##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  FORM 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934For the Fiscal Year Ended December 29, 2007oro

TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934For the Transition Period
    From          to   Commission File Number
    001-08634
 Temple-Inland Inc.
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

75-1903917(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)  1300 MoPac Expressway South,
    3rd
    Floor
 Austin, Texas 78746
 (Address of principal executive
    offices, including Zip code)
  Registrants telephone number, including area code:
    (512) 434-5800
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange On Which RegisteredCommon Stock, $1.00 Par Value per Share,
    non-cumulative
    Preferred Share Purchase Rights

New York Stock Exchange
    New York Stock Exchange         Indicate by check mark if the registrant is a well-known
    seasoned issuer, as defined in Rule 405 of the Securities
    Act.  Yes þ     No o
  Indicate by check mark if the registrant is not required to
    file reports pursuant to Section 13 or Section 15(d)
    of the Securities Exchange Act of
    1934.  Yes o     No þ
  Indicate by check mark 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 such filing requirements for the past
    90 days.  Yes þ     No o
  Indicate by check mark if disclosure of delinquent filers
    pursuant to Item 405 of
    Regulation S-K
    is not contained herein, and will not be contained, to the best
    of registrants knowledge, in definitive proxy or
    information statements incorporated by reference in
    Part III of this
    Form 10-K
    or any amendment to this
    Form 10-K.þ
  Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, a non-accelerated
    filer, or a smaller reporting company. See the definitions of
    large accelerated filer, accelerated
    filer and smaller reporting company in
    Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated
    filer þ o o o
   Indicate by check mark whether the registrant is a shell
    company (as defined in
    Rule 12b-2
    of the
    Act).  Yes o     No þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





TABLE OF
    CONTENTS
   
  PagePART I.Item 1.

Business


1Item 1A.

Risk Factors


8Item 1B.

Unresolved Staff Comments


11Item 2.

Properties


11Item 3.

Legal Proceedings


14Item 4.

Submission of Matters to a Vote of Security
    Holders


15PART II.Item 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


15Item 6.

Selected Financial Data


17Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


19Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


38Item 8.

Financial Statements and Supplementary Data


39Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


79Item 9A.

Controls and Procedures


79Item 9B.

Other Information


79PART III.Item 10.

Directors, Executive Officers and Corporate
    Governance


80Item 11.

Executive Compensation


80Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


81Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


81Item 14.

Principal Accounting Fees and Services


81PART IV.Item 15.

Exhibits, Financial Statement Schedules


81SIGNATURES


85Pulpwood Supply AgreementSawtimber Supply Agreement2008 Incentive PlanForm of Nonqualified Stock Option Agreement, as Revised in 2008, Issued Pursuant to 2003 Stock Incentive PlanForm of Restricted Stock Units Agreement Issued Pursuant to the 2008 Incentive PlanSubsidiaries of the CompanyConsent of Ernst & Young LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906   i




---



##### Table of Contents



PART I  Item 1.
    Business  Introduction
  Form 10-K.
  
  rd (512) 434-5800.
  Financial
    Information
  Form 10-K.
  Transformation
    Plan
  Form 10-K
   1




---



##### Table of Contents



Narrative
    Description of the Business
  Corrugated Packaging.
  
    five linerboard mills,
    one corrugating medium mill, and
    64 converting facilities.            Building Products.
  
    lumber,
    gypsum wallboard,
    particleboard,
    medium density fiberboard (or MDF), and
    fiberboard.   2




---



##### Table of Contents



Raw
    Materials
      and/or
      Energy
   3




---



##### Table of Contents



Employees
    Approximate Number ofLocation

Bargaining Unit(s)

Employees Covered

Expiration DatesLinerboard Mill, Orange, Texas

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy,
    Allied Industrial and Service Workers International Union (or
    USW), Local 1398, and USW, Local 391

202 hourly production employees and 79 hourly
    maintenance employees

July 31, 2008Linerboard Mill, Bogalusa, Louisiana

USW, Local 189, and International Brotherhood of Electrical
    Workers (or IBEW), Local 1077

338 hourly production employees and 26 electrical
    maintenance employees

July 31, 2009Linerboard Mill, Rome, Georgia

USW, Local 804, IBEW, Local 613, United Association of
    Journeymen & Apprentices of the Plumbing & Pipefitting
    Industry Local 72, and International Association of Machinists
    & Aerospace Workers, Local 414

247 hourly production employees, 28 electrical maintenance
    employees, 25 pipefitter maintenance employees, and 63
    mechanical maintenance employees

August 31, 2010Evansville, Indiana and Middletown, Ohio, Box Plants (or
    Northern Multiple)

USW, Local 1046 and USW, Local 114, respectively

94 and 100 hourly production and maintenance employees,
    respectively

April 30, 2008Rome, Georgia and Orlando, Florida, Box Plants (or Southern
    Multiple)

USW Local 838 and USW Local 834, respectively

112 and 101 hourly production and maintenance employees,
    respectively

December 1, 2008       Environmental
    Protection
   4




---



##### Table of Contents



5




---



##### Table of Contents



Competition
       6




---



##### Table of Contents



Executive
    Officers of the Registrant
    Name

Age

OfficeDoyle R. Simons


44


Chairman of the Board and Chief Executive OfficerJ. Patrick Maley III


46


President and Chief Operating OfficerBart J. Doney


58


Group Vice PresidentJack C. Sweeny


61


Group Vice PresidentDennis J. Vesci


60


Group Vice PresidentGrant F. Adamson


49


Chief Governance OfficerJ. Bradley Johnston


52


Chief Administrative OfficerRandall D. Levy


56


Chief Financial OfficerScott Smith


53


Chief Information OfficerLeslie K. ONeal


52


Vice President, Assistant General Counsel and SecretaryCarolyn C. Sloan


47


Vice President, Internal AuditC. Morris Davis


65


General CounselTroy L. Hester


51


Principal Accounting Officer and Corporate ControllerDavid W. Turpin


57


Treasurer                      7




---



##### Table of Contents



Available
    Information
  http://www.templeinland.com
  
    our annual reports on
    Form 10-K,
    quarterly reports on Form
    10-Q,
    current reports on
    Form 8-K,
    including amendments to these reports, and other documents as
    soon as reasonably practicable after we file them with the
    Securities and Exchange Commission (or SEC);
    beneficial ownership reports filed by officers, directors, and
    principal security holders under Section 16(a) of the
    Securities Exchange Act of 1934, as amended (or the Exchange
    Act); and
    corporate governance information that includes our  
    corporate governance principles,
    audit committee charter,
    management development and executive compensation committee
    charter,
    nominating and governance committee charter,
    standards of business conduct and ethics,
    code of ethics for senior financial officers, and
    information on how to communicate directly with our board of
    directors.  1-800-SEC-0330. (http://www.sec.gov)
  Item 1A.
    Risk
    Factors  The
    business segments in which we operate are highly
    competitive.
   8




---



##### Table of Contents



The
    profitability of our business is affected by changes in raw
    material and other costs.
      The
    corrugated packaging and building products industries are
    cyclical in nature and experience periods of
    overcapacity.
  and/or
  Our
    manufacturing activities are subject to environmental
    regulations and liabilities that could have a negative effect on
    our operating results.
  Form 10-K,
 9




---



##### Table of Contents



Downward
    changes in demand for housing in the market regions where we
    operate could decrease profitability in our building products
    segment.
    If
    certain internal restructuring transactions and the
    distributions of Forestar and Guaranty are determined to be
    taxable for U.S. federal income tax purposes, we and our
    stockholders that are subject to U.S. federal income tax could
    incur significant U.S. federal income tax
    liabilities.
    If the
    sale of our strategic timberland did not qualify for installment
    method reporting for U.S. federal income tax purposes, we could
    incur significant U.S. federal income tax liabilities the
    payment of which we believe to be deferred.
    We
    have interest rate risk in connection with our financial assets
    and nonrecourse financial liabilities of special purpose
    entities.
   10




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Containerboard
    Mills
  Number of


Annual


2007Location

Product

Machines


Capacity


Production(In tons)Ontario, California

Linerboard and corrugating medium


1



336,000



334,479Rome, Georgia

Linerboard


2



837,000



834,069Orange, Texas

Linerboard and corrugating medium


2



730,000



725,546Bogalusa, Louisiana

Linerboard


2



915,000



916,021Maysville, Kentucky

Linerboard and corrugating medium


1



454,000



455,102New Johnsonville, Tennessee

Corrugating medium


1



348,000



349,7063,620,000



3,614,923Newport, Indiana*

Corrugating medium, linerboard,


1



308,000



300,882and gypsum facing paper     *
    
    The table shows the full capacity of this facility that is owned
    by a joint venture in which we own a 50 percent interest.
    In 2007, we purchased 52,788 tons of corrugating medium and
    linerboard and 42,136 tons of gypsum facing paper from the
    venture.  Converting
    Facilities*
  CorrugatorLocation

SizePhoenix, Arizona

982Fort Smith, Arkansas

872Fort Smith,
    Arkansas(1)***

NoneBell, California

982Buena Park,
    California(1)

852El Centro,
    California(1)

872Gilroy,
    California(1)

872Gilroy,
    California(1)***

982Ontario, California

872Santa Fe Springs, California

982Santa Fe Springs,
    California(1)**

872
    and
    852Santa Fe Springs,
    California(1)***

NoneTracy, California

1102Union City,
    California(1)***

NoneWheat Ridge, Colorado

872Orlando, Florida

982Tampa,
    Florida(1)

782Rome, Georgia

982Carol Stream, Illinois

872Chicago, Illinois

872 11




---



##### Table of Contents



CorrugatorLocation

SizeChicago,
    Illinois(1)***

NoneElgin, Illinois

782Elgin, Illinois***

NoneCrawfordsville, Indiana

982Evansville, Indiana

982Indianapolis, Indiana

872Indianapolis, Indiana***

NoneSt. Anthony, Indiana***

NoneTipton, Indiana***

1102Garden City, Kansas

982Kansas City, Kansas

872Bogalusa, Louisiana

982Minden, Louisiana

982Minneapolis, Minnesota

872St. Louis, Missouri

872St. Louis, Missouri***

982Milltown, New
    Jersey(1)***

NoneSpotswood, New Jersey

982Binghamton, New York

872Buffalo, New York***

NoneScotia, New York***

NoneUtica, New York***

NoneWarren County, North Carolina

982Madison, Ohio***

NoneMarion, Ohio

872Middletown, Ohio

982Streetsboro, Ohio

982Biglerville, Pennsylvania

982Hazleton, Pennsylvania

982Littlestown, Pennsylvania***

NoneScranton, Pennsylvania

682Vega Alta, Puerto Rico

872Lexington, South Carolina

982Ashland City,
    Tennessee(1)***

NoneElizabethton,
    Tennessee(1)***

NoneDallas, Texas

982Edinburg, Texas

872San Antonio, Texas

982San Antonio, Texas***

982Petersburg, Virginia

872San Jose Iturbide, Mexico

982Monterrey, Mexico

872Los Mochis, Sinaloa, Mexico

872Guadalajara,
    Mexico(1)***

None  12




---



##### Table of Contents



*
    
    The annual capacity of the converting facilities is a function
    of the product mix, customer requirements and the type of
    converting equipment installed and operating at each plant, each
    of which varies from time to time.**
    
    These plants each contain more than one corrugator.***
    
    Sheet or sheet feeder plants.  (1)
    
    Leased facilities.    Building
    Products
  Rated AnnualDescription

Location

Capacity(In millions ofboard feet)Lumber

Diboll, Texas


199
*Lumber

Pineland, Texas


310
**Lumber

Buna, Texas


198Lumber

Rome, Georgia


165Lumber

DeQuincy, Louisiana


198Total lumber




1,070     *
    
    Includes separate finger jointing capacity of 20 million
    board feet.**
    
    Includes separate stud mill capacity of 110 million board
    feet.  Rated AnnualDescription

Location

Capacity(In millions ofsquare feet)Gypsum Wallboard

West Memphis, Arkansas


440Gypsum Wallboard

Fletcher, Oklahoma


460Gypsum Wallboard

McQueeney, Texas


400Gypsum Wallboard

Cumberland City, Tennessee


800Total gypsum wallboard




2,100Particleboard

Monroeville, Alabama


160Particleboard

Thomson, Georgia


160Particleboard

Diboll, Texas


160Particleboard

Hope, Arkansas


200Particleboard(1)(2)

Mt. Jewett, Pennsylvania


200Total particleboard




880MDF*

El Dorado, Arkansas


160MDF(1)

Mt. Jewett, Pennsylvania


140Total MDF




300Fiberboard

Diboll, Texas


460     *
    
    The table shows the full capacity of this facility that is owned
    by a joint venture in which we own a 50 percent interest.  (1)
    
    Leased facilities.(2)
    
    Due to market conditions, we curtailed production at this
    facility beginning in 2003 and made the decision in 2007 to
    cease production permanently. 13




---



##### Table of Contents



Other
      Item 3.
    Legal
    Proceedings  General
    Antitrust
    Litigation
      Bogalusa
    Litigation
      Asbestos
    Other
   14




---



##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    2007


2006Price Range





Price RangeHigh


Low


Dividends


High


Low


DividendsFirst Quarter

$
63.61


$
44.29


$
0.28


$
47.92


$
40.83


$
0.25Second Quarter

$
64.45


$
59.00


$
0.28


$
47.68


$
38.12


$
0.25Third Quarter

$
66.28


$
49.17


$
0.28


$
45.48


$
39.78


$
0.25Fourth Quarter*

$
57.51


$
29.09


$
10.53


$
46.71


$
37.84


$
0.25For the Year

$
66.28


$
29.09


$
11.37


$
47.92


$
37.84


$
1.00     *
    
    Includes a special dividend of $10.25 per share paid in December
    2007.  Shareholders
    Dividend
    Policy
    Issuer
    Purchases of Equity
    Securities(1)
  MaximumTotal Number


Number ofof Shares


Shares ThatPurchased as


May Yet beTotal


Average


Part of Publicly


PurchasedNumber of


Price


Announced


Under theShares


Paid per


Plans or


PlansPeriod

Purchased


Share


Programs


or ProgramsMonth 1 (10/1/2007  10/31/2007)





$








6,650,000Month 2 (11/1/2007  11/30/2007)





$








6,650,000Month 3 (12/1/2007  12/31/2007)





$








6,650,000Total





$




     (1)
    
    On August 4, 2006, we announced that our Board of Directors
    authorized the repurchase of up to 6,000,000 shares of our
    common stock. We have purchased 4,350,000 shares under this
    authorization, which has no expiration date. On February 2,
    2007, we announced that our Board of Directors authorized the 15




---



##### Table of Contents



purchase of up to an additional 5,000,000 shares of our
    common stock, increasing the maximum number of shares yet to be
    purchased under our repurchase plans to 6,650,000 shares.
    We have no plans or programs that expired during the period
    covered by the table above and no plans or programs that we
    intend to terminate prior to expiration or under which we no
    longer intend to make further purchases.  Performance
    Graph
    
  Assumes $100
    invested on the last trading day in fiscal year 2002
    *Total return assumes reinvestment of dividends
  Other
  See Item 12. Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters
 16




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  For the Year2007


2006(a)


2005


2004


2003(b)(Dollars in millions, except per share)Revenues:Corrugated packaging

$
3,044


$
2,977


$
2,825


$
2,736


$
2,700Building products


806



1,119



898



851



684Timber and timberland


76



89



120



107



108Total revenues

$
3,926


$
4,185


$
3,843


$
3,694


$
3,492Segment operating income:Corrugated packaging

$
287


$
255


$
120


$
96


$
18Building products


8



221



125



129



2Timber and timberland


65



63



72



52



42Segment operating income


360



539



317



277



62Items not allocated to segments:General and administrative


(100
)


(107
)


(91
)


(79
)


(73
)Share-based compensation


(34
)


(38
)


(21
)


(12
)


(6
)Gain on sale of timberland


2,053















Other operating income
    (expense)(c)


(188
)


26



(85
)


(42
)


(133
)Other non-operating income
    (expense)(c)


(35
)


93











(8
)Net interest income on financial assets and nonrecourse
    financial liabilities of special purpose
    entities(d)


10















Interest expense on debt


(111
)


(123
)


(109
)


(125
)


(135
)Income (loss) before taxes


1,955



390



11



19



(293
)Income tax (expense)
    benefit(e)


(753
)


(103
)


7



8



264Income from continuing operations


1,202



287



18



27



(29
)Discontinued
    operations(f)


103



181



158



133



131Effect of accounting
    change(g)


















(1
)Net income

$
1,305


$
468


$
176


$
160


$
101Diluted earnings per share:Income from continuing operations

$
11.12


$
2.59


$
0.16


$
0.24


$
(0.27
)Discontinued
    operations(f)


0.96



1.63



1.38



1.18



1.21Effect of accounting
    change(g)


















(0.01
)Net income

$
12.08


$
4.22


$
1.54


$
1.42


$
0.93Dividends per common
    share(h)

$
11.37


$
1.00


$
0.90


$
1.22


$
0.68Average diluted shares outstanding


108.1



110.8



114.5



112.4



108.4Common shares outstanding at year-end


106.1



104.9



111.0



112.2



109.2Depreciation and amortization

$
214


$
225


$
218


$
219


$
233Capital expenditures

$
237


$
204


$
220


$
219


$
134At Year-End:Assets:Manufacturing assets

$
3,559


$
3,627


$
3,411


$
3,522


$
3,474Financial assets of special purpose entities


2,383















Assets of discontinued operations






16,847



18,219



16,622



17,893Total assets

$
5,942


$
20,474


$
21,630


$
20,144


$
21,367Debt (long-term excluding current maturities and nonrecourse
    financial liabilities of special purpose entities)

$
852


$
1,584


$
1,498


$
1,485


$
1,611Nonrecourse financial liabilities of special purpose entities

$
2,140


$



$



$



$
Liability for pension and postretirement benefits

$
256


$
366


$
407


$
432


$
396Shareholders equity

$
780


$
2,189


$
2,080


$
2,107


$
1,988Ratio of debt to total capitalization


52
%


42
%


42
%


41
%


45
%     (a)
    
    In January 2006, we purchased our partners 50 percent
    interest in Standard Gypsum LP for $150 million and assumed
    debt of $28 million. Unaudited pro forma information
    assuming this acquisition and related financing had occurred at
    the beginning of 2005 follows: revenues $4.04 billion;
    income from continuing operations $32 million; and income
    from continuing operations, per diluted share $0.28. These pro
    forma results are not necessarily an indication of what actually
    would have occurred if the acquisition and financing
    transactions had been completed at the beginning of the periods
    presented and are not intended to be indicative of future
    results. 17




---



##### Table of Contents



(b)
    
    The 2003 fiscal year, which ended on January 3, 2004, had
    53 weeks. The extra week did not have a significant effect
    on earnings or financial position. As a result of the
    consolidation of our administrative functions and adoption of a
    shared services concept, beginning 2004, we changed the way we
    allocate costs to our business segments. The effect of this
    change was to increase segment operating income and to increase
    unallocated expenses by a like amount. The 2003 amounts have
    been reclassified to reflect this change.(c)
    
    Other operating and non-operating income (expense) consists of:  For the Year2007


2006


2005


2004


2003(In millions)Other operating income (expense):Transformation costs (advisory and legal fees, change of control
    and employee related)

$
(69
)

$



$



$



$
Closure and sale of converting and production facilities and
    sale of non-strategic assets


(55
)


(4
)


(50
)


(27
)


(83
)Litigation


(56
)


(6
)


(13
)






Environmental remediation


(9
)


(8
)


(3
)






Softwood Lumber Agreement






42











Hurricane related costs and, in 2006, related insurance proceeds






2



(16
)






Consolidation of administrative functions














(11
)


(48
)Other


1







(3
)


(4
)


(2
)$
(188
)

$
26


$
(85
)

$
(42
)

$
(133
)Other non-operating income (expense):Charges related to early repayment of debt

$
(40
)

$



$
(6
)

$
(2
)

$
(8
)Tax litigation and other settlements






89



2







Interest and other income


5



4



4



2



$
(35
)

$
93


$



$



$
(8
)   (d)
    
    In October 2007, we received $2.38 billion in notes from
    the sale of our timberland, which we later contributed to two
    wholly-owned, bankruptcy-remote special purpose entities. In
    December 2007, the special purpose entities pledged the notes as
    collateral for $2.14 billion nonrecourse loans payable in
    2027. Both the notes and the borrowings require quarterly
    interest payments based on variable interest rates that reset
    quarterly. We include these two special purpose entities in our
    consolidated financial statements.(e)
    
    Income taxes include one-time tax benefits of: $7 million
    in 2007, of which $3 million is related to changes to the
    State of Texas margin tax and $4 million is related to the
    resolution of state income tax matters; $36 million in
    2006, of which $6 million is related to the State of Texas
    margin tax and $30 million is related to the non-taxable
    tax litigation settlement; $16 million in 2005 related to
    the sale of our Pembroke, Canada MDF facility; and
    $20 million in 2004 and $165 million in 2003 related
    to the resolution and settlement of prior years tax
    examinations.(f)
    
    Discontinued operations include the operations of our financial
    services and real estate segments, which were spun off to our
    shareholders on December 28, 2007, and the non-strategic
    operations obtained in the Gaylord acquisition, including the
    multi-wall bag business and kraft paper mill which were sold in
    January 2003 and the chemical business which was sold in August
    2007. The resolution and settlement of environmental and other
    indemnifications we provided in the 1999 sale of the bleached
    paperboard operation are also included in 2004.(g)
    
    In 2003, we adopted Statement of Financial Accounting Standards
    (SFAS) No. 143, Accounting for Asset Retirement
    Obligations,which resulted in an after-tax cumulative
    effect charge of $1 million.In 2006, (i) we adopted the modified prospective
    application of SFAS No. 123 (revised December 2004),
    Share-Based Payment, which decreased 2006 income before
    taxes by $6 million; (ii) we began applying the
    guidance in Emerging Issues Task Force (EITF) Issue
    No. 04-13,
    Accounting for Purchases and Sales 18




---



##### Table of Contents



of Inventory with the Same Counterparty, which decreased
    income before taxes by $7 million in 2006 and
    $2 million in 2007; and (iii) we adopted
    SFAS No. 158, Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans,
    which increased our liability for pension and postretirement
    benefits by $76 million, decreased prepaid expenses and
    other assets by $16 million, decreased deferred income
    taxes by $35 million, and decreased shareholders
    equity by $57 million.In 2007, (i) we adopted Financial Accounting Standards
    Board (FASB) Interpretation No. 48 (FIN 48),
    Accounting for Uncertainty in Income Taxes, which
    increased assets by $2 million, reduced liabilities by
    $3 million and increased beginning retained earnings by
    $5 million (we also reclassified $11 million from
    deferred income taxes to other long-term liabilities),
    (ii) we adopted the measurement provisions of
    SFAS No. 158, Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans,which reduced beginning retained earnings by
    $5 million, and (iii) we adopted FASB Staff Position
    No. AUG AIR-1, Accounting for Planned Major Maintenance
    Activities,electing the expense-as-incurred method which
    had no effect on our annual earnings or financial position.(h)
    
    Includes special dividends of $10.25 per share in 2007 and $0.50
    per share in 2004.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements
    
    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;
    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; and
    other factors, many of which are beyond our control.    Non-GAAP Financial
    Measure
   19




---



##### Table of Contents



Accounting
    Policies
  Critical
    Accounting Estimates
  Note 1 to the Consolidated Financial
    Statements.
  
    Measuring assets for impairment requires estimating intentions
    as to holding periods, future operating cash flows and residual
    values of the assets under review. Changes in our intentions,
    market conditions, or operating performance could require us to
    revise the impairment charges we previously provided.
    The expected long-term rate of return on pension plan assets is
    an important assumption in determining pension expense. In
    selecting that rate, currently 6.875 percent, particular
    consideration is given to our asset allocation because
    approximately 80 percent of our plan assets are debt
    related with a duration that closely matches that of our benefit
    obligation. Another important consideration is the discount rate
    used to determine the present value of our benefit obligation,
    currently 6.125 percent. Differences between actual and
    expected rates of return and changes in the discount rate will
    affect future pension expense and funded status. For example, a
    25 basis point change in the discount rate would affect the
    projected benefit obligation by about $42 million and the
    interest cost on the projected benefit obligation by about
    $5 million. However, due to our move in late 2007 to a more
    matched position between our plan assets and our projected
    benefit obligation, we would expect a 25 basis point change in
    the discount rate to affect the funded status of our plan by
    only $12 million and the total net periodic benefit expense
    by only $2 million.
    Contingency reserves are established for potential losses
    related to litigation, environmental remediation, and disputes
    with taxing authorities, among other items. Estimating these
    reserves requires us to make certain judgments and assumptions
    regarding actual or potential claims, interpretations to be made
    by courts or 20




---



##### Table of Contents



regulatory bodies, and other factors and events that are outside
    our control. Changes and inaccuracies in our interpretations and
    actions of others could require us to revise the reserves we
    previously provided.  New
    Accounting Pronouncements and Change in Measurement Date of our
    Defined Benefit and Postretirement Plans
  Accounting for Planned Major Maintenance
    Activities; Accounting for Uncertainty in
    Income Taxes Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans Note 1
    to the Consolidated Financial Statements
  Transformation
    
    On October 31, 2007, we sold 1.55 million acres of
    timberland for $2.38 billion to an investment entity
    affiliated with The Campbell Group, LLC and recognized a pre-tax
    gain of $2.053 billion, which is included in other
    operating income. The acreage sold consisted of
    1.38 million acres owned in fee and leases covering
    175,000 acres. The total consideration consisted almost
    entirely of notes due in 2027 that are secured by irrevocable
    letters of credit issued by independent financial institutions.
    We also entered into a
    20-year
    fiber supply agreement for pulpwood and a
    12-year
    fiber supply agreement for sawtimber. Both agreements are at
    market prices and are subject to extension.
    We contributed the notes and irrevocable letters of credit
    received in connection with the sale of our timberland to two
    wholly-owned, bankruptcy-remote special purpose entities. On
    December 3, 2007, the special purpose entities pledged the
    notes received from the sale of the timberland as collateral for
    $2.14 billion nonrecourse loans payable in 2027. The net
    cash proceeds, after alternative minimum and other taxes related
    to sale of the timberland and transactions costs, were
    $1.8 billion. We used $1.1 billion of the net cash
    proceeds to pay a $10.25 per share special cash dividend to our
    shareholders in December 2007. The remaining $700 million
    was used to reduce debt. We have concluded that we are the
    primary beneficiary of these special purpose entities. As a
    result, we include these special purpose entities in our
    consolidated financial statements.
    On December 28, 2007, we completed the spin-off of our real
    estate segment, Forestar Real Estate Group Inc. (Forestar), and
    our financial services segment, Guaranty Financial Group Inc.
    (Guaranty). These spin-offs were effected through tax-free
    distributions of one share of Forestar and one share of Guaranty
    for every three shares of Temple-Inland common stock. These
    spin-offs reduced retained earnings by $1.6 billion. Our
    financial information has been reclassified to reflect Forestar
    and Guaranty as discontinued operations for all periods
    presented.    Results
    of Operations for the Years 2007, 2006, and 2005
  Summary
    
    Maximizing ROI and
    Profitably growing our business 21




---



##### Table of Contents




    Maintaining full integration,
    Driving for low cost through asset utilization and manufacturing
    excellence,
    Improving mix and margins through sales excellence, and
    Growing our business.    
    Delivering a tailored portfolio of building products,
    Driving for low cost through manufacturing excellence,
    Serving growing markets with favorable demographics, and
    Promoting sales excellence.    
    We had record production in our containerboard mills through
    manufacturing excellence.
    We continued to drive for low cost.
    We improved asset utilization in our box plants through
    manufacturing excellence.
    We grew our box shipments by one percent through sales
    excellence (excluding shipments from Performance Sheets, which
    was sold in August 2006).    For the Year2007


2006


2005(Dollars in millions, except per share)Consolidated revenues

$
3,926


$
4,185


$
3,843Income from continuing operations


1,202



287



18Income from continuing operations, per diluted share


11.12



2.59



0.16ROI


7.8
%


13.4
%


7.2
%     
    In connection with our transformation plan, we recognized a
    $2.053 billion gain on sale of our strategic timberland,
    and we incurred $109 million in expenses primarily related
    to early repayment of debt, change of control agreements and
    other employee payments, and legal and advisory services.
    We experienced higher prices for our corrugated packaging
    products; however, we experienced lower prices and volumes for
    most of our building products.
    While we continue to see the benefit in our manufacturing
    operations from our initiatives to lower costs, improve asset
    utilization, and increase operating efficiencies, the higher
    cost of recycled fiber used at our containerboard mills offset
    some of the benefits.
    We recognized $120 million in charges, including
    $64 million as a result of the decision to cease production
    permanently at our Mt. Jewett particleboard facility and
    $56 million for the settlement of antitrust and other
    litigation.    
    We continued to see benefits in our manufacturing operations
    from our initiatives to lower costs, improve asset utilization,
    and increase operating efficiencies. 22




---



##### Table of Contents




    We experienced improved markets for our corrugated packaging and
    building products, principally gypsum wallboard and
    particleboard. We acquired our partners 50 percent
    interest in Standard Gypsum LP in January.
    Charges related to facility closures and environmental
    remediation at a paper mill site totaled $12 million.
    We realized one-time cash gains of $89 million related to
    the settlement of tax litigation and $42 million related to
    the Softwood Lumber Agreement entered into between the
    U.S. and Canada.    
    We continued to see benefits in our manufacturing operations
    from our initiatives to lower costs, improve asset utilization,
    and increase operating efficiencies.
    Charges related to facility closures were $58 million.
    In connection with the sale of our Canadian MDF facility, we
    recognized a one-time tax benefit of $16 million.
    Hurricanes Katrina and Rita adversely affected segment operating
    income by about $11 million due to production downtime and
    re-start expenses.
    Hurricane related losses and other unusual expenses related to
    litigation and the early repayment of debt totaled
    $32 million.  Business
    Segments
      Corrugated
    Packaging
      For the Year2007


2006


2005(Dollars in millions)Revenues

$
3,044


$
2,977


$
2,825Costs and expenses


(2,757
)


(2,722
)


(2,705
)Segment operating income

$
287


$
255


$
120Segment ROI


14.3
%


12.5
%


5.6
%  23




---



##### Table of Contents



Year over YearIncrease (Decrease)2007


2006


2005Corrugated packagingAverage prices


3
%


6
%


2
%Shipments, average
    week(a)


(1
)%


(2
)%


2
%Industry shipments, average
    week(b)


(2
)%


1
%


1
%LinerboardAverage prices


5
%


22
%


(6
)%Shipments, in thousand tons


(7
)


46



(56
)     (a)
    
    Excluding the impact of the sale of Performance Sheets in August
    2006, our shipments were up one percent in 2007.(b)
    
    Source: Fibre Box Association          Year over YearIncrease (Decrease)2007


2006


2005(In millions)Wood fiber

$
8


$
16


$
22Recycled fiber


77



(9
)


(6
)Energy, principally natural gas


(1
)


(8
)


30Freight


(3
)


32



40Depreciation


(11
)


(7
)


1Health care


(1
)


(3
)


(16
)Pension and postretirement


(12
)


(2
)


(3
)    24




---



##### Table of Contents



For the Year2007


2006


2005Number of converting facilities (at year end)


64



64



65Corrugated packaging shipments, in million tons


3.4



3.4



3.4Mill production, in million tons


3.6



3.6



3.4Percent mill production used internally


92
%


91
%


92
%Percent of total fiber requirements sourced from recycled fiber


36
%


34
%


36
%Corrugating medium purchases from our Premier Boxboard Limited
    LLC joint venture, in thousand tons


53



85



68   Building
    Products
        For the Year2007


2006


2005Actual


Actual


Actual


Pro
    forma(a)(Dollars in millions)Revenues

$
806


$
1,119


$
898


$
1,095Costs and expenses


(798
)


(898
)


(773
)


(938
)Segment operating income

$
8


$
221


$
125


$
157Segment ROI


1.4
%


37.7
%


34.6
%


43.5
%     (a)
    
    Pro forma to reflect the results of operations from Standard
    Gypsum LP as if the acquisition occurred at the beginning of
    2005.    Year over YearIncrease (Decrease)2007


2006


2005Lumber:Average prices


(13
)%


(16
)%


5
%Shipments


1
%


7
%


1
%Gypsum wallboard:Average prices


(27
)%


26
%


16
%Shipments


(26
)%


132
%


12
%Particleboard:Average prices


2
%


15
%


(1
)%Shipments


(17
)%


(5
)%


8
%MDF:Average prices


1
%


5
%


(1
)%Shipments


(5
)%


(30
)%


(20
)%  25




---



##### Table of Contents



Year over YearIncrease (Decrease)2007


2006


2005(In millions)Wood fiber

$
(32
)

$
(12
)

$
19Energy, principally natural gas


(21
)


16



13Freight


(12
)


26



11Chemicals


(5
)


(1
)


14Depreciation


1



9



(3
)Health care


1



(1
)


(6
)Pension and postretirement


1



(3
)


2       For the Year2007


2006


2005Number of converting and manufacturing facilities (at year end)


16



17



17Average operating rates for all product lines excluding sold or
    closed facilities:High


102
%


106
%


102
%Low


59
%


86
%


91
%Gypsum facing paper purchases from our Premier Boxboard Limited
    LLC joint venture, in thousand tons


42



68



71Percent of gypsum facing paper supplied by our Premier Boxboard
    Limited LLC joint venture


65
%


76
%


77
%     Timber
    and Timberland
   26




---



##### Table of Contents



For the Year2007(a)


2006


2005(Dollars in millions)Revenues

$
76


$
89


$
120Costs and expenses


(11
)


(26
)


(48
)Segment operating income

$
65


$
63


$
72Segment ROI


20.4
%


19.5
%


18.0
%     (a)
    
    Reflects ten months of operating results.      For the Year2007(a)


2006


2005Timber harvest, in million tons:Sawtimber


2.1



2.6



2.4Pulpwood


2.9



3.4



3.35.0



6.0



5.7     (a)
    
    Reflects ten months of operating results.  Income
    and Expenses Not Allocated to Segments
       27




---



##### Table of Contents



For the Year2007


2006


2005(In millions)Transformation costs

$
(69
)

$



$
Closure and sale of converting and production facilities and
    sale of non-strategic assets


(55
)


(4
)


(50
)Litigation


(56
)


(6
)


(13
)Environmental remediation


(9
)


(8
)


(3
)Softwood Lumber Agreement






42



Hurricane related costs and, in 2006, related insurance proceeds






2



(16
)Other


1







(3
)$
(188
)

$
26


$
(85
)               Income
    Taxes
     28




---



##### Table of Contents



Discontinued
    Operations
          For the Year2007


2006


2005(In millions)Real estate income before taxes

$
41


$
83


$
59Financial services income before taxes


138



204



192Chemical operations and
    other(a)


(13
)


(2
)


1Income from discontinued operations before taxes


166



285



252Income tax expense


(63
)


(104
)


(94
)Discontinued operations

$
103


$
181


$
158     (a)
    
    2007 includes a $6 million charge for environmental
    remediation.  Average
    Shares Outstanding
    Capital
    Resources and Liquidity
  Sources
    and Uses of Cash
      29




---



##### Table of Contents



For the Year2007


2006


2005(In millions)We received cash from:Operations

$
296


$
649


$
508Tax litigation settlement, net






89



Softwood Lumber Agreement payments






42



From operations


296



780



508Exercise of options and in 2005 the settlement of equity
    purchase contracts


35



57



393Nonrecourse borrowing secured by financial assets of special
    purpose entities (net of costs of $4 million)


2,136







Borrowings, net






40



13Other


36



64



45Total sources


2,503



941



959We used cash to:Reduce borrowings, net (including $38 million of debt tender
    premium)


(780
)






Return to shareholders through:Dividends


(1,212
)


(108
)


(102
)Repurchase of common stock


(24
)


(318
)


(527
)Reinvest in the business through:Capital expenditures


(237
)


(204
)


(220
)Acquisition, joint ventures, and other


(21
)


(149
)


(23
)Total uses


(2,274
)


(779
)


(872
)Discontinued operations, net


(32
)


(132
)


(96
)Change in cash and cash equivalents

$
197


$
30


$
(9
)   (sm)
         30




---



##### Table of Contents



Liquidity
    and Contractual Obligations
    Payments Due or Expiring by YearTotal


2008


2009-10


2011-12


Thereafter(In millions)Long-term debt (including current
    maturities)(a)

$
855


$
13


$
35


$
294


$
513Nonrecourse financial liabilities of special purposes
    entities(a)


2,140















2,140Less, related financial assets of special purpose
    entities(a)


(2,140
)














(2,140
)Principal portion of capital lease
    obligations(a)


188















188Less, related municipal bonds we
    own(a)


(188
)














(188
)Contractual interest payments on fixed- rate, long-term debt and
    capital lease obligations, net of interest on related municipal
    bonds we own


437



60



117



116



144Operating
    leases(b)


222



38



61



40



83Purchase
    obligations(c)


3,173



265



445



441



2,022Other long-term
    liabilities(a)


37



7



21



2



7$
4,724


$
383


$
679


$
893


$
2,769     (a)
    
    Denotes items included on our balance sheet.(b)
    
    In 2007, we recorded an impairment charge related to a
    long-term operating lease. As a result, $60 million present
    value of our future operating lease payments are included on our
    balance sheet, of which, $3 million is in current
    liabilities and $57 million in other long-term liabilities.(c)
    
    In 2007, we entered into a
    20-year
    fiber supply agreement for pulpwood and a
    12-year
    fiber supply agreement for sawtimber, the terms of which are
    both subject to extension. These purchase obligations are valued
    at year-end 2007 market prices, however, our actual future
    purchases will be at the then current market price.    AccountsCommitted


ReceivableCredit


SecuritizationAgreements


Facility


Total(In millions)Committed

$
835


$
247


$
1,082Less: borrowings and commitments


(14
)


(1
)


(15
)Unused borrowing capacity at year-end 2007

$
821


$
246


$
1,067    31




---



##### Table of Contents



32




---



##### Table of Contents



Pension,
    Postretirement Medical and Health Care Matters
      Off-Balance
    Sheet Arrangements
    Expiring by YearTotal


2008


2009-10


2011-12


Thereafter(In millions)Joint venture guarantees

$
70


$
18


$
52


$



$
Performance bonds and recourse obligations


56



56











$
126


$
74


$
52


$



$
       Pension,
    Postretirement Medical and Health Care Matters
     33




---



##### Table of Contents



10-15 year
          Energy
    and the Effects of Inflation
     34




---



##### Table of Contents



Environmental
    Protection
  Business  Environmental Regulation
  Litigation
    Matters
  Legal
    Proceedings
 35




---



##### Table of Contents



Calculation
    of Non-GAAP Financial Measures
  Corrugated


Building


Timber andConsolidated


Packaging


Products


Timberland(Dollars in millions)Year 2007Return:Segment operating income determined in accordance with GAAP

$
360


$
287


$
8


$
65Expenses not allocated to segments:General and administrative


(100
)


N/A



N/A



N/AShare-based compensation


(34
)


N/A



N/A



N/A$
226


$
287


$
8


$
65Investment:Beginning of year total assets or segment assets determined in
    accordance with GAAP

$
20,474


$
2,275


$
638


$
330Adjustments:Current liabilities (excluding current portion of long-term debt)


(550
)


(271
)


(76
)


(11
)Assets of discontinued operations


(16,847
)


N/A



N/A



N/AMunicipal bonds related to capital leases included in other
    assets


(188
)


N/A



N/A



N/A$
2,889


$
2,004


$
562


$
319ROI


7.8
%


14.3
%


1.4
%


20.4
%Year 2006Return:Segment operating income determined in accordance with GAAP

$
539


$
255


$
221


$
63Expenses not allocated to segments:General and administrative


(107
)


N/A



N/A



N/AShare-based compensation


(38
)


N/A



N/A



N/A$
394


$
255


$
221


$
63Investment:Beginning of year total assets or segment assets determined in
    accordance with GAAP

$
21,630


$
2,308


$
456


$
333Adjustments:Current liabilities (excluding current portion of long-term debt)


(476
)


(269
)


(66
)


(10
)Assets of discontinued operations


(18,219
)


N/A



N/A



N/AMunicipal bonds related to capital leases included in other
    assets


(188
)


N/A



N/A



N/AAcquisition of Standard Gypsum LP in January 2006


196



N/A



196



N/A$
2,943


$
2,039


$
586


$
323ROI


13.4
%


12.5
%


37.7
%


19.5
%Year 2005Return:Segment operating income determined in accordance with GAAP

$
317


$
120


$
125


$
72Expenses not allocated to segments:General and administrative


(91
)


N/A



N/A



N/AShare-based compensation


(21
)


N/A



N/A



N/A$
205


$
120


$
125


$
72Investment:Beginning of year total assets or segment assets determined in
    accordance with GAAP

$
20,144


$
2,448


$
423


$
409Adjustments:Current liabilities (excluding current portion of long-term debt)


(503
)


(323
)


(62
)


(9
)Assets of discontinued operations


(16,622
)


N/A



N/A



N/AMunicipal bonds related to capital leases included in other
    assets


(188
)


N/A



N/A



N/A$
2,831


$
2,125


$
361


$
400ROI


7.2
%


5.6
%


34.6
%


18.0
%  36




---



##### Table of Contents



Statistical
    and Other Data
    For the Year2007


2006


2005(Dollars in millions)RevenuesCorrugated PackagingCorrugated packaging

$
2,905


$
2,841


$
2,728Linerboard


139



136



97$
3,044


$
2,977


$
2,825Building ProductsPine lumber

$
244


$
278


$
312Particleboard


181



214



195Gypsum
    wallboard(a)


228



420



143Medium density
    fiberboard(a)


62



65



87Fiberboard


52



72



83Other


39



70



78$
806


$
1,119


$
898Timber and TimberlandFiber and other

$
76


$
89


$
120Unit salesCorrugated PackagingCorrugated packaging, thousands of tons


3,351



3,371



3,437Linerboard, thousands of tons


303



310



2643,654



3,681



3,701Building ProductsPine lumber, million board feet


838



829



777Particleboard, million square feet


506



609



640Gypsum wallboard, million square
    feet(a)


1,475



1,990



859Medium density fiberboard, million square
    feet(a)


135



142



202Fiberboard, million square feet


288



362



431     (a)
    
    Comparisons of revenue and unit sales of gypsum wallboard are
    affected by the 2006 acquisition of our partners interest
    in Standard Gypsum LP. Comparisons for MDF are affected by the
    sale of the Pembroke facility in second quarter 2005. 37




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
    Increase (Decrease) inChange in

Income Before TaxesInterest Rates

At Year-End 2007


At Year-End 2006(In millions)+2%

$
(4
)

$
(3
)+1%


(2
)


(2
)−1%


2



2−2%


4



4     Foreign
    Currency Risk
    Commodity
    Price Risk
   38




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  PageManagements Annual Report on Internal
    Control over Financial Reporting


40Report of Independent Registered Public
    Accounting Firm


41Report of Independent Registered Public
    Accounting Firm


42Temple-Inland Inc. and Subsidiaries:Consolidated Balance Sheets


43Consolidated Statements of Income


44Consolidated Statements of Cash Flows


45Consolidated Statements of Shareholders
    Equity


46Notes to Consolidated Financial Statements


47  39




---



##### Table of Contents



MANAGEMENTS
    ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING    Rule 13a-15 Internal Control  Integrated
    Framework
    Form 10-K,
 40




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Board
    of Directors and Shareholders of Temple-Inland Inc.:
  Internal Control 
    Integrated Framework
                 41




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Board
    of Directors and Shareholders of Temple-Inland Inc.:
          Internal Control 
    Integrated Framework
       42




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS  At Year-End2007


2006(In millions)ASSETSCurrent AssetsCash and cash equivalents

$
227


$
30Trade receivables, net of allowance for doubtful accounts of $14
    in 2007 and $14 in 2006


433



452Inventories:Work in process and finished goods


116



109Raw materials


224



211Supplies and other


121



115Total inventories


461



435Deferred tax asset


99



61Prepaid expenses and other


57



60Total current assets


1,277



1,038Timber and Timberland






315Property and EquipmentLand and buildings


641



637Machinery and equipment


3,423



3,400Construction in progress


120



82Less allowances for depreciation


(2,552
)


(2,491
)Total property and equipment


1,632



1,628Financial Assets of Special Purpose Entities


2,383



Goodwill


365



365Assets of Discontinued Operations






16,847Other Assets


285



281TOTAL ASSETS

$
5,942


$
20,474LIABILITIESCurrent LiabilitiesAccounts payable

$
244


$
229Accrued employee compensation and benefits


108



126Accrued interest


31



32Accrued property taxes


11



19Accrued income taxes


258



Other accrued expenses


173



129Current portion of long-term debt


3



13Current portion of pension and postretirement benefits


62



15Total current liabilities


890



563Long-Term Debt


852



1,584Nonrecourse Financial Liabilities of Special Purpose
    Entities


2,140



Deferred Tax Liability


762



244Liability for Pension Benefits


71



229Liability for Postretirement Benefits


123



122Liabilities of Discontinued Operations






15,291Other Long-Term Liabilities


324



252TOTAL LIABILITIES


5,162



18,285SHAREHOLDERS EQUITYPreferred 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 123,605,344 shares in 2007
    and 2006, including shares held in the treasury


124



124Additional paid-in capital


475



468Accumulated other comprehensive loss


(139
)


(191
)Retained earnings


987



2,501Cost of shares held in the treasury: 17,464,189 shares in
    2007 and 18,754,907 shares in 2006


(667
)


(713
)TOTAL SHAREHOLDERS EQUITY


780



2,189TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
5,942


$
20,474    43




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF INCOME  For the Year2007


2006


2005(In millions)NET REVENUES

$
3,926


$
4,185


$
3,843COSTS AND EXPENSESCost of sales


(3,390
)


(3,476
)


(3,382
)Selling


(112
)


(107
)


(97
)General and administrative


(197
)


(214
)


(198
)Gain on sale of timberland


2,053







Other operating income (expense)


(189
)


32



(46
)(1,835
)


(3,765
)


(3,723
)OPERATING INCOME


2,091



420



120Other non-operating income (expense)


(35
)


93



Interest income on financial assets of special purpose entities


19







Interest expense on nonrecourse financial liabilities of special
    purpose entities


(9
)






Interest expense on debt


(111
)


(123
)


(109
)INCOME FROM CONTINUING OPERATIONS BEFORE TAXES


1,955



390



11Income tax expense


(753
)


(103
)


7INCOME FROM CONTINUING OPERATIONS


1,202



287



18Discontinued operations


103



181



158NET INCOME

$
1,305


$
468


$
176WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBasic


106.0



108.8



112.6Diluted


108.1



110.8



114.5EARNINGS PER SHAREBasic:Income from continuing operations

$
11.33


$
2.64


$
0.16Discontinued operations


0.98



1.66



1.40Net income

$
12.31


$
4.30


$
1.56Diluted:Income from continuing operations

$
11.12


$
2.59


$
0.16Discontinued operations


0.96



1.63



1.38Net income

$
12.08


$
4.22


$
1.54    44




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  For the Year2007


2006


2005(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income

$
1,305


$
468


$
176Adjustments:Gain on sale of timberland


(2,053
)






Impairments


64







24Loss on early payment of debt


40







Loss on sale of Pembroke










25Depreciation and amortization


214



225



218Non-cash share-based compensation


39



38



26Non-cash pension and postretirement expense


44



56



58Cash contribution to pension and postretirement plans


(80
)


(76
)


(76
)Deferred income taxes


435



34



40Earnings of joint ventures


(5
)


(11
)


(39
)Dividends from joint ventures


8



12



43Tax benefit of stock options exercised










7Other


14



18



16Changes in:Receivables


19



(28
)


(16
)Inventories


(30
)


(10
)


Accounts payable and accrued expenses


274



32



4Prepaid expenses and other


8



22



2296



780



508CASH PROVIDED BY (USED FOR) INVESTINGCapital expenditures


(225
)


(187
)


(192
)Reforestation and net acquisition of timber and timberland


(12
)


(17
)


(28
)Sale of timberland


(21
)






Sales of non-strategic assets and operations and proceeds from
    sale of property and equipment


24



64



45Acquisitions, net of cash acquired, and joint ventures


(5
)


(148
)


(5
)Other


4



1



2(235
)


(287
)


(178
)CASH PROVIDED BY (USED FOR) FINANCINGNonrecourse borrowing secured by financial assets of special
    purpose entities


2,140







Payments of debt


(567
)


(47
)


(502
)Borrowings under accounts receivable securitization facility, net


(163
)


133



15Borrowings under revolving credit facility, net


(12
)


(56
)


Change in book overdrafts


13



2



(13
)Fees associated with debt


(42
)






Other additions to debt






10



500Cash dividends paid to shareholders


(1,212
)


(108
)


(102
)Repurchase of common stock


(24
)


(318
)


(527
)Exercise of options


20



47



48Tax benefit of stock options exercised


15



10



Settlement of equity purchase contracts










345Other






(4
)


(7
)168



(331
)


(243
)CASH PROVIDED BY (USED FOR) DISCONTINUED OPERATIONSNet cash provided by (used for) operating activities


(33
)


255



78Net cash provided by (used for) investing activities


(619
)


1,056



(1,785
)Net cash provided by (used for) financing activities


620



(1,443
)


1,611(32
)


(132
)


(96
)Effect of exchange rate changes on cash and cash equivalents










Net increase (decrease) in cash and cash equivalents


197



30



(9
)Cash and cash equivalents at beginning of year


30







9Cash and cash equivalents at year-end

$
227


$
30


$
    45




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES







CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY  AccumulatedAdditional


OtherCommon


Paid-In


Comprehensive


Retained


TreasuryStock


Capital


Income / (Loss)


Earnings


Stock


Total(In millions)Balance at year-end 2004

$
123


$
350


$
(192
)

$
2,067


$
(241
)

$
2,107Comprehensive income, net of tax:Net income














176







176Unrealized gains/(losses) on securities










(3
)










(3
)Defined benefits










3











3Foreign currency translation adjustment










4











4Derivative financial instruments










(1
)










(1
)Comprehensive income for the year 2005






















179Dividends paid on common stock  $0.90 per share














(102
)






(102
)Share-based compensation, net of distributions 
    578,774 shares






13











19



32Exercise of stock options  1,833,688 net shares


















48



48Tax benefit from exercise of stock options






7















7Settlement of equity purchase contracts 
    10,875,739 shares


1



75











269



345Repurchase of common stock  14,500,000 shares


















(536
)


(536
)Balance at year-end 2005

$
124


$
445


$
(189
)

$
2,141


$
(441
)

$
2,080Comprehensive income, net of tax:Net income














468







468Unrealized gains/(losses) on securities










(1
)










(1
)Defined benefits










57











57Foreign currency translation adjustment










(2
)










(2
)Derivative financial instruments










1











1Comprehensive income for the year 2006






















523Dividends paid on common stock  $1.00 per share














(108
)






(108
)Share-based compensation, net of distributions 
    10,289 shares






28











(1
)


27Exercise of stock options  1,736,335 net shares






(15
)










62



47Tax benefit from exercise of stock options






10















10Repurchase of common stock  7,850,000 shares


















(333
)


(333
)Adoption of SFAS No. 158, net of tax










(57
)










(57
)Balance at year-end 2006

$
124


$
468


$
(191
)

$
2,501


$
(713
)

$
2,189Comprehensive income, net of tax:Net income














1,305







1,305Unrealized gains/(losses) on securities










(36
)










(36
)Defined benefits










53











53Foreign currency translation adjustment






















Derivative financial instruments






















Comprehensive income for the year 2007






















1,322Regular dividends paid on common stock  $1.12 per
    share














(118
)






(118
)Special dividend paid on common stock  $10.25 per
    share














(1,094
)






(1,094
)Share-based compensation, net of distributions 
    281,472 shares






2











16



18Exercise of stock options  1,009,246 net shares






(10
)










30



20Tax benefit from exercise of stock options






15















15Adoption of FASB Interpretation No. 48, net of tax














5







5Adoption of measurement provisions of SFAS No. 158,
    net of tax














(5
)






(5
)Spin-off of Forestar














(434
)






(434
)Spin-off of Guaranty










35



(1,173
)






(1,138
)Balance at year-end 2007

$
124


$
475


$
(139
)

$
987


$
(667
)

$
780    46




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Note 1 
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    
    On October 31, 2007, we sold 1.55 million acres of
    timberland for $2.38 billion to an investment entity
    affiliated with The Campbell Group, LLC and recognized a pre-tax
    gain of $2.053 billion, which is included in other
    operating income. The acreage sold consisted of
    1.38 million acres owned in fee and leases covering
    175,000 acres. The total consideration consisted almost
    entirely of notes due in 2027, which are secured by irrevocable
    letters of credit issued by independent financial institutions.
    We also entered into a
    20-year
    fiber supply agreement for pulpwood and a
    12-year
    fiber supply agreement for sawtimber. Both agreements are at
    market prices, and are subject to extension.
    We contributed the notes and irrevocable letters of credit
    received in connection with the sale of our timberlands to two
    wholly-owned, bankruptcy-remote special purpose entities. On
    December 3, 2007, the special purpose entities pledged the
    notes receivable from the sale of timberland as collateral for
    $2.14 billion nonrecourse loans payable 2027. The net cash
    proceeds, after alternative minimum and other taxes related to
    sale of the timberland and transaction costs, were
    $1.8 billion. We used $1.1 billion of the net cash
    proceeds to pay a $10.25 per share special cash dividend to our
    shareholders in December 2007. The remaining $700 million
    was used to reduce debt. We have concluded that we are the
    primary beneficiary of these special purpose entities. As a
    result we include these special purpose entities in our
    consolidated financial statements.
    On December 28, 2007, we completed the spin-off of our real
    estate segment, Forestar Real Estate Group Inc. (Forestar), and
    our financial services segment, Guaranty Financial Group Inc.
    (Guaranty). These spin-offs were effected through tax-free
    distributions of one share of Forestar and one share of Guaranty
    for every three shares of Temple-Inland common stock. These
    spin-offs reduced retained earnings by $1.6 billion. Our
    financial information has been reclassified to reflect Forestar
    and Guaranty as discontinued operations for all periods
    presented.           47




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Asset
    Retirement Obligations and Environmental
    Obligations
  Accounting for Conditional Asset Retirement Obligations an
    interpretation of FASB Statement No. 143. and/or and/or
        Capitalized
    Software
    Cash
    and Cash Equivalents
    Derivatives
   48




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fair
    Value of Financial Instruments
    Goodwill
    and Other Intangible Assets
    Impairment
    of Long-Lived Assets
    Income
    Taxes
    Accounting for Uncertainty in Income Taxes.
 49




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  first-in,
  No. 04-13, Accounting for Purchases and Sales of Inventory with the Same
    Counterparty.
  Pension
    and Postretirement Plans
  Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans
    Before Application


Adjustments


After Applicationof SFAS No. 158


Increase (Decrease)


of SFAS No. 158(In millions)Prepaid expenses and other

$
76


$
(16
)

$
60Deferred tax liability


279



(35
)


244Liability for pension benefits


156



73



229Liability for postretirement benefits


119



3



122Total liabilities


18,244



41



18,285Accumulated other comprehensive loss


134



57



191Total shareholders equity


2,246



(57
)


2,189  50




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Property
    and Equipment
    CarryingValue AtEstimated


Year-EndClassification

Useful Lives


2007(In millions)Land and land improvements


N/A


$
40Buildings and building improvements


10 to 40 years



298Machinery and equipment:Paper machines


5 to 25 years



632Mill equipment


5 to 25 years



79Converting equipment


3 to 20 years



410Other production equipment


5 to 25 years



5Transportation equipment


3 to 20 years



28Office and other equipment


3 to 5 years



20Construction in progress


N/A



120$
1,632     Revenue
    Recognition
        Share-Based
    Compensation
  Share-Based Payment , Accounting
    for Stock-Based Compensation-Transition and Disclosure, an
    amendment of FASB Statement No. 123.
  
    The fair value of awards granted to retirement eligible
    employees is expensed at the date of grant because our stock
    option awards and some of our other awards provide for
    accelerated or continued 51




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  vesting upon retirement. Previously, the fair value of these
    awards was expensed over the expected service period. This
    change accelerated about $6 million of expense into first
    quarter 2006 related to awards granted in 2006. We will continue
    to expense the fair value of awards granted prior to 2006 over
    the expected service period.  
    Forfeitures over the expected term of the award are estimated at
    the date of grant and the estimates adjusted to reflect actual
    subsequent forfeitures. Previously, we had reflected forfeitures
    as they occurred. The effect of this change was not significant.
    Tax benefits recognized as a result of the exercise of employee
    stock options are classified as a financing cash flow. Prior to
    2006, we classified these tax benefits as an operating cash flow.
    The fair value of unvested outstanding options at the beginning
    of first quarter 2006 will be expensed over the remaining
    service period. The effect of this change was not significant
    because we began accounting for options at fair value determined
    at the date of grant in 2003. As a result, this applied only to
    our unvested outstanding options granted prior to 2003.      For the Year2005(In millions,except per share)Net income, as reported

$
176Add: Share-based compensation expense, net of related tax
    effects, included in the determination of reported net
    income(a)


19Deduct: Total share-based compensation expense, net of related
    tax effects, determined under the fair value based method for
    all
    awards(a)


(23
)Pro forma net income

$
172Earnings per shareBasic, as reported

$
1.56Basic, pro forma

$
1.53Diluted, as reported

$
1.54Diluted, pro forma

$
1.50     (a)
    
    Includes treasury stock contributions to fulfill our obligation
    for matching contributions to our 401(k) plans of
    $3 million, net of related tax effects.  Special
    Purpose and Variable Interest Entities
  Consolidation of Variable Interest Entities an Interpretation
    of ARB No. 51.
 52




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Timber
    and Timberland
          Pending
    Accounting Pronouncements
  Business Combinations
  Fair Value Measures
  The Fair Value Options for Financial
    Assets and Financial Liabilities
  Noncontrolling Interest in
    Consolidated Financial Statements
 53




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 2 
    Acquisitions        Total(In millions)Current assets

$
35Property and equipment


74Goodwill


129Total assets


238Current liabilities


(13
)Current portion of long-term debt


(56
)Total liabilities


(69
)Net assets at date of acquisition

$
169       Note 3 
    Joint
    Ventures   54




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 2
    At Year-End2007


2006(In millions)Current assets

$
29


$
26Total assets


234



241Current
    liabilities(a)


25



24Long-term debt


85



90Equity


124



127Our investment in joint ventures:50 percent share in joint ventures equity

$
62


$
63Unamortized basis difference


(30
)


(32
)Investment in joint ventures

$
32


$
31     (a)
    
    Includes current maturities of debt of $6 million in 2007 and $6
    million in 2006.  For the Year2007


2006


2005(In millions)Net revenues

$
200


$
192


$
378Operating income


13



24



85Earnings


5



17



74Our equity in earnings:50 percent share of earnings

$
3


$
8


$
37Amortization of basis difference


2



3



2Equity in earnings of joint ventures

$
5


$
11


$
39        55




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 4 
    Long-Term
    Debt    At Year-End2007


2006(In millions)Borrowings under bank credit agreements  average
    interest rate of 6.26% in 2007 and 5.89% in 2006

$



$
12Accounts receivable securitization facility  average
    interest rate of 5.44% in 2007 and 5.05% in 2006


1



1646.75% Notes, payable in 2009


14



3007.875% Senior Notes, payable in 2012, net of discounts


285



4986.375% Senior Notes, payable in 2016, net of discounts


249



2496.625% Senior Notes, payable in 2018, net of discounts


248



248Revenue bonds, payable 2007 through 2024  average
    interest rate of 5.41% in 2007 and 5.75% in 2006


51



65Other indebtedness due through 2027  average interest
    rate of 7.89% in 2007 and 6.99% in 2006


7



61855



1,597Less current portion of long-term debt


(3
)


(13
)$
852


$
1,584            56




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 5 
    Financial
    Assets and Nonrecourse Financial Liabilities of Special Purpose
    Entities        Note 6 
    Capital
    Stock      Note 9
 57




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 7 
    Accumulated
    Other Comprehensive Income (Loss)    UnrealizedGains (Losses)





Foreignon Available-


Defined


CurrencyFor-Sale


Benefit


Translation


DerivativeSecurities


Plans


Adjustment


Instruments


Total(In millions)Balance at beginning of year 2005

$
5


$
(171
)

$
(26
)

$



$
(192
)Changes during the year


(4
)


6



4



(1
)


5Deferred taxes on changes


1



(3
)










(2
)Net change for 2005


(3
)


3



4



(1
)


3Balance at year-end 2005

$
2


$
(168
)

$
(22
)

$
(1
)

$
(189
)Changes during the year


(1
)


95



(2
)


1



93Deferred taxes on changes






(38
)










(38
)Net change for 2006


(1
)


57



(2
)


1



55Adoption of SFAS No. 158, net of deferred taxes of $35






(57
)










(57
)Balance at year-end 2006

$
1


$
(168
)

$
(24
)

$



$
(191
)Changes during the year


(56
)


85











29Deferred taxes on changes


20



(32
)










(12
)Net change for 2007


(36
)


53











17Spin-off of Guaranty


35















35Balance at year-end 2007

$



$
(115
)

$
(24
)

$



$
(139
)   Note 8 
    Pension
    and Postretirement Plans    For the Year2007


2006


2005(In millions)401 (k) matching plan

$
17


$
16


$
16Defined benefit


35



46



49Postretirement medical


8



9



8$
60


$
71


$
73        58




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Obligations
    and Funded Status
      For the YearDefined Benefits


PostretirementQualified


Supplemental


Total


Benefits2007


2006


2007


2006


2007


2006


2007


2006(In millions)Benefit obligation  beginning of valuation period

$
(1,284
)

$
(1,300
)

$
(56
)

$
(51
)

$
(1,340
)

$
(1,351
)

$
(139
)

$
(155
)Service cost


(32
)


(27
)


(1
)


(1
)


(33
)


(28
)


(2
)


(2
)Interest cost


(94
)


(71
)


(4
)


(2
)


(98
)


(73
)


(10
)


(8
)Plan amendments






(1
)














(1
)






Actuarial gain (loss)


16



51



(4
)


(4
)


12



47



(3
)


11Benefits paid by the plan


84



64



6



2



90



66



21



18Participant contributions


























(4
)


(3
)Benefit obligation  end of valuation period


(1,310
)


(1,284
)


(59
)


(56
)


(1,369
)


(1,340
)


(137
)


(139
)Fair value of plan assets  beginning of valuation
    period


1,094



1,004











1,094



1,004







Actual return


165



94











165



94







Benefits paid by the plan


(84
)


(64
)


(6
)


(2
)


(90
)


(66
)


(21
)


(19
)Contributions we made


75



60



6



2



81



62



17



16Participant contributions


























4



3Fair value of plan assets  end of valuation period


1,250



1,094











1,250



1,094







Funded status  end of valuation period


(60
)


(190
)


(59
)


(56
)


(119
)


(246
)


(137
)


(139
)Contributions we made after the annual measurement date






15















15







4Funded status at year-end

$
(60
)

$
(175
)

$
(59
)

$
(56
)

$
(119
)

$
(231
)

$
(137
)

$
(135
)  59




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At Year-EndDefined


PostretirementBenefits


Benefits2007


2006


2007


2006(In millions)Liability/funded status

$
(119
)

$
(231
)

$
(137
)

$
(135
)Accumulated other comprehensive loss:Unrecognized net loss

$
166


$
253


$
21


$
19Unamortized prior service cost


13



16



(13
)


(16
)Additional minimum liability














Total accumulated other comprehensive loss

$
179


$
269


$
8


$
3   Additional
    Information
    At Year-End2007


2006(In millions)Projected benefit obligation

$
(1,369
)

$
(1,340
)Accumulated benefit obligation

$
(1,305
)

$
(1,267
)Fair value of plan assets


1,250



1,094Contributions we made after the annual measurement date






15Excess of accumulated benefit obligation over fair value of plan
    assets

$
(55
)

$
(158
)Excess of accumulated benefit obligation over fair value of plan
    assets consists of:Qualified plan

$
(1
)

$
(108
)Supplemental plan


(54
)


(50
)$
(55
)

$
(158
)  60




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Components
    of Net Periodic Benefit Expense and Other Amounts Recognized in
    Other Comprehensive Income
  For the YearDefined Benefits


Postretirement Benefits2007


2006


2005


2007


2006


2005(In millions)Net periodic benefit expense:Service costs  benefits earned during the period

$
27


$
28


$
25


$
1


$
2


$
2Interest cost on benefit obligation


78



73



72



8



8



8Expected return on plan assets


(85
)


(78
)


(72
)










Amortization of prior service costs


2



2



2



(2
)


(2
)


(2
)Amortization of actuarial net loss


14



22



23



1



1



Total net periodic benefit
    expense(a)


36



47



50



8



9



8Amounts recognized in other comprehensive income, pre-tax


(90
)


(95
)


(6
)


5







Total recognized in net periodic benefit expense and other
    comprehensive income, pre-tax

$
(54
)

$
(48
)

$
44


$
13


$
9


$
8     (a)
    
    Includes amounts allocated to discontinued operations of
    $1 million in 2007, 2006, and 2005.    Assumptions
    Defined Benefits


Postretirement Benefits2007


2006


2007


2006Discount rate


6.125
%


6.00
%


6.125
%


6.00
%Rate of compensation increase


3.70
%


3.80
%






     Defined Benefits


Postretirement Benefits2007


2006


2005


2007


2006


2005Discount rate


6.00
%


5.50
%


6.00
%


6.00
%


5.50
%


6.00
%Expected return on plan assets


8.00
%


8.00
%


8.50
%










Rate of compensation increase


3.80
%


3.70
%


3.70
%










    61




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        For the Year2007


2006Health care trend rate assumed for the next year


9.0
%


8.0
%Rate to which the cost trend rate is assumed to decline
    (ultimate trend rate)


4.5
%


4.5
%Year that the rate reaches the ultimate trend rate


2014



2013     1 Percentage


1 PercentagePoint Increase


Point Decrease(In millions)Increase (decrease) in:Total service and interest cost components

$
1


$
(1
)Accumulated postretirement benefit obligation


11



(9
)   Plan
    Assets
       62




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Range of


Percentage ofTarget


Plan Assets atAllocations


Year-End2007


2006


2007


2006Asset category:Debt securities


78-88
%


33-37
%


80
%


35
%Equity securities


10-15
%


50-61
%


15



59Real estate


0-7
%


0-7
%


5



6100
%


100
%     Cash
    Flows
        Defined Benefits


PostretirementQualified


Supplemental


Benefits(In millions)2008(a)

$
72


$
49


$
132009


75



6



122010


78



6



122011


82



5



122012


85



5



122013-2017


470



17



56     (a)
    
    Includes $42 million in lump-sum settlements in the
    supplemental plan.  Note 9 
    Share-Based
    Compensation   63




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Restricted
    or performance units
    Weighted Average


AggregateGrant Date Fair


CurrentUnits


Value per Unit


Value(In thousands)





(In millions)Not vested beginning of 2007


1,408


$
39Granted


949



52Vested


(539
)


30Forfeited


(16
)


44Awards held by Forestar employees at date of spin-off


(121
)


50Awards held by Guaranty employees at date of spin-off


(265
)


49Not vested year-end 2007


1,416



48


$
43Not vested year-end 2007 to be settled in cash and subject to:Time vesting requirements


711






$
22Performance requirements


705







211,416






$
43     Restricted
    stock
   64




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    options
    Weighted


AggregateWeighted


Average


Intrinsic ValueAverage


Remaining


(Current valueExercise Price


Contractual


less exerciseShares


per
    Share(a)


Term


price)(In thousands)





(In years)


(In millions)Outstanding beginning of 2007


6,012


$
15Granted


1,028



25Exercised


(1,057
)


21Forfeited


(35
)


40Awards held by Forestar employees at date of spin-off


(266
)


17Awards held by Guaranty employees at date of spin-off


(971
)


17Outstanding year-end 2007


4,711



15



6


$
14Exercisable year-end 2007


2,889



12



4


$
19     (a)
    
    The weighted average exercise price per share has been adjusted
    to reflect the spin-off of Forestar and Guaranty, and the
    special cash dividend.      For the Year2007


2006


2005Expected dividend yield


2.3
%


2.4
%


2.3
%Expected stock price volatility


22.8
%


25.1
%


28.2
%Risk-free interest rate


4.9
%


4.4
%


4.2
%Expected life of options in years


6



6



8Weighted average estimated fair value of options granted
    adjusted for spin-offs:Temple-Inland options

$
7.39


$
6.82


$
6.61Forestar options


3.09



2.85



2.77Guaranty options


1.99



1.83



1.77Weighted average estimated fair value of options at original
    grant date

$
12.47


$
11.50


$
11.15  65




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Share-based
    compensation expense
    For the Year2007


2006


2005(In millions)Restricted or performance units-cash

$
23


$
15


$
3Restricted or performance units-stock


6



11



13Stock options


10



12



5401(k) match










5$
39


$
38


$
26     For the Year2007


2006


2005(In millions)Cost of sales

$
7


$
6


$
5Selling expense


2



1



1General and administrative


25



31



20Other operating income (expense)


5







$
39


$
38


$
26          66




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 10 
    Other
    Operating Income (Expense)  For the Year2007


2006


2005(In millions)Transformation costs

$
(69
)

$



$
Closures and sales of converting and production facilities and
    sales of non-strategic assets


(55
)


(4
)


(50
)Litigation


(56
)


(6
)


(13
)Environmental remediation


(9
)


(8
)


(3
)Softwood Lumber Agreement






42



Hurricane related costs, and in 2006, related insurance
    recoveries






2



(16
)Other charges


(5
)


(5
)


(3
)Equity in earnings of manufacturing joint ventures


5



11



39$
(189
)

$
32


$
(46
)            67




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Beginning


Additions/


Cash


Year-of Year


Revisions


Payments


End(In millions)For the Year 2007Involuntary employee terminations

$
1


$



$
(1
)

$
Demolition and environmental remediation


8



1
(a)


(8
)


1$
9


$
1


$
(9
)

$
1For the Year 2006Involuntary employee terminations

$
1


$
1


$
(1
)

$
1Contract termination penalties


2







(2
)


Demolition and environmental remediation


9



8
(a)


(9
)


8$
12


$
9


$
(12
)

$
9For the Year 2005Involuntary employee terminations

$
2


$
7


$
(8
)

$
1Contract termination penalties


6



(4
)






2Demolition and environmental remediation


16



1



(8
)


9$
24


$
4


$
(16
)

$
12     (a)
    
    In 2007 and 2006, we revised our estimates relating to the
    demolition and related environmental remediation costs
    associated with our exit activities. We added $6 million in
    2007 and $8 million in 2006 to this accrual by charging
    other operating expense. We transferred $6 million to
    Forestar as part of the spin-off.  Note 11 
    Income
    Taxes    For the Year2007


2006


2005(In millions)Current tax provision:U.S. Federal

$
(278
)

$
(57
)

$
57State and other


(10
)


(8
)


(3
)(288
)


(65
)


54Deferred tax provision:U.S. Federal


(410
)


(43
)


(47
)State and other


(55
)


5



(465
)


(38
)


(47
)Income tax expense

$
(753
)

$
(103
)

$
7Income taxes (paid) refunded, net

$
3


$
(88
)

$
39      68




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          For the Year2007


2006


2005(In millions)U.S.

$
1,948


$
381


$
4Non-U.S.


7



9



7$
1,955


$
390


$
11     For the Year2007


2006


2005Federal statutory rate


35
%


35
%


35
%State, net of federal benefit


3







15Foreign










(4
)Other


1







3739
%


35
%


83
%Settlement of tax litigation






(8
)


State of Texas tax legislation






(1
)


Sale of foreign subsidiary










(147
)Effective tax rate


39
%


26
%


(64
)%  69




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At Year-End2007


2006(In millions)Deferred Tax Liabilities:Property, equipment, and intangible assets


$(350
)

$
(330
)Timber and timberland, including deferred gain on sale in 2007


(822
)


(77
)U.S. taxes on unremitted foreign earnings


(16
)


(14
)Other


(4
)


(15
)(1,192
)


(436
)Deferred Tax Assets:Alternative minimum tax credits


286



Foreign and state net operating loss carryforwards


22



26Pension and postretirement benefits


104



140Employee benefits


59



53Accruals not deductible until paid


51



31Other


35



30Gross deferred tax assets


557



280Less valuation allowance


(28
)


(27
)529



253Net Deferred Tax Liability


$(663
)

$
(183
)     At Year-End2007


2006(In millions)Current deferred tax assets

$
99


$
61Non-current deferred tax liabilities


(762
)


(244
)Net deferred tax liability

$
(663
)

$
(183
)      70




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In millions)Balance beginning of 2007

$
20Additions based on tax positions related to the current year


4Reductions for tax positions of prior years


(1
)Settlements/collections


3Balance end of 2007

$
26     Note 12 
    Litigation        Note 13 
    Commitments
    and Other Contingencies     71




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    20-year 12-year
    Note 14 
    Derivative
    Instruments and Variable Interest Entities         72




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 15 
    Other
    Information    Note 16 
    Fair
    Value of Financial Instruments    At Year-End2007


2006Carrying


Fair


Carrying


FairValue


Value


Value


Value(In millions)Financial liabilitiesFixed-rate, long-term debt

$
854


$
909


$
1,413


$
1,483       Note 17 
    Earnings
    Per Share    For the Year2007


2006


2005(In millions)Earnings for basic and diluted earnings per share:Income from continuing operations

$
1,202


$
287


$
18Discontinued operations


103



181



158Net income

$
1,305


$
468


$
176Weighted average shares outstanding:Weighted average shares outstanding  basic


106.0



108.8



112.6Dilutive effect of equity purchase contracts










0.4Dilutive effect of stock options (Note 9)


2.1



2.0



1.5Weighted average shares outstanding  diluted


108.1



110.8



114.5      73




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 18 
    Segment
    Information      Items NotAllocated toCorrugated


Building


Timber and


Segments andPackaging


Products


Timberland


Eliminations


Total(In millions)For the year or at year-end 2007:Revenues from external customers

$
3,044


$
806


$
76


$



$
3,926Depreciation and amortization


142



45



11



16



214Equity income from joint ventures


4



1











5Income (loss) from continuing operations before taxes


287



8



65



1,595
(b)


1,955Total assets


2,301



623







3,018



5,942Investment in equity method investees and joint ventures


11



23











34Goodwill


236



129











365Capital expenditures and reforestation


167



42



13



15



237For the year or at year-end 2006:Revenues from external customers

$
2,977


$
1,119


$
89


$



$
4,185Depreciation and amortization


153



44



14



14



225Equity income from joint ventures


8



3











11Income (loss) from continuing operations before taxes


255



221



63



(149
)(b)


390Total assets


2,275



638



330



384



3,627
(a)Investment in equity method investees and joint ventures


11



22











33Goodwill


236



129











365Capital expenditures and reforestation


117



46



19



22



204For the year or at year-end 2005:Revenues from external customers

$
2,825


$
898


$
120


$



$
3,843Depreciation and amortization


160



35



12



11



218Equity income from joint ventures


11



28











39Income (loss) from continuing operations before taxes


120



125



72



(306
)(b)


11Total assets


2,308



456



333



314



3,411
(a)Investment in equity method investees and joint ventures


11



36











47Goodwill


236















236Capital expenditures and reforestation


126



43



30



21



220     (a)
    
    Excludes assets of discontinued operations of
    $16,847 million in 2006 and $18,219 million in 2005. 74




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (b)
    
    Items not allocated to segments consists of:  For the Year2007

2006

2005(In millions)General and administrative

$
(100
)

$
(107
)

$
(91
)Share-based compensation


(34
)


(38
)


(21
)Gain on sale of timberland


2,053







Other operating income (expense)


(188
)


26



(85
)Other non-operating income (expense)


(35
)


93



Net interest income on financial assets and nonrecourse
    financial liabilities of special purpose entities


10







Interest


(111
)


(123
)


(109
)$
1,595


$
(149
)

$
(306
)Other operating income (expense) applies to:Corrugated packaging

$
(64
)

$
(21
)

$
(38
)Building products


(63
)


42



(27
)Timber and timberland


2,060







Unallocated


(68
)


5



(20
)$
1,865


$
26


$
(85
)   Note 10
    For the YearGeographic Information

2007


2006


2005(In millions)Revenues from external customers:United States

$
3,739


$
4,009


$
3,660Mexico


187



176



156Canada(a)










27$
3,926


$
4,185


$
3,843   At Year-End2007


2006


2005(In millions)Property and equipment:United States

$
1,596


$
1,591


$
1,582Mexico


36



37



38Canada(a)










1$
1,632


$
1,628


$
1,621     (a)
    
    In 2005, we sold our MDF facility located in Pembroke, Canada,
    as a result, we have no significant assets or ongoing operations
    in Canada. 75




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 19 
    Summary
    of Quarterly Results of Operations (Unaudited)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions, except per share)2007Total revenues

$
1,003


$
1,023


$
963


$
937Gross profit

$
144


$
146


$
129


$
117Income from continuing
    operations(a)

$
7


$
26


$
11


$
1,158Discontinued operations


31



40



25



7Net income

$
38


$
66


$
36


$
1,165Earnings per
    share(b)Basic:Income from continuing operations

$
0.07


$
0.24


$
0.11


$
10.88Discontinued operations


0.29



0.39



0.23



0.08Net income

$
0.36


$
0.63


$
0.34


$
10.96Diluted:Income from continuing operations

$
0.07


$
0.24


$
0.11


$
10.69Discontinued operations


0.28



0.38



0.22



0.07Net income

$
0.35


$
0.62


$
0.33


$
10.76     (a)
    
    Income from continuing operations includes the following items:  First

Second

Third

FourthQuarter

Quarter

Quarter

Quarter(In millions)Gain on sale of timberland

$



$



$



$
2,053Other operating income (expense):Transformation costs (advisory and legal fees, change of control
    and employee related)

$
(4
)

$
(4
)

$
(2
)

$
(59
)Closures and sales of converting and production facilities and
    sales of non-strategic assets






8



(1
)


(62
)Litigation


(10
)










(46
)Environmental remediation














(9
)Other






(5
)


(3
)


9$
(14
)

$
(1
)

$
(6
)

$
(167
)Other non-operating income (expense):Charges related to early repayment of debt

$



$



$



$
(40
)Interest and other income






1



1



3$



$
1


$
1


$
(37
)   (b)
    
    The sum of earnings per share for the quarters does not equal
    earnings per share for the year due to the use of average shares
    outstanding for each period.  76




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions, except per share)2006Total revenues

$
1,043


$
1,090


$
1,051


$
1,001Gross profit

$
155


$
203


$
190


$
161Income from continuing
    operations(a)(b)

$
29


$
148


$
49


$
61Discontinued operations


50



43



46



42Net
    income(b)

$
79


$
191


$
95


$
103Earnings per
    share(c)Basic:Income from continuing
    operations(b)

$
0.26


$
1.35


$
0.45


$
0.59Discontinued operations


0.45



0.39



0.42



0.40Net
    income(b)

$
0.71


$
1.74


$
0.87


$
0.99Diluted:Income from continuing
    operations(b)

$
0.26


$
1.32


$
0.44


$
0.57Discontinued operations


0.44



0.38



0.42



0.39Net
    income(b)

$
0.70


$
1.70


$
0.86


$
0.96     (a)
    
    Income from continuing operations includes the following items:  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions)Other operating income (expense):Closures and sales of converting and production facilities and
    sales of non-strategic assets

$



$
(1
)

$
(4
)

$
1Litigation










(4
)


(2
)Environmental remediation














(8
)Softwood Lumber Agreement














42Hurricane related insurance recoveries














2$



$
(1
)

$
(8
)

$
35Other non-operating income (expense):Tax litigation settlement

$



$
89


$



$
Interest and other income


1



2



1



$
1


$
91


$
1


$
   (b)
    
    2006 quarters have been recast for the retrospective application
    of FASB Staff Position No. AUG AIR  1
    Accounting for Planned Major Maintenance. (c)
  Note 20 
    Discontinued
    Operations   77




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ,
      ChemicalReal


Financial


OperationsEstate


Services


and Other


Total(In millions)Cash and cash equivalents

$
3


$
372


$
5


$
380Loans and loans held for sale






9,640







9,640Securities






5,644







5,644Real estate


564











564Property and equipment


2



214



7



223Other assets


31



357



8



396Total Assets

$
600


$
16,227


$
20


$
16,847Deposits

$



$
9,486


$



$
9,486Debt


44



5,177







5,221Other liabilities


43



87



7



137Subordinated notes payable to trust






142







142Preferred stock issued by subsidiaries






305







305Total Liabilities

$
87


$
15,197


$
7


$
15,291     For the Year2007


2006


2005(In millions)Real estate income before taxes

$
41


$
83


$
59Financial services income before taxes


138



204



192Chemical operations and
    other(a)


(13
)


(2
)


1Income from discontinued operations before taxes


166



285



252Income tax expense


(63
)


(104
)


(94
)Discontinued operations

$
103


$
181


$
158     (a)
    
    2007 includes a $6 million charge for environmental
    remediation.  Note 21 
    Subsequent
    Events   78




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures    Rules 13a-15(e) 15d-15(e)
    Item 8. Financial Statements
    and Supplementary Data.
  Rules 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information   79




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Year FirstElected toName

Age

the Board

Principal OccupationDoyle R. Simons


44



2007


Chairman and Chief Executive Officer of Temple-Inland Inc.Afsaneh M. Beschloss


52



2002


President and Chief Executive Officer of The Rock Creek GroupDr. Donald M. Carlton


70



2003


Former President and Chief Executive Officer of Radian
    International LLCCassandra C. Carr


63



2004


Senior Advisor, Public Strategies, Inc.E. Linn Draper, Jr.


66



2004


Former Chairman, President and Chief Executive Officer of
    American Electric Power Company, Inc.Larry R. Faulkner


62



2005


President of Houston Endowment Inc.James T. Hackett


54



2000


Chairman, President and Chief Executive Officer of Anadarko
    Petroleum CorporationJeffrey M. Heller


68



2004


Vice Chairman of Electronic Data Systems, Inc.J. Patrick Maley, III


46



2007


President and Chief Operating Officer of Temple-Inland Inc.W. Allen Reed


60



2000


Former Chairman of the Board of General Motors Asset Management
    CorporationRichard M. Smith


62



2006


Chairman of NewsweekArthur Temple III


66



1983


Chairman of the Board of First Bank & Trust, East Texas and
    the T.L.L. Temple FoundationLarry E. Temple


72



1991


Attorney-at-law   Form 10-K
  Item 11.
    Executive
    Compensation   80




---



##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    (c)Number of Securities(a)

(b)

Remaining AvailableNumber of Securities

Weighted-Average

for Future Issuanceto be Issued Upon

Exercise Price of

Under EquityExercise of Outstanding

Outstanding Options,

Compensation PlansOptions, Warrants and

Warrants and

(Excluding SecuritiesPlan Category

Rights

Rights

Reflected in Column(a))Equity compensation plans approved by security holders

7,108,174

$15

NoneEquity compensation plans not approved by security holders

None

None

NoneTotal

7,108,174

$15

None     Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules    Financial Statements
  Form 10-K.
  Financial Statement Schedules
    Exhibits
  ExhibitNumber



Exhibit3
.01



Amended and Restated Certificate of Incorporation of the Company
    (incorporated by reference to Exhibit 3.1 to the
    Companys
    Form 10-Q
    for the quarter ended June 30, 2007, and filed with the
    Commission on August 7, 2007)3
.02



Amended and Restated Bylaws of the Company (incorporated by
    reference to Exhibit 3.2 to the Companys
    Form 10-Q
    for the quarter ended June 30, 2007, and filed with the
    Commission on August 7, 2007)4
.01



Form of Specimen Common Stock Certificate of the Company
    (incorporated by reference to Exhibit 4.03 to registration
    statement on
    Form S-8
    (Reg.
    No. 33-27286)
    filed by the Company with the Commission on March 2, 1989)4
.02



Indenture dated as of September 1, 1986, between the
    Registrant and Bank of New York Trust Company, N.A.
    (successor to Chemical Bank), as Trustee (or Senior Notes
    Indenture) (incorporated by reference to Exhibit 4.01 to
    registration statement on
    Form S-1
    (Reg.
    No. 33-8362)
    filed by the Company with the Commission on August 29,
    1986) 81




---



##### Table of Contents



ExhibitNumber



Exhibit4
.03



First Supplemental Indenture to the Senior Notes Indenture,
    dated as of April 15, 1988, between the Company and Bank of
    New York Trust Company, N.A. (successor to The Chase
    Manhattan Bank and Chemical Bank), as Trustee (incorporated by
    reference to Exhibit 4.02 to registration statement on
    Form S-3,
    Registration
    No. 33-20431,
    filed with the Commission on March 2, 1988)4
.04



Second Supplemental Indenture to the Senior Notes Indenture,
    dated as of December 27, 1990, between the Company and Bank
    of New York Trust Company, N.A. (successor to The Chase
    Manhattan Bank and Chemical Bank), as Trustee (incorporated by
    reference to Exhibit 4.03 to
    Form 8-K,
    filed with the Commission on December 27, 1990)4
.05



Third Supplemental Indenture to the Senior Notes Indenture,
    dated as of May 9, 1991, between the Company and Bank of
    New York Trust Company, N.A. (successor to The Chase
    Manhattan Bank and Chemical Bank), as Trustee (incorporated by
    reference to Exhibit 4 to
    Form 10-Q
    for the quarter ended June 29, 1991, filed with the
    Commission on August 7, 1991)4
.06



Certificate of Designation, Preferences and Rights of
    Series A Junior Participating Preferred Stock, dated
    February 16, 1989 (incorporated by reference to
    Exhibit 4.04 to the Companys
    Form 10-K
    for the year ended December 31, 1988, and filed with the
    Commission on March 21, 1989)4
.07



Rights Agreement, dated February 20, 1999, between the
    Company and Computershare Trust Company, N.A. (f/k/a First
    Chicago Trust Company of New York), as Rights Agent
    (incorporated by reference to Exhibit 1 to the
    Companys registration statement on Form 8A filed with
    the Commission on February 19, 1999)4
.08



Form of Fixed-rate Medium Term Note, Series F, of the
    Company (incorporated by reference to Exhibit 4.05 to the
    Companys
    Form 8-K
    filed with the Commission on June 3, 1998)4
.09



Form of 7.875% Senior Notes due 2012 of the Company
    (incorporated by reference to Exhibit 4.1 to the
    Companys
    Form 8-K
    filed with the Commission on May 3, 2002)4
.10



Form of 6.375% Senior Notes due 2016 of the Company
    (incorporated by reference to Exhibit 4.1 to the
    Companys
    Form 8-K
    filed with the Commission on December 6, 2005)4
.11



Form of 6.625% Senior Notes due 2018 of the Company
    (incorporated by reference to Exhibit 4.2 to the
    Companys
    Form 8-K
    filed with the Commission on December 6, 2005)10
.01



Credit Agreement dated July 28, 2005, with Bank of America,
    N.A., as administrative agent and L/C Issuer; Citibank, N.A. and
    The Toronto Dominion Bank, as co-syndication agents; BNP Paribas
    and The Bank Of Nova Scotia, as co-documentation agents; Banc of
    America Securities LLC and Citigroup Global Markets Inc., as
    joint lead arrangers and joint book managers; and the lenders
    party thereto (incorporated by reference to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on August 1, 2005)10
.02*



Temple-Inland Inc. 1993 Stock Option Plan (incorporated by
    reference to the Companys definitive proxy statement in
    connection with the Annual Meeting of Shareholders held
    May 6, 1994, and filed with the Commission on
    March 21, 1994)10
.03*



First amendment to Temple-Inland Inc. 1993 Stock Option Plan
    (incorporated by reference to Exhibit 10.1 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2006, and filed with
    the Commission on November 7, 2006)10
.04*



Temple-Inland Inc. 1997 Stock Option Plan (incorporated by
    reference to the Companys Definitive Proxy Statement in
    connection with the Annual Meeting of Shareholders held
    May 2, 1997, and filed with the Commission on
    March 17, 1997), as amended May 7, 1999 (incorporated
    by reference to the Companys definitive proxy statement in
    connection with the Annual Meeting of Shareholders held
    May 7, 1999, and filed with the Commission on
    March 26, 1999)10
.05*



First amendment to Temple-Inland Inc. 1997 Stock Option Plan
    (incorporated by reference to Exhibit 10.2 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2006, and filed with
    the Commission on November 7, 2006)10
.06*



Temple-Inland Inc. 1997 Restricted Stock Plan (incorporated by
    reference to the Companys Definitive Proxy Statement in
    connection with the Annual Meeting of Shareholders held
    May 2, 1997, and filed with the Commission on
    March 17, 1997)10
.07*



Temple-Inland Inc. 2001 Stock Incentive Plan (incorporated by
    reference to the Companys definitive proxy statement in
    connection with the Annual Meeting of Shareholders held
    May 4, 2001, and filed with the Commission on
    March 23, 2001) 82




---



##### Table of Contents



ExhibitNumber



Exhibit10
.08*



First amendment to Temple-Inland Inc. 2001 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.3 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2006, and filed with
    the Commission on November 7, 2006)10
.09*



Temple-Inland Inc. 2003 Stock Incentive Plan (incorporated by
    reference to Appendix A of the Companys definitive
    proxy statement dated March 31, 2003, and prepared in
    connection with the annual meeting of stockholders held
    May 2, 2003)10
.10*



First amendment to Temple-Inland Inc. 2003 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.4 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2006, and filed with
    the Commission on November 7, 2006)10
.11*



Form of Nonqualified Stock Option Agreement issued pursuant to
    the Temple-Inland Inc. 2003 Stock Incentive Plan (incorporated
    by reference to Exhibit 10.23 to the Companys
    Form 10-K
    for the year ended January 3, 2004, and filed with the
    Commission on February 23, 2004)10
.12*



Revised Form of Performance Stock Units Agreement issued
    pursuant to the Temple-Inland Inc. 2003 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.08 to the
    Companys
    Form 10-K
    for the year ended December 31, 2005, and filed with the
    commission on March 8, 2006)10
.13*



Revised Form of Restricted Stock Unit Agreement issued pursuant
    to the Temple-Inland Inc. 2003 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.09 to the
    Companys
    Form 10-K
    for the year ended December 31, 2005, and filed with the
    commission on March 8, 2006)10
.14*



Revised Form of Nonqualified Stock Option Agreement for
    Non-Employee Directors issued pursuant to the Temple-Inland Inc.
    2003 Stock Incentive Plan (incorporated by reference to
    Exhibit 10.10 to the Companys
    Form 10-K
    for the year ended December 31, 2005, and filed with the
    commission on March 8, 2006)10
.15*



Amendment to outstanding Temple-Inland Option Agreements and
    Restricted Stock Agreements (incorporated by reference to
    Exhibit 10.4 to the Companys Current Report on
    Form 8-K
    filed with the Commission on December 31, 2007)10
.16*



Amended and restated Temple-Inland Nonqualified Deferred
    Compensation Plan (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed with the Commission on December 31, 2007)10
.17*



Amended and restated Temple-Inland Directors Fee Deferral
    Plan (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on December 31, 2007)10
.18*



Amended and restated Temple-Inland Supplemental Executive
    Retirement Plan (incorporated by reference to Exhibit 10.3
    to the Companys Current Report on
    Form 8-K
    filed with the Commission on December 31, 2007)10
.19*



Employment Agreement between the company and Doyle R. Simons,
    dated August 9, 2007 (incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    filed with the Commission on August 10, 2007)10
.20*



Change in Control Agreement dated June 1, 2003, between the
    Company and J. Patrick Maley III (incorporated by reference
    to Exhibit 10.1 to the Companys
    Form 10-Q
    for the quarter ended September 28, 2003, and filed with
    the Commission on November 12, 2003)10
.21*



Change in Control Agreement dated October 2, 2000, between
    the Company and Jack C. Sweeny (incorporated by reference to
    Exhibit 10.29 to the Companys
    Form 10-K
    for the year ended December 30, 2000, and filed with the
    Commission on March 5, 2001)10
.22*



Change in Control Agreement dated October 2, 2000, between
    the Company and Randall D. Levy (incorporated by reference to
    Exhibit 10.31 to the Companys
    Form 10-K
    for the year ended December 30, 2000, and filed with the
    Commission on March 5, 2001)10
.23



Loan Agreement, dated December 3, 2007, by and among TIN
    Land Financing, LLC, Citibank, N.A., Citicorp
    North America, Inc., as Agent, and the other Lenders named
    therein (incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on December 4, 2007)10
.24



Loan Agreement, dated December 3, 2007, by and among TIN
    Timber Financing, LLC, Citibank, N.A., Citicorp North America,
    Inc., as Agent, and the other Lenders named therein
    (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on December 4, 2007)10
.25



Pulpwood Supply Agreement, dated October 31, 2007, by and
    between TIN Inc. and CPT LOGCO, LLC (1)(2)10
.26



Sawtimber Supply Agreement, dated October 31, 2007, by and
    between TIN Inc. and CPT LOGCO, LLC (1)(2)10
.27*



Temple-Inland Inc. 2008 Incentive Plan (1) (3) 83




---



##### Table of Contents



ExhibitNumber



Exhibit10
.28*



Form of Nonqualified Stock Option Agreement, as revised in 2008,
    issued pursuant to the Temple-Inland Inc. 2003 Stock Incentive
    Plan (1)10
.29*



Form of Restricted Stock Units Agreement issued pursuant to the
    Temple-Inland Inc. 2008 Incentive Plan (1)21




Subsidiaries of the Company (1)23




Consent of Ernst & Young LLP (1)31
.1



Certification of Chief Executive Officer pursuant to Exchange
    Act
    rule 13a-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 (1)31
.2



Certification of Chief Financial Officer pursuant to Exchange
    Act
    rule 13a-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 (1)32
.1



Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (1)32
.2



Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (1)     *
    
    Management contract or compensatory plan or arrangement.(1)
    
    Filed herewith(2)
    
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment filed with the Securities and
    Exchange Commission. The omissions have been indicated with
    asterisks (***), and the omitted text has been filed
    separately with the Commission.(3)
    
    To be submitted for shareholder approval at the 2008 Annual
    Meeting of Stockholders. 84




---



##### Table of Contents



SIGNATURES    Temple-Inland Inc.
  By:
    /s/  Doyle
    R. Simons   Chairman of the Board and
 Chief Executive Officer
      Signature

Capacity

Date/s/  Doyle
    R. SimonsDoyle
    R. Simons

Director, Chairman of the Board, 
    and Chief Executive Officer

February 25, 2008/s/  Randall
    D. LevyRandall
    D. Levy

Chief Financial Officer

February 25, 2008/s/  Troy
    L. HesterTroy
    L. Hester

Principal Accounting Officer

February 25, 2008/s/  Afsaneh
    M. BeschlossAfsaneh
    M. Beschloss

Director

February 25, 2008/s/  Donald
    M. CarltonDonald
    M. Carlton

Director

February 25, 2008/s/  Cassandra
    C. CarrCassandra
    C. Carr

Director

February 25, 2008/s/  E.
    Linn Draper, Jr.E.
    Linn Draper, Jr.

Director

February 25, 2008/s/  Larry
    R. FaulknerLarry
    R. Faulkner

Director

February 25, 2008/s/  James
    T. HackettJames
    T. Hackett

Director

February 25, 2008/s/  Jeffrey
    M. HellerJeffrey
    M. Heller

Director

February 25, 2008 85




---



##### Table of Contents



Signature

Capacity

Date/s/  J.
    Patrick Maley IIIJ.
    Patrick Maley III

Director

February 25, 2008/s/  W.
    Allen ReedW.
    Allen Reed

Director

February 25, 2008/s/  Richard
    M. SmithRichard
    M. Smith

Director

February 25, 2008/s/  Arthur
    Temple IIIArthur
    Temple III

Director

February 25, 2008/s/  Larry
    E. TempleLarry
    E. Temple

Director

February 25, 2008  86