Purchases of mortgage-backed and investment
securities available-for-sale (2.7) (53.7)
Maturities of mortgage-backed and investment
securities held-to-maturity 245.3 299.9
Maturities of mortgage-backed and investment
securities available-for-sale 69.9 11.0
Proceeds from sales of mortgage-backed and
investment securities available-for-sale 4.3 192.6
Loans originated net of principal collected (492.3) (898.6)
Reduction in covered assets - 117.9
Other (33.3) (12.2)
(437.4) (653.7)
Cash Provided by Financing
Additions to debt 259.4 376.1
Payments of debt (312.9) (138.5)
Net increase in short-term borrowings
and repurchase agreements 466.9 361.6
Cash dividends paid to shareholders (51.0) (47.1)
Net (decrease) in deposits (157.2) (117.2)
Net increase in advances from borrowers
for taxes and insurance 71.0 77.4
Other (14.5) (1.0)
261.7 511.3
Effect of exchange rate changes on cash and
cash equivalents - (.3)
Net increase in cash and cash equivalents 78.7 112.0
Cash and cash equivalents at beginning of period 357.8 314.8
Cash and cash equivalents at end of period $ 436.5 $ 426.8
See notes to consolidated financial statements.
<PAGE>13
TEMPLE-INLAND INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal accruals) considered necessary for a
fair presentation have been included. For further information, refer to the
consolidated financial statements and footnotes included in, or incorporated
into, Temple-Inland Inc.'s (the "Company") Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
The consolidated financial statements include the accounts of Temple-Inland
Inc. and all subsidiaries in which the Company has more than a 50 percent
equity ownership. However, because certain assets and liabilities are in
separate corporate entities, the consolidated assets are not available to
satisfy all consolidated liabilities. All material intercompany amounts and
transactions have been eliminated. Certain amounts have been reclassified to
conform with current year s classification.
Included as an integral part of the consolidated financial statements are
separate summarized financial statements for the Company's primary business
groups.
The Parent Company (Temple-Inland Inc.) summarized financial statements
include the accounts of Temple-Inland Inc. and its manufacturing subsidiaries.
The financial services subsidiaries and the 20 percent to 50 percent owned
companies are reflected in the financial statements on the equity basis.
The Temple-Inland Financial Services group summarized financial statements
include savings bank, mortgage banking, real estate development activities and
insurance operations.
NOTE B - CONTINGENCIES
There are pending against the Company and its subsidiaries lawsuits and claims
arising in the regular course of business. In the opinion of management,
recoveries, if any, by plaintiffs or claimants that may result from the
foregoing litigation and claims will not be material in relation to the
consolidated financial statements of the Company and its subsidiaries.
<PAGE>14
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Results of operations, including information regarding the Company's principal
business segments, are shown below:
Third Quarter First Nine Months
1996 1995 1996 1995
(in millions)
Revenues
Corrugated container $ 401.7 $ 464.9 $ 1,278.6 $ 1,374.7
Bleached paperboard 107.6 83.7 305.6 270.7
Building products 137.4 125.1 390.7 386.6
Manufacturing net sales 646.7 673.7 1,974.9 2,032.0
Financial services 204.4 196.0 608.2 561.4
Total revenues $ 851.1 $ 869.7 $ 2,583.1 $ 2,593.4
Income
Corrugated container $ 14.1 $ 103.7 $ 129.7 $ 255.6
Bleached paperboard 5.6 9.9 (15.8) 25.5
Building products 28.1 13.1 67.9 52.1
Operating profit 47.8 126.7 181.8 333.2
Financial services (17.6) 24.9 36.8 63.1
30.2 151.6 218.6 396.3
Corporate expenses (2.6) (5.3) (12.4) (16.0)
Parent company interest - net (27.4) (16.7) (81.6) (50.6)
Other - net 1.6 .8 3.1 2.5
Income before taxes 1.8 130.4 127.7 332.2
Settlement of FDIC tax-sharing (31.5) - (31.5) -
Taxes on income .6 45.6 44.7 116.2
Net income $ 32.7 $ 84.8 $ 114.5 $ 216.0
<PAGE>15
Third Quarter 1996 vs. Third Quarter 1995
Third quarter consolidated earnings were $32.7 million, or $.59 per share.
These results included a one-time $44 million pre-tax assessment against
Guaranty Federal Bank, F.S.B. ( Guaranty ), levied in connection with the
recapitalization of the Savings Association Insurance Fund ( SAIF ) and a
credit to the Company s tax provision of $31.5 million. Excluding these
nonrecurring items, the Company recorded earnings for the quarter of $29.8
million, or $.54 per share, compared with $84.8 million, or $1.51 per share,
in the third quarter of 1995. Consolidated revenues for the quarter were
$851.1 million, a decrease of four percent from last year s third quarter
revenues of $869.7 million.
The corrugated container group earned $14.1 million in the quarter, 86 percent
below last year s third quarter earnings of $103.7 million. This decrease in
earnings was primarily attributable to a significant decline in prices early
in the quarter, which stabilized somewhat by the end of the quarter as demand
for corrugated containers recovered.
The bleached paperboard group earned $5.6 million in the quarter compared with
earnings of $9.9 million in the third quarter of 1995. Although a decline
from last year s third quarter earnings, the bleached paperboard group did
return to profitability in the quarter after a second quarter loss of $11.1
million. Sales volume continued to improve each quarter which allowed
production at the modernized mill at Evadale, Texas to continue to improve,
reaching a new record level.
The building products group earned $28.1 million in the quarter, up from $13.1
million earned in the third quarter last year. Net revenues increased ten
percent, or $12.3 million, as a result of improved price levels for lumber,
fiber products and gypsum wallboard. Gypsum wallboard and fiberboard both
achieved new records of profitability in the period. While demand for
particleboard remained good, this group s results were dampened by the costs
associated with the major renovation of the Monroeville, Alabama particleboard
plant and the continuation of start-up operations at the new particleboard
plant in Hope, Arkansas.
The financial services group recorded a $17.6 million loss in the quarter as a
result of a $44 million assessment in connection with the recapitalization of
the SAIF. During the quarter, Congress approved legislation to recapitalize
the SAIF by imposing a one-time assessment of 65.7 basis points on the
deposits of all SAIF insured institutions. Current SAIF insurance premiums of
23 basis points of deposits will decline to 6.4 basis points on January 1,
1997, resulting in an annual savings to Guaranty of approximately $11 million
based on current deposit levels. Excluding this charge, the financial
services group recorded operating earnings of $26.4 million for the quarter,
up from $24.9 million earned in the third quarter last year.
<PAGE>16
Third Quarter 1996 vs. Third Quarter 1995--Continued
Net interest expense increased to $27.4 million in the third quarter of 1996
compared with $16.7 million in the third quarter of last year. The increase
in net interest expense is due primarily to a decrease in capitalized interest
from $11.6 million in the third quarter of 1995 to $.5 million in the third
quarter of 1996 as a result of the completion of the modernization and
expansion project at the Evadale, Texas mill.
The other nonrecurring item recorded by the Company during the quarter was a
one-time credit to its tax provision of $31.5 million. In connection with the
acquisition of Guaranty in 1988, the Company entered into an assistance
agreement (the Assistance Agreement ) with the Federal Savings and Loan
Insurance Corporation. Pursuant to the Assistance Agreement, the Company
received various tax benefits to be shared with the Federal Deposit Insurance
Corporation ( FDIC ) when the cash benefits were realized by the Company.
During the term of the Assistance Agreement, the Company recorded these tax-
sharing liabilities on an undiscounted basis. The Company and the FDIC
terminated the Assistance Agreement. As a part of this termination, the
Company and the FDIC agreed to a one-time payment that was based on the
present value of future liabilities. The Company recognized a credit to its
tax provision of $31.5 million as a result of the completion of this
transaction.
First Nine Months of 1996 vs. First Nine Months of 1995
For the nine-month period, net income was $114.5 million, or $2.06 per share.
Excluding net nonrecurring items, net income was $111.6 million, or $2.01 per
share, versus net income of $216.0 million, or $3.85 per share, for last
year s first three quarters.
The corrugated container group earned $129.7 million, down 49 percent from the
$255.6 million earned in the first nine months of 1995. This decline in
earnings was attributable primarily to deteriorating prices for containerboard
and corrugated containers. Those prices began to fall late last year and
continued to decline throughout 1996 with prices stabilizing somewhat by the
end of the third quarter.
The bleached paperboard group lost $15.8 million for the first nine months of
1996. During the first half of 1996, the Company continued its activities to
consolidate management of its paper operations in order to better serve its
customers in both the bleached and unbleached segments of the business.
Results for the bleached paperboard group include a $5 million charge
associated with these consolidation and restructuring efforts. Excluding this
charge, the group has lost $10.8 million year-to-date compared with earnings
of $25.5 million in the first nine months of 1995. Although sales for the
first nine months of 1996 were 13 percent above 1995 levels, product prices
declined and the Company limited production in the first half of 1996 due to
high inventory levels. The group returned to profitability in the third
quarter.
<PAGE>17
First Nine Months of 1996 vs. First Nine Months of 1995--Continued
The building products group earned $67.9 million, up from $52.1 million for
the first nine months of 1995. The improved results reflect the improved
price levels for lumber, fiber products and gypsum wallboard, along with
substantial reductions in net wood costs for the solid wood group. Demand for
fiber products and gypsum wallboard strengthened throughout the first nine
months of 1996 and had a positive impact on earnings. Although demand for
particleboard remained good, the group s results were dampened due to the
renovation of the Monroeville, Alabama particleboard plant and the start-up
operations at the new particleboard plant in Hope, Arkansas.
The financial services group earned $36.8 million for the first nine months of
1996. Excluding the one-time SAIF assessment charge, the group recorded
operating earnings of $80.8 million versus $63.1 million for last year's
comparable period. Earnings improved for mortgage banking, real estate and
insurance; however, the savings bank provided the largest portion of the
earnings increase. Increase in loan portfolio activity and continuous
improvement in operating efficiencies are the major factors for this positive
contribution.
Net interest expenses increased to $81.6 million for the first nine months of
1996 compared with $50.6 million in the first nine months of 1995. The
increase in net interest expense is due primarily to a decrease in capitalized
interest from $31.7 in the first three quarters of 1995 to $2.9 million for
the first three quarters of 1996. The decrease in capitalized interest is
primarily attributable to the completion of the modernization and expansion
project at the Evadale, Texas mill.
The tax provision for the first nine months of 1996 includes a one-time credit
of $31.5 million that was recorded as a result of the termination of the
Assistance Agreement between the Company and the FDIC. As a part of this
termination, the Company and the FDIC agreed to a one-time payment that was
based on the present value of future liabilities. The recognition of this
credit to its tax provision is a result of the completion of this transaction.
Liquidity and Capital Resources
The Company s financial condition continues to be strong. Internally
generated funds, existing credit facilities and the capacity to issue long-
term debt are sufficient to fund projected capital expenditures, to service
existing debt, to pay dividends and to meet normal working capital
requirements. As part of the Company s share repurchase plan, approximately
358,623 shares were repurchased in 1996 at a cost of $16.3 million.
Guaranty continues to meet all three regulatory requirement formulae set out
under the Financial Institution Reform, Recovery and Enforcement Act of 1989
( FIRREA ).
<PAGE>18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth in Note B to Notes to Consolidated
Financial Statements in Part I of this report is incorporated
by reference thereto.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Regulation S-K
Exhibit Number
(11) Statement re computation of per share earnings.
(27) Financial Data Schedule
(b) Reports on Form 8-K. During the nine months ended
September 28, 1996, the Company did not file any
reports on Form 8-K.
<PAGE>19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEMPLE-INLAND INC.
(Registrant)
Date: November 11, 1996 By /s/ David H. Dolben
David H. Dolben
Vice President and
Chief Accounting Officer
<PAGE>20
EXHIBIT INDEX
The following is an index of the exhibits filed herewith. The page reference
set forth opposite the description of exhibits included in such index refer to
the pages under the sequential numbering system prescribed by Rule 0-3(b)
under the Securities Exchange Act of 1934.
Regulation S-K
Exhibit Sequential
Number Page Number
(11) Statement re computation of per
share earnings 21
(27) Financial Data Schedule 22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED INCOME STATEMENTS FOR
TEMPLE-INLAND INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 436
<SECURITIES> 0
<RECEIVABLES> 312
<ALLOWANCES> 0
<INVENTORY> 323
<CURRENT-ASSETS> 0
<PP&E> 2,917
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,195
<CURRENT-LIABILITIES> 0
<BONDS> 1,665
0
0
<COMMON> 61
<OTHER-SE> 1,952
<TOTAL-LIABILITY-AND-EQUITY> 13,195
<SALES> 1,975
<TOTAL-REVENUES> 2,583
<CGS> 1,806
<TOTAL-COSTS> 2,377
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82
<INCOME-PRETAX> 128
<INCOME-TAX> 13
<INCOME-CONTINUING> 115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115
<EPS-PRIMARY> 2.06
<EPS-DILUTED> 2.06
</TABLE>
EXHIBIT (11)
TEMPLE-INLAND INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(in thousands, except for per share data)
Third Quarter First Nine Months
1996 1995 1996 1995
Primary
Average common shares outstanding 55,448 56,123 55,506 56,095
Net effect of dilutive stock options
based on treasury stock method using
average market price 85 136 49 74
Weighted average shares outstanding 55,533 56,259 55,555 56,169
Net income $ 32,648 $ 84,748 $114,480 $215,974
Earnings per share $ .59 $ 1.51 $ 2.06 $ 3.85
Fully Diluted
Average common shares outstanding 55,448 56,123 55,506 56,095
Net effect of dilutive stock options
based on treasury stock method
using the closing market price, if
higher than average market price 410 374 157 153
Weighted average shares outstanding 55,858 56,497 55,663 56,248
Net income $ 32,648 $ 84,748 $114,480 $215,974
Earnings per share $ .58 $ 1.50 $ 2.06 $ 3.84
