##### 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 January 2, 2010oro

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(State or Other Jurisdiction
    of
    Incorporation or Organization)

75-1903917(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

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 whether the registrant has submitted
    electronically and posted on its corporate Website, if any,
    every Interactive Data File required to be submitted and posted
    pursuant to Rule 405 of
    Regulation S-T
    during the preceding 12 months (or for such shorter period
    that the registrant was required to submit and post such
    files).  Yes o     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

Accelerated filer o

Non-accelerated filer o
    (Do not check if a smaller reporting company)

Smaller reporting company 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




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##### 





TABLE OF
    CONTENTS
   
 PagePART I.Item 1.

Business


1Item 1A.

Risk Factors


7Item 1B.

Unresolved Staff Comments


11Item 2.

Properties


11Item 3.

Legal Proceedings


13PART II.Item 4.

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


15Item 5.

Selected Financial Data


17Item 6.

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


19Item 6A.

Quantitative and Qualitative Disclosures About
    Market Risk


41Item 7.

Financial Statements and Supplementary Data


42Item 8.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


80Item 8A.

Controls and Procedures


80Item 8B.

Other Information


80PART III.Item 9.

Directors, Executive Officers and Corporate
    Governance


81Item 10.

Executive Compensation


81Item 11.

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


82Item 12.

Certain Relationships and Related Transactions,
    and Director Independence


82Item 13.

Principal Accounting Fees and Services


82PART IV.Item 14.

Exhibits, Financial Statement Schedules


82SIGNATURES


86EX-10.17EX-10.19EX-10.20EX-10.21EX-10.23EX-10.25EX-10.34EX-10.36EX-10.37EX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2   i




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PART I  Item 1.
    Business  Introduction
  Form 10-K.
  
  (512) 434-5800.
  Financial
    Information
  Form 10-K.
  Narrative
    Description of the Business
  Corrugated Packaging.
  
    seven mills, and
    63 converting facilities.   1




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Building Products.
  
    lumber,
    gypsum wallboard,
    particleboard,
    medium density fiberboard (or MDF), and
    fiberboard.      Raw
    Materials
     2




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and/or
      Energy
      Employees
          Environmental
    Protection
   3




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4




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Climate
    Change
    Coal
    Combustion By-products
    Competition
       5




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Executive
    Officers of the Registrant
    Name

Age

OfficeDoyle R. Simons


46


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


48


President and Chief Operating OfficerJack C. Sweeny


63


Group Vice PresidentLarry C. Norton


50


Group Vice PresidentDennis J. Vesci


62


Group Vice PresidentRandall D. Levy


58


Chief Financial Officer and TreasurerJ. Bradley Johnston


54


Chief Administrative OfficerC. Morris Davis


67


General CounselScott Smith


55


Chief Information OfficerGrant F. Adamson


51


Chief Governance OfficerLeslie K. ONeal


54


Vice President, Assistant General Counsel and SecretaryCarolyn C. Sloan


49


Vice President, Internal AuditTroy L. Hester


53


Principal Accounting Officer and Corporate Controller                      6




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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.
     7




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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
  We are
    subject to environmental regulations and liabilities that could
    have a negative effect on our operating results.
  Form 10-K,
 8




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Further
    downward changes in demand for housing in the market regions
    where we operate could decrease profitability in our building
    products segment.
    Current
    conditions in financial markets could have adverse consequences
    on our ability to finance our operations.
    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.
   9




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If the
    sale of our strategic timberland did not qualify for installment
    method reporting for U.S. federal income tax purposes, we could
    be required to fund significant U.S. federal income tax
    liabilities the payment of which we believe to be
    deferred.
    If the
    credit ratings of a bank issuing letters of credit in our
    timberland financing transaction are lowered below designated
    levels and we failed to secure substitute letter of credit
    issuers, we could be required to fund 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




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


Annual


2009Location

Product

Machines


Capacity


Production(In tons)Ontario, California

Linerboard and corrugating medium


1



340,280



337,100Rome, Georgia

Linerboard


2



877,100



757,566Orange, Texas

Linerboard and corrugating medium


2



769,700



765,471Bogalusa, Louisiana

Linerboard


2



895,000



861,879Maysville, Kentucky

Linerboard and corrugating medium


1



524,900



506,361New Johnsonville, Tennessee

Corrugating medium


1



371,050



362,940Newport, Indiana

Corrugating medium, white-top linerboard,


1and gypsum facing paper






340,280



314,7334,118,310



3,906,050   Converting
    Facilities*
  CorrugatorLocation

SizePhoenix, Arizona

98Fort Smith, Arkansas

87Fort Smith, Arkansas(1)***

NoneBell, California

98Buena Park, California(1)

85El Centro, California(1)

87Gilroy, California(1)

87Gilroy, California(1)***

98Ontario, California

87Santa Fe Springs, California

98Santa Fe Springs, California(1)**

87 and 85Santa Fe Springs, California(1)***

NoneTracy, California

110Union City, California(1)***

NoneWheat Ridge, Colorado

87Orlando, Florida

98Tampa, Florida(1)

78Carol Stream, Illinois

87Chicago, Illinois

87Chicago, Illinois(1)***

NoneElgin, Illinois

78Elgin, Illinois***

NoneCrawfordsville, Indiana

98 11




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##### Table of Contents



CorrugatorLocation

SizeEvansville, Indiana

98Indianapolis, Indiana

87Indianapolis, Indiana***

NoneSt. Anthony, Indiana***

NoneTipton, Indiana***

110Garden City, Kansas

98Kansas City, Kansas

87Bogalusa, Louisiana

98Minden, Louisiana

98Minneapolis, Minnesota

87St. Louis, Missouri

87St. Louis, Missouri***

98Milltown, New Jersey(1)***

NoneSpotswood, New Jersey

98Binghamton, New York

87Buffalo, New York***

NoneScotia, New York***

NoneUtica, New York***

NoneWarren County, North Carolina

98Madison, Ohio***

NoneMarion, Ohio

87Middletown, Ohio

98Streetsboro, Ohio

98Biglerville, Pennsylvania

98Hazleton, Pennsylvania

98Littlestown, Pennsylvania***

NoneScranton, Pennsylvania

68Vega Alta, Puerto Rico

87Lexington, South Carolina

98Ashland City, Tennessee(1)***

NoneElizabethton, Tennessee(1)***

NoneDallas, Texas

98Edinburg, Texas

87San Antonio, Texas

98San Antonio, Texas***

98Petersburg, Virginia

87San Jose Iturbide, Mexico

98Monterrey, Mexico

87Los Mochis, Sinaloa, Mexico

87Guadalajara, Mexico(1)***

None     *
    
    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. 12




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Building
    Products
  Rated AnnualDescription

Location

Capacity(In millions ofboard feet)Lumber

Diboll, Texas


270
*Lumber

Pineland, Texas


360
**Lumber

Buna, Texas


198
***Lumber

Rome, Georgia


180Lumber

DeQuincy, Louisiana


198Total lumber




1,206     *
    
    Includes separate finger jointing capacity of 20 million
    board feet.**
    
    Includes separate stud mill capacity of 110 million board
    feet.***
    
    In 2009, production at this facility was ceased for an
    indefinite period.  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


150Particleboard

Thomson, Georgia


150Particleboard

Diboll, Texas


150Particleboard

Hope, Arkansas


200Total particleboard




650MDF*

El Dorado, Arkansas


150MDF(1)

Mt. Jewett, Pennsylvania


140Total MDF




290Fiberboard

Diboll, Texas


272     *
    
    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.  Other
    Item 3.
    Legal
    Proceedings  General
   13




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Bogalusa
    Litigation
      Asbestos
    Guaranty
    Bank
        Other
   14




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PART II  Item 4.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    2009


2008Price Range





Price RangeHigh


Low


Dividends


High


Low


DividendsFirst Quarter

$
6.47


$
2.37


$
0.10


$
21.68


$
11.64


$
0.10Second Quarter

$
15.64


$
4.95


$
0.10


$
15.54


$
11.08


$
0.10Third Quarter

$
18.90


$
10.90


$
0.10


$
20.49


$
10.52


$
0.10Fourth Quarter

$
22.68


$
14.85


$
0.10


$
15.42


$
2.34


$
0.10For the Year

$
22.68


$
2.37


$
0.40


$
21.68


$
2.34


$
0.40   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(2)


Share


Programs


or ProgramsMonth 1 (10/1/2009  10/31/2009)





$








6,650,000Month 2 (11/1/2009  11/30/2009)


43


$
17.95







6,650,000Month 3 (12/1/2009  12/31/2009)


4,686


$
20.49







6,650,000Total


4,729


$
20.47



     (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
    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.(2)

    
    Represents shares purchased from employees to pay taxes related
    to the vesting of restricted shares. 15




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Performance
    Graph
      
       Other
  See Item 12. Security Ownership of Certain Beneficial
    Owners and Management and Related Matters
 16




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Item 5.
    Selected
    Financial Data  For the Year2009(a)


2008(b)


2007(c)


2006(d)


2005(Dollars in millions, except per share)Revenues:Corrugated packaging

$
3,001


$
3,190


$
3,044


$
2,977


$
2,825Building products


576



694



806



1,119



898Timber and
    timberland(e)










76



89



120Total revenues

$
3,577


$
3,884


$
3,926


$
4,185


$
3,843Segment operating income:Corrugated packaging

$
347


$
225


$
287


$
255


$
120Building products


(27
)


(40
)


8



221



125Timber and
    timberland(e)










65



63



72Segment operating income


320



185



360



539



317Items not included in segments:General and administrative expense


(70
)


(76
)


(100
)


(107
)


(91
)Share-based and long-term incentive compensation


(58
)


2



(34
)


(38
)


(21
)Gain on sale of
    timberland(e)










2,053







Other operating income
    (expense)(f)


206



(29
)


(188
)


26



(85
)Other non-operating income
    (expense)(f)


(1
)






(35
)


93



Net interest income (expense) on financial assets and
    nonrecourse financial liabilities of special purpose
    entities(e)


(2
)


(2
)


10







Interest expense on debt


(63
)


(81
)


(111
)


(123
)


(109
)Income (loss) before taxes


332



(1
)


1,955



390



11Income tax (expense)
    benefit(g)


(125
)


(7
)


(753
)


(103
)


7Income (loss) from continuing operations


207



(8
)


1,202



287



18Discontinued
    operations(h)










103



181



158Net income (loss)


207



(8
)


1,305



468



176Less: Net income (loss) attributable to noncontrolling interest
    of special purpose
    entities(e)


(1
)














Net income (loss) attributable to Temple-Inland Inc.

$
206


$
(8
)

$
1,305


$
468


$
176Diluted earnings (loss) per share:Income (loss) from continuing
    operations(i)

$
1.89


$
(0.08
)

$
10.89


$
2.53


$
0.14Discontinued
    operations(h)










0.96



1.63



1.38Net income (loss)

$
1.89


$
(0.08
)

$
11.85


$
4.16


$
1.52Dividends per common
    share(j)

$
0.40


$
0.40


$
11.37


$
1.00


$
0.90Average basic shares outstanding


106.9



106.7



106.0



108.8



112.6Average diluted shares outstanding


108.0



107.4



108.1



110.8



114.5Common shares outstanding at year-end


107.4



106.5



106.1



104.9



111.0Depreciation and amortization

$
200


$
206


$
214


$
225


$
218Capital expenditures

$
130


$
164


$
237


$
204


$
220At Year-End:Assets:Manufacturing assets

$
3,234


$
3,395


$
3,559


$
3,627


$
3,411Financial assets of special purpose
    entities(e)


2,475



2,474



2,383







Assets of discontinued
    operations(h)














16,847



18,219Total assets

$
5,709


$
5,869


$
5,942


$
20,474


$
21,630Debt (long-term excluding current maturities and nonrecourse
    financial liabilities of special purpose entities)

$
710


$
1,191


$
852


$
1,584


$
1,498Nonrecourse financial liabilities of special purpose
    entities(e)

$
2,140


$
2,140


$
2,140


$



$
Liability for pension and postretirement benefits

$
407


$
290


$
256


$
366


$
407Noncontrolling interest of special purpose
    entities(e)

$
92


$
91


$



$



$
Shareholders equity

$
794


$
686


$
780


$
2,189


$
2,080Ratio of debt to total capitalization


47
%


63
%


52
%


42
%


42
%     (a)

    
    In 2009, we adopted the following new accounting guidance:
    (i) Financial Accounting Standards Board (FASB) Accounting
    Standards Codification (ASC) 810,
    Consolidation  adoption required the
    reclassification of $91 million of noncontrolling interest
    of special purpose entities to shareholders equity; and
    (ii) ASC 260, Earning Per Share  adoption
    reduced our earnings per share by $0.02 in 2009, no effect in
    2008, $0.23 in 2007, $0.06 in 2006, and $0.02 in 2005. 17




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(b)

    
    The 2008 fiscal year, which ended on January 3, 2009, had
    53 weeks. The extra week did not have a significant effect
    on earnings or financial position. In July 2008, we purchased
    our partners 50 percent interest in Premier Boxboard
    Limited LLC (PBL). Unaudited pro forma information assuming this
    acquisition and related financing had occurred at the beginning
    of 2008, is not presented because the results would not have
    been materially different from those reported.(c)

    
    In 2007, we adopted the following new accounting guidance:
    (i) Accounting for Uncertainty in Income Taxes,FASB
    Interpretation No. 48 (FIN 48)  adoption
    increased our assets by $2 million, reduced our liabilities
    by $3 million and increased our beginning retained earnings
    by $5 million (we also reclassified $11 million from
    deferred income taxes to other long-term liabilities); and
    (ii) measurement date provisions of Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans (ASC 715)  adoption reduced our beginning
    retained earnings by $5 million.(d)

    
    In January 2006, we purchased our partners 50 percent
    interest in Standard Gypsum LP. Unaudited pro forma information
    assuming this acquisition and related financing had occurred at
    the beginning of 2005 follows:  For the Year2005Revenues

$
4.04 billionIncome from continuing operations

$
32 millionIncome 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
    2005 and are not intended to be indicative of future results.
    Also in 2006, we adopted the following new accounting guidance:
    (i) Share-Based Payment(ASC 718) 
    adoption decreased our 2006 income before taxes by
    $6 million; (ii) Accounting for Purchases and Sales
    of Inventory with the Same Counterparty(ASC
    845-10-50-3) 
    adoption decreased our income before taxes by $7 million in
    2006 and $2 million in 2007; and
    (iii) Employers Accounting for Defined Benefit
    Pension and Other Postretirement Plans (ASC 715) 
    adoption 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.(e)

    
    Timber and timberland is no longer an active segment as a result
    of the sale of our timberlands. In October 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. The total
    consideration consisted almost entirely of $2.38 billion in
    notes due in 2027 that are secured by irrevocable letters of
    credit issued by independent financial institutions. We later
    contributed the $2.38 billion in notes 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. We include
    our special purpose entities in our consolidated financial
    statements. In 2008, the buyer of our timberland transferred the
    timberland out of special purpose entities that it had formed to
    complete the purchase. Upon this transfer, these special purpose
    entities became variable interest entities, and we determined
    that we were the primary beneficiary. As a result, we began
    consolidating the timberland buyers special purpose
    entities in 2008. 18




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(f)

    
    Other operating and non-operating income (expense) consists of:  For the Year2009


2008


2007


2006


2005(In millions)Other operating income (expense):Alternative fuel mixture tax credits, net of costs

$
213


$



$



$



$
Transformation costs (advisory and legal fees, change of control
    and employee related)






(20
)


(69
)






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


(5
)


(9
)


(55
)


(4
)


(50
)Litigation






5



(56
)


(6
)


(16
)Environmental remediation










(9
)


(8
)


(3
)Softwood Lumber Agreement














42



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














2



(16
)Other charges


(2
)


(5
)


1







$
206


$
(29
)

$
(188
)

$
26


$
(85
)Other non-operating income (expense):Substitution costs

$
(17
)

$



$



$



$
Gain on purchase and retirement of debt


15















Charges related to early repayment of debt






(4
)


(40
)






(6
)Tax litigation and other settlements














89



2Interest and other income


1



4



5



4



4$
(1
)

$



$
(35
)

$
93


$
   (g)

    
    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; and $16 million in 2005 related
    to the sale of our Pembroke, Canada MDF facility.(h)

    
    Discontinued operations include our financial services and real
    estate segments, which were spun off to our shareholders on
    December 28, 2007, and the chemical business obtained in
    the Gaylord acquisition, which was sold in August 2007.(i)

    
    In 2008, earnings per share is based on average basic shares
    outstanding due to our loss from continuing operations.(j)

    
    Includes special dividends of $10.25 per share in 2007.  Item 6.
    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 19




---



##### Table of Contents




    fluctuations in costs and expenses including the costs of raw
    materials, purchased energy, and freight
    changes in interest rates
    current conditions in financial markets could adversely affect
    our ability to finance our operations
    demand for new housing
    accuracy of accounting assumptions related to impaired assets,
    pension and postretirement costs, contingency reserves, and
    income taxes
    competitive actions by other companies
    changes in laws or regulations
    our ability to execute certain strategic and business
    improvement initiatives
    the accuracy of certain judgments and estimates concerning the
    integration of acquired operations
    other factors, many of which are beyond our control    Non-GAAP Financial
    Measure
        Accounting
    Policies
  Critical
    Accounting Estimates
  Note 1 to the Consolidated Financial
    Statements.
 20




---



##### Table of Contents




    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.
    Contingency reserves are established for potential losses
    related to litigation, environmental remediation and 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 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.
    The expected long-term rate of return on pension plan assets is
    an important assumption in determining pension expense. In
    selecting that rate, particular consideration is given to our
    asset allocation because 84 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. We determined the discount rate by referencing the
    Citigroup Pension Discount Curve. 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 decrease in the discount rate would increase
    the projected benefit obligation by about $44 million and
    increase the net periodic pension cost by about $5 million.
    A 25 basis point change in the expected long-term rate of
    return would affect the net periodic pension cost by about
    $3 million.
    Tax provisions are based on the respective tax rules and
    regulations of the jurisdictions in which we operate. Where we
    believe a tax position is supportable for income tax purposes,
    it is included in the respective tax return. When a position is
    uncertain, a liability is recorded for the most likely outcome
    considering the technical merits of the position and specific
    facts. Changes to liabilities are only made when an event occurs
    that changes the most likely outcome, such as settlement with
    the relevant tax authority, expiration of statutes of
    limitations, changes in tax law, or recent court rulings.  New
    Accounting Pronouncements
  810-10). Note 1 to the
    Consolidated Financial Statements
  Transformation
     21




---



##### Table of Contents



Results
    of Operations for the Years 2009, 2008 and 2007
  Summary
    
    Maximizing ROI and
    Profitably growing our business    
    Matching supply and demand
    Maintaining a high integration level in corrugated packaging
    Driving for low cost through asset utilization and manufacturing
    excellence
    Improving mix and margins through sales excellence
    Profitably growing our business    
    Our integration level was at 95 percent.
    We improved asset utilization and lowered costs in our box plant
    system through our box plant transformation.
    We lowered costs in our mills through enhanced reliability and
    targeted investments to reduce energy consumption and enhance
    mill flexibility and had record production in our mills.
    We improved mix and margins through our segmenting, targeting,
    and positioning initiative focused on targeted customers for
    which we can create value.
    We continued to realize benefits from the 2008 acquisition of
    our partners 50 percent interest in PBL, a joint
    venture that manufactures containerboard and gypsum facing paper
    at a mill in Newport, Indiana.
    We continued to drive down our costs throughout our company.    For the Year2009


2008


2007(Dollars in millions, except per share)Consolidated revenues

$
3,577


$
3,884


$
3,926Income (loss) from continuing operations attributable to
    Temple-Inland Inc.


206



(8
)


1,202Income (loss) from continuing operations, per share,
    attributable to Temple-Inland Inc.


1.89



(0.08
)


10.89ROI


7.0
%


4.5
%


7.8
%     
    We experienced lower prices and volumes for our corrugated
    packaging products, and lower prices and volumes for most of our
    building products except for gypsum wallboard volumes.
    We realized benefits from the production of white top linerboard
    at the Newport mill and its integration into our corrugated
    packaging operations.
    We continued to see the benefits in our manufacturing operations
    from our initiatives to lower costs, improve asset utilization,
    and increase operating efficiencies, and realized benefits from
    lower costs for energy, freight and fiber in our corrugated
    packaging operations. 22




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##### Table of Contents




    Share-based and long-term incentive compensation increased due
    to the impact on our cash-settled awards of the increase in the
    market price of our common stock.
    We recognized other operating income of $213 million
    related to alternative fuel mixture tax credits, net of related
    costs.
    We incurred $7 million of other operating expense primarily
    associated with 2008 facility closures and severance.
    We recognized a net gain of $15 million in connection with
    the purchase and retirement of $245 million of our
    long-term debt.
    We recognized $17 million of non-operating expense
    associated with the substitution of an issuer of irrevocable
    letters of credit securing the notes we received in connection
    with the 2007 sale of our strategic timberland.
    Interest expense decreased primarily due to our purchase and
    retirement of long-term debt, lower levels of variable rate debt
    and, to a lesser degree, lower interest rates on our
    variable-rate debt.    
    We experienced higher pricing and lower volumes for our
    corrugated packaging products, lower volumes for most of our
    building products, and lower pricing for gypsum wallboard.
    While we continued to see the benefits in our manufacturing
    operations from our initiatives to lower costs, improve asset
    utilization, and increase operating efficiencies, the increased
    cost of energy, freight, and fiber in our corrugated packaging
    operations more than offset these benefits.
    Share-based compensation decreased due to the impact on our
    cash-settled awards of the decrease in the market price of our
    common stock.
    We incurred $20 million of costs primarily related to our
    transformation plan, of which $15 million was related to
    the settlement of supplemental retirement benefits. We also
    decreased litigation reserves by $5 million due to the
    settlement of the remaining claim related to our antitrust
    litigation.
    Charges related to the closure of our Rome, Georgia converting
    facility totaled $2 million and charges related to our exit
    of the hardboard siding business in building products totaled
    $7 million.
    Interest expense decreased primarily due to the December 2007
    early retirement of $286 million of 6.75% Notes, and
    $213 million of 7.875% Senior Notes.
    In July 2008, we purchased for $62 million the remaining
    50 percent interest we did not previously own in PBL.
    Subsequent to the purchase we prepaid $50 million in joint
    venture debt and incurred a $4 million prepayment penalty.    
    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 continued 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. 23




---



##### Table of Contents



Business
    Segments
      Corrugated
    Packaging
      For the Year2009


2008


2007(Dollars in millions)Revenues

$
3,001


$
3,190


$
3,044Costs and expenses


(2,654
)


(2,965
)


(2,757
)Segment operating income

$
347


$
225


$
287Segment ROI


16.5
%


11.3
%


14.3
%       Year over YearIncrease (Decrease)2009


2008


2007Corrugated packagingAverage prices


(3
)%


4
%


3
%Shipments, average
    week(a)


1
%


(2
)%


(1
)%Industry shipments, average
    week(b)


(7
)%


(4
)%


(2
)%PaperboardAverage prices


(12
)%


1
%


5
%Shipments, in thousand
    tons(c)


(116
)


166



(7
)     (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(c)

    
    The decrease in 2009 paperboard shipments to third parties was
    primarily due to a decrease of 150,000 tons of containerboard
    shipments offset by an increase of 40,000 tons of light-weight
    gypsum facing paper shipments. The increase in 2008 includes
    43,000 tons of light-weight gypsum facing paper and 25,000 tons
    of containerboard shipped by PBL since its purchase in July 2008. 24




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##### Table of Contents



Year over YearIncrease (Decrease)2009


2008


2007(In millions)Wood fiber

$
(27
)

$
5


$
8Recycled and purchased pulp fiber


(30
)


15



77Energy, principally natural gas


(62
)


61



(1
)Freight


(27
)


29



(3
)Depreciation


(1
)


4



(11
)Health care


6



(1
)


(1
)Pension and postretirement


5







(12
)       For the Year2009


2008


2007Number of converting facilities (at year-end)


63



63



64Corrugated packaging shipments, in million tons


3.3



3.3



3.4Paperboard production, in million tons


3.9



3.7



3.6Percent containerboard production used internally


93
%


88
%


92
%Percent of total fiber requirements sourced from recycled fiber


44
%


42
%


36
%      25




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##### Table of Contents



Building
    Products
      For the Year2009


2008


2007(Dollars in millions)Revenues

$
576


$
694


$
806Costs and expenses


(603
)


(734
)


(798
)Segment operating income (loss)

$
(27
)

$
(40
)

$
8Segment ROI


(5.0
)%


(7.1
)%


1.4
%     Year over YearIncrease (Decrease)2009


2008


2007Lumber:Average prices


(14
)%


1
%


(13
)%Shipments


(7
)%


(8
)%


1
%Gypsum wallboard:Average prices


(4
)%


(18
)%


(27
)%Shipments


10
%


(28
)%


(26
)%Particleboard:Average prices


(7
)%


4
%


2
%Shipments


(17
)%


(7
)%


(17
)%MDF:Average prices






12
%


1
%Shipments


(11
)%


4
%


(5
)%        26




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##### Table of Contents



Year over YearIncrease (Decrease)2009


2008


2007(In millions)Wood fiber

$
(33
)

$
(43
)

$
(32
)Energy, principally natural gas


(26
)






(21
)Freight


(15
)


(6
)


(12
)Chemicals


(25
)


12



(5
)Depreciation


(4
)


3



1Health care






(2
)


1Pension and postretirement


(2
)


1



1       For the Year2009


2008


2007Number of converting and manufacturing facilities (at year-end)


16



16



16Operating rates for:Lumber


66
%


76
%


91
%Gypsum wallboard


56
%


51
%


70
%Particleboard


57
%


67
%


72
%MDF


89
%


97
%


102
%     Timber
    and Timberland
      First 10 Months 2007(Dollars in millions)Revenues

$
76Costs and expenses


(11
)Segment operating income

$
65Segment ROI


20.4
%    27




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##### Table of Contents



Items Not
    Included in Segments
          For the Year2009


2008


2007(In millions)Alternative fuel mixture tax credits, net of costs

$
213


$



$
Transformation costs






(20
)


(69
)Closure and sale of converting and production facilities and
    sale of non-strategic assets


(5
)


(9
)


(55
)Litigation






5



(56
)Environmental remediation










(9
)Other charges


(2
)


(5
)


1$
206


$
(29
)

$
(188
)        28




---



##### Table of Contents



For the Year2009


2008


2007(In millions)Substitution costs

$
(17
)

$



$
Gain on purchase and retirement of debt


15







Charges related to early repayment of debt






(4
)


(40
)Interest and other income


1



4



5$
(1
)

$



$
(35
)         Goodwill
       29




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##### Table of Contents



Income
    Taxes
      Discontinued
    Operations
        For the Year2007(In millions)Real estate income before taxes

$
41Financial services income before taxes


138Chemical operations and
    other(a)


(13
)Income from discontinued operations before taxes


166Income tax expense


(63
)Discontinued operations

$
103     (a)

    
    Includes a $6 million charge for environmental remediation.  Average
    Shares Outstanding
   30




---



##### Table of Contents



Capital
    Resources and Liquidity
  Sources
    and Uses of Cash
    For the Year2009


2008


2007(In millions)Cash received from:Operations (including payments related to our 2007
    transformation plan of $50 million in 2008 and
    $23 million in
    2007)(a)(b)

$
549


$
222


$
25Working capital (including payments related to our 2007
    transformation plan of $297 million in
    2008)(c)


91



(404
)


271Cash received from (used for) operations


640



(182
)


296Nonrecourse borrowing secured by financial assets of special
    purpose entities (net of costs of $4 million)










2,136Borrowings, net






286



Exercise of options and related tax benefits


8







35Other


5



4



36Total sources


653



108



2,503Cash used to:Reduce borrowings, net (including a $38 million debt tender
    premium in 2007)


(467
)






(780
)Return to shareholders through:Dividends


(43
)


(43
)


(1,212
)Repurchase of common stock










(24
)Reinvest in the business through:Capital expenditures


(130
)


(164
)


(237
)Acquisition of PBL, net of cash acquired






(57
)


Joint ventures and other


(18
)


(30
)


(21
)Total uses


(658
)


(294
)


(2,274
)Discontinued operations, net










(32
)Change in cash and cash equivalents

$
(5
)

$
(186
)

$
197     (a)

    
    Includes voluntary, discretionary contributions to our defined
    benefit plan of $30 million in 2009, $30 million in
    2008, and $60 million in 2007.(b)

    
    Includes alternative fuel mixture tax credits, net of related
    costs and tax payments, of $175 million in 2009.(c)

    
    Includes a federal income tax refund of $58 million in 2009.   31




---



##### Table of Contents



Liquidity
    and Contractual Obligations
  Credit
    Agreements
    AccountsCommitted


ReceivableCredit


SecuritizationAgreements


Facility


Total(In millions)Committed

$
825


$
250


$
1,075Less: borrowings and commitments


(55
)


(130
)


(185
)Unused borrowing capacity at year-end 2009

$
770


$
120


$
890      32




---



##### Table of Contents



Contractual
    Obligations
    Payments Due or Expiring by YearTotal


2010


2011-12


2013-14


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

$
710


$



$
350


$



$
360Nonrecourse 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


221



40



70



48



63Operating
    leases(b)


186



41



56



28



61Purchase obligations


1,512



159



252



200



901Other long-term
    liabilities(a)


56



18



23



2



13$
2,685


$
258


$
751


$
278


$
1,398     (a)

    
    Items included on our balance sheet.(b)

    
    The present value of future operating lease payments of
    $52 million is included on our balance sheet. 33




---



##### Table of Contents



Financial Assets and Nonrecourse Financial Obligations of
    Special Purpose Entities
        Pension, Postretirement Medical and Health Care Matters.
      Financial
    Assets and Nonrecourse Financial Liabilities of Special Purpose
    Entities
   34




---



##### Table of Contents



35




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Expiring by YearTotal

2010

2011-12

2013-14

Thereafter(In millions)Joint venture guarantees

$
15


$



$
15


$



$
Performance bonds and recourse obligations

$
67


$
66


$
1


$



$
       Pension,
    Postretirement Medical and Health Care Matters
           36




---



##### Table of Contents



Critical Accounting Estimates Note 9 to the Consolidated Financial Statements
      For the Year2009


2008


2007(In millions)Cost incurred by us

$
71


$
65


$
69Cost incurred by employees


28



31



31$
99


$
96


$
100   Energy
    and the Effects of Inflation
         37




---



##### Table of Contents



Environmental
    Protection
  Business  Environmental Regulation
  Litigation
    Matters
  Legal Proceedings
 38




---



##### Table of Contents



Calculation
    of Non-GAAP Financial Measures
  Corrugated


Building


Timber andConsolidated


Packaging


Products


Timberland(Dollars in millions)Year 2009Return:Segment operating income determined in accordance with GAAP

$
320


$
347


$
(27
)

$
N/AItems not included in segments:General and administrative expense


(70
)


N/A



N/A



N/AShare-based and long-term incentive compensation


(58
)


N/A



N/A



N/A$
192


$
347


$
(27
)

$
N/AInvestment:Beginning of year total assets or segment assets determined in
    accordance with GAAP

$
5,869


$
2,366


$
580


$
N/AAdjustments:Current liabilities (excluding current portion of long-term debt)


(445
)


(257
)


(45
)


N/AFinancial assets of special purpose entities


(2,474
)


N/A



N/A



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


(188
)


N/A



N/A



N/A$
2,762


$
2,109


$
535


$
N/AROI


7.0
%


16.5
%


(5.0
)%


N/AYear 2008Return:Segment operating income determined in accordance with GAAP

$
185


$
225


$
(40
)

$
N/AItems not included in segments:General and administrative expense


(76
)


N/A



N/A



N/AShare-based compensation


2



N/A



N/A



N/A$
111


$
225


$
(40
)

$
N/AInvestment:Beginning of year total assets or segment assets determined in
    accordance with GAAP

$
5,942


$
2,301


$
623


$
N/AAdjustments:Current liabilities (excluding current portion of long-term debt)


(887
)


(311
)


(63
)


N/AFinancial assets of special purpose entities


(2,383
)


N/A



N/A



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


(188
)


N/A



N/A



N/A$
2,484


$
1,990


$
560


$
N/AROI


4.5
%


11.3
%


(7.1
)%


N/AYear 2007Return:Segment operating income determined in accordance with GAAP

$
360


$
287


$
8


$
65Items not included in segments:General and administrative expense


(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
%  39




---



##### Table of Contents



Statistical
    and Other Data
    For the Year2009


2008


2007(Dollars in millions)RevenuesCorrugated PackagingCorrugated packaging

$
2,856


$
2,975


$
2,905Paperboard(a)(b)


145



215



139$
3,001


$
3,190


$
3,044Building ProductsLumber

$
181


$
225


$
244Gypsum wallboard


141



135



228Particleboard


136



175



181Medium density fiberboard


64



72



62Fiberboard


23



41



52Other


31



46



39$
576


$
694


$
806Timber and
    Timberland(c)Fiber and other


N/A



N/A


$
76Unit salesCorrugated PackagingCorrugated packaging, thousands of tons


3,285



3,303



3,351Paperboard, thousands of
    tons(a)(b)


353



469



3033,638



3,772



3,654Building ProductsLumber, million board feet


718



769



838Gypsum wallboard, million square feet


1,162



1,061



1,475Particleboard, million square feet


394



472



506Medium density fiberboard, million square feet


124



140



135Fiberboard, million square feet


121



213



288     (a)

    
    Paperboard includes containerboard and light-weight gypsum
    facing paper.(b)

    
    Comparisons of revenue and unit sales of paperboard are affected
    by the July 25, 2008 purchase of our partners
    interest in PBL. The effects on revenues and unit sales for the
    periods presented are not material.(c)

    
    We no longer have a timber and timberlands segment as a result
    of the fourth quarter 2007 sale of our timberlands. 40




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##### Table of Contents



Item 6A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
            Increase (Decrease)Year-End 2009


Year-End 2008Special








SpecialChange in

Variable


Purpose





Variable


PurposeInterest Rates

Rate Debt


Entities - Net


Total


Rate Debt


Entities - Net


Total(In millions)+2%

$
(3
)

$
5


$
2


$
(7
)

$
5


$
(2
)+1%


(2
)


3



1



(3
)


2



(1
)−1%


2



N/A



2



3



(2
)


1−2%


N/A



N/A



N/A



7



(5
)


2     Foreign
    Currency Risk
    Commodity
    Price Risk
   41




---



##### 



Item 7.
    Financial
    Statements and Supplementary Data   
 PageManagements Annual Report on Internal
    Control over Financial Reporting


43Report of Independent Registered Public
    Accounting Firm


44Report of Independent Registered Public
    Accounting Firm


45Temple-Inland Inc. and Subsidiaries:Consolidated Balance Sheets


46Consolidated Statements of Income


47Consolidated Statements of Cash Flows


48Consolidated Statements of Shareholders
    Equity


49Notes to Consolidated Financial Statements


50   42




---



##### Table of Contents



MANAGEMENTS
    ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING    Rule 13a-15 Internal Control  Integrated
    Framework
    Form 10-K,
 43




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Board of Directors and Shareholders of Temple-Inland
    Inc.:
  Internal Control  Integrated Framework
                44




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Board of Directors and Shareholders of Temple-Inland
    Inc.:
          Internal Control 
    Integrated Framework
      45




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  At Year-End2009


2008(In millions)ASSETSCurrent AssetsCash and cash equivalents

$
36


$
41Trade receivables, net of allowance for doubtful accounts of $14
    in 2009 and 2008


411



407Inventories:Work in process and finished goods


97



104Raw materials


182



217Supplies and other


134



137Total inventories


413



458Deferred tax asset


69



66Income taxes receivable


13



57Prepaid expenses and other


50



44Total current assets


992



1,073Property and EquipmentLand and buildings


682



671Machinery and equipment


3,581



3,577Construction in progress


54



36Less allowances for depreciation


(2,722
)


(2,620
)Total property and equipment


1,595



1,664Financial Assets of Special Purpose Entities


2,475



2,474Goodwill


394



394Other Assets


253



264TOTAL ASSETS

$
5,709


$
5,869LIABILITIESCurrent LiabilitiesAccounts payable

$
186


$
162Accrued employee compensation and benefits


91



84Accrued interest


17



30Accrued property taxes


12



12Other accrued expenses


148



140Current portion of long-term debt






1Current portion of pension and postretirement benefits


17



17Total current liabilities


471



446Long-Term Debt


710



1,191Nonrecourse Financial Liabilities of Special Purpose
    Entities


2,140



2,140Deferred Tax Liability


721



750Liability for Pension Benefits


285



172Liability for Postretirement Benefits


105



101Other Long-Term Liabilities


391



292TOTAL LIABILITIES


4,823



5,092SHAREHOLDERS EQUITYTemple-Inland Inc. Shareholders 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 2009
    and 2008, including shares held in the treasury


124



124Additional paid-in capital


433



461Accumulated other comprehensive loss


(256
)


(189
)Retained earnings


1,099



936Cost of shares held in the treasury: 16,228,916 shares in
    2009 and 17,098,808 shares in 2008


(606
)


(646
)Total Temple-Inland Inc. Shareholders Equity


794



686Noncontrolling Interest of Special Purpose Entities


92



91TOTAL SHAREHOLDERS EQUITY


886



777TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
5,709


$
5,869    46




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
  For the Year2009


2008


2007(In millions)NET REVENUES

$
3,577


$
3,884


$
3,926COSTS AND EXPENSESCost of sales


(3,092
)


(3,533
)


(3,390
)Selling


(110
)


(113
)


(112
)General and administrative


(181
)


(128
)


(197
)Gain on sale of timberland










2,053Other operating income (expense)


204



(28
)


(189
)(3,179
)


(3,802
)


(1,835
)OPERATING INCOME


398



82



2,091Other non-operating income (expense)


(1
)






(35
)Interest income on financial assets of special purpose entities


26



80



19Interest expense on nonrecourse financial liabilities of special
    purpose entities


(28
)


(82
)


(9
)Interest expense on debt


(63
)


(81
)


(111
)INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES


332



(1
)


1,955Income tax expense


(125
)


(7
)


(753
)INCOME (LOSS) FROM CONTINUING OPERATIONS


207



(8
)


1,202Discontinued operations










103NET INCOME (LOSS)


207



(8
)


1,305Net income attributable to noncontrolling interest of special
    purpose entities


(1
)






NET INCOME (LOSS) ATTRIBUTABLE TO TEMPLE-INLAND INC.

$
206


$
(8
)

$
1,305WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBasic


106.9



106.7



106.0Diluted


108.0



107.4



108.1EARNINGS PER SHAREBasic:Income (loss) from continuing operations

$
1.91


$
(0.08
)

$
11.09Discontinued operations










0.98Net income (loss)

$
1.91


$
(0.08
)

$
12.07Diluted:Income (loss) from continuing operations

$
1.89


$
(0.08
)

$
10.89Discontinued operations










0.96Net income (loss)

$
1.89


$
(0.08
)

$
11.85DIVIDENDS PER SHARE(Includes special dividend of $10.25
    in 2007)

$
0.40


$
0.40


$
11.37    47




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Year2009


2008


2007(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income

$
206


$
(8
)

$
1,305Noncontrolling interest


1







Adjustments:Depreciation and amortization


200



206



214Impairments


2



3



64Gains related to purchase and retirement of debt


(15
)






Write-off of fees related to special purpose entities


17







Non-cash share-based compensation


58



(2
)


39Non-cash pension and postretirement expense


50



60



44Cash contribution to pension and postretirement plans


(47
)


(93
)


(80
)Deferred income taxes


71



55



435Earnings of joint ventures


(1
)


(7
)


(5
)Dividends from joint ventures


6



12



8Loss on early payment of debt










40Gain on sale of timberland










(2,053
)Other


1



(4
)


14Changes in:Receivables


(3
)


27



19Inventories


44



11



(30
)Accounts payable and accrued expenses


10



(395
)


274Prepaid expenses and other


40



(47
)


8640



(182
)


296CASH PROVIDED BY (USED FOR) INVESTINGCapital expenditures


(130
)


(164
)


(225
)Reforestation and net acquisition of timber and timberland










(12
)Sale of timberland










(21
)Sales of non-strategic assets and operations and proceeds from
    sale of property and equipment


5



4



24Acquisitions, net of cash acquired






(57
)


Investment in joint ventures


(4
)


(7
)


(5
)Other


3



(3
)


4(126
)


(227
)


(235
)CASH PROVIDED BY (USED FOR) FINANCINGPayments of debt


(271
)


(64
)


(567
)Borrowings under accounts receivable securitization facility, net


(60
)


189



(163
)Borrowings under revolving credit facility, net


(136
)


161



(12
)Change in book overdrafts


2



(17
)


13Fees, related to special purpose entities and other debt


(20
)






(42
)Nonrecourse borrowings of special purpose entities










2,140Cash dividends paid to shareholders


(43
)


(43
)


(1,212
)Repurchase of common stock










(24
)Exercise of stock options


6



1



20Tax benefit (expense) on share-based compensation


2



(1
)


15(520
)


226



168CASH PROVIDED BY (USED FOR) DISCONTINUED OPERATIONSNet cash used for operating activities










(33
)Net cash used for investing activities










(619
)Net cash provided by financing activities










620







(32
)Effect of exchange rate changes on cash and cash equivalents


1



(3
)


Net increase (decrease) in cash and cash equivalents


(5
)


(186
)


197Cash and cash equivalents at beginning of year


41



227



30Cash and cash equivalents at year-end

$
36


$
41


$
227    48




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  AccumulatedAdditional


Other








Non-Common


Paid-In


Comprehensive


Retained


Treasury


ControllingStock


Capital


Income /(Loss)


Earnings


Stock


Interest


Total(In millions)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 benefit plans










53















53Comprehensive 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



















15Impact of adoption of new income tax accounting guidance, net of
    tax














5











5Impact of adoption of new measurement date for pension
    accounting, net of tax














(5
)










(5
)Spin-off of real estate segment














(434
)










(434
)Spin-off of financial services segment










35



(1,173
)










(1,138
)Balance at year-end 2007

$
124


$
475


$
(139
)

$
987


$
(667
)

$



$
780Comprehensive income, net of tax:Net loss














(8
)










(8
)Defined benefit plans










(36
)














(36
)Foreign currency translation adjustment










(14
)














(14
)Comprehensive income for the year 2008


























(58
)Dividends paid on common stock  $0.40 per share














(43
)










(43
)Share-based compensation, net of distributions 
    287,645 shares






(10
)










17







7Exercise of stock options  77,736 net shares






(3
)










4







1Tax benefit from exercise of stock options






(1
)


















(1
)Consolidation of variable interest entity






















91



91Balance at year-end 2008

$
124


$
461


$
(189
)

$
936


$
(646
)

$
91


$
777Comprehensive income, net of tax:Net income














206







1



207Defined benefit plans










(72
)














(72
)Foreign currency translation adjustment










5















5Comprehensive income for the year 2009


























140Dividends paid on common stock  $0.40 per share














(43
)










(43
)Share-based compensation, net of distributions 
    5,137 shares






4



















4Exercise of stock options  864,755 net shares






(34
)










40







6Tax benefit from exercise of stock options






2



















2Balance at year-end 2009

$
124


$
433


$
(256
)

$
1,099


$
(606
)

$
92


$
886    49




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
          2007
    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 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 received in connection with the sale of
    our timberlands and irrevocable letters of credit securing the
    notes 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 concluded that we
    were 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 and financial services segments. These spin-offs reduced
    retained earnings by $1.6 billion. Our financial
    information has been reclassified to reflect these segments as
    discontinued operations for all periods prior to the spin-offs.  Allowance
    for Doubtful Accounts
   50




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Asset
    Retirement and Environmental Obligations
          Capitalized
    Software
    Cash
    and Cash Equivalents
    Derivatives
     51




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Measurements
    Goodwill
    and Other Intangible Assets
        Impairment
    of Long-Lived Assets
    Income
    Taxes
    Inventories
  first-in,
   52




---



##### Table of Contents



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


Year-EndUseful Lives


2009Classification

(In millions)Land and land improvements


N/A


$
43Buildings and building improvements


10 to 40 years



294Machinery and equipment:Paper machines


22 years



694Mill equipment


5 to 25 years



60Converting equipment


5 to 25 years



415Other production equipment


5 to 25 years



4Transportation equipment


3 to 20 years



20Office and other equipment


2 to 10 years



11Construction in progress


N/A



54$
1,595     Revenue
    Recognition
        Share-Based
    and Long-term Incentive Compensation
   53




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Special
    Purpose and Variable Interest Entities
    New
    Accounting Standards Adopted in 2009
  The FASB Accounting Standards
    Codification TM and the Hierarchy of Generally Accepted Accounting Principles The FASB Accounting
    Standards
    Codification TM Generally Accepted Accounting
    Principles.
  Consolidation
  Earnings per Share
  Business, Combinations Derivatives and Hedging Fair Value
    Measurements and Disclosures Investments  Debt and Equity Securities Subsequent Events Compensation  Retirement Benefits
  Pending
    Accounting Standards
  Consolidation
  Note 2 
    Acquisitions   54




---



##### Table of Contents



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

$
26Property and equipment


81Goodwill


29Other assets


1Total assets


137Current liabilities


(15
)Long-term pension liability


(1
)Current portion of long-term debt


(51
)Total liabilities


(67
)Net assets at date of acquisition

$
70     Note 3 
    Joint
    Ventures  Note 2
    At Year-End2009


2008(In millions)Current assets

$
7


$
8Total assets


83



88Current
    liabilities(a)


2



7Long-term debt


29



29Equity


52



52Our investment in joint ventures:50 percent share in joint ventures equity

$
26


$
26     (a)

    
    Includes current maturities of debt of $5 million in 2008.  55




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year2009


2008(a)


2007(a)(In millions)Net revenues

$
55


$
147


$
200Operating income


3



13



13Earnings


3



10



5Our equity in earnings:50 percent share of earnings

$
2


$
5


$
3Amortization of PBL joint venture basis difference






2



2Equity in earnings of joint ventures

$
2


$
7


$
5     (a)

    
    Includes PBL revenues, operating income and earnings prior to
    acquisition in July 2008.         56




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4 
    Long-Term
    Debt    At Year-End2009


2008(In millions)Borrowings under bank credit agreements  average
    interest rate of 1.94% in 2009 and 4.10% in 2008

$
25


$
161Accounts receivable securitization facility  average
    interest rate of 1.08% in 2009 and 2.83% in 2008


130



1907.875% Senior Notes, payable in 2012, net of discounts


195



2856.375% Senior Notes, payable in 2016, net of
    discounts  interest rate of 6.625% at year-end 2009
    and 2008


114



2496.625% Senior Notes, payable in 2018, net of
    discounts  interest rate of 6.875% at year-end 2009
    and 2008


230



249Revenue bonds, payable 2008 through 2024  average
    interest rate of 5.77% in 2009 and 5.72% in 2008


16



416.75% Notes, payable in 2009






14Other indebtedness  average interest rate of 8.48% in
    2009 and 8.12% in 2008






3710



1,192Less current portion of long-term debt






(1
)$
710


$
1,191            57




---



##### 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           58




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 6 
    Asset
    Retirement and Environmental Obligations    At Year-End2009


2008(In millions)Asset retirement obligations

$
9


$
14Accrued environmental obligations


2



6Total asset retirement and environmental obligations

$
11


$
20Asset retirement and environmental obligations due within one
    year classified as other accrued expenses

$



$
4Long-term asset retirement and environmental obligations
    classified as other long-term liabilities


11



16Total asset retirement and environmental obligations

$
11


$
20     At Year-End2009


2008(In millions)Beginning of year

$
14


$
13Accretion expense


1



1Changes in timing of retirement obligations


(4
)


Liabilities incurred


(2
)


Balance at end of year

$
9


$
14   Note 7 
    Capital
    Stock   59




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8 
    Accumulated
    Other Comprehensive Income (Loss)    UnrealizedGains (Losses)





Foreignon Available-


Defined


CurrencyFor-Sale


Benefit


TranslationSecurities


Plans


Adjustment


Total(In millions)Balance at beginning of year 2007

$
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 financial services segment


35











35Balance at year-end 2007

$



$
(115
)

$
(24
)

$
(139
)Changes during the year






(66
)


(14
)


(80
)Deferred taxes on changes






30







30Net change for 2008






(36
)


(14
)


(50
)Balance at year-end 2008

$



$
(151
)

$
(38
)

$
(189
)Changes during the year






(114
)


5



(109
)Deferred taxes on changes






42







42Net change for 2009






(72
)


5



(67
)Balance at year-end 2009

$



$
(223
)

$
(33
)

$
(256
)   Note 9 
    Pension
    and Postretirement Plans    For the Year2009


2008


2007(In millions)401(k) plan match

$
18


$
16


$
17Defined benefit


44



37



35Postretirement medical


6



8



8$
68


$
61


$
60        60




---



##### Table of Contents



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


Supplemental


Total


Postretirement Benefits2009


2008


2009


2008


2009


2008


2009


2008(In millions)Benefit obligation  beginning of year

$
(1,355
)

$
(1,310
)

$
(30
)

$
(59
)

$
(1,385
)

$
(1,369
)

$
(113
)

$
(137
)Service cost


(23
)


(26
)


(1
)


(2
)


(24
)


(28
)


(1
)


(1
)Interest cost


(80
)


(80
)


(2
)


(2
)


(82
)


(82
)


(7
)


(8
)Plan amendments






(8
)






(17
)






(25
)






Actuarial gain (loss)


(48
)


1



(8
)


2



(56
)


3



(6
)


24Acquisition






(3
)














(3
)






New prior service cost






























(6
)Benefits paid by the plan


74



71







6



74



77



14



16Medicare subsidies


























(1
)


Lump-sum settlements










6



42



6



42







1Participant contributions


























(2
)


(2
)Benefit obligation  year-end


(1,432
)


(1,355
)


(35
)


(30
)


(1,467
)


(1,385
)


(116
)


(113
)Fair value of plan assets  beginning of year


1,208



1,250











1,208



1,250







Actual return


12



(3
)










12



(3
)






Acquisition






2















2







Benefits paid by the plan


(74
)


(71
)






(6
)


(74
)


(77
)


(14
)


(16
)Lump-sum settlements










(6
)


(42
)


(6
)


(42
)






(1
)Medicare subsidies


























1



Contributions we made


30



30



6



48



36



78



11



15Participant contributions


























2



2Fair value of plan assets  year-end


1,176



1,208











1,176



1,208







Funded status at year-end

$
(256
)

$
(147
)

$
(35
)

$
(30
)

$
(291
)

$
(177
)

$
(116
)

$
(113
)     At Year-EndDefined Benefits


Postretirement Benefits2009


2008


2009


2008(In millions)Liability/funded status

$
(291
)

$
(177
)

$
(116
)

$
(113
)Accumulated other comprehensive loss:Unrecognized net loss (gain)

$
340


$
228


$
3


$
(4
)Unrecognized prior service cost (credit)


27



33



(3
)


(4
)Total accumulated other comprehensive loss

$
367


$
261


$



$
(8
)  61




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Plan
    Assets
      PercentageofPlan AssetsRange of


atTarget


Year-EndAllocations


2009


2008Asset category:Debt securities


78-88
%


84
%


86
%Equity securities


10-15
%


13



9Real estate


0-7
%


3



5100
%


100
%     Note 16
  Level 1


Level 2


Level 3


Total(In millions)Cash and cash equivalents

$



$
27


$



$
27Debt securities:Corporate bonds






472







472Government securities






464







464Other fixed income






37







37Equity securities


17



129







146Private equity










8



8Real estate










33



33Fair value of qualified defined benefit plan assets

$
17


$
1,129


$
41



1,187Less: Receivables and payables














(11
)Total fair value of qualified defined benefit plan assets













$
1,176  62




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Level 3(In millions)Fair value beginning of the year 2009

$
72Unrealized gains/(losses)


(34
)Purchases, sales, issuances, and settlements (net)


3Fair value end of the year 2009

$
41   Accumulated
    Benefit Obligation
    At Year-End2009


2008(In millions)Projected benefit obligation

$
(1,467
)

$
(1,385
)Accumulated benefit obligation

$
(1,411
)

$
(1,328
)Fair value of plan assets


1,176



1,208Excess of accumulated benefit obligation over fair value of plan
    assets

$
(235
)

$
(120
)Excess of accumulated benefit obligation over fair value of plan
    assets consists of:Qualified plan

$
(201
)

$
(91
)Supplemental plan


(34
)


(29
)$
(235
)

$
(120
)   Components
    of Net Periodic Benefit Expense and Other Amounts Recognized in
    Other Comprehensive Income
  For the YearDefined Benefits


Postretirement Benefits2009


2008


2007


2009


2008


2007(In millions)Net periodic benefit expense:Service costs  benefits earned during the year

$
24


$
28


$
27


$
1


$
1


$
1Interest cost on benefit obligation


82



82



78



7



8



8Expected return on plan assets


(80
)


(83
)


(85
)










Amortization of prior service costs


5



5



2



(2
)


(2
)


(2
)Amortization of actuarial net loss


13



5



14







1



1Total net periodic benefit
    expense(a)


44



37



36



6



8



8Amounts recognized in other comprehensive income, pre-tax


106



82



(90
)


8



(16
)


5Total recognized in net periodic benefit expense and other
    comprehensive income, pre-tax

$
150


$
119


$
(54
)

$
14


$
(8
)

$
13     (a)

    
    Excludes $15 million of expense in 2008 related to lump-sum
    settlements of supplemental benefits. Includes $1 million
    in 2007 allocated to discontinued operations. 63




---



##### Table of Contents



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


Postretirement Benefits2009


2008


2009


2008Discount rate


5.79
%


6.11
%


5.37
%


6.20
%Expected return on plan assets


6.50
%


6.875
%






Rate of compensation increase


3.20
%


3.50
%






     Defined Benefits


Postretirement Benefits2009


2008


2007


2009


2008


2007Discount rate


6.11
%


6.125
%


6.00
%


6.20
%


6.125
%


6.00
%Expected return on plan assets


6.875
%


6.875
%


8.00
%










Rate of compensation increase


3.50
%


3.70
%


3.80
%










           For the Year2009


2008


2007Health care trend rate assumed for the next year


9.0
%


9.0
%


9.0
%Rate to which the cost trend rate is assumed to decline
    (ultimate trend rate)


4.5
%


4.5
%


4.5
%Year that the rate reaches the ultimate trend rate


2016



2015



2014     1 Percentage


1 PercentagePoint Increase


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

$
1


$
(1
)Accumulated postretirement benefit obligation


8



(7
)  64




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash
    Flows
        Postretirement BenefitsPension Benefits





MedicareQualified


Supplemental


Benefits


Subsidies(In millions)2010

$
79


$
6


$
12


$
12011


82



6



11



12012


85



5



11



12013


89



5



11



12014


92



4



11



12015 - 2019


501



12



47



4   Note 10 
    Share-Based
    and Long-Term Incentive Compensation     65




---



##### 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 cash-settled units beginning of 2009


1,871


$
32Granted


1,395



6Vested


(493
)


35Forfeited


(20
)


27Not vested cash-settled units at year-end 2009


2,753



18


$
58Not vested cash-settled units at year-end 2009 subject to:Time vesting requirements


862






$
18Performance requirements


1,891







402,753






$
58     Restricted
    Stock
    Stock
    Options
   66




---



##### Table of Contents



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


AggregateWeighted


Average


Intrinsic ValueAverage


Remaining


(Current valueExercise Price


Contractual


less exerciseShares


per Share


Term


price)(In thousands)





(In years)


(In millions)Outstanding beginning of 2009


6,903


$
17Granted


1,600



6Exercised


(972
)


10Forfeited


(214
)


17Outstanding year-end 2009


7,317



15



7


$
47Exercisable year-end 2009


3,686



16



5


$
19       For the Year2009


2008


2007Expected dividend yield


3.2
%


2.1
%


2.3
%Expected stock price volatility


57.5
%


28.2
%


22.8
%Risk-free interest rate


2.6
%


3.3
%


4.9
%Expected life of options in years


8



8



6Weighted average estimated fair value of options granted
    adjusted for spin-offs:Temple-Inland options

$
2.49


$
2.02


$
7.39Real estate options


N/A



N/A



3.09Financial services options


N/A



N/A



1.99Weighted average estimated fair value of options at original
    grant date

$
2.49


$
2.02


$
12.47    67




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Share-Based
    and Long-Term Incentive Compensation Expense
    For the Year2009


2008


2007(In millions)Restricted or performance units-cash

$
47


$
(12
)

$
23Restricted or performance units-stock






1



6Stock options


6



9



10Total share-based compensation expense

$
53


$
(2
)

$
39Long-term incentive compensation expense


5







Total share-based and long-term incentive compensation expense

$
58


$
(2
)

$
39     For the Year2009


2008


2007(In millions)Cost of sales

$
6


$
5


$
7Selling expense


2







2General and administrative


50



(7
)


25Other operating income (expense)










5$
58


$
(2
)

$
39       Note 11 
    Other
    Operating Income (Expense)  For the Year2009


2008


2007(In millions)Alternative fuel mixture tax credits, net of costs

$
213


$



$
Transformation costs






(20
)


(69
)Closures and sales of converting and production facilities and
    sales of non-strategic assets


(5
)


(9
)


(55
)Litigation






5



(56
)Environmental remediation










(9
)Other charges


(2
)


(5
)


1Gain (loss) on sale or retirement of operating property and
    equipment


(3
)


(6
)


(6
)Equity in earnings of joint ventures


1



7



5$
204


$
(28
)

$
(189
)    68




---



##### 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 2009Involuntary employee terminations

$
2


$



$
(2
)

$
Demolition and environmental remediation














$
2


$



$
(2
)

$
For the Year 2008Involuntary employee terminations

$



$
3


$
(1
)

$
2Demolition and environmental remediation


1







(1
)


$
1


$
3


$
(2
)

$
2For the Year 2007Involuntary employee terminations

$
1


$



$
(1
)

$
Demolition and environmental remediation


8



1
(a)


(8
)


1$
9


$
1


$
(9
)

$
1     (a)

    
    In 2007, we revised our estimates relating to the demolition and
    related environmental remediation costs associated with our exit
    activities. We added $6 million to this accrual in 2007 by
    charging other operating expense and transferred $6 million
    to our real estate segment as part of the spin-off. 69




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12 
    Income
    Taxes    For the Year2009


2008


2007(In millions)Current tax provision:U.S. Federal

$
(44
)

$
55


$
(278
)Foreign, state and other


(8
)


(7
)


(10
)(52
)


48



(288
)Deferred tax provision:U.S. Federal


(65
)


(54
)


(410
)Foreign, state and other


(8
)


(1
)


(55
)(73
)


(55
)


(465
)Income tax expense

$
(125
)

$
(7
)

$
(753
)Income taxes (paid) refunded, net

$
(6
)

$
(271
)

$
3       For the Year2009


2008


2007(In millions)U.S.

$
319


$
(16
)

$
1,948Non-U.S.


13



15



7$
332


$
(1
)

$
1,955     For the Year2009


2008


2007Taxes at federal statutory rate

$
116


$



$
684State, net of federal benefit


8



2



60Foreign


4



2



Other


(3
)


3



9Total

$
125


$
7


$
753  70




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At Year-End2009


2008(In millions)Deferred Tax Liabilities:Property, equipment, and intangible assets

$
(375
)

$
(361
)Deferred gain on sale of timberland


(819
)


(818
)U.S. taxes on unremitted foreign earnings


(20
)


(16
)(1,214
)


(1,195
)Deferred Tax Assets:Alternative minimum tax credits


281



281Foreign and state net operating loss carryforwards


22



24Pension and postretirement benefits


160



116Employee benefits


51



35Accruals not deductible until paid


42



45Other


29



36Gross deferred tax assets


585



537Less valuation allowance


(23
)


(26
)562



511Net Deferred Tax Liability

$
(652
)

$
(684
)     At Year-End2009


2008(In millions)Current deferred tax assets

$
69


$
66Non-current deferred tax liabilities


(721
)


(750
)Net deferred tax liability

$
(652
)

$
(684
)      71




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year2009


2008(In millions)Balance beginning of year

$
24


$
26Additions based on tax positions related to the current year


89



2Reductions for tax positions of prior years


(5
)


(1
)Settlements/collections






(2
)Expiration of statute of limitations






(1
)Balance at year-end

$
108


$
24     Note 13 
    Litigation    Note 14 
    Commitments
    and Other Contingencies     72




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 15 
    Derivative
    Instruments and Variable Interest Entities        Note 16 
    Fair
    Values and Fair Value Measurements of Financial
    Instruments    Level 1 
    Observable inputs such as quoted prices in active marketsLevel 2 
    Inputs, other than quoted prices in active markets, that are
    observable either directly or indirectlyLevel 3 
    Unobservable inputs in which there is little or no market data,
    which require a reporting entity to develop its own assumptions 73




---



##### Table of Contents



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



Prices and other relevant information generated by market
    transactions involving identical or comparable assets or
    liabilities.Cost approach



Amount that would be required to replace the service capacity of
    an asset (replacement cost).Income approach



Techniques to convert future amounts to a single present amount
    based on market expectations (including present-value
    techniques, option-pricing and excess earning models).
       At Year-End 2009


At Year-End 2008Carrying Value


Fair Value


Carrying Value


Fair Value


Valuation Technique(In millions)Financial LiabilitiesFixed rate, long-term debt

$
555


$
580


$
841


$
680



Level 2 -Market approach      74




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 17 
    Earnings
    Per Share    For the Year2009


2008


2007(In millions)Earnings for basic and diluted earnings per share:Net income (loss)

$
207


$
(8
)

$
1,305Less: Distributed and undistributed amounts allocated to
    participating securities


(2
)






(25
)205



(8
)


1,280Less: Net income attributable to noncontrolling interest of
    special purpose entities


(1
)






Net income (loss) from continuing operations available to common
    shareholders

$
204


$
(8
)

$
1,280Weighted average shares outstanding:Weighted average shares outstanding  basic


106.9



106.7



106.0Dilutive effect of stock options


1.1



0.7



2.1Weighted average shares outstanding  diluted


108.0



107.4



108.1       At Year End2009


2008(Shares in thousands)Options held


557



1,126Options exercisable


512



832Weighted average exercise price

$
18


$
15Weighted average remaining contractual term (in years)


5



6   Note 18 
    Segment
    Information     75




---



##### Table of Contents



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


Building


Timber and


Segments andPackaging


Products


Timberland


Eliminations


Total(In millions)For the year or at year-end 2009:Revenues from external customers

$
3,001


$
576


$



$



$
3,577Depreciation and amortization


145



44







11



200Equity income (loss) from joint ventures


(1
)


2











1Income (loss) from continuing operations before taxes


347



(27
)






12
(a)


332Total assets


2,295



545







2,869



5,709Investment in joint ventures


3



26











29Goodwill


265



129











394Capital expenditures


107



21







2



130For the year or at year-end 2008:Revenues from external customers

$
3,190


$
694


$



$



$
3,884Depreciation and amortization


146



48







12



206Equity income from joint ventures


6



1











7Income (loss) from continuing operations before taxes


225



(40
)






(186
)(a)


(1
)Total assets


2,366



580







2,923



5,869Investment in joint ventures


3



26











29Goodwill


265



129











394Capital expenditures


142



17







5



164For 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 from continuing operations before taxes


287



8



65



1,595
(a)


1,955Total assets


2,301



623







3,018



5,942Investment in joint ventures


11



23











34Goodwill


236



129











365Capital expenditures and reforestation


167



42



13



15



237     (a)

    
    Items not included in segments consist of:  For the Year2009


2008


2007(In millions)General and administrative expense

$
(70
)

$
(76
)

$
(100
)Share-based and long-term incentive compensation


(58
)


2



(34
)Gain on sale of timberland










2,053Other operating income (expense)


206



(29
)


(188
)Other non-operating income (expense)


(1
)






(35
)Net interest income on financial assets and nonrecourse
    financial liabilities of special purpose entities


(2
)


(2
)


10Interest expense on debt


(63
)


(81
)


(111
)$
12


$
(186
)

$
1,595Other operating income (expense) applies to:Corrugated packaging

$
210


$
4


$
(64
)Building products






(9
)


(63
)Unallocated


(4
)


(24
)


(61
)$
206


$
(29
)

$
(188
)  76




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year2009


2008


2007(In millions)Revenues from external customers:United States

$
3,379


$
3,680


$
3,739Mexico


198



204



187$
3,577


$
3,884


$
3,926   At Year-End2009


2008


2007(In millions)Property and equipment:United States

$
1,567


$
1,635


$
1,596Mexico


28



29



36$
1,595


$
1,664


$
1,632   Note 19 
    Summary
    of Quarterly Results of Operations (Unaudited)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions, except per share)2009Total revenues

$
941


$
906


$
885


$
845Gross profit

$
144


$
125


$
132


$
84Net income attributable to Temple-Inland
    Inc.(a)

$
35


$
66


$
67


$
38Earnings per share:Basic

$
0.33


$
0.62


$
0.62


$
0.35Diluted

$
0.33


$
0.61


$
0.61


$
0.34     (a)

    
    Net income attributable to Temple-Inland Inc. includes the
    following items:  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions)Other operating income (expense):Alternative fuel mixture tax credits, net of related costs

$



$
77


$
69


$
67Closure and sale of converting and production facilities and
    sale of non-strategic assets


(3
)


(1
)


(1
)


Other charges


(1
)


(1
)






$
(4
)

$
75


$
68


$
67Other non-operating income (expense):Substitution costs

$



$
(17
)

$



$
Gain (loss) on purchase and retirement of debt


10



8



(3
)


Interest and other income














1$
10


$
(9
)

$
(3
)

$
1   77




---



##### 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)2008Total revenues

$
944


$
991


$
976


$
973Gross profit

$
68


$
98


$
85


$
100Net income (loss) attributable to Temple-Inland
    Inc.(a)

$
(13
)

$
8


$
3


$
(6
)Earnings per share:Basic

$
(0.12
)

$
0.07


$
0.03


$
(0.06
)Diluted :

$
(0.12
)

$
0.07


$
0.03


$
(0.06
)     (a)

    
    Net income (loss) attributable to Temple-Inland Inc. includes
    the following items:  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions)Other operating income (expense):Transformation costs

$
(20
)

$



$



$
Closures of converting and production facilities














(9
)Litigation


5











Other charges










(1
)


(4
)$
(15
)

$



$
(1
)

$
(13
)Other non-operating income (expense):Charges related to early repayment of debt

$



$



$
(4
)

$
Interest and other income


1



1



1



1$
1


$
1


$
(3
)

$
1   Note 20 
    Discontinued
    Operations    ,
  held-for-sale.
 78




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year 2007(In millions)Real estate income before taxes

$
41Financial services income before taxes


138Chemical operations and
    other(a)


(13
)Income from discontinued operations before taxes


166Income tax expense


(63
)Discontinued operations

$
103     (a)

    
    Includes a $6 million charge for environmental remediation.  Note 21 
    Subsequent
    Events     79




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##### Table of Contents



Item 8.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 8A.
    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 8B.
    Other
    Information   80




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##### Table of Contents



PART III Item 9.
    Directors,
    Executive Officers and Corporate Governance    Year FirstElected toName

Age

the Board

Principal OccupationDoyle R. Simons


46



2007


Chairman and Chief Executive Officer of Temple-Inland Inc.Donald M. Carlton


72



2003


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


65



2004


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


68



2004


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


64



2005


President of Houston Endowment Inc.Jeffrey M. Heller


70



2004


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


48



2007


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


62



2000


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


64



2006


Chairman of NewsweekArthur Temple III


67



1983


Chairman of the Board of First Bank & Trust, East Texas and
    the T.L.L. Temple FoundationR.A. (Al) Walker


53



2008


Chief Operating Officer of Anadarko Petroleum Corporation   Form 10-K
  Item 10.
    Executive
    Compensation   81




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##### Table of Contents



Item 11.
    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(1)

Rights(1)

Reflected in
    Column(a))(1)Equity compensation plans approved by security holders

7,874,322

$15

NoneEquity compensation plans not approved by security holders

None

None

NoneTotal

7,874,322

$15

None     (1)

    
    Includes 7,874,322 options outstanding, of which 7,316,920
    relate to our employees and have a weighted average term of
    seven years and 557,402 relate to employees of spun-off
    entities, Guaranty Financial Group Inc. and Forestar Group Inc.,
    and have a weighted average term of five years. Includes
    143,446 shares payable to directors for deferred fees.
    Includes 14,672 stock-settled restricted stock units that
    related to deferred bonuses and deferred vested restricted
    shares that could not be paid out until after retirement due to
    Code Section 162(m) policy.    Item 12.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 13.
    Principal
    Accounting Fees and Services   PART IV  Item 14.
    Exhibits,
    Financial Statement Schedules    Financial Statements
  Form 10-K.
  Financial Statement Schedules
   82




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##### Table of Contents



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 3.02 to the Companys
    Form 8-K
    dated February 5, 2010, and filed with the Commission on
    February 9, 2010)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)4
.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



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
.08



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
.09



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. 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
.03*



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
.04*



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)10
.05*



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) 83




---



##### Table of Contents



ExhibitNumber



Exhibit10
.06*



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
.07*



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
.08*



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
.09*



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
.10*



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
.11*



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
.12*



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
.13*



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
.14*



Amended and Restated Temple-Inland Supplemental Executive
    Retirement Plan (incorporated by reference to Exhibit 10.15
    to the Companys
    Form 10-K
    for the year ended January 3, 2009, and filed with the
    commission on February 23, 2009)10
.15*



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
.16*



Amendment to Employment Agreement between the Company and Doyle
    R. Simons, dated November 7, 2008 (incorporated by
    reference to Exhibit 10.17 to the Companys
    Form 10-K
    for the year ended January 3, 2009, and filed with the
    commission on February 23, 2009)10
.17*



Second Amendment to Employment Agreement between the Company and
    Doyle R. Simons, dated November 6, 2009(1)10
.18*



Change in Control Agreement dated November 7, 2008, between
    the Company and J. Patrick Maley III (incorporated by
    reference to Exhibit 10.18 to the Companys
    Form 10-K
    for the year ended January 3, 2009, and filed with the
    commission on February 23, 2009)10
.19*



First Amendment to Change in Control Agreement between the
    Company and J. Patrick Maley III dated August 7,
    2009(1)10
.20*



Change in Control Agreement dated November 7, 2008, between
    the Company and Dennis J. Vesci(1)10
.21*



First Amendment to Change in Control Agreement between the
    Company and Dennis J. Vesci dated August 7, 2009(1)10
.22*



Change in Control Agreement dated November 7, 2008, between
    the Company and Randall D. Levy (incorporated by reference to
    Exhibit 10.20 to the Companys
    Form 10-K
    for the year ended January 3, 2009, and filed with the
    commission on February 23, 2009)10
.23*



First Amendment to Change in Control Agreement between the
    Company and Randall D. Levy dated August 7, 2009(1)10
.24*



Change in Control Agreement dated November 7, 2008, between
    the Company and Larry C. Norton (incorporated by reference to
    Exhibit 10.21 to the Companys
    Form 10-K
    for the year ended January 3, 2009, and filed with the
    commission on February 23, 2009)10
.25*



First Amendment to Change in Control Agreement between the
    Company and Larry C. Norton dated August 7, 2009(1) 84




---



##### Table of Contents



ExhibitNumber



Exhibit10
.26



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
.27



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
.28



Pulpwood Supply Agreement, dated October 31, 2007, by and
    between TIN Inc. and CPT LOGCO, LLC (incorporated by reference
    to Exhibit 10.25 to the Companys Annual Report on
    Form 10-K
    for the year ended December 29, 2007, and filed with the
    Commission on February 27, 2008)(2)10
.29



Sawtimber Supply Agreement, dated October 31, 2007, by and
    between TIN Inc. and CPT LOGCO, LLC (incorporated by reference
    to Exhibit 10.26 to the Companys Annual Report on
    Form 10-K
    for the year ended December 29, 2007, and filed with the
    Commission on February 27, 2008)(2)10
.30*



Temple-Inland Inc. 2008 Incentive Plan (incorporated by
    reference to Exhibit 10.27 to the Companys Annual
    Report on
    Form 10-K
    for the year ended December 29, 2007, and filed with the
    Commission on February 27, 2008)10
.31*



Form of Nonqualified Stock Option Agreement issued pursuant to
    the Temple-Inland Inc. 2008 Stock Incentive Plan (incorporated
    by reference to Exhibit 10.28 to the Companys Annual
    Report on
    Form 10-K
    for the year ended December 29, 2007, and filed with the
    Commission on February 27, 2008)10
.32*



Form of Restricted Stock Units Agreement issued pursuant to the
    Temple-Inland Inc. 2008 Incentive Plan (incorporated by
    reference to Exhibit 10.29 to the Companys Annual
    Report on
    Form 10-K
    for the year ended December 29, 2007, and filed with the
    Commission on February 27, 2008)10
.33*



Form of Restricted Units Agreement issued pursuant to the
    Temple-Inland Inc. 2008 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.29 to the Companys Annual
    Report on
    Form 10-K
    for the year ended January 3, 2009, and filed with the
    Commission on February 23, 2009)10
.34*



Revised Form of Performance Stock Units Agreement issued
    pursuant to the Temple-Inland Inc. 2008 Incentive Plan(1)10
.35*



Temple-Inland Inc. Bonus Plan for Tier I
    Level Executives (incorporated by reference to
    Exhibit 10.31 to the Companys Annual Report on
    Form 10-K
    for the year ended January 3, 2009, and filed with the
    Commission on February 23, 2009)10
.36*



Temple-Inland Inc. 2010 Incentive Plan(1)10
.37*



Temple-Inland Inc. 2010 Bonus Plan for Tier I
    Level Executives(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. 85




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##### 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 23, 2010/s/  Randall
    D. LevyRandall
    D. Levy

Chief Financial Officer

February 23, 2010/s/  Troy
    L. HesterTroy
    L. Hester

Principal Accounting Officer

February 23, 2010/s/  Donald
    M. CarltonDonald
    M. Carlton

Director

February 23, 2010/s/  Cassandra
    C. CarrCassandra
    C. Carr

Director

February 23, 2010/s/  E.
    Linn Draper, Jr.E.
    Linn Draper, Jr.

Director

February 23, 2010/s/  Larry
    R. FaulknerLarry
    R. Faulkner

Director

February 23, 2010/s/  Jeffrey
    M. HellerJeffrey
    M. Heller

Director

February 23, 2010/s/  J.
    Patrick Maley IIIJ.
    Patrick Maley III

Director

February 23, 2010/s/  W.
    Allen ReedW.
    Allen Reed

Director

February 23, 2010 86




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##### Table of Contents



Signature

Capacity

Date/s/  Richard
    M. SmithRichard
    M. Smith

Director

February 23, 2010/s/  Arthur
    Temple IIIArthur
    Temple III

Director

February 23, 2010/s/  R.A.
    WalkerR.A.
    Walker

Director

February 23, 2010  87