TEMPLE INLAND INC

CIK:0000731939|SEC Filings

Earnings per Share

9 Months Ended

Oct. 01, 2011

Note 8 - Earnings per Share

We computed earnings per share by dividing net income by weighted average shares outstanding using the following:

		Third Quarter						First Nine Months
		2011			2010			2011		2010
		(In millions)
Earnings for basic and diluted earnings per share:
Net income	$	7		$	126		$	41	$	141
Less: Distributed and undistributed amounts allocated to participating securities		0			(1	)		0		(1	)
Distributed and undistributed income available to Temple-Inland common shareholders		7			125			41		140
Less: Net (income) loss attributable to noncontrolling interest of special purpose entities		(1	)		(1-	)		0		0
Net income available to common shareholders	$	6		$	124		$	41	$	140
Weighted average shares outstanding:
Weighted average shares outstanding - basic		109.3			107.9			108.7		107.8
Dilutive effect of stock options and unvested stock-settled restricted stock units		2.4			1.5			2.2		1.7
Weighted average shares outstanding - diluted		111.7			109.4			110.9		109.5

Participating securities include unvested cash-settled restricted stock units issued to employees that contain non-forfeitable rights to dividends. These units vested in first quarter 2011. There are no participating securities outstanding at third quarter-end 2011.

Certain employees of entities spun off in 2007 participated in our employee stock option program. Following the spin-offs, these employees retained stock option rights associated with our stock. These stock options will remain a consideration in our dilutive effect of stock options until they are exercised, cancelled or expire. Information regarding options held by employees of spun-off entities follows:

	Third Quarter-End
		2011		2010
		(Shares in thousands)
Options held		174		451
Options exercisable		174		436
Weighted average exercise price	$	20	$	19
Weighted average remaining contractual term (in years)		4		5

Stock options outstanding that were not included in the computation of diluted common shares outstanding because their exercise price exceeded the average market price of our common stock were as follows:

	Third Quarter		First Nine Months
	2011	2010	2011	2010
	(Shares in thousands)

Options outstanding held by employees	0	3,628	0	1,352
Options outstanding held by employees of spun-off entities	0	279	0	279

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions	9 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions	Oct. 01, 2011	Oct. 02, 2010
CASH PROVIDED BY (USED FOR) OPERATIONS
Net income (loss)	$ 41	$ 141
Adjustments:
Depreciation and amortization	146	145
Asset impairment charges	6	9
Loss related to purchase and retirement of long-term debt	4	0
Non-cash share-based and long-term incentive compensation	51	20
Cash payment for share-based awards settled	(17)	(17)
Non-cash pension and postretirement expense	52	53
Cash contribution to pension and postretirement plans	(9)	(42)
Deferred income taxes	16	(37)
Other	9	(31)
Changes in:
Receivables	(23)	(56)
Inventories	1	(34)
Accounts payable and accrued expenses	15	42
Prepaid expenses and other	(16)	10
Net Cash Provided by (Used in) Operating Activities	276	203
CASH PROVIDED BY (USED FOR) INVESTING
Capital expenditures	(170)	(144)
Sale of non-strategic assets and operations	8	2
Other	(18)	0
Net Cash Provided by (Used in) Investing Activities	(180)	(142)
CASH PROVIDED BY (USED FOR) FINANCING
Payments of debt	(54)	0
Borrowings under accounts receivable securitization facility, net	8	(5)
Borrowings under revolving credit facility, net	(19)	4
Fees related to revolving credit facility	0	(6)
Fees related to special purpose entities	7	(4)
Changes in book overdrafts	0	(5)
Cash dividends paid to shareholders	(43)	(35)
Exercise of stock options	21	4
Tax benefit on share-based compensation	6	1
Net Cash Provided by (Used in) Financing Activities	(74)	(46)
Effect of exchange rate changes on cash and cash equivalents	(3)	1
Net increase in cash and cash equivalents	19	16
Cash and cash equivalents at beginning of period	28	36
Cash and cash equivalents at end of period	$ 47	$ 52

CONSOLIDATED BALANCE SHEETS (USD $) In Millions	Oct. 01, 2011	Jan. 01, 2011
Current Assets
Cash and cash equivalents	$ 47	$ 28
Trade receivables, net of allowance for doubtful accounts of $16 in 2011 and 2010	492	471
Inventories:
Work in process and finished goods	110	90
Raw materials	224	253
Supplies and other	149	142
Total inventories	483	485
Deferred tax asset	115	108
Income taxes receivable	14	0
Prepaid expenses and other	44	44
Total current assets	1,195	1,136
Property and Equipment
Land and buildings	723	684
Machinery and equipment	3,694	3,640
Construction in progress	66	74
Less allowances for depreciation	(2,842)	(2,771)
Total property and equipment	1,641	1,627
Financial Assets of Special Purpose Entities	2,475	2,475
Goodwill	394	394
Other Assets	262	277
TOTAL ASSETS	5,967	5,909
Current Liabilities
Accounts payable	221	219
Accrued employee compensation and benefits	136	109
Accrued interest	12	17
Accrued property taxes	19	13
Other accrued expenses	139	134
Current portion of long-term debt	0	0
Current portion of pension and postretirement benefits	16	16
Total current liabilities	543	508
Long-Term Debt	657	718
Nonrecourse Financial Liabilities of Special Purpose Entities	2,140	2,140
Deferred Tax Liability	732	700
Liability for Pension Benefits	330	308
Liability for Postretirement Benefits	109	110
Other Long-Term Liabilities	399	404
TOTAL LIABILITIES	4,910	4,888
Temple-Inland Inc. Shareholders' Equity
Preferred stock - par value $1 per share: authorized 25,000,000 shares; none issued	0	0
Common stock - par value $1 per share: authorized 200,000,000 shares; issued 123,605,344 shares in 2011 and 2010, including shares held in the treasury	124	124
Additional paid-in capital	394	426
Accumulated other comprehensive loss	(253)	(257)
Retained earnings	1,218	1,220
Cost of shares held in the treasury: 13,970,175 shares in 2011 and 15,654,157 shares in 2010	(518)	(584)
Total Temple-Inland Inc. shareholders' equity	965	929
Noncontrolling Interest of Special Purpose Entities	92	92
TOTAL SHAREHOLDERS' EQUITY	1,057	1,021
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 5,967	$ 5,909