Weyerhaeuser Provides Update on Fourth Quarter Earnings
Thursday, December 12, 2002
FEDERAL WAY, Wash.- Dec. 11, 2002--Weyerhaeuser Company today provided updated information on the projected performance of its segments for the fourth quarter and said it expects to report earnings for the quarter of approximately 50 cents per share including unusual items. As previously reported, these after-tax unusual items are expected to include: * A one-time estimated gain of $97 million on the sale of timberlands in western Washington announced in October. * An estimated $26 million in expected insurance recovery associated with the business interruption at the Plymouth, N.C. paper facility. * Charges associated with the successful integration of Willamette Industries of approximately $13 million. * Charges of approximately $27 million for closing selected facilities. * Charges of approximately $25 million associated with terminating the former MacMillan Bloedel salaried pension plans for U.S. employees. Weyerhaeuser will report its fourth quarter earnings before the market opens on Jan. 22, 2003. Updated Fourth Quarter Performance by Segment Timberlands -- Earnings for the fourth quarter, excluding the one-time gain on the timberlands sale, are expected to be higher than the $138 million reported in the third quarter based on seasonally higher harvest volumes and better than expected pricing. Wood Products -- At the end of the third quarter, Weyerhaeuser noted the high degree of uncertainty in lumber prices due, in part, to oversupply and other unintended consequences of the countervailing and anti-dumping duties on Canadian softwood lumber imported into the United States. This situation worsened in the fourth quarter with lumber prices dropping to levels lower than third quarter combined with seasonally lower volumes. As a consequence of the market conditions, Weyerhaeuser plans to take extended maintenance downtime in its softwood lumber mills during the holidays. In addition, prices for structural and non-structural panels are lower than third quarter levels. As a result, the segment is expected to realize a loss from operations, excluding unusual items, in the fourth quarter that is expected to be significantly higher than the third quarter loss of $18 million. Pulp and Paper -- The segment is expected to report higher fourth quarter earnings, excluding unusual items, compared with the third quarter. Uncoated free sheet markets have remained strong throughout the quarter allowing Weyerhaeuser to implement announced price increases. This improved performance by the uncoated free sheet business has more than offset the effect of recent weakness in pulp prices. Containerboard, Packaging and Recycling -- Higher box prices and a decline in old corrugated container (OCC) costs are expected to result in stronger fourth quarter earnings compared to the third quarter. This segment has rationalized inefficient box and mill capacity and is realizing improved operating efficiencies. Weyerhaeuser expects to take approximately 35,000 tons of market-related downtime, in addition to normally scheduled seasonal maintenance, during December. Real Estate and related assets -- The business continues to report consistent traffic and closings due to strong market conditions and low interest rates. The backlog of homes sold, but not delivered, remains steady at slightly more than six months. Fourth quarter earnings are expected to be lower than third quarter levels due to the absence of sales of multifamily units. Other -- Cash flow for the company should improve significantly in the fourth quarter as a result of improved operations, working capital reductions, continued capital spending discipline and proceeds from the sale of timberlands in Western Washington. As a result, Weyerhaeuser is expected to achieve its capital expenditure and debt reduction goals for the year.