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Weyerhaeuser Reports Net Earnings of $1.3 Billion for 2004

Monday, January 24, 2005

Press release from the issuing company

FEDERAL WAY, Wash., Jan. 21 -- Weyerhaeuser Company today reported net earnings of $1.3 billion for 2004, or $5.43 per diluted share, on net sales of $22.7 billion. This compares with $277 million, or $1.25 per diluted share, on net sales of $19.9 billion for the full year 2003. Fourth quarter 2004 earnings were $199 million, or 82 cents per diluted share, on net sales of $5.9 billion. Last year, Weyerhaeuser reported fourth quarter net earnings of $92 million, or 41 cents per diluted share, on net sales of $5.1 billion. Fourth quarter 2004 earnings include the following after-tax items: -- A charge of $34 million, or 14 cents per diluted share, for early extinguishment of debt. -- A gain of $24 million, or 10 cents per diluted share, for gains on the sale of facilities. -- A charge of $19 million, or 8 cents per diluted share, for the impairment of assets in the company's European manufacturing operations. -- A charge of $16 million, or 7 cents per diluted share, recognized in connection with a change in the method of estimating workers' compensation liabilities. -- A charge of $15 million, or 6 cents per diluted share, for the net book value of technology donated to a university. Fourth quarter 2003 earnings included the following after-tax items: -- A charge of $29 million, or 14 cents per diluted share, for closure of facilities. -- A charge of $17 million, or 8 cents per diluted share, for integration and restructuring activities. -- A charge of $5 million, or 2 cents per diluted share, associated with the settlement of litigation. -- A gain of $40 million, or 18 cents per diluted share, on the sale of timberlands in Tennessee and the Carolinas. Other significant fourth quarter 2004 financial matters include: -- The company, including Real Estate and Related Assets, reduced outstanding debt by approximately $730 million. For the year, the company reduced outstanding debt by approximately $1.9 billion and ended the year with approximately $1.2 billion in cash and short-term investments and approximately $10.6 billion in outstanding debt. -- Capital spending, excluding Real Estate and Related Assets, for 2004 was approximately $504 million. "Our strong performance for the year demonstrates that our focus on customers, efficiency and financial management has created a competitive Weyerhaeuser that can deliver strong shareholder returns," said Steven R. Rogel, chairman, president and chief executive officer. "In the fourth quarter, however, some of our businesses experienced higher than expected costs which hurt our results. Some of these costs resulted from maintenance we had delayed until the fourth quarter due to strong market demand earlier in the year. We also incurred additional costs due to weather-related issues and the downtime we took to balance orders with customer demand. As we look to the first quarter, we are concerned about the impact unusually bad weather may have on our results." Excluding the third quarter $271 million pre-tax gain on the sale of 270,000 acres of timberlands in Georgia, fourth quarter earnings increased $38 million from the third quarter primarily because of sales of other non- strategic timberlands that closed earlier than expected. Weyerhaeuser expects first quarter market conditions to be similar to fourth quarter. WOOD PRODUCTS 4Q 2004 3Q 2004 Change Contribution to pre-tax earnings (millions) $72 $362 ($290) Fourth quarter earnings of $72 million include a $30 million pre-tax gain from the sale of a mill site in Vancouver, British Columbia, and a $6 million pre-tax gain from the sale of three mills in the Carolinas. Third quarter earnings included a $20 million pre-tax gain from the tenure reallocation agreement with the British Columbia government and a $20 million reduction in the reserve for hardboard siding claims. As expected, fourth quarter prices were significantly lower than third quarter, particularly in softwood lumber and structural panels. In addition, higher delivered log costs in the South and Canada caused by weather-related transportation disruptions and shortages affected the segment. Higher resin and energy costs, and a stronger Canadian dollar also negatively affected the segment. Volumes of key products declined approximately six percent due to seasonal market conditions. The company also experienced extended maintenance at several facilities, including its largest oriented strand board facility. The segment incurred $27 million in countervailing and anti-dumping duties and related costs on Canadian softwood lumber the company sold into the United States in the fourth quarter, compared with $31 million in the third quarter. For the year, the company incurred $118 million in countervailing and anti- dumping duties and related costs, compared with $97 million in 2003. Weyerhaeuser expects first quarter earnings to increase from fourth quarter due to improving prices and strong housing starts. PULP AND PAPER 4Q 2004 3Q 2004 Change Contribution to pre-tax earnings (millions) $35 $80 ($45) Earnings declined during the quarter due to higher costs associated with planned maintenance downtime, a stronger Canadian dollar, and higher than anticipated energy costs. Papergrade pulp prices, which had declined early in the quarter, began to recover. Fluff pulp prices improved slightly. Pricing for Fine Paper products improved compared with third quarter. Weyerhaeuser expects higher first quarter earnings compared with fourth quarter. Prices for papergrade pulp, which began improving late in the quarter, should continue to improve. Fine Paper prices are expected to hold steady. CONTAINERBOARD, PACKAGING AND RECYCLING 4Q 2004 3Q 2004 Change Contribution to pre-tax earnings (millions) $81 $82 ($1) Fourth quarter earnings were relatively unchanged from third quarter. Higher fourth quarter containerboard and box prices offset lower box shipments and higher energy and maintenance costs. During the fourth quarter, Weyerhaeuser took 24,000 tons of market downtime. The company expects first quarter earnings to be consistent with the fourth quarter. REAL ESTATE AND RELATED ASSETS 4Q 2004 3Q 2004 Change Contribution to pre-tax earnings (millions) $217 $155 $62 Fourth quarter earnings benefited from increased single-family home closings, and higher sales prices and margins. In addition, a $24 million net pre-tax gain on land and lot sales contributed to earnings. Sales of single- family homes declined seasonally during the quarter compared to the prior quarter. The backlog of homes sold, but not closed, at the end of the fourth quarter is near six months. Weyerhaeuser expects first quarter earnings to decline seasonally from fourth quarter due to decreased single-family home closings in the markets in which the company operates.

 

 

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