FEDERAL WAY, Wash., October 31, 2007 - Weyerhaeuser Company today reported net earnings of $101 million for the third quarter of 2007, or 47 cents per diluted share, on sales of $4.1 billion.
Third quarter 2007 earnings include the following after-tax items:
- A charge of $17 million, or 8 cents per diluted share, for closures, restructuring and asset impairments in our Wood Products segment.
- A charge of $17 million, or 8 cents per diluted share related to the restructuring of administrative functions, including a Canadian regional office, and one-time costs to transition to a new information technology provider.
- A charge of $16 million, or 7 cents per diluted share, for the impairment of real estate assets;
- A net gain of $26 million, or 12 cents per diluted share, related to legal settlements.
- A gain of $7 million, or 3 cents per diluted share, on the sale of operations and previously closed plant sites.
Excluding these items, the company earned $118 million, or 55 cents per diluted share, in the third quarter of 2007.
Third quarter 2006 results have been recast to reflect the fine paper business and related assets included in the Domtar transaction as discontinued operations and to apply the new accounting pronouncement to expense planned major maintenance costs as incurred.
For third quarter 2006, Weyerhaeuser net earnings were $224 million, or 91 cents per diluted share, on net sales of $4.6 billion. Third quarter 2006 earnings include the following after-tax items:
- A gain of $31 million, or 13 cents per diluted share, from the sale of the North American composites business.
- A gain of $15 million, or 6 cents per diluted share, due to a reduction of the reserve for hardboard siding claims.
- A charge of $25 million, or 10 cents per diluted share, for the additional impairment of assets related to the closure of the Prince Albert, Saskatchewan facility and the write-off of additional goodwill associated with the former BC Coastal business.
- A charge of $18 million, or 7 cents per diluted share, for asset impairments and costs associated with facility closures or curtailments, primarily in the Wood Products segment.
- A charge of $9 million, or 4 cents per diluted share, for impairment of real estate assets.
- A charge of $6 million, or 2 cents per diluted share, related to the previously announced acquisition of OrganicID, a research and development company.
Excluding these items, the company earned $236 million, or 95 cents per diluted share, in the third quarter of 2006.
SUMMARY OF THIRD QUARTER BUSINESS PERFORMANCE
- Timberlands - The continued weakness in the wood products markets resulted in lower log prices, but sales of non-strategic timberlands increased.
- Wood Products - Demand for wood products continued to weaken.
- Cellulose Fibers - Prices continued to increase and productivity improved.
- Containerboard Packaging and Recycling - Mill productivity improvements and decreased annual scheduled maintenance downtime were partially offset by seasonally-lower packaging shipments and higher costs for old corrugated containers (OCC).
- Real Estate and Related Assets - Housing markets continued to decline. Single-family closings increased seasonally and margins improved due to mix.
"An already weak wood products market deteriorated further during the third quarter," said Steven R. Rogel, chairman, president and chief executive officer. "We were adjusting our production to meet our reduced order level, but we took additional action in the quarter as demand and prices slid. We will continually adjust our operating posture as necessary to balance production with demand.
"Meanwhile, the work we've done to operate more efficiently resulted in improved mill productivity in our Cellulose Fibers and Containerboard Packaging businesses. We expect improved price realizations in both businesses in the fourth quarter."