Weyerhaeuser Reports Third Quarter Net Earnings of $82 Million
Monday, November 03, 2003
FEDERAL WAY, Wash.--Oct. 24, 2003--Weyerhaeuser Company today reported third quarter net earnings of $82 million, or 37 cents per share, on net sales of $5.2 billion. This compares with $13 million, or 6 cents per share, on net sales of $4.9 billion for the third quarter of 2002. Third quarter 2003 earnings include the following after-tax items: A charge of $32 million, or 14 cents per share, for closure of facilities; A charge of $15 million, or 7 cents per share, associated with the settlement of a class action linerboard antitrust lawsuit; A charge of $15 million, or 7 cents per share, for integration and restructuring activities. Third quarter 2002 earnings include the following after-tax items: A charge of $11 million, or 5 cents per share, for integration and restructuring activities; A charge of $20 million, or 9 cents per share, for business disruption costs following a recovery boiler incident at the Plymouth, N.C., paper facility. Other significant third quarter financial matters include: Reduced Weyerhaeuser Company debt to $12.4 billion as of the end of the third quarter. Total company debt, which includes Real Estate and related operations, was reduced approximately $360 million to $13.2 billion at the end of the quarter. Capital spending, excluding Real Estate and related operations, for the first nine months was approximately $471 million, in line with a revised estimate of $720 million for the entire year. Incurred approximately $25 million in countervailing and anti-dumping duties and related costs on Canadian softwood lumber the company imports into the United States. This compares with $26 million incurred in the second quarter. "The strength of the structural panel and softwood lumber markets provided the long-awaited improvement of our Wood Products segment, but our fine paper and containerboard packaging businesses face challenges from weak demand and deteriorating prices," said Steven R. Rogel, chairman, president and chief executive officer. "Real estate continues to be a strong performer. In addition, we continue to make progress on paying down the debt associated with the Willamette acquisition. "We see some bright spots in the fourth quarter," Rogel said. "Our home building businesses continue to operate with a strong backlog and wood products pricing is expected to decline seasonally, but remain strong relative to fourth quarter last year. Market pulp prices are improving modestly, but paper and packaging markets are expected to remain weak. " Excluding a pre-tax gain of $144 million in the second quarter on the sales of Western Washington timberlands, third quarter earnings were slightly lower than the previous quarter. Lower harvest levels resulting from fire danger in the West and unseasonable wet weather in the South affected third quarter earnings. The segment benefited, however, from a stronger export market aided by a strengthening Japanese housing market. The fourth quarter outlook for Timberlands earnings, excluding previously announced timberland sales in the Carolinas and Tennessee, is expected to decline slightly from the third quarter due to lower southern fee harvest. WOOD PRODUCTS 3Q 2003 2Q 2003 Change Contribution (charge) to earnings (millions) $151 ($53) $204 An exceptionally strong market for oriented strand board and plywood, as well as an improving lumber market, produced the segment's first quarterly earnings since second quarter in 2002. Third quarter results reflect a pre-tax charge of $31 million for costs associated with the closure of the Dierks, Ark., veneer operations and the engineered lumber mill in Junction City, Ore. Fourth quarter results are expected to be lower than third quarter due primarily to lower lumber and structural panel prices. PULP AND PAPER 3Q 2003 2Q 2003 Change Contribution (charge) to earnings (millions) ($18) ($7) ($11) Pulp prices rebounded late in the quarter, but a weak paper market hurt third quarter results. Costs associated with approximately 64,000 tons of market-related downtime for fine paper also negatively affected the third quarter performance. Third quarter results include pre-tax charges totaling $9 million for costs associated with staff reductions at a number of facilities. Fourth quarter earnings are expected to be lower than third quarter due to weak paper markets that will offset expected increases in pulp prices. CONTAINERBOARD, PACKAGING AND RECYCLING 3Q 2003 2Q 2003 Change Contribution to earnings (millions) $42 $108 ($66) Eroding packaging and containerboard prices produced third quarter results that were lower than second quarter levels. During the quarter, Weyerhaeuser took approximately 89,000 tons of market-related downtime. Third quarter results include pre-tax charges of $40 million for costs associated primarily with the settlement of a class action linerboard antitrust lawsuit and the closure of the North Bend, Ore., containerboard mill. Excluding the third quarter charges for settlement of the class action linerboard antitrust lawsuit and closures, fourth quarter earnings are expected to be lower than third quarter due primarily to eroding prices and seasonally lower packaging shipments. REAL ESTATE AND RELATED ASSETS 3Q 2003 2Q 2003 Change Contribution to earnings (millions) $97 $91 $6 Real estate benefited from the continued strong housing market to produce record quarterly earnings. Closings increased from second quarter levels and traffic during the third quarter remained strong. Fourth quarter earnings are expected to be slightly higher than third quarter due to increased closings of single-family homes. The company currently has a backlog in excess of six months of homes sold, but not closed.