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 27, 1997
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) 829-5511
(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 27, 1997
Common Stock (par
value $1.00 per share) 56,561,185
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
1997 1996 1997 1996
(in millions)
Revenues
Net sales $ 678.2 $ 658.1 $ 2,014.3 $ 2,006.4
Financial services
earnings 37.4 (17.6) 99.3 36.8
715.6 640.5 2,113.6 2,043.2
Costs and Expenses
Cost of sales 602.4 560.6 1,771.7 1,647.0
Selling and
administrative 66.0 52.3 193.7 190.0
668.4 612.9 1,965.4 1,837.0
Operating Income 47.2 27.6 148.2 206.2
Interest - net (27.3) (27.4) (83.4) (81.6)
Other 1.8 1.6 4.5 3.1
Income Before Taxes 21.7 1.8 69.3 127.7
Settlement of FDIC tax-
sharing - (31.5) - (31.5)
Taxes on income 9.1 .6 27.9 44.7
Net Income $ 12.6 $ 32.7 $ 41.4 $ 114.5
See notes to consolidated financial statements.
<PAGE> 3
Summarized Balance Sheets
Parent Company (Temple-Inland Inc.)
Unaudited
September 27, December 28,
1997 1996
(in millions)
ASSETS
Current Assets
Cash $ 13 $ 14
Receivables, less allowances of
$12 million in 1997 and $9
million in 1996 324 295
Inventories:
Work in process and
finished goods 113 107
Raw materials 209 220
322 327
Prepaid expenses 18 13
Total current assets 677 649
Investment in Financial Services 597 592
Property and Equipment
Buildings 550 516
Machinery and equipment 3,667 3,576
Less allowances for depreciation
and amortization (2,049) (1,882)
2,168 2,210
Construction in progress 124 106
2,292 2,316
Timber and timberlands--
less depletion 521 503
Land 32 31
Total property and equipment 2,845 2,850
Other Assets 183 161
Total Assets $ 4,302 $ 4,252
See notes to consolidated financial statements.
<PAGE> 4
Summarized Balance Sheets - Continued
Parent Company (Temple-Inland Inc.)
Unaudited
September 27, December 28,
1997 1996
(in millions)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 149 $ 143
Accrued expenses 172 140
Employee compensation and benefits 19 28
Current portion of long-term debt 3 8
Total current liabilities 343 319
Long-Term Debt 1,498 1,522
Deferred Income Taxes 239 234
Postretirement Benefits 139 136
Other Liabilities 15 26
Shareholders' Equity 2,068 2,015
Total Liabilities and
Shareholders' Equity $ 4,302 $ 4,252
See notes to consolidated financial statements.
<PAGE> 5
Summarized Statements of Cash Flows
Parent Company (Temple-Inland Inc.)
Unaudited
First Nine Months
1997 1996
(in millions)
Cash Provided by (Used for) Operations
Net income $ 41.4 $ 114.5
Adjustments to reconcile net income
to net cash:
Depreciation and depletion 190.1 183.0
Deferred taxes 5.2 (40.4)
Unremitted earnings of affiliates (82.3) (20.1)
Receivables (29.1) (30.8)
Inventories 4.8 22.2
Prepaid expenses (4.8) 1.3
Accounts payable and accrued expenses 29.4 (19.1)
Other (39.1) 16.4
115.6 227.0
Cash Provided by (Used for) Investments
Capital expenditures (170.6) (218.5)
Investment in joint ventures/acquisitions (8.1) (24.1)
Sale of property and equipment 2.1 4.0
Capital contributions to financial services (24.6) -
Dividends from financial services 225.0 50.0
Acquisition of California Financial Holding
Company, net of cash acquired (22.2) -
1.6 (188.6)
Cash Provided by (Used for) Financing
Change in debt, net (29.3) 27.4
Purchase of stock for treasury (44.5) (16.3)
Cash dividends paid to shareholders (53.6) (51.0)
Other 8.7 1.8
(118.7) (38.1)
Net increase (decrease)in cash and cash
equivalents (1.5) .3
Cash and cash equivalents at beginning
of period 14.3 14.7
Cash and cash equivalents at end
of period $ 12.8 $ 15.0
See notes to consolidated financial statements.
<PAGE> 6
Summarized Statements of Income
Temple-Inland Financial Services
Unaudited
Third Quarter First Nine Months
1997 1996 1997 1996
(in millions)
Interest Income
Mortgage-backed and
investment securities $ 42.9 $ 44.4 $ 117.1 $ 140.8
Loans receivable and
mortgage loans
held for sale 143.9 108.3 384.7 315.8
Other earning assets 5.9 5.2 16.1 16.1
Total interest income 192.7 157.9 517.9 472.7
Interest Expense
Deposits 89.3 76.5 240.4 232.2
Borrowed funds 42.2 32.8 115.3 93.3
Total interest expense 131.5 109.3 355.7 325.5
Net Interest Income 61.2 48.6 162.2 147.2
Provision for loan losses .5 3.4 1.2 12.5
Net Interest Income After
Provision For Loan Losses 60.7 45.2 161.0 134.7
Noninterest Income
Loan servicing fees 22.3 14.3 54.4 41.8
Loan origination and
marketing 15.7 7.8 32.1 22.0
Other 29.5 24.4 78.5 71.7
67.5 46.5 165.0 135.5
Noninterest Expense
Compensation and benefits 37.7 26.3 94.5 76.9
Other 50.4 83.0 128.5 156.5
Total noninterest expense 88.1 109.3 223.0 233.4
Income before taxes 40.1 (17.6) 103.0 36.8
Minority interest in income
of consolidated subsidiary (2.7) - (3.7) -
Pretax Income After
Minority Interest 37.4 (17.6) 99.3 36.8
Taxes on income 5.5 (4.7) 17.0 16.7
Net Income $ 31.9 $ (12.9) $ 82.3 $ 20.1
See notes to consolidated financial statements.
<PAGE> 7
Summarized Balance Sheets
Temple-Inland Financial Services
Unaudited
September 30, December 31,
1997 1996
(in millions)
ASSETS
Cash and cash equivalents $ 207 $ 214
Mortgage loans held for sale 574 244
Loans receivable 6,856 5,414
Mortgage-backed and investment
securities 2,793 2,783
Other assets 897 680
TOTAL ASSETS $ 11,327 $ 9,335
LIABILITIES
Deposits $ 7,302 $ 6,263
Securities sold under repurchase
agreements 1,914 1,937
Federal Home Loan Bank advances 598 55
Other borrowings 155 133
Other liabilities 611 355
TOTAL LIABILITIES 10,580 8,743
PREFERRED STOCK ISSUED BY SUBSIDIARY 150 -
SHAREHOLDER'S EQUITY 597 592
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY $ 11,327 $ 9,335
See notes to consolidated financial statements.
<PAGE> 8
Summarized Statements of Cash Flows
Temple-Inland Financial Services
Unaudited
First Nine Months
1997 1996
(in millions)
Cash Provided by (Used for) Operations
Net income $ 82.3 $ 20.1
Adjustments to reconcile net income
to net cash:
Amortization, accretion and
depreciation 31.1 24.3
Provision for loan losses 1.2 12.5
Receivable from FDIC - 7.4
Mortgage loans held for sale (155.4) 3.8
Collections and remittances on loans
serviced for others, net 138.5 (5.7)
Other (19.3) (35.0)
78.4 27.4
Cash Provided by (Used for) Investments
Purchases of securities held-to-maturity - (.1)
Purchases of securities available-for-sale (96.8) (2.7)
Maturities of securities held-to-maturity 328.7 245.3
Maturities of securities available-for-sale 61.4 69.9
Proceeds from sale of securities available-
for-sale 441.4 4.3
Loans originated or acquired - net of
principal collected on loans (1,045.5) (492.3)
Other (2.1) (23.2)
(312.9) (198.8)
Cash Provided by (Used for) Financing
Net increase (decrease) in deposits 55.1 (157.2)
Securities sold under repurchase agreements
and short-term borrowings - net (53.9) 466.9
Change in debt, net 199.9 (80.9)
Capital contributions from parent 24.6 -
Proceeds from sale of subsidiary
preferred stock 150.1 -
Dividends paid to parent (225.0) (50.0)
Net increase in advances from borrowers
for taxes and insurance 76.2 71.0
227.0 249.8
Net increase (decrease) in cash and cash
equivalents (7.5) 78.4
Cash and cash equivalents at
beginning of period 214.4 343.1
Cash and cash equivalents at
end of period $ 206.9 $ 421.5
See notes to consolidated financial statements.
<PAGE> 9
Consolidated Statements of Income
Temple-Inland Inc. and Subsidiaries
Unaudited
Third Quarter First Nine Months
1997 1996 1997 1996
(In millions, except for per share data)
Revenues
Manufacturing net sales $ 678.2 $ 658.1 $ 2,014.3 $ 2,006.4
Financial services
revenues 260.2 204.4 682.9 608.2
938.4 862.5 2,697.2 2,614.6
Costs and Expenses
Manufacturing costs
and expenses 668.4 612.9 1,965.4 1,837.0
Financial services
expenses 222.8 222.0 583.6 571.4
891.2 834.9 2,549.0 2,408.4
Operating Income 47.2 27.6 148.2 206.2
Parent Company Interest
- net (27.3) (27.4) (83.4) (81.6)
Other 1.8 1.6 4.5 3.1
Income Before Taxes 21.7 1.8 69.3 127.7
Settlement of FDIC
tax-sharing - (31.5) - (31.5)
Taxes on Income 9.1 .6 27.9 44.7
Net Income $ 12.6 $ 32.7 $ 41.4 $ 114.5
Earnings per share $ .22 $ .59 $ .74 $2.06
Dividends Paid Per Share
of Common Stock $ .32 $ .32 $ .96 $ .92
Weighted Average Shares
Outstanding 56.9 55.5 56.0 55.6
See notes to consolidated financial statements.
<PAGE>10
Consolidated Balance Sheets
Temple-Inland Inc. and Subsidiaries
September 27, 1997
Unaudited
Parent Financial
Company Services Consolidated
(in millions)
ASSETS
Cash and cash equivalents $ 13 $ 207 $ 220
Mortgage loans held for sale - 574 574
Loans receivable - 6,856 6,856
Mortgage-backed and investment
securities - 2,793 2,793
Trade and other receivables 324 - 319
Inventories 322 - 322
Property & equipment 2,845 99 2,944
Other assets 201 798 948
Investment in financial
services 597 - -
TOTAL ASSETS $ 4,302 $ 11,327 $14,976
LIABILITIES
Deposits $ - $ 7,302 $ 7,302
Securities sold under repurchase
agreements and Federal Home
Loan Bank advances - 2,512 2,512
Other liabilities 358 611 939
Long-term debt 1,498 155 1,653
Deferred income taxes 239 - 213
Postretirement benefits 139 - 139
TOTAL LIABILITIES $ 2,234 $ 10,580 12,758
PREFERRED STOCK ISSUED BY
SUBSIDIARY - 150 150
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 355
Translation and other adjustments (20)
Retained earnings 1,826
2,222
Cost of shares held in the treasury:
4,828,367 shares (154)
TOTAL SHAREHOLDERS' EQUITY 2,068
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $14,976
See notes to consolidated financial statements.
<PAGE> 11
Consolidated Balance Sheets
Temple-Inland Inc. and Subsidiaries
December 28, 1996
Unaudited
Parent Financial
Company Services Consolidated
(in millions)
ASSETS
Cash and cash equivalents $ 14 $ 214 $ 228
Mortgage loans held for sale - 244 244
Loans receivable - 5,414 5,414
Mortgage-backed and investment
securities - 2,783 2,783
Trade and other receivables 295 - 292
Inventories 327 - 327
Property & equipment 2,850 81 2,931
Other assets 174 599 728
Investment in financial
services 592 - -
TOTAL ASSETS $ 4,252 $ 9,335 $12,947
LIABILITIES
Deposits $ - $ 6,263 $ 6,263
Securities sold under repurchase
agreements and Federal Home
Loan Bank advances - 1,992 1,992
Other liabilities 345 355 685
Long-term debt 1,522 133 1,655
Deferred income taxes 234 - 201
Postretirement benefits 136 - 136
TOTAL LIABILITIES $ 2,237 $ 8,743 10,932
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 305
Translation and other adjustments (24)
Retained earnings 1,837
2,179
Cost of shares held in the treasury:
5,940,802 shares (164)
TOTAL SHAREHOLDERS' EQUITY 2,015
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,947
See notes to consolidated financial statements.
<PAGE> 12
Consolidated Statements of Cash Flows
Temple-Inland Inc. and Subsidiaries
Unaudited
First Nine Months
1997 1996
(in millions)
Cash Provided by (Used for) Operations
Net income $ 41.4 $ 114.5
Adjustments to reconcile net income to
net cash:
Depreciation and depletion 199.8 189.8
Amortization and accretion 21.3 17.5
Deferred taxes 7.1 (29.1)
Receivable from FDIC - 7.4
Trade and other receivables (29.1) (30.8)
Accounts payable and accrued expenses 29.4 (22.6)
Inventories 4.8 22.2
Mortgage loans held for sale (155.4) 3.8
Increase (decrease) in collections and
remittances on loans serviced for
others, net 138.5 (5.7)
Other (63.8) (12.6)
194.0 254.4
Cash Provided by (Used for) Investments
Capital expenditures (181.8) (228.5)
Purchases of securities held-to-maturity - (.1)
Purchases of securities available-for-sale (96.8) (2.7)
Maturities of securities held-to-maturity 328.7 245.3
Maturities of securities available-for-sale 61.4 69.9
Proceeds from sale of securities available-
for-sale 441.4 4.3
Loans originated or acquired - net of
principal collected on loans (1,045.5) (492.3)
Acquisition of California Financial Holding
Company, net of cash acquired (22.2) -
Other 3.1 (33.3)
(511.7) (437.4)
Cash Provided by (Used for) Financing
Additions to debt 420.3 259.4
Payments of debt (249.7) (312.9)
Securities sold under repurchase agreements
and short-term borrowings - net (53.9) 466.9
Cash dividends paid to shareholders (53.6) (51.0)
Net increase (decrease) in deposits 55.1 (157.2)
Net increase in advances from borrowers for
taxes and insurance 76.2 71.0
Purchase of stock for treasury (44.5) (16.3)
Proceeds from sale of subsidiary
preferred stock 150.1 -
Other 8.7 1.8
308.7 261.7
Net increase (decrease) in cash and
cash equivalents (9.0) 78.7
Cash and cash equivalents at
beginning of period 228.7 357.8
Cash and cash equivalents at
end of period $ 219.7 $ 436.5<PAGE>
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 28, 1996.
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's (Temple-Inland Inc.) summarized financial
statements include the accounts of Temple-Inland Inc. and its
manufacturing subsidiaries with the Financial Services
subsidiaries and the 20 percent to 50 percent owned companies
being reflected in the financial statements on the equity basis.
The Temple-Inland Financial Services Group's summarized financial
statements include savings bank, mortgage banking, real estate
development activities and insurance operations.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share , which is effective for
financial statements issued for periods ending after December 15,
1997. The impact of Statement 128 on the calculation of earnings
per share is not expected to be material.
<PAGE> 14
TEMPLE-INLAND INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
The Company has previously disclosed that as a result of
allegations made by a former employee in a wrongful termination
lawsuit and to the Securities and Exchange Commission (the
Commission ), the Commission began a non-public investigation
into the allegations. The Company has denied the allegations and
remains confident that the results of the investigation will
determine the allegations to be without merit or grounds
whatsoever and will not have an adverse effect on the Company's
consolidated financial statements.
NOTE C - ACQUISITIONS
On June 27, 1997 the Company acquired California Financial
Holding Company, the parent company of Stockton Savings Bank,
F.S.B., and merged Stockton Savings Bank into Guaranty Federal
Bank. The purchase price of $143.4 million included $47.3
million in cash and approximately 1,615,000 shares of Temple-
Inland Inc. common stock valued at $96.1 million. The
acquisition has been accounted for under the purchase method of
accounting. The net assets acquired consisted of $24.6 million
in cash, $955.1 million of loans, $297.5 million of mortgage-
backed securities and investments, $126.5 million in other
assets, $982.2 million of deposits, $320.1 million of FHLB
advances and other borrowings, and $13.0 million of other
liabilities. The excess of the aggregate purchase price over the
fair market value of net assets acquired of approximately $55
million was recognized as goodwill and is being amortized on a
straight-line basis over 25 years. The operating results of
Stockton Savings Bank have been included in the Company's
consolidated financial statements since the date of acquisition.
On June 4, 1997, Temple-Inland Mortgage Corporation acquired
Knutson Mortgage Company. The net assets acquired consisted
primarily of $94.6 million in mortgage loans held for sale, $72.3
million in mortgage loan servicing rights, $15.8 million in other
assets, $161.8 million in debt, and $6.3 million in other
liabilities. The acquisition has been accounted for under the
purchase method of accounting with the net assets acquired
approximating the purchase price paid. The operating results of
Knutson Mortgage Company have been included in the Company's
consolidated financial statements since the date of acquisition.
<PAGE> 15
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
1997 1996 1997 1996
(in millions)
Revenues
Paper $ 518.2 $ 510.5 $ 1,548.2 $ 1,586.8
Building products 160.0 147.6 466.1 419.6
Manufacturing net
sales 678.2 658.1 2,014.3 2,006.4
Financial services 260.2 204.4 682.9 608.2
Total revenues $ 938.4 $ 862.5 $ 2,697.2 $ 2,614.6
Income
Paper $ (19.0) $ 16.4 $ (36.2) 106.4
Building products 34.7 31.4 103.2 75.4
Operating profit 15.7 47.8 67.0 181.8
Financial services 37.4 (17.6) 99.3 36.8
53.1 30.2 166.3 218.6
Corporate expenses (5.9) (2.6) (18.1) (12.4)
Parent company interest
- net (27.3) (27.4) (83.4) (81.6)
Other - net 1.8 1.6 4.5 3.1
Income before taxes 21.7 1.8 69.3 127.7
Settlement of FDIC
tax-sharing - (31.5) - (31.5)
Taxes on income 9.1 .6 27.9 44.7
Net income $ 12.6 $ 32.7 $ 41.4 $ 114.5
<PAGE> 16
Third Quarter 1997 vs. Third Quarter 1996
Third quarter earnings for 1997 totaled $12.6 million, or $.22
per share, a decrease of 62.7 percent from third quarter 1996 net
income of $32.7 million or $.59 per share. Revenues for the
period were $938.4 million, up 8.8 percent from the $862.5
million reported for the same quarter of 1996.
The paper group recorded an operating loss of $19.0 million for
the quarter compared with operating earnings of $16.4 million for
the third quarter of 1996. Demand for linerboard and boxes
continued to improve in the quarter, and box shipments were at
record levels for the quarter. The record level of shipments,
coupled with the downtime taken early in the quarter, resulted in
containerboard inventories approaching historically low levels.
The downward trend in box prices experienced throughout the
second quarter continued into July. Although prices began to
rebound in August, average box prices for the quarter were down
$55 per ton from last year's third quarter and remained slightly
below this year's second quarter. Prices for old corrugated
containers (OCC), the principal raw material used in our recycle
operations, also rose sharply in the quarter, negatively
impacting earnings. OCC prices, however, moderated late in the
quarter.
The average price for bleached paperboard products was up
slightly in the quarter as pricing increased for some products
and the mix continued to improve. Production in the quarter was
hampered by pulp mill operation problems, and shipments were
below second quarter levels due to seasonal factors and
disruptions associated with rail transportation difficulties.
The building products group reported third quarter operating
earnings of $34.7 million, an increase of 10.5 percent from the
prior year's third quarter. Although lumber prices trended
downward in the quarter, the average price for the quarter
remained 11.2 percent higher than last year's third quarter. The
market for high value fiberboard products remained strong with
competitive pricing pressure experienced in most other products
in this segment. As a result of weak demand from the ready-to-
assemble furniture manufacturers, demand for particleboard slowed
in the quarter and pricing declined. Gypsum markets remained
strong and prices rose late in the quarter.
The financial services group reported record third quarter
operating earnings of $37.4 million. This compares with
operating earnings of $26.4 million (excluding a $44 million
assessment in connection with the recapitalization of the Savings
Association Insurance Fund) in the third quarter of 1996. These
record operating earnings were primarily a result of improved net
interest income, continued excellent levels of non-operating
expenses, and initial cost savings related to the acquisition of
Stockton Savings Bank.
Net interest expense decreased to $27.3 million in the current
quarter compared with $27.4 million in the third quarter of last
year.
<PAGE>17
The tax provision for the third quarter of 1997 was $9.1 million.
The tax provision for the third quarter 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 Federal Savings and Loan Insurance Corporation (the FSLIC ).
As a part of this termination agreement, the Company and the
Federal Deposit Insurance Corporation as successor to the FSLIC
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 in 1996 is a result of the completion of this
transaction.
First Nine Months of 1997 vs. First Nine Months of 1996
Earnings for the first nine months of 1997 were $41.4 million, or
$.74 per share compared with $114.5 million, or $2.06 per share
for the first nine months of last year. Revenues of $2,697.2
million were up slightly from the 1996 first nine months of
$2,614.6 million.
The paper group lost $36.2 million compared with earnings of
$106.4 million in the first nine months of 1996. Although box
shipments for the corrugated container operation were up compared
with the same period last year, the continued downward pressure
on box prices more than offset the benefit of the record volumes.
The bleached paperboard operation continued to experience
improved sales and production volumes.
The building products group earned $103.2 million, up from $75.4
million for the first nine months of 1996. This improvement in
earnings is primarily due to increased earnings for the solid
wood and gypsum operations.
The financial services group earned $99.3 million for the first
nine months of 1997. This compares with operating earnings of
$80.8 million (excluding a $44 million assessment in connection
with the recapitalization of the Savings Association Fund) for
the last year's comparable period. These record operating
earnings were primarily a result of improved net interest income
and a decrease in provision for loan losses.
Financial Condition
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 744,930 shares
were repurchased year-to-date in 1997 at a cost of $44.5 million.
Guaranty Federal Bank continues to exceed all three regulatory
capital requirements.
<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 27, 1997, 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, 1997 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 21
per share earnings.
(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> JAN-03-1998
<PERIOD-END> SEP-27-1997
<CASH> 220
<SECURITIES> 0
<RECEIVABLES> 319
<ALLOWANCES> 0
<INVENTORY> 322
<CURRENT-ASSETS> 0
<PP&E> 2,944
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,976
<CURRENT-LIABILITIES> 0
<BONDS> 1,653
0
0
<COMMON> 61
<OTHER-SE> 2,007
<TOTAL-LIABILITY-AND-EQUITY> 14,976
<SALES> 2,014
<TOTAL-REVENUES> 2,697
<CGS> 1,965
<TOTAL-COSTS> 2,549
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83
<INCOME-PRETAX> 69
<INCOME-TAX> 28
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</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
1997 1996 1997 1996
Primary
Average common shares
outstanding 56,664 55,448 55,848 55,506
Net effect of dilutive stock
options based on treasury
stock method using
average market price 203 85 184 49
Weighted average shares
outstanding 56,867 55,533 56,032 55,555
Net income $ 12,559 $ 32,648 $ 41,360 $114,480
Earnings per share $ .22 $ .59 $ .74 $ 2.06
Fully Diluted
Average common shares
outstanding 56,664 55,448 55,848 55,506
Net effect of dilutive stock
options based on treasury
stock method using the closing
market price, if higher than
average market price 275 410 218 157
Weighted average shares
outstanding 56,939 55,858 56,066 55,663
Net income $ 12,559 $ 32,648 $ 41,360 $114,480
Earnings per share $ .22 $ .58 $ .74 $ 2.06
