April 26, 2006 (Press Release) - Temple-Inland Inc. today reported first quarter 2006 net income of $76 million, or $0.67 per diluted share, compared with first quarter 2005 net income of $45 million, or $0.39 per diluted share, and fourth quarter 2005 net income of $24 million, or $0.21 per diluted share.

As reflected in the table below, results for first quarter 2006 include after-tax special charges of $2 million, or $0.02 per share, principally related to severance associated with the elimination of the wholesale mortgage operation.

Corrugated Packaging
Corrugated packaging earnings in first quarter 2006 compared with first quarter 2005 were negatively affected by lower corrugated container prices and higher energy and freight costs. Earnings improved in first quarter 2006 compared with fourth quarter 2005 due to higher corrugated container pricing, and lower energy and recycled fiber costs.

Despite the closure of four box plants since first quarter 2005, on a volume per workday basis, shipments of corrugated containers were essentially flat in first quarter 2006 compared with first quarter 2005. Actual shipments were up in first quarter 2006 compared with first quarter 2005.

Average prices for corrugated containers in first quarter 2006 were down 1% compared with first quarter 2005, but up 3% compared with fourth quarter 2005. The average cost of recycled fiber in first quarter 2006 was down 26% compared with first quarter 2005 and down 8% compared with fourth quarter 2005. Freight costs were up $11 million compared with first quarter 2005 and up $3 million compared with fourth quarter 2005. Energy costs were up $9 million in first quarter 2006 compared with first quarter 2005, but down $7 million compared with fourth quarter 2005.

Forest Products
Forest products reported record quarterly income of $82 million in first quarter 2006. Despite higher energy and freight costs, earnings improved in first quarter 2006 compared with first quarter 2005 due to improved pricing and volumes and the acquisition of our partner's interest in the Standard Gypsum joint venture. Earnings improved in first quarter 2006 compared with fourth quarter 2005 due to improved pricing and volumes and the gypsum acquisition.

Average lumber prices in first quarter 2006 were down 2% compared with first quarter 2005 and essentially flat compared with fourth quarter 2005. Gypsum prices were up 30% compared with first quarter 2005 and up 8% compared with fourth quarter 2005. Particleboard prices were down 3% compared with first quarter 2005, but up 2% compared with fourth quarter 2005.

Shipments of lumber and gypsum were up in first quarter 2006 compared with first quarter 2005 and fourth quarter 2005. Shipments of particleboard were down in first quarter 2006 compared with first quarter 2005, but up compared with fourth quarter 2005.

Real Estate
Real estate earnings in first quarter 2006 were $26 million, including a gain of $8 million on the sale of five acres of land for commercial use. During first quarter 2006, 923 acres of high-value land were sold at an average sales price of approximately $8,100 per acre, resulting in a gain of $7 million.

Residential development activity for all wholly and partially-owned projects during first quarter 2006 included the sale of 1,061 lots at an average price of approximately $48,000 per lot.

Financial Services

Financial services earnings improved in first quarter 2006 compared with first quarter 2005 due to higher net interest income driven by an increase in earning assets, principally mortgage-backed securities. The elimination of the wholesale mortgage operation was completed in first quarter 2006.

Comments
In announcing first quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc. said, "First quarter 2006 was a record first quarter for Temple-Inland. Our results reflect continued benefit from strategic initiatives and improved market conditions. During first quarter 2006 we repurchased 1.5 million shares. We have 2.0 million shares remaining under our current share repurchase authorization.

"Corrugated packaging benefited from business improvements related to lower mill and converting costs. Despite higher energy and freight costs, our mills and converting facilities operated at lower unit costs in first quarter 2006 compared with first quarter 2005.

"Results in our forest products operation reflect the acquisition of our partner's interest in the Standard Gypsum joint venture during the quarter and strength in commercial and residential construction as well as repair and remodeling markets. Our forest products operations benefit from low cost and strategic locations near some of the fastest growing housing markets. Additionally, we continue to benefit from our focus on fiber integration.

"In first quarter 2006, we began segmenting our fourth line of business, real estate, which will operate as Forestar Real Estate Group. Financial information for this segment, combined with the launch of our new real estate website located at www.forestargroup.com, will provide additional transparency into this business.

"In our real estate operation, we designated an additional 16,000 acres of our strategic timberland as high-value land, including nearly 11,000 acres located in our Texas forest. Our real estate operations now include over 239,000 acres.

"Financial services continues to benefit from our branch locations in strong deposit growth markets, nationwide loan generation capability, and low cost. Financial services is positioned for continued strong financial performance."

Temple-Inland Inc. operates four business segments: corrugated packaging, forest products, real estate and financial services. The Company's 2.0 million acres of forestland are certified as managed in compliance with ISO 14001 and in accordance with the Sustainable Forestry Initiative® (SFI) Standard of the Sustainable Forestry Board to ensure forest management is conducted in a scientifically sound and environmentally sensitive manner.

SOURCE: Temple-Inland Inc.