##### 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 3, 2009oro

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,
    3rdFloor
 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,

New York Stock Exchangenon-cumulative         Indicate by check mark if the registrant is a well-known
    seasoned issuer, as defined in Rule 405 of the Securities
    Act.  Yes o No þ
  Indicate by check mark if the registrant is not required to
    file reports pursuant to Section 13 or Section 15(d)
    of the Securities Exchange Act of
    1934.  Yes o No þ
  Indicate by check mark whether the registrant: (1) has
    filed all reports required to be filed by Section 13 or
    15(d) of the Securities Exchange Act of 1934 during the
    preceding 12 months (or for such shorter period that the
    registrant was required to file such reports), and (2) has
    been subject to such filing requirements for the past
    90 days.  Yes þ No o
  Indicate by check mark if disclosure of delinquent filers
    pursuant to Item 405 of
    Regulation S-K
    is not contained herein, and will not be contained, to the best
    of registrants knowledge, in definitive proxy or
    information statements incorporated by reference in
    Part III of this
    Form 10-K
    or any amendment to this
    Form 10-K. þ
  Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, a non-accelerated
    filer, or a smaller reporting company. See the definitions of
    large accelerated filer, accelerated
    filer and smaller reporting company in
    Rule 12b-2
    of the Exchange Act. (Check one):
 Large accelerated filer þ

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


8Item 1B.

Unresolved Staff Comments


11Item 2.

Properties


11Item 3.

Legal Proceedings


14Item 4.

Submission of Matters to a Vote of Security
    Holders


15PART II.Item 5.

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


15Item 6.

Selected Financial Data


18Item 7.

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


20Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


40Item 8.

Financial Statements and Supplementary Data


41Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


80Item 9A.

Controls and Procedures


80Item 9B.

Other Information


80PART III.Item 10.

Directors, Executive Officers and Corporate
    Governance


81Item 11.

Executive Compensation


81Item 12.

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


82Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


82Item 14.

Principal Accounting Fees and Services


82PART IV.Item 15.

Exhibits, Financial Statement Schedules


82SIGNATURES.


86EX-10.15EX-10.17EX-10.18EX-10.19EX-10.20EX-10.21EX-10.29EX-10.30EX-10.31EX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2   i




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PART I  Item 1.
    Business  Introduction
  Form 10-K.
  
  rd (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
     3




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Employees
    Approximate Number ofLocation

Bargaining Unit(s)

Employees Covered

Expiration DatesLinerboard Mill,
    Orange, Texas

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

198 hourly production employees and 90 hourly
    maintenance employees

July 31, 2008Linerboard Mill,
    Bogalusa, Louisiana

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

222 hourly production employees
    and 102 hourly
    maintenance employees

July 31, 2009Linerboard Mill,
    Rome, Georgia

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

244 hourly production employees, 24 electrical maintenance
    employees,
    25 pipefitter
    maintenance employees, and 58 mechanical maintenance employees

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

USW, Local 1046 and USW, Local 114,
    respectively

77 and 78 hourly production and
    maintenance employees,
    respectively

April 30, 2011Paper Mill,
    Newport, Indiana

USW, Local 7-154

32 hourly maintenance employees
    and 77 hourly production
    employees

July 14, 2010       Environmental
    Protection
   4




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5




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Climate
    Change
      Competition
       6




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Executive
    Officers of the Registrant
    Name

Age

OfficeDoyle R. Simons


45


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


47


President and Chief Operating OfficerJack C. Sweeny


62


Group Vice PresidentLarry C. Norton


49


Group Vice PresidentDennis J. Vesci


61


Group Vice PresidentRandall D. Levy


57


Chief Financial Officer and TreasurerJ. Bradley Johnston


53


Chief Administrative OfficerC. Morris Davis


66


General CounselScott Smith


54


Chief Information OfficerGrant F. Adamson


50


Chief Governance OfficerLeslie K. ONeal


53


Vice President, Assistant General Counsel and SecretaryCarolyn C. Sloan


48


Vice President, Internal AuditTroy L. Hester


52


Principal Accounting Officer and Corporate Controller                      7




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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.
     8




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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.
   9




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Form 10-K,
  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.
    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.
   10




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


Annual


2008Location

Product

Machines


Capacity


Production(In tons)Ontario, California

Linerboard and corrugating medium


1



332,100



308,908Rome, Georgia

Linerboard


2



894,250



863,493Orange, Texas

Linerboard and corrugating medium


2



757,375



681,809Bogalusa, Louisiana

Linerboard


2



912,500



860,001Maysville, Kentucky

Linerboard and corrugating medium


1



535,050



517,593 11




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##### Table of Contents



Number of


Annual


2008Location

Product

Machines


Capacity


Production(In tons)New Johnsonville, Tennessee

Corrugating medium


1



378,225



363,682Newport, Indiana*

Corrugating medium, linerboard,
    and gypsum facing paper


1



339,480



291,7154,148,980



3,887,201     *
    
    The table shows the full capacity and production of this
    facility, which was owned by a joint venture in which we owned a
    50 percent interest until July 2008 when it became
    wholly-owned.  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Evansville, 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 12




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##### Table of Contents



CorrugatorLocation

SizeMilltown, 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.   13




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Building
    Products
  Rated AnnualDescription

Location

Capacity(In millions ofboard feet)Lumber

Diboll, Texas


199
*Lumber

Pineland, Texas


310
**Lumber

Buna, Texas


198Lumber

Rome, Georgia


165Lumber

DeQuincy, Louisiana


198Total lumber




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

Location

Capacity(In millions ofsquare feet)Gypsum Wallboard

West Memphis, Arkansas


440Gypsum Wallboard

Fletcher, Oklahoma


460Gypsum Wallboard

McQueeney, Texas


400Gypsum Wallboard

Cumberland City, Tennessee


800Total gypsum wallboard




2,100Particleboard

Monroeville, Alabama


160Particleboard

Thomson, Georgia


160Particleboard

Diboll, Texas


160Particleboard

Hope, Arkansas


200Total particleboard




680MDF*

El Dorado, Arkansas


160MDF(1)

Mt. Jewett, Pennsylvania


140Total MDF




300Fiberboard**

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.**
    
    Excludes capacity for hardboard siding, which we ceased
    producing in 2008.(1)

    
    Leased facilities.  Other
      Item 3.
    Legal
    Proceedings  General
   14




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Bogalusa
    Litigation
      Asbestos
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    2008


2007(1)Price Range





Price RangeHigh


Low


Dividends


High


Low


DividendsFirst Quarter

$
21.68


$
11.64


$
0.10


$
63.61


$
44.29


$
0.28Second Quarter

$
15.54


$
11.08


$
0.10


$
64.45


$
59.00


$
0.28Third Quarter

$
20.49


$
10.52


$
0.10


$
66.28


$
49.17


$
0.28Fourth Quarter

$
15.42


$
2.34


$
0.10


$
57.51


$
29.09


$
10.53
*For the Year

$
21.68


$
2.34


$
0.40


$
66.28


$
29.09


$
11.37
*     (1)

    
    Stock prices for 2007 have not been restated to reflect the
    effects of the special dividend or the spin-offs of Guaranty
    Financial Group and Forestar Group at the end of 2007.
    Accordingly, it may be difficult to make meaningful comparisons
    between 2008 and 2007.*
    
    Includes a special dividend of $10.25 per share paid in December
    2007. 15




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Shareholders
    Dividend
    Policy
    Issuer
    Purchases of Equity
    Securities(1)
  MaximumTotal Number


Number ofof Shares


Shares ThatPurchased as


May Yet beTotal


Average


Part of Publicly


PurchasedNumber of


Price


Announced


Under theShares


Paid per


Plans or


PlansPeriod

Purchased


Share


Programs


or ProgramsMonth 1 (10/1/2008  10/31/2008)





$








6,650,000Month 2 (11/1/2008  11/30/2008)


8,370
(2)

$
5.49







6,650,000Month 3 (12/1/2008  12/31/2008)





$








6,650,000Total


8,370


$
5.49



     (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.  Performance
    Graph
     16




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##### Table of Contents



*
    Other
  See Item 12. Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters
 17




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Item 6.
    Selected
    Financial Data  For the Year2008(a)


2007(b)


2006(c)


2005


2004(Dollars in millions, except per share)Revenues:Corrugated packaging

$
3,190


$
3,044


$
2,977


$
2,825


$
2,736Building products


694



806



1,119



898



851Timber and timberland






76



89



120



107Total revenues

$
3,884


$
3,926


$
4,185


$
3,843


$
3,694Segment operating income:Corrugated packaging

$
225


$
287


$
255


$
120


$
96Building products


(40
)


8



221



125



129Timber and timberland






65



63



72



52Segment operating income


185



360



539



317



277Items not included in segments:General and administrative expense


(76
)


(100
)


(107
)


(91
)


(79
)Share-based compensation


2



(34
)


(38
)


(21
)


(12
)Gain on sale of
    timberland(d)






2,053











Other operating income
    (expense)(e)


(29
)


(188
)


26



(85
)


(42
)Other non-operating income
    (expense)(e)






(35
)


93







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


(2
)


10











Interest expense on debt


(81
)


(111
)


(123
)


(109
)


(125
)Income (loss) before taxes


(1
)


1,955



390



11



19Income tax (expense)
    benefit(g)


(7
)


(753
)


(103
)


7



8Income (loss) from continuing operations


(8
)


1,202



287



18



27Discontinued
    operations(h)






103



181



158



133Net income (loss)

$
(8
)

$
1,305


$
468


$
176


$
160Diluted earnings (loss) per share:Income (loss) from continuing
    operations(i)

$
(0.08
)

$
11.12


$
2.59


$
0.16


$
0.24Discontinued
    operations(h)






0.96



1.63



1.38



1.18Net income (loss)

$
(0.08
)

$
12.08


$
4.22


$
1.54


$
1.42Dividends per common
    share(j)

$
0.40


$
11.37


$
1.00


$
0.90


$
1.22Average basic shares outstanding


106.7



106.0



108.8



112.6



111.4Average diluted shares outstanding


107.4



108.1



110.8



114.5



112.4Common shares outstanding at year-end


106.5



106.1



104.9



111.0



112.2Depreciation and amortization

$
206


$
214


$
225


$
218


$
219Capital expenditures

$
164


$
237


$
204


$
220


$
219At Year-End:Assets:Manufacturing assets

$
3,395


$
3,559


$
3,627


$
3,411


$
3,522Financial assets of special purpose
    entities(f)


2,474



2,383











Assets of discontinued operations










16,847



18,219



16,622Total assets

$
5,869


$
5,942


$
20,474


$
21,630


$
20,144Debt (long-term excluding current maturities and nonrecourse
    financial liabilities of special purpose entities)

$
1,191


$
852


$
1,584


$
1,498


$
1,485Nonrecourse financial liabilities of special purpose
    entities(f)

$
2,140


$
2,140


$



$



$
Liability for pension and postretirement benefits

$
290


$
256


$
366


$
407


$
432Noncontrolling interest of special purpose
    entities(f)

$
91


$



$



$



$
Shareholders equity

$
686


$
780


$
2,189


$
2,080


$
2,107Ratio of debt to total capitalization


63
%


52
%


42
%


42
%


41
%     (a)

    
    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) for $62 million and prepaid the
    ventures debt of $50 million. 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. 18




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(b)

    
    In 2007, we adopted Financial Accounting Standards Board (FASB)
    Interpretation No. 48 (FIN 48), Accounting for
    Uncertainty in Income Taxes, which increased assets by
    $2 million, reduced liabilities by $3 million and
    increased beginning retained earnings by $5 million (we
    also reclassified $11 million from deferred income taxes to
    other long-term liabilities). We also adopted the measurement
    provisions of Statement of Financial Accounting Standards (SFAS)
    No. 158, Employers Accounting for Defined Benefit
    Pension and Other Postretirement Plans,which reduced
    beginning retained earnings by $5 million.(c)

    
    In January 2006, we purchased our partners 50 percent
    interest in Standard Gypsum LP for $150 million and assumed
    debt of $28 million. Unaudited pro forma information
    assuming this acquisition and related financing had occurred at
    the beginning of 2005 follows: revenues $4.04 billion;
    income from continuing operations $32 million; and income
    from continuing operations, per diluted share $0.28. These pro
    forma results are not necessarily an indication of what actually
    would have occurred if the acquisition and financing
    transactions had been completed at the beginning of 2005 and are
    not intended to be indicative of future results.Also in 2006, (i) we adopted the modified prospective
    application of SFAS No. 123 (revised December 2004),
    Share-Based Payment, which decreased 2006 income before
    taxes by $6 million; (ii) we began applying the
    guidance in Emerging Issues Task Force (EITF) Issue
    No. 04-13,
    Accounting for Purchases and Sales of Inventory with the Same
    Counterparty, which decreased income before taxes by
    $7 million in 2006 and $2 million in 2007; and
    (iii) we adopted SFAS No. 158, Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans, which increased our liability for pension and
    postretirement benefits by $76 million, decreased prepaid
    expenses and other assets by $16 million, decreased
    deferred income taxes by $35 million, and decreased
    shareholders equity by $57 million.(d)

    
    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. The acreage sold consisted of
    1.38 million acres owned in fee and leases covering
    175,000 acres. The total consideration consisted almost
    entirely of notes due in 2027 that are secured by irrevocable
    letters of credit issued by independent financial institutions.
    We also entered into a
    20-year
    fiber supply agreement for pulpwood and a
    12-year
    fiber supply agreement for sawtimber. Both agreements are at
    market prices and are subject to extension.(e)

    
    Other operating and non-operating income (expense) consists of:  For the Year2008


2007


2006


2005


2004(In millions)Other operating income (expense):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


(9
)


(55
)


(4
)


(50
)


(27
)Litigation


5



(56
)


(6
)


(16
)


(4
)Environmental remediation






(9
)


(8
)


(3
)


Softwood Lumber Agreement










42







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










2



(16
)


Consolidation of administrative functions


















(11
)Other charges


(5
)


1











$
(29
)

$
(188
)

$
26


$
(85
)

$
(42
)Other non-operating income (expense):Charges related to early repayment of debt

$
(4
)

$
(40
)

$



$
(6
)

$
(2
)Tax litigation and other settlements










89



2



Interest and other income


4



5



4



4



2$



$
(35
)

$
93


$



$
  19




---



##### Table of Contents



(f)

    
    In October 2007, we received $2.38 billion in notes from
    the sale of our timberland, which we later contributed to two
    wholly-owned, bankruptcy-remote special purpose entities. In
    December 2007, the special purpose entities pledged the notes as
    collateral for $2.14 billion nonrecourse loans payable in
    2027. Both the notes and the borrowings require quarterly
    interest payments based on variable interest rates. Interest
    rates on the notes are based on LIBOR and reset quarterly.
    Interest rates on the borrowings reflect the lenders
    pooled commercial paper issuances and reset daily. We include
    these 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 these special purpose entities in 2008.(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; $16 million in 2005 related to
    the sale of our Pembroke, Canada MDF facility; and
    $20 million in 2004 related to the resolution and
    settlement of prior years tax examinations.(h)

    
    Discontinued operations include the operations of our financial
    services and real estate segments, which were spun off to our
    shareholders on December 28, 2007, and the chemical
    business obtained in the Gaylord acquisition, which was sold in
    August 2007. The resolution and settlement of environmental and
    other indemnifications related to the 1999 sale of our bleached
    paperboard operation are also included in 2004.(i)

    
    Earnings per share for 2008 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 and $0.50
    per share in 2004.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements
    
    general economic, market, or business conditions;
    the opportunities (or lack thereof) that may be presented to us
    and that we may pursue;
    fluctuations in costs and expenses including the costs of raw
    materials, purchased energy, and freight;
    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; 20




---



##### Table of Contents




    our ability to execute certain strategic and business
    improvement initiatives;
    the accuracy of certain judgments and estimates concerning the
    integration of acquired operations; and
    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.
  
    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. 21




---



##### Table of Contents




    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 86 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. We believe that using a yield
    curve more accurately reflects changes in the present value of
    our defined benefit plan obligation because each years
    cash flow will be discounted at a rate at which it could
    effectively be settled versus the use of a single index rate. We
    previously referenced an index for long-term, high-quality
    bonds, ensuring that the duration of that index did not
    materially differ from the duration of the plans
    liabilities. Differences between actual and expected rates of
    return and changes in the discount rate will affect future
    pension expense and funded status. For example, a 25 basis
    point change in the discount rate would affect the projected
    benefit obligation by about $41 million and the net
    periodic pension cost by about $4 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
  Fair Value
    Measurements The Fair Value
    Option for Financial Assets and Financial Liabilities Note 1 to the
    Consolidated Financial Statements
  Transformation
      Results
    of Operations for the Years 2008, 2007, and 2006
  Summary
    
    Maximizing ROI and
    Profitably growing our business. 22




---



##### Table of Contents




    Maintaining full integration,
    Driving for low cost through asset utilization and manufacturing
    excellence,
    Improving mix and margins through sales excellence, and
    Growing our business.    
    Delivering a tailored portfolio of building products,
    Driving for low cost through manufacturing excellence,
    Serving growing markets with favorable demographics, and
    Promoting sales excellence.    
    We had record production in our containerboard mills through
    manufacturing excellence.
    We improved asset utilization and lowered costs in our box
    plants through our box plant transformation.
    We grew our business through the purchase 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. Late in 2008, we began producing white-top
    linerboard at this mill.
    We continued to drive down our costs throughout our company.    For the Year2008


2007


2006(Dollars in millions, except per share)Consolidated revenues

$
3,884


$
3,926


$
4,185Income (loss) from continuing operations


(8
)


1,202



287Income (loss) from continuing operations, per share


(0.08
)


11.12



2.59ROI


4.5
%


7.8
%


13.4
%     
    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 effect of the
    lower share price on our cash-settled awards.
    We incurred $20 million of costs primarily related to our
    transformation plan, of which $15 million is 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. 23




---



##### Table of Contents




    Interest expense decreased primarily due to the December 2007
    early retirement of $286 million of
    6.75 percent Notes and $213 million of
    7.875 percent 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 continue to see the benefit in our manufacturing
    operations from our initiatives to lower costs, improve asset
    utilization, and increase operating efficiencies, the higher
    cost of recycled fiber used at our containerboard mills offset
    some of the benefits.
    We recognized $120 million in charges, including
    $64 million as a result of the decision to cease production
    permanently at our Mt. Jewett particleboard facility and
    $56 million for the settlement of antitrust and other
    litigation.    
    We continued to see benefits in our manufacturing operations
    from our initiatives to lower costs, improve asset utilization,
    and increase operating efficiencies.
    We experienced improved markets for our corrugated packaging and
    building products, principally gypsum wallboard and
    particleboard. We acquired our partners 50 percent
    interest in Standard Gypsum LP in January.
    Charges related to facility closures and environmental
    remediation at a paper mill site totaled $12 million.
    We realized one-time cash gains of $89 million related to
    the settlement of tax litigation and $42 million related to
    the Softwood Lumber Agreement entered into between the
    U.S. and Canada.  Business
    Segments
      Corrugated
    Packaging
   24




---



##### Table of Contents



For the Year2008


2007


2006(Dollars in millions)Revenues

$
3,190


$
3,044


$
2,977Costs and expenses


(2,965
)


(2,757
)


(2,722
)Segment operating income

$
225


$
287


$
255Segment ROI


11.3
%


14.3
%


12.5
%       Year over YearIncrease (Decrease)2008


2007


2006Corrugated packagingAverage prices


4
%


3
%


6
%Shipments, average
    week(a)


(2
)%


(1
)%


(2
)%Industry shipments, average
    week(b)


(4
)%


(2
)%


1
%PaperboardAverage prices


1
%


5
%


22
%Shipments, in thousand
    tons(c)


166



(7
)


46     (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 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.       25




---



##### Table of Contents



Year over YearIncrease (Decrease)2008


2007


2006(In millions)Wood fiber

$
5


$
8


$
16Recycled fiber


15



77



(9
)Energy, principally natural gas


61



(1
)


(8
)Freight


29



(3
)


32Depreciation


4



(11
)


(7
)Health care


(1
)


(1
)


(3
)Pension and postretirement






(12
)


(2
)       For the Year2008


2007


2006Number of converting facilities (at year-end)


63



64



64Corrugated packaging shipments, in million tons


3.3



3.4



3.4Paperboard production, in million tons


3.7



3.6



3.6Percent containerboard production used internally


87
%


92
%


91
%Percent of total fiber requirements sourced from recycled fiber


42
%


36
%


34
%       Building
    Products
      For the Year2008


2007


2006(Dollars in millions)Revenues

$
694


$
806


$
1,119Costs and expenses


(734
)


(798
)


(898
)Segment operating income (loss)

$
(40
)

$
8


$
221Segment ROI


(7.1
)%


1.4
%


37.7
%  26




---



##### Table of Contents



Year over YearIncrease (Decrease)2008


2007


2006Lumber:Average prices


1
%


(13
)%


(16
)%Shipments


(8
)%


1
%


7
%Gypsum wallboard:Average prices


(18
)%


(27
)%


26
%Shipments


(28
)%


(26
)%


132
%Particleboard:Average prices


4
%


2
%


15
%Shipments


(7
)%


(17
)%


(5
)%MDF:Average prices


12
%


1
%


5
%Shipments


4
%


(5
)%


(30
)%           Year over YearIncrease (Decrease)2008


2007


2006(In millions)Wood fiber

$
(43
)

$
(32
)

$
(12
)Energy, principally natural gas


(6
)


(21
)


16Freight


(6
)


(12
)


26Chemicals


12



(5
)


(1
)Depreciation


3



1



9Health care


(2
)


1



(1
)Pension and postretirement


1



1



(3
)    27




---



##### Table of Contents



For the Year2008


2007


2006Number of converting and manufacturing facilities (at year-end)


16



16



17Operating rates for:Lumber


76
%


91
%


91
%Gypsum wallboard


51
%


70
%


95
%Particleboard


67
%


72
%


70
%MDF


97
%


102
%


33
%     Timber
    and Timberland
      For the Year2007(a)


2006(Dollars in millions)Revenues

$
76


$
89Costs and expenses


(11
)


(26
)Segment operating income

$
65


$
63Segment ROI


20.4
%


19.5
%     (a)

    
    Ten months of operating results.      For the Year2007(a)


2006(In million tons)Sawtimber


2.1



2.6Pulpwood


2.9



3.45.0



6.0     (a)

    
    Ten months of operating results. 28




---



##### Table of Contents



Items Not
    Included in Segments
          For the Year2008


2007


2006(In millions)Transformation costs

$
(20
)

$
(69
)

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


(9
)


(55
)


(4
)Litigation


5



(56
)


(6
)Environmental remediation






(9
)


(8
)Softwood Lumber Agreement










42Hurricane related insurance proceeds










2Other charges


(5
)


1



$
(29
)

$
(188
)

$
26        29




---



##### Table of Contents



Financial Assets and Nonrecourse Financial Liabilities of
    Special Purpose Entities
    Income
    Taxes
      Discontinued
    Operations
          For the Year2007


2006(In millions)Real estate income before taxes

$
41


$
83Financial services income before taxes


138



204Chemical operations and
    other(a)


(13
)


(2
)Income from discontinued operations before taxes


166



285Income tax expense


(63
)


(104
)Discontinued operations

$
103


$
181     (a)

    
    2007 includes a $6 million charge for environmental
    remediation. 30




---



##### Table of Contents



Average
    Shares Outstanding
    Capital
    Resources and Liquidity
  Sources
    and Uses of Cash
    For the Year2008


2007


2006(In millions)Cash received from:Operations (including payments related to our 2007
    transformation plan of $50 million in 2008 and
    $23 million in 2007)

$
222
(a)

$
25
(a)

$
633
(a)Working capital (including payments related to our 2007
    transformation plan of $297 million in 2008)


(404
)


271



16Tax litigation settlement, net










89Softwood Lumber Agreement payments










42Cash received from (used for) operations


(182
)


296



780Nonrecourse borrowing secured by financial assets of special
    purpose entities (net of costs of $4 million)






2,136



Borrowings, net


286







40Exercise of options and related tax benefits






35



57Other


4



36



64Total sources


108



2,503



941Cash used to:Reduce borrowings, net (including a payment of a
    $38 million debt tender premium in 2007)






(780
)


Return to shareholders through:Dividends


(43
)


(1,212
)


(108
)Repurchase of common stock






(24
)


(318
)Reinvest in the business through:Capital expenditures


(164
)


(237
)


(204
)Acquisition of PBL in 2008 and Standard Gypsum in 2006, net of
    cash acquired


(57
)






(144
)Joint ventures and other


(30
)


(21
)


(5
)Total uses


(294
)


(2,274
)


(779
)Discontinued operations, net






(32
)


(132
)Change in cash and cash equivalents

$
(186
)

$
197


$
30     (a)

    
    Includes voluntary, discretionary contributions to our defined
    benefit plan of $30 million in 2008, $60 million in
    2007, and $60 million in 2006. 31




---



##### Table of Contents



Liquidity
    and Contractual Obligations
  Credit
    Agreements
    AccountsCommitted


ReceivableCredit


SecuritizationAgreements


Facility


Total(In millions)Committed

$
835


$
250


$
1,085Less: borrowings and commitments


(180
)


(190
)


(370
)Unused borrowing capacity at year-end 2008

$
655


$
60


$
715      32




---



##### Table of Contents



Contractual
    Obligations
    Payments Due or Expiring by YearTotal


2009


2010-11


2012-13


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

$
1,192


$
33


$
354


$
293


$
512Nonrecourse 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


364



59



115



79



111Operating
    leases(b)


215



43



63



39



70Purchase obligations


1,617



195



289



218



915Other long-term
    liabilities(a)


13



4



5



1



3$
3,401


$
334


$
826


$
630


$
1,611     (a)

    
    Items included on our balance sheet.(b)

    
    The present value of future operating lease payments of
    $57 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



Off-Balance
    Sheet Arrangements
    Expiring by YearTotal

2009

2010-11

2012-13

Thereafter(In millions)Joint venture guarantees

$
17



2



15







Performance bonds and recourse obligations


58



58











      35




---



##### Table of Contents



Pension,
    Postretirement Medical and Health Care Matters
                Critical Accounting Estimates Note 8 to the Consolidated Financial Statements
      For the Year2008

2007

2006(In millions)Cost incurred by us

$
65


$
69


$
67Cost incurred by employees


31



31



30$
96


$
100


$
97  36




---



##### Table of Contents



Energy
    and the Effects of Inflation
      Environmental
    Protection
  Business  Environmental Regulation
  Litigation
    Matters
  Legal Proceedings
 37




---



##### Table of Contents



Calculation
    of Non-GAAP Financial Measures
  Corrugated


Building


Timber andConsolidated


Packaging


Products


Timberland(Dollars in millions)Year 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
%Year 2006Return:Segment operating income determined in accordance with GAAP

$
539


$
255


$
221


$
63Items not included in segments:General and administrative expense


(107
)


N/A



N/A



N/AShare-based compensation


(38
)


N/A



N/A



N/A$
394


$
255


$
221


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

$
21,630


$
2,308


$
456


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


(476
)


(269
)


(66
)


(10
)Assets of discontinued operations


(18,219
)


N/A



N/A



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


(188
)


N/A



N/A



N/AAcquisition of Standard Gypsum LP in January 2006


196



N/A



196



N/A$
2,943


$
2,039


$
586


$
323ROI


13.4
%


12.5
%


37.7
%


19.5
%  38




---



##### Table of Contents



Statistical
    and Other Data
    For the Year2008


2007


2006(Dollars in millions)RevenuesCorrugated PackagingCorrugated packaging

$
2,975


$
2,905


$
2,841Paperboard(a)(b)


215



139



136$
3,190


$
3,044


$
2,977Building ProductsPine lumber

$
225


$
244


$
278Particleboard


175



181



214Gypsum wallboard


135



228



420Medium density fiberboard


72



62



65Fiberboard


41



52



72Other


46



39



70$
694


$
806


$
1,119Timber and
    Timberland(c)Fiber and other

$
N/A


$
76


$
89Unit salesCorrugated PackagingCorrugated packaging, thousands of tons


3,303



3,351



3,371Paperboard, thousands of
    tons(a)(b)


469



303



3103,772



3,654



3,681Building ProductsPine lumber, million board feet


769



838



829Particleboard, million square feet


472



506



609Gypsum wallboard, million square feet


1,061



1,475



1,990Medium density fiberboard, million square feet


140



135



142Fiberboard, million square feet


213



288



362     (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 Premier Boxboard Limited LLC. 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. 39




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##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
            Increase (Decrease)Year-End 2008


Year-End 2007Special








SpecialChange in

Variable


Purpose





Variable


PurposeInterest Rates

Rate Debt


Entities - Net


Total


Rate Debt


Entities - Net


Total(In millions)+2%

$
(7
)

$
5


$
(2
)

$
(1
)

$
5


$
4+1%


(3
)


2



(1
)






2



2−1%


3



(2
)


1







(2
)


(2
)−2%


7



(5
)


2



1



(5
)


(4
)   Foreign
    Currency Risk
    Commodity
    Price Risk
   40




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##### Table of Contents



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


42Report of Independent Registered Public
    Accounting Firm


43Report of Independent Registered Public
    Accounting Firm


44Temple-Inland Inc. and Subsidiaries:Consolidated Balance Sheets


45Consolidated Statements of Income


46Consolidated Statements of Cash Flows


47Consolidated Statements of Shareholders
    Equity


48Notes to Consolidated Financial Statements


49  41




---



##### Table of Contents



MANAGEMENTS
    ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING    Rule 13a-15 Internal Control  Integrated
    Framework
    Form 10-K,
 42




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##### Table of Contents



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




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  At Year-End2008


2007(In millions)ASSETSCurrent AssetsCash and cash equivalents

$
41


$
227Trade receivables, net of allowance for doubtful accounts of $14
    in 2008 and 2007


407



433Inventories:Work in process and finished goods


104



116Raw materials


217



224Supplies and other


137



121Total inventories


458



461Deferred tax asset


66



99Income taxes receivable


57



Prepaid expenses and other


44



57Total current assets


1,073



1,277Property and EquipmentLand and buildings


671



641Machinery and equipment


3,577



3,423Construction in progress


36



120Less allowances for depreciation


(2,620
)


(2,552
)Total property and equipment


1,664



1,632Financial Assets of Special Purpose Entities


2,474



2,383Goodwill


394



365Other Assets


264



285TOTAL ASSETS

$
5,869


$
5,942LIABILITIESCurrent LiabilitiesAccounts payable

$
162


$
244Accrued employee compensation and benefits


84



108Accrued interest


30



31Accrued property taxes


12



11Accrued income taxes






258Other accrued expenses


140



173Current portion of long-term debt


1



3Current portion of pension and postretirement benefits


17



62Total current liabilities


446



890Long-Term Debt


1,191



852Nonrecourse Financial Liabilities of Special Purpose
    Entities


2,140



2,140Deferred Tax Liability


750



762Liability for Pension Benefits


172



71Liability for Postretirement Benefits


101



123Other Long-Term Liabilities


292



324TOTAL LIABILITIES


5,092



5,162NONCONTROLLING INTEREST OF SPECIAL PURPOSE ENTITIES


91



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 2008
    and 2007, including shares held in the treasury


124



124Additional paid-in capital


461



475Accumulated other comprehensive loss


(189
)


(139
)Retained earnings


936



987Cost of shares held in the treasury: 17,098,808 shares in
    2008 and 17,464,189 shares in 2007


(646
)


(667
)TOTAL SHAREHOLDERS EQUITY


686



780TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
5,869


$
5,942    45




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
  For the Year2008


2007


2006(In millions)NET REVENUES

$
3,884


$
3,926


$
4,185COSTS AND EXPENSESCost of sales


(3,533
)


(3,390
)


(3,476
)Selling


(113
)


(112
)


(107
)General and administrative


(128
)


(197
)


(214
)Gain on sale of timberland






2,053



Other operating income (expense)


(28
)


(189
)


32(3,802
)


(1,835
)


(3,765
)OPERATING INCOME


82



2,091



420Other non-operating income (expense)






(35
)


93Interest income on financial assets of special purpose entities


80



19



Interest expense on nonrecourse financial liabilities of special
    purpose entities


(82
)


(9
)


Interest expense on debt


(81
)


(111
)


(123
)INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES


(1
)


1,955



390Income tax expense


(7
)


(753
)


(103
)INCOME (LOSS) FROM CONTINUING OPERATIONS


(8
)


1,202



287Discontinued operations






103



181NET INCOME (LOSS)

$
(8
)

$
1,305


$
468WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBasic


106.7



106.0



108.8Diluted


107.4



108.1



110.8EARNINGS PER SHAREBasic:Income (loss) from continuing operations

$
(0.08
)

$
11.33


$
2.64Discontinued operations






0.98



1.66Net income (loss)

$
(0.08
)

$
12.31


$
4.30Diluted:Income (loss) from continuing operations

$
(0.08
)

$
11.12


$
2.59Discontinued operations






0.96



1.63Net income (loss)

$
(0.08
)

$
12.08


$
4.22    46




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Year2008


2007


2006(In millions)CASH PROVIDED BY (USED FOR) OPERATIONSNet income

$
(8
)

$
1,305


$
468Adjustments:Depreciation and amortization


206



214



225Impairments


3



64



Non-cash share-based compensation


(2
)


39



38Non-cash pension and postretirement expense


60



44



56Cash contribution to pension and postretirement plans


(93
)


(80
)


(76
)Deferred income taxes


55



435



34Earnings of joint ventures


(7
)


(5
)


(11
)Dividends from joint ventures


12



8



12Loss on early payment of debt






40



Gain on sale of timberland






(2,053
)


Other


(4
)


14



18Changes in:Receivables


27



19



(28
)Inventories


11



(30
)


(10
)Accounts payable and accrued expenses


(395
)


274



32Prepaid expenses and other


(47
)


8



22(182
)


296



780CASH PROVIDED BY (USED FOR) INVESTINGCapital expenditures


(164
)


(225
)


(187
)Reforestation and net acquisition of timber and timberland






(12
)


(17
)Sale of timberland






(21
)


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


4



24



64Acquisitions, net of cash acquired


(57
)






(144
)Investment in joint ventures


(7
)


(5
)


(4
)Other


(3
)


4



1(227
)


(235
)


(287
)CASH PROVIDED BY (USED FOR) FINANCINGPayments of debt


(64
)


(567
)


(47
)Borrowings under accounts receivable securitization facility, net


189



(163
)


133Borrowings under revolving credit facility, net


161



(12
)


(56
)Change in book overdrafts


(17
)


13



2Fees associated with debt






(42
)


Other additions to debt










10Nonrecourse borrowings of special purpose entities






2,140



Cash dividends paid to shareholders


(43
)


(1,212
)


(108
)Repurchase of common stock






(24
)


(318
)Exercise of stock options


1



20



47Tax benefit of stock options exercised


(1
)


15



10Other










(4
)226



168



(331
)CASH PROVIDED BY (USED FOR) DISCONTINUED OPERATIONSNet cash provided by (used for) operating activities






(33
)


255Net cash provided by (used for) investing activities






(619
)


1,056Net cash provided by (used for) financing activities






620



(1,443
)



(32
)


(132
)Effect of exchange rate changes on cash and cash equivalents


(3
)






Net increase (decrease) in cash and cash equivalents


(186
)


197



30Cash and cash equivalents at beginning of year


227



30



Cash and cash equivalents at year-end

$
41


$
227


$
30    47




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##### Table of Contents



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


OtherCommon


Paid-In


Comprehensive


Retained


TreasuryStock


Capital


Income /(Loss)


Earnings


Stock


Total(In millions)Balance at year-end 2005

$
124


$
445


$
(189
)

$
2,141


$
(441
)

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














468







468Unrealized gains/(losses) on securities










(1
)










(1
)Defined benefits










57











57Foreign currency translation adjustment










(2
)










(2
)Derivative financial instruments










1











1Comprehensive income for the year 2006






















523Dividends paid on common stock  $1.00 per share














(108
)






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






28











(1
)


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






(15
)










62



47Tax benefit from exercise of stock options






10















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


















(333
)


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










(57
)










(57
)Balance at year-end 2006

$
124


$
468


$
(191
)

$
2,501


$
(713
)

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














1,305







1,305Unrealized gains/(losses) on securities










(36
)










(36
)Defined benefits










53











53Foreign currency translation adjustment






















Derivative financial instruments






















Comprehensive income for the year 2007






















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














(118
)






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














(1,094
)






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






2











16



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






(10
)










30



20Tax benefit from exercise of stock options






15















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














5







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














(5
)






(5
)Spin-off of Forestar














(434
)






(434
)Spin-off of Guaranty










35



(1,173
)






(1,138
)Balance at year-end 2007

$
124


$
475


$
(139
)

$
987


$
(667
)

$
780Comprehensive income, net of tax:Net loss














(8
)






(8
)Defined benefits










(36
)










(36
)Foreign currency translation adjustment










(14
)










(14
)Derivative financial instruments






















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
)Balance at year-end 2008

$
124


$
461


$
(189
)

$
936


$
(646
)

$
686    48




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##### 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 and irrevocable letters of credit
    received in connection with the sale of our timberlands to two
    wholly-owned, bankruptcy-remote special purpose entities. On
    December 3, 2007, the special purpose entities pledged the
    notes receivable from the sale of timberland as collateral for
    $2.14 billion nonrecourse loans payable 2027. The net cash
    proceeds, after alternative minimum and other taxes related to
    sale of the timberland and transaction costs, were
    $1.8 billion. We used $1.1 billion of the net cash
    proceeds to pay a $10.25 per share special cash dividend to our
    shareholders in December 2007. The remaining $700 million
    was used to reduce debt. We 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 segment, Forestar Group Inc. (Forestar), and our
    financial services segment, Guaranty Financial Group Inc.
    (Guaranty). These spin-offs reduced retained earnings by
    $1.6 billion. Our financial information has been
    reclassified to reflect Forestar and Guaranty as discontinued
    operations for all periods prior to the spin-offs. Please read
    Note 19 for additional information.  Allowance
    for Doubtful Accounts
   49




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Asset
    Retirement Obligations and Environmental
    Obligations
          Capitalized
    Software
    Cash
    and Cash Equivalents
    Derivatives
   50




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fair
    Value Measurements
  Fair Value Measurements, The Fair Value Option for Financial Assets and Financial
    Liabilities,
  Goodwill
    and Other Intangible Assets
      Impairment
    of Long-Lived Assets
    Income
    Taxes
   51




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##### Table of Contents



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


Year-EndClassification

Useful Lives


2008(In millions)Land and land improvements


N/A


$
42Buildings and building improvements


10 to 40 years



307Machinery and equipment:Paper machines


5 to 25 years



728Mill equipment


5 to 25 years



69Converting equipment


3 to 20 years



438Other production equipment


5 to 25 years



4Transportation equipment


3 to 20 years



26Office and other equipment


3 to 5 years



14Construction in progress


N/A



36$
1,664  52




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue
    Recognition
        Share-Based
    Compensation
  Share-Based Payment , Accounting
    for Stock-Based Compensation-Transition and Disclosure, an
    amendment of FASB Statement No. 123.
    Special
    Purpose and Variable Interest Entities
  Consolidation of Variable Interest Entities an Interpretation
    of ARB No. 51.
  Timber
    and Timberland
     53




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Pending
    Accounting Pronouncements
  Business Combinations
  Noncontrolling Interest in
    Consolidated Financial Statements
  Disclosures about Derivative
    Instruments and Hedging Activities
  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-End2008


2007(In millions)Current assets

$
8


$
29Total assets


88



234Current
    liabilities(a)


7



25Long-term debt


29



85Equity


52



124Our investment in joint ventures:50 percent share in joint ventures equity

$
26


$
62Unamortized PBL joint venture basis difference






(30
)Investment in joint ventures

$
26


$
32     (a)

    
    Includes current maturities of debt of $5 million in 2008
    and $6 million in 2007.  55




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year2008(a)


2007


2006(In millions)Net revenues

$
147


$
200


$
192Operating income


13



13



24Earnings


10



5



17Our equity in earnings:50 percent share of earnings

$
5


$
3


$
8Amortization of PBL joint venture basis difference


2



2



3Equity in earnings of joint ventures

$
7


$
5


$
11     (a)

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




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4 
    Long-Term
    Debt    At Year-End2008


2007(In millions)Borrowings under bank credit agreements  average
    interest rate of 4.10% in 2008 and 6.26% in 2007

$
161


$
Accounts receivable securitization facility  average
    interest rate of 2.83% in 2008 and 5.44% in 2007


190



16.75% Notes, payable in 2009


14



147.875% Senior Notes, payable in 2012, net of discounts


285



2856.375% Senior Notes, payable in 2016, net of
    discounts   interest rate of 6.625% at year-end 2008
    and 2007


249



2496.625% Senior Notes, payable in 2018, net of
    discounts   interest rate of 6.875% at year-end 2008
    and 2007


249



248Revenue bonds, payable 2008 through 2024  average
    interest rate of 5.72% in 2008 and 5.41% in 2007


41



51Other indebtedness due through 2027  average interest
    rate of 8.12% in 2008 and 7.89% in 2007


3



71,192



855Less current portion of long-term debt


(1
)


(3
)$
1,191


$
852            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          Note 6 
    Capital
    Stock    Note 9
 58




---



##### Table of Contents



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





Foreignon Available-


Defined


CurrencyFor-Sale


Benefit


Translation


DerivativeSecurities


Plans


Adjustment


Instruments


Total(In millions)Balance at beginning of year 2006

$
2


$
(168
)

$
(22
)

$
(1
)

$
(189
)Changes during the year


(1
)


95



(2
)


1



93Deferred taxes on changes






(38
)










(38
)Net change for 2006


(1
)


57



(2
)


1



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






(57
)










(57
)Balance at year-end 2006

$
1


$
(168
)

$
(24
)

$



$
(191
)Changes during the year


(56
)


85











29Deferred taxes on changes


20



(32
)










(12
)Net change for 2007


(36
)


53











17Spin-off of Guaranty


35















35Balance at year-end 2007

$



$
(115
)

$
(24
)

$



$
(139
)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
)   Note 8 
    Pension
    and Postretirement Plans    For the Year2008


2007


2006(In millions)401(k) plan match

$
16


$
17


$
16Defined benefit


37



35



46Postretirement medical


8



8



9$
61


$
60


$
71        59




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##### Table of Contents



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


PostretirementQualified


Supplemental


Total


Benefits2008


2007


2008


2007


2008


2007


2008


2007(In millions)Benefit obligation  beginning of year

$
(1,310
)

$
(1,284
)

$
(59
)

$
(56
)

$
(1,369
)

$
(1,340
)

$
(137
)

$
(139
)Service cost


(26
)


(32
)


(2
)


(1
)


(28
)


(33
)


(1
)


(2
)Interest cost


(80
)


(94
)


(2
)


(4
)


(82
)


(98
)


(8
)


(10
)Plan amendments


(8
)






(17
)






(25
)










Actuarial gain (loss)


1



16



2



(4
)


3



12



24



(3
)Acquisition


(3
)














(3
)










New prior service cost


























(6
)


Benefits paid by the plan


71



84



6



6



77



90



16



21Lump-sum settlements










42







42







1



Participant contributions


























(2
)


(4
)Benefit obligation  year-end


(1,355
)


(1,310
)


(30
)


(59
)


(1,385
)


(1,369
)


(113
)


(137
)Fair value of plan assets  beginning of year


1,250



1,094











1,250



1,094







Actual return


(3
)


165











(3
)


165







Acquisition


2















2











Benefits paid by the plan


(71
)


(84
)


(6
)


(6
)


(77
)


(90
)


(16
)


(21
)Lump-sum settlements










(42
)






(42
)


Contributions we made


30



75



48



6



78



81



14



17Participant contributions


























2



4Fair value of plan assets  year-end


1,208



1,250











1,208



1,250







Funded status at year-end

$
(147
)

$
(60
)

$
(30
)

$
(59
)

$
(177
)

$
(119
)

$
(113
)

$
(137
)     At Year-EndDefined


PostretirementBenefits


Benefits2008


2007


2008


2007(In millions)Liability/funded status

$
(177
)

$
(119
)

$
(113
)

$
(137
)Accumulated other comprehensive loss:Unrecognized net loss (gain)

$
228


$
166


$
(4
)

$
21Unrecognized prior service cost (credit)


33



13



(4
)


(13
)Total accumulated other comprehensive loss

$
261


$
179


$
(8
)

$
8  60




---



##### Table of Contents



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


Plan Assets atTarget


Year-EndAllocations


2008


2007Asset category:Debt securities


78-88
%


86
%


80
%Equity securities


10-15
%


9



15Real estate


0-7
%


5



5100
%


100
%     Additional
    Information
    At Year-End2008


2007(In millions)Projected benefit obligation

$
(1,385
)

$
(1,369
)Accumulated benefit obligation

$
(1,328
)

$
(1,305
)Fair value of plan assets


1,208



1,250Excess of accumulated benefit obligation over fair value of plan
    assets

$
(120
)

$
(55
)Excess of accumulated benefit obligation over fair value of plan
    assets consists of:Qualified plan

$
(91
)

$
(1
)Supplemental plan


(29
)


(54
)$
(120
)

$
(55
)  61




---



##### Table of Contents



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


Postretirement Benefits2008


2007


2006


2008


2007


2006(In millions)Net periodic benefit expense:Service costs  benefits earned during the period

$
28


$
27


$
28


$
1


$
1


$
2Interest cost on benefit obligation


82



78



73



8



8



8Expected return on plan assets


(83
)


(85
)


(78
)










Amortization of prior service costs


5



2



2



(2
)


(2
)


(2
)Amortization of actuarial net loss


5



14



22



1



1



1Total net periodic benefit
    expense(a)


37



36



47



8



8



9Amounts recognized in other comprehensive income, pre-tax


82



(90
)


(95
)


(16
)


5



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

$
119


$
(54
)

$
(48
)

$
(8
)

$
13


$
9     (a)

    
    Includes amounts allocated to discontinued operations of
    $1 million in 2007 and 2006. Excludes $15 million of
    expense in 2008 related to lump-sum settlements of supplemental
    benefits.  Assumptions
    Defined Benefits


Postretirement Benefits2008


2007


2008


2007Discount rate


6.11
%


6.125
%


6.20
%


6.125
%Rate of compensation increase


3.50
%


3.70
%






     PostretirementDefined Benefits


Benefits2008


2007


2006


2008


2007


2006Discount rate


6.125
%


6.00
%


5.50
%


6.125
%


6.00
%


5.50
%Expected return on plan assets


6.875
%


8.00
%


8.00
%










Rate of compensation increase


3.700
%


3.80
%


3.70
%










      62




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        For the Year2008


2007


2006Health care trend rate assumed for the next year


9.0
%


9.0
%


8.0
%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


2015



2014



2013     1 Percentage


1 PercentagePoint Increase


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

$
1


$
(1
)Accumulated postretirement benefit obligation


8



(7
)   Cash
    Flows
        Postretirement BenefitsPension Benefits





MedicareQualified


Supplemental


Benefits


Subsidies_(In millions)2009

$
76


$
5


$
12


$
12010


79



5



11



12011


82



5



11



12012


86



5



11



12013


89



4



11



12014 -2018


487



12



49



5  63




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 9 
    Share-Based
    Compensation      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 2008


1,416


$
48Granted


794



20Vested


(328
)


20Forfeited


(11
)


40Not vested cash-settled units at year-end 2008


1,871



37


$
9Not vested cash-settled units at year-end 2008 subject to:Time vesting requirements


1,378






$
7Performance requirements


493







21,871






$
9    64




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Stock
    Stock
    Options
    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 2008


4,711


$
15Granted


2,375



19Exercised


(69
)


11Forfeited


(114
)


15Outstanding year-end 2008


6,903



17



6


$
Exercisable year-end 2008


3,739



13



4


$
       For the Year2008


2007


2006Expected dividend yield


2.1
%


2.3
%


2.4
%Expected stock price volatility


28.2
%


22.8
%


25.1
%Risk-free interest rate


3.3
%


4.9
%


4.4
%Expected life of options in years


8



6



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

$
2.02


$
7.39


$
6.82Forestar options


N/A



3.09



2.85Guaranty options


N/A



1.99



1.83Weighted average estimated fair value of options at original
    grant date

$
2.02


$
12.47


$
11.50  65




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Share-Based
    Compensation Expense
    For the Year2008


2007


2006(In millions)Restricted or performance units-cash

$
(12
)

$
23


$
15Restricted or performance units-stock


1



6



11Stock options


9



10



12$
(2
)

$
39


$
38     For the Year2008


2007


2006(In millions)Cost of sales

$
5


$
7


$
6Selling expense






2



1General and administrative


(7
)


25



31Other operating income (expense)






5



$
(2
)

$
39


$
38         Note 10 
    Other
    Operating Income (Expense)  For the Year2008


2007


2006(In millions)Transformation costs

$
(20
)

$
(69
)

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


(9
)


(55
)


(4
)Litigation


5



(56
)


(6
)Environmental remediation






(9
)


(8
)Softwood Lumber Agreement










42Hurricane related insurance recoveries










2Other charges


(5
)


1



Gain (loss) on sale of operating property and equipment


(6
)


(6
)


(5
)Equity in earnings of manufacturing joint ventures


7



5



11$
(28
)

$
(189
)

$
32  66




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             67




---



##### Table of Contents



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


Additions/


Cash


Year-of Year


Revisions


Payments


End(In millions)For the Year 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
)

$
1For the Year 2006Involuntary employee terminations

$
1


$
1


$
(1
)

$
1Contract termination penalties


2







(2
)


Demolition and environmental remediation


9



8
(a)


(9
)


8$
12


$
9


$
(12
)

$
9     (a)

    
    In 2007 and 2006, we revised our estimates relating to the
    demolition and related environmental remediation costs
    associated with our exit activities. We added $6 million in
    2007 and $8 million in 2006 to this accrual by charging
    other operating expense. We transferred $6 million to
    Forestar as part of the spin-off.  Note 11 
    Income
    Taxes    For the Year2008


2007


2006(In millions)Current tax provision:U.S. Federal

$
55


$
(278
)

$
(57
)Foreign, state and other


(7
)


(10
)


(8
)48



(288
)


(65
)Deferred tax provision:U.S. Federal


(54
)


(410
)


(43
)Foreign, state and other


(1
)


(55
)


5(55
)


(465
)


(38
)Income tax expense

$
(7
)

$
(753
)

$
(103
)Income taxes (paid) refunded, net

$
(271
)

$
3


$
(88
)      68




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        For the Year2008


2007


2006(In millions)U.S

$
(16
)

$
1,948


$
381Non-U.S


15



7



9$
(1
)

$
1,955


$
390     For the Year2008


2007


2006Taxes at federal statutory rate

$



$
684


$
137State, net of federal benefit


2



60



Foreign


2







Other


3



9



7



753



137Settlement of tax litigation










(30
)State of Texas tax legislation










(4
)Total

$
7


$
753


$
103  69




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At Year-End2008


2007(In millions)Deferred Tax Liabilities:Property, equipment, and intangible assets

$
(361
)

$
(350
)Deferred gain on sale of timberland


(818
)


(822
)U.S. taxes on unremitted foreign earnings


(16
)


(16
)Other






(4
)(1,195
)


(1,192
)Deferred Tax Assets:Alternative minimum tax credits


281



286Foreign and state net operating loss carryforwards


24



22Pension and postretirement benefits


116



104Employee benefits


35



59Accruals not deductible until paid


45



51Other


36



35Gross deferred tax assets


537



557Less valuation allowance


(26
)


(28
)511



529Net Deferred Tax Liability

$
(684
)

$
(663
)     At Year-End2008


2007(In millions)Current deferred tax assets

$
66


$
99Non-current deferred tax liabilities


(750
)


(762
)Net deferred tax liability

$
(684
)

$
(663
)      70




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year2008


2007(In millions)Balance beginning of year

$
26


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


2



4Reductions for tax positions of prior years


(1
)


(1
)Settlements/collections


(2
)


3Expiration of statute of limitations


(1
)


Balance at year-end

$
24


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




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 14 
    Derivative
    Instruments and Variable Interest Entities        Note 15 
    Fair
    Values and Fair Value Measurements of Financial
    Instruments      Level 2 
    Inputs, other than quoted prices in active markets, that are
    observable either directly or indirectly. 72




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Level 3 
    Unobservable inputs in which there is little or no market data,
    which require a reporting entity to develop its own assumptions.    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 2008

At Year-End 2007Carrying Value

Fair Value

Carrying Value

Fair Value

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

$
841


$
680


$
854


$
909



Level 2 - Market Approach        73




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 16 
    Earnings
    Per Share    For the Year2008


2007


2006(In millions)Earnings for basic and diluted earnings per share:Income (loss) from continuing operations

$
(8
)

$
1,202


$
287Discontinued operations






103



181Net income (loss)

$
(8
)

$
1,305


$
468Weighted average shares outstanding:Weighted average shares outstanding  basic


106.7



106.0



108.8Dilutive effect of stock options (Note 9)


0.7



2.1



2.0Weighted average shares outstanding  diluted


107.4



108.1



110.8       At Year-End2008


2007Options held


1,126,374



1,236,437Options exercisable


831,713



551,627Weighted average exercise price

$
15


$
17Weighted average remaining contractual term(in years)


6



7   Note 17 
    Segment
    Information      74




---



##### 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 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 equity method investees and joint ventures






26











26Goodwill


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 equity method investees and joint ventures


11



23











34Goodwill


236



129











365Capital expenditures and reforestation


167



42



13



15



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

$
2,977


$
1,119


$
89


$



$
4,185Depreciation and amortization


153



44



14



14



225Equity income from joint ventures


8



3











11Income from continuing operations before taxes


255



221



63



(149
)(a)


390Total assets (excludes discontinued operations)


2,275



638



330



384



3,627Investment in equity method investees and joint ventures


11



22











33Goodwill


236



129











365Capital expenditures and reforestation


117



46



19



22



204     (a)

    
    Items not included in segments consists of:  For the Year2008


2007


2006(In millions)General and administrative

$
(76
)

$
(100
)

$
(107
)Share-based compensation


2



(34
)


(38
)Gain on sale of timberland






2,053



Other operating income (expense)


(29
)


(188
)


26Other non-operating income (expense)






(35
)


93Net interest income on financial assets and nonrecourse
    financial liabilities of special purpose entities


(2
)


10



Interest expense


(81
)


(111
)


(123
)$
(186
)

$
1,595


$
(149
)Other operating income (expense) applies to:Corrugated packaging

$
4


$
(64
)

$
(21
)Building products


(9
)


(63
)


42Unallocated


(24
)


(61
)


5$
(29
)

$
(188
)

$
26   Note 10
 75




---



##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year2008


2007


2006(In millions)Revenues from external customers:United States

$
3,680


$
3,739


$
4,009Mexico


204



187



176$
3,884


$
3,926


$
4,185   At Year-End2008


2007


2006(In millions)Property and equipment:United States

$
1,635


$
1,596


$
1,591Mexico


29



36



37$
1,664


$
1,632


$
1,628   Note 18 
    Summary
    of Quarterly Results of Operations (Unaudited)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions, except per share)2008Total revenues

$
944


$
991


$
976


$
973Gross profit

$
68


$
98


$
85


$
100Income (loss) from continuing
    operations(a)

$
(13
)

$
8


$
3


$
(6
)Net income (loss)

$
(13
)

$
8


$
3


$
(6
)Earnings per shareBasic:Income (loss) from continuing operations

$
(0.12
)

$
0.07


$
0.03


$
(0.06
)Net income (loss)

$
(0.12
)

$
0.07


$
0.03


$
(0.06
)Diluted:Income (loss) from continuing operations

$
(0.12
)

$
0.07


$
0.03


$
(0.06
)Net income (loss)

$
(0.12
)

$
0.07


$
0.03


$
(0.06
)     (a)

    
    Income (loss) from continuing operations includes the following
    items:  76




---



##### Table of Contents



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


Second


Third


FourthQuarter


Quarter


Quarter


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

$
1,003


$
1,023


$
963


$
937Gross profit

$
144


$
146


$
129


$
117Income from continuing
    operations(a)

$
7


$
26


$
11


$
1,158Discontinued operations


31



40



25



7Net income

$
38


$
66


$
36


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

$
0.07


$
0.24


$
0.11


$
10.88Discontinued operations


0.29



0.39



0.23



0.08Net income

$
0.36


$
0.63


$
0.34


$
10.96Diluted:Income from continuing operations

$
0.07


$
0.24


$
0.11


$
10.69Discontinued operations


0.28



0.38



0.22



0.07Net income

$
0.35


$
0.62


$
0.33


$
10.76     (a)

    
    Income from continuing operations includes the following items:  77




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##### Table of Contents



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


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In millions)Gain on sale of timberland

$



$



$



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

$
(4
)

$
(4
)

$
(2
)

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






8



(1
)


(62
)Litigation


(10
)










(46
)Environmental remediation














(9
)Other charges






(5
)


(3
)


9$
(14
)

$
(1
)

$
(6
)

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

$



$



$



$
(40
)Interest and other income






1



1



3$



$
1


$
1


$
(37
)   (b)

    
    The sum of earnings per share for the quarters does not equal
    earnings per share for the year due to the use of average shares
    outstanding for each period.  Note 19 
    Discontinued
    Operations    ,
      At Year-End2007


2006(In millions)Real estate income before taxes

$
41


$
83Financial services income before taxes


138



204Chemical operations and
    other(a)


(13
)


(2
)Income from discontinued operations before taxes


166



285Income tax expense


(63
)


(104
)Discontinued operations

$
103


$
181     (a)

    
    2007 includes a $6 million charge for environmental
    remediation. 78




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##### Table of Contents



TEMPLE-INLAND
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 20 
    Subsequent
    Events  Dividend
    Declaration
    Financial
    Assets and Nonrecourse Financial Liabilities of Special Purpose
    Entities
  Note 5.
 79




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures    Rules 13a-15(e) 15d-15(e)
    Item 8. Financial Statements
    and Supplementary Data.
  Rules 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information   80




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##### Table of Contents



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

Age

the Board

Principal OccupationDoyle R. Simons


45



2007


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


71



2003


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


64



2004


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


67



2004


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


63



2005


President of Houston Endowment Inc.Jeffrey M. Heller


69



2004


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


47



2007


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


61



2000


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


63



2006


Chairman of NewsweekArthur Temple III


66



1983


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


52



2008


Senior Vice President of Finance and Chief Financial Officer of
    Anadarko Petroleum Corporation   Form 10-K
  Item 11.
    Executive
    Compensation   81




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##### Table of Contents



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

(b)

Remaining AvailableNumber of Securities

Weighted-Average

for Future Issuanceto be Issued Upon

Exercise Price of

Under EquityExercise of Outstanding

Outstanding Options,

Compensation PlansOptions, Warrants and

Warrants and

(Excluding SecuritiesPlan Category

Rights

Rights

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

8,029,256

$16.58

NoneEquity compensation plans not approved by security holders

None

None

NoneTotal

8,029,256

$16.58

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



Exhibit3
.01



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



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



Form of Specimen Common Stock Certificate of the Company
    (incorporated by reference to Exhibit 4.03 to registration
    statement on
    Form S-8
    (Reg.
    No. 33-27286)
    filed by the Company with the Commission on March 2, 1989) 82




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##### Table of Contents



ExhibitNumber



Exhibit4
.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 Fixed-rate Medium Term Note, Series F, of the
    Company (incorporated by reference to Exhibit 4.05 to the
    Companys
    Form 8-K
    filed with the Commission on June 3, 1998)4
.08



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
.09



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
.10



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)10
.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) 83




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##### Table of Contents



ExhibitNumber



Exhibit10
.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 Performance Stock Units Agreement issued
    pursuant to the Temple-Inland Inc. 2003 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.08 to the
    Companys
    Form 10-K
    for the year ended December 31, 2005, and filed with the
    commission on March 8, 2006)10
.10*



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
.11*



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
.12*



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
.13*



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
.14*



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
.15*



Amended and Restated Temple-Inland Supplemental Executive
    Retirement Plan (1)10
.16*



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
.17*



Amendment to Employment Agreement between the company and Doyle
    R. Simons, dated November 7, 2008 (1)10
.18*



Change in Control Agreement dated November 7, 2008, between
    the Company and J. Patrick Maley III (1)10
.19*



Change in Control Agreement dated November 7, 2008, between
    the Company and Jack C. Sweeny (1)10
.20*



Change in Control Agreement dated November 7, 2008, between
    the Company and Randall D. Levy (1)10
.21*



Change in Control Agreement dated November 7, 2008, between
    the Company and Larry C. Norton (1)10
.22



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
.23



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
.24



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
.25



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
.26*



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
.27*



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
.28*



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
.29*



Form of Restricted Units Agreement issued pursuant to the
    Temple-Inland Inc. 2008 Stock Incentive Plan (1)10
.30*



Form of Performance Stock Units Agreement issued pursuant to the
    Temple-Inland Inc. 2008 Incentive Plan (1) 84




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##### Table of Contents



ExhibitNumber



Exhibit10
.31*



Temple-Inland Inc. 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 20, 2009/s/  Randall
    D. LevyRandall
    D. Levy

Chief Financial Officer

February 20, 2009/s/  Troy
    L. HesterTroy
    L. Hester

Principal Accounting Officer

February 20, 2009/s/  Donald
    M. CarltonDonald
    M. Carlton

Director

February 20, 2009/s/  Cassandra
    C. CarrCassandra
    C. Carr

Director

February 20, 2009/s/  E.
    Linn Draper, Jr.E.
    Linn Draper, Jr.

Director

February 20, 2009/s/  Larry
    R. FaulknerLarry
    R. Faulkner

Director

February 20, 2009/s/  Jeffrey
    M. HellerJeffrey
    M. Heller

Director

February 20, 2009/s/  J.
    Patrick Maley IIIJ.
    Patrick Maley III

Director

February 20, 2009/s/  W.
    Allen ReedW.
    Allen Reed

Director

February 20, 2009 86




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##### Table of Contents



Signature

Capacity

Date/s/  Richard
    M. SmithRichard
    M. Smith

Director

February 20, 2009/s/  Arthur
    Temple IIIArthur
    Temple III

Director

February 20, 2009/s/  R.A.
    WalkerR.A.
    Walker

Director

February 20, 2009  87