News Room
Weyerhaeuser Reports Third Quarter Net Earnings of $211 Million, or 85 Cents per Diluted Share, on Net Sales of $5.3 Billion
PRNewswire-FirstCall
FEDERAL WAY, Wash.
Oct 25, 2006
Weyerhaeuser Company (NYSE: WY) today reported third quarter net earnings of $211 million, or 85 cents per diluted share, on net sales of $5.3 billion. This compares with $285 million, or $1.16 per diluted share, on net sales of $5.4 billion for the third quarter 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040116/WYLOGO-a http://www.newscom.com/cgi-bin/prnh/20040116/WYLOGO-b ) 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. Third quarter 2005 earnings include the following after-tax items: -- A gain of $75 million, or 31 cents per diluted share, for the sale of MAS Capital Management Partners, LP, a joint venture. -- A charge of $19 million, or 8 cents per diluted share, for closure of facilities. -- A loss of $14 million, or 6 cents per diluted share, for the early extinguishment of debt.
During third quarter 2006, Weyerhaeuser repurchased 5.3 million shares of common stock. As of the end of the third quarter, Weyerhaeuser has repurchased a total of 5.5 million shares of the 18 million-share repurchase previously authorized by the company's board of directors.
"We anticipated the downturn in the housing market and transformed Weyerhaeuser into a more focused company to position it to be a strong performer during this market cycle," said Steven R. Rogel, chairman, president and chief executive officer. "While anticipated, the housing market decline was more abrupt and drove wood products prices and demand into a deeper plunge than expected. We are taking the necessary actions to match our production to demand and over the long-term, remain confident about the residential housing market. We have the right strategies and combination of businesses to succeed and add value for shareholders.
"Our cellulose fiber, white papers and packaging businesses showed continued improved performance during the quarter," Rogel said. "Some of this was the result of stronger pricing, but we also benefited from the decisive action we have taken to improve the ability of these businesses to meet customer demand. Such steps take time, but we are starting to benefit from the long-term changes they are creating within Weyerhaeuser."
SUMMARY OF THIRD QUARTER FINANCIAL HIGHLIGHTS
Millions (except per share data) 3Q 2006 3Q 2005 Change
Net earnings $211 $285 ($74)
Earnings per diluted share $0.85 $1.16 ($0.31)
Net sales $5,328 $5,432 ($104)
SEGMENT RESULTS FOR THIRD QUARTER
(Contributions to Pre-Tax Earnings)
Millions 3Q 2006 3Q 2005 Change
Timberlands $178 $191 ($13)
Wood Products $11 $124 ($113)
Cellulose Fiber and White Papers $115 ($2) $117
Containerboard, Packaging and Recycling $96 $36 $60
Real Estate and Related Assets $135 $145 ($10)
TIMBERLANDS
3Q 2006 2Q 2006 Change
Contribution to pre-tax earnings (millions) $178 $224 ($46)
Third quarter earnings decreased from second quarter 2006 due to the timing of sales of non-strategic properties, seasonally reduced fee harvest levels and the adverse effect of falling lumber prices on domestic log prices. Third quarter costs benefited from the absence of salvage logging expense with the completion of the Hurricane Katrina cleanup in the second quarter.
Weyerhaeuser expects lower fourth quarter earnings for the segment compared with the third quarter due to decreased demand for lumber which will result in lower domestic log prices.
WOOD PRODUCTS
3Q 2006 2Q 2006 Change
Contribution to pre-tax earnings (millions) $11 $131 ($120)
Third quarter contribution to earnings included a $51 million gain on the sale of the company's North American composites business, $23 million of income related to a reduction in the reserve for hardboard siding claims, and charges of $17 million for the impairment of fixed assets associated with mill closures and curtailments. Excluding these items, contribution to earnings decreased $177 million from the second quarter.
Lower prices and volumes contributed to the lower earnings. Weaker prices in lumber, plywood and oriented strand board caused by normal seasonal declines in demand and the weakening housing market were significant factors in the earnings decline. Lower wood product shipment volumes and the loss of ongoing earnings from the North American composites business, which Weyerhaeuser sold in late July, also contributed to the decline. Manufacturing costs did not vary significantly from quarter to quarter.
Weyerhaeuser expects the segment to continue to operate at a loss in the fourth quarter.
The company incurred $7 million in countervailing and anti-dumping duties and related costs on Canadian softwood lumber the company sold into the United States in the third quarter of 2006. The Canadian softwood lumber agreement became effective on Oct. 12, and at current price levels, the company will pay a 15 percent tax on lumber produced by its Canadian mills exported to the United States. This compares to the duty deposit rate of 13.13 percent in effect since December 2005. The company expects to receive a refund of duty based on the outcome of the new agreement.
CELLULOSE FIBER AND WHITE PAPERS
3Q 2006 2Q 2006 Change
Contribution to pre-tax earnings (millions) $115 $23 $92
Fine paper and cellulose fiber products experienced stronger market conditions in the third quarter, resulting in the realization of higher prices. Sales volumes for fine paper and cellulose fiber declined slightly in the third quarter because of the second-quarter closures of a paper machine at Dryden, Ontario and the Prince Albert, Saskatchewan pulp mill.
Third quarter manufacturing costs for fine paper and cellulose fiber decreased significantly from the second quarter when the company incurred shutdowns for annual mill maintenance, capital upgrades and power interruptions. Productivity improved in the third quarter and energy, chemicals and maintenance costs decreased.
Weyerhaeuser expects fourth quarter earnings for the segment to be similar to third quarter.
CONTAINERBOARD, PACKAGING AND RECYCLING
3Q 2006 2Q 2006 Change
Contribution to pre-tax earnings (millions) $96 $74 $22
Third quarter 2006 results included charges of $6 million for costs associated with facility closures and workforce reductions related to the continued implementation of the segment's new business model. Second quarter 2006 results included charges of $18 million for restructuring costs associated with implementing the segment's new business model and charges of $5 million related to facility closures. Excluding these items, third quarter earnings improved $5 million compared with the second quarter.
During the third quarter, the company completed the implementation of the previously announced price increases for containerboard and packaging. Significantly higher costs for old corrugated containerboard (OCC), rising wood chip costs and a seasonal decline in packaging shipments to the produce market segment partially offset the effect from higher prices. In addition, packaging volumes were down as the company exited certain low-margin business.
Weyerhaeuser expects fourth quarter earnings for the segment to be comparable with third quarter results. Shipments are expected to increase and OCC costs are expected to decline from third quarter levels. Rapidly rising wood chip costs, primarily on the West Coast, and seasonally higher energy usage are expected to offset higher packaging shipments and lower OCC costs.
REAL ESTATE AND RELATED ASSETS
3Q 2006 2Q 2006 Change
Contribution to pre-tax earnings (millions) $135 $123 $12
Third quarter single-family home closing volume was comparable to the second quarter. Higher prices for single-family homes closed and lower overhead contributed to the third quarter earnings increase, partially offset by $14 million in impairment charges for two real estate projects.
Closing volumes were greater than new sales in the third quarter, decreasing the backlog of homes sold, but not closed, to approximately 4.5 months' sales.
Weyerhaeuser expects earnings from real estate and related assets to increase in the fourth quarter because of seasonally higher closing volumes, which are expected to be partially offset by lower margins. The company expects fourth quarter earnings to be substantially below last year's fourth quarter performance.
ABOUT WEYERHAEUSER
Weyerhaeuser Company, one of the world's largest integrated forest products companies, was incorporated in 1900. In 2005, sales were $22.6 billion. It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. Additional information about Weyerhaeuser's businesses, products and practices is available at http://www.weyerhaeuser.com/ .
EARNINGS CALL INFORMATION
The company will hold a live conference call at 7 a.m. Pacific (10 a.m. Eastern) on Oct. 25 to discuss third quarter results.
To access the conference call from within North America, dial 1-888-221- 5699 at least 15 minutes prior to the call. Those calling from outside North America should dial 1-706-643-3795. Replays will be available for one week at 1-800-642-1687 (access code - 2336060) from within North America and at 1-706- 645-9291 (access code - 2336060) from outside North America.
The call is being webcast through Weyerhaeuser's Internet site at http://investor.weyerhaeuser.com/ by clicking on the "Q3 2006 Earnings Conference Call" link.
The webcast is available through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at http://www.fulldisclosure.com/ , Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected site, StreetEvents (http://www.streetevents.com/ ).
FORWARD-LOOKING STATEMENT
This news release contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these forward-looking statements can be identified by the use of forward-looking terminology such as "expects," "may," "will," "believes," "should," "approximately," "anticipates," "estimates," and "plans," and the negative or other variations of those terms or comparable terminology or by discussions of strategy, plans or intentions. In particular, some of these forward-looking statements deal with expectations regarding the company's markets in the fourth quarter 2006; expected earnings and performance of the company's business segments during the fourth quarter 2006, demand and pricing for the company's products in the fourth quarter 2006, lower domestic log prices in the fourth quarter 2006, lower prices and reduced shipment volumes for lumber, oriented strand board, and engineered lumber products in the fourth quarter 2006, higher wood products manufacturing costs due to lower production volumes in the fourth quarter 2006, expected refunds of softwood lumber duties, seasonal increases in real estate earnings, higher raw material and energy costs in the fourth quarter 2006 and related matters. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to:
-- The effect of general economic conditions, including the level of
interest rates and housing starts;
-- Market demand for the company's products, which may be tied to the
relative strength of various U.S. business segments;
-- Energy prices;
-- Raw material prices;
-- Chemical prices;
-- Performance of the company's manufacturing operations including
unexpected maintenance requirements;
-- The successful execution of internal performance plans;
-- The level of competition from domestic and foreign producers;
-- The effect of forestry, land use, environmental and other governmental
policies and regulations, and changes in accounting regulations;
-- The effect of weather;
-- The risk of loss from fires, floods, windstorms, hurricanes and other
natural disasters;
-- Transportation costs;
-- Legal proceedings;
-- The effect of timing of retirements and changes in the market price of
company stock on charges for stock-based compensation; and
-- Performance of pension fund investments and related derivatives.
The company is also a large exporter and is affected by changes in economic activity in Europe and Asia, particularly Japan, and by changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Euro and the Canadian dollar, and restrictions on international trade or tariffs imposed on imports. These and other factors could cause or contribute to actual results differing materially from such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any of them occurs, what effect they will have on the company's results of operations or financial condition. The company expressly declines any obligation to publicly revise any forward-looking statements that have been made to reflect the occurrence of events after the date of this news release.
WEYERHAEUSER COMPANY
STATISTICAL INFORMATION (unaudited)
CONSOLIDATED
EARNINGS Q1 Q2 Q3
(in millions) March March June June Sept. Sept.
26, 27, 25, 26, 24, 25,
2006 2005 2006 2005 2006 2005
Net sales and
revenues:
Weyerhaeuser (1) $4,566 $4,577 $4,911 $5,017 $4,579 $4,836
Real Estate and
Related Assets 690 655 746 648 749 596
Total net sales and
revenues 5,256 5,232 5,657 5,665 5,328 5,432
Costs and expenses:
Weyerhaeuser:
Costs of products
sold (2) 3,612 3,504 3,815 3,833 3,590 3,800
Depreciation,
depletion and
amortization 306 316 305 319 305 320
Selling expenses 109 115 125 116 123 116
General and
administrative
expenses 255 221 223 215 234 234
Research and
development
expenses (3) 16 14 15 12 21 18
Taxes other than
payroll and
income taxes 44 44 46 44 43 45
Charges for
restructuring
(4) - 5 18 4 4 2
Charges for
closure of
facilities 1 5 17 3 43 29
Impairment of
goodwill (5) 746 - 3 - - -
Other operating
costs, net (6)
(7) 31 9 (23) (40) (34) (32)
5,120 4,233 4,544 4,506 4,329 4,532
Real Estate and
Related Assets:
Costs and
operating
expenses (8) 481 426 552 441 537 401
Depreciation and
amortization 3 3 4 4 10 4
Selling expenses 37 33 43 36 44 36
General and
administrative
expenses 30 24 34 25 30 27
Taxes other than
payroll and
income taxes 1 1 2 - 2 1
Other operating
costs, net (3) - 3 (2) (2) (2)
Impairment of
long-lived
assets - - 3 - 14 -
549 487 641 504 635 467
Total costs and
expenses 5,669 4,720 5,185 5,010 4,964 4,999
Operating income (413) 512 472 655 364 433
Interest expense and
other:
Weyerhaeuser:
Interest expense
incurred (9) (152) (196) (152) (179) (149) (193)
Less: interest
capitalized (2) 16 - 20 2 21 3
Interest income
and other 19 27 15 20 17 143
Equity in income
(loss) of
affiliates (10) 3 - 6 4 - 2
Real Estate and
Related Assets:
Interest expense
incurred (14) (14) (14) (14) (12) (13)
Less: interest
capitalized 14 14 14 14 12 13
Interest income
and other 10 5 3 (2) 7 4
Equity in income
of
unconsolidated
entities
(11) 21 10 15 13 14 14
Earnings (loss)
before income taxes (496) 358 379 513 274 406
Income tax (expense)
benefit (12) (87) (125) (82) (225) (89) (119)
Earnings (loss) from
continuing
operations (583) 233 297 288 185 287
Earnings (loss) from
discontinued
operations, net of
taxes (13) 3 6 17 132 26 (2)
Net earnings (loss) $(580) $239 $314 $420 $211 $285
Basic net earnings
(loss) per share:
Continuing
operations $(2.37) $0.96 $1.20 $1.18 $0.75 $1.17
Discontinued
operations 0.01 0.02 0.07 0.54 0.10 (0.01)
Net earnings
(loss) per share $(2.36) $0.98 $1.27 $1.72 $0.85 $1.16
Diluted net earnings
(loss) per share:
Continuing
operations $(2.37) $0.96 $1.19 $1.17 $0.75 $1.17
Discontinued
operations 0.01 0.02 0.07 0.54 0.10 (0.01)
Net earnings
(loss) per share $(2.36) $0.98 $1.26 $1.71 $0.85 $1.16
Dividends paid per
share $0.50 $0.40 $0.50 $0.50 $0.60 $0.50
Weighted average
shares outstanding
(in thousands)
Basic 245,794 242,863 248,147 244,702 247,428 245,009
Diluted 245,794 244,185 249,194 245,881 247,900 246,190
Year
CONSOLIDATED EARNINGS Year-to-date Q4 Ended
(in millions) Sept. 24, Sept. 25, Dec. 25, Dec. 25,
2006 2005 2005 2005
Net sales and revenues:
Weyerhaeuser (1) $14,056 $14,430 $4,700 $19,130
Real Estate and Related Assets 2,185 1,899 1,016 2,915
Total net sales and revenues 16,241 16,329 5,716 22,045
Costs and expenses:
Weyerhaeuser:
Costs of products sold (2) 11,017 11,137 3,832 14,969
Depreciation, depletion and
amortization 916 955 326 1,281
Selling expenses 357 347 106 453
General and administrative
expenses 712 670 221 891
Research and development
expenses (3) 52 44 17 61
Taxes other than payroll and
income taxes 133 133 16 149
Charges for restructuring (4) 22 11 10 21
Charges for closure of facilities 61 37 656 693
Impairment of goodwill (5) 749 - - -
Other operating costs,
net (6) (7) (26) (63) 3 (60)
13,993 13,271 5,187 18,458
Real Estate and Related Assets:
Costs and operating expenses (8) 1,570 1,268 677 1,945
Depreciation and amortization 17 11 5 16
Selling expenses 124 105 46 151
General and administrative
expenses 94 76 28 104
Taxes other than payroll and
income taxes 5 2 1 3
Other operating costs, net (2) (4) 1 (3)
Impairment of long-lived assets 17 - 33 33
1,825 1,458 791 2,249
Total costs and expenses 15,818 14,729 5,978 20,707
Operating income 423 1,600 (262) 1,338
Interest expense and other:
Weyerhaeuser:
Interest expense incurred (9) (453) (568) (171) (739)
Less: interest capitalized (2) 57 5 4 9
Interest income and other 51 190 24 214
Equity in income (loss) of
affiliates (10) 9 6 (12) (6)
Real Estate and Related Assets:
Interest expense incurred (40) (41) (14) (55)
Less: interest capitalized 40 41 14 55
Interest income and other 20 7 5 12
Equity in income of unconsolidated
entities (11) 50 37 20 57
Earnings (loss) before income taxes 157 1,277 (392) 885
Income tax (expense) benefit (12) (258) (469) 151 (318)
Earnings (loss) from continuing
operations (101) 808 (241) 567
Earnings (loss) from discontinued
operations, net of taxes (13) 46 136 30 166
Net earnings (loss) $(55) $944 $(211) $733
Basic net earnings (loss) per share:
Continuing operations $(0.41) $3.31 $(0.98) $2.32
Discontinued operations 0.19 0.55 0.12 0.68
Net earnings (loss) per share $(0.22) $3.86 $(0.86) $3.00
Diluted net earnings (loss) per share:
Continuing operations $(0.41) $3.30 $(0.98) $2.31
Discontinued operations 0.19 0.55 0.12 0.67
Net earnings (loss) per share $(0.22) $3.85 $(0.86) $2.98
Dividends paid per share $1.60 $1.40 $0.50 $1.90
Weighted average shares outstanding
(in thousands)
Basic 247,123 244,191 245,215 244,447
Diluted 247,123 245,354 246,198 245,559
WEYERHAEUSER COMPANY
STATISTICAL INFORMATION (unaudited)
FOOTNOTES TO CONSOLIDATED EARNINGS
(in millions)
Year
Year-to-date Ended
___________
Q1 Q1 Q2 Q2 Q3 Q3 Q3 Q3 Q4
2006 2005 2006 2005 2006 2005 2006 2005 2005 2005
(1) Countervailing
and anti-dumping
duties and
related costs: $11 $22 $10 $27 $7 $19 $28 $68 $16 $84
(2) Weyerhaeuser capitalized interest on Weyerhaeuser Real Estate Company
(WRECO) assets in the first, second and third quarters of 2006 in the
amount of $14 million, $15 million and $17 million, respectively.
Weyerhaeuser cost of products sold includes $7 million, $7 million and $8
million for the first, second and third quarters of 2006, respectively, to
expense previously capitalized interest in connection with the sale of
WRECO assets. See footnote 7 for 2005 information.
(3) The third quarter of 2006 includes a $9 million charge related to the
acquisition of OrganicID, a research and development company.
(4) The second quarter of 2006 includes an $18 million charge related to
the restructuring of the Containerboard, Packaging and Recycling business
model.
(5) The first and second quarters of 2006 include charges of $746 million
and $3 million, respectively, for the impairment of goodwill associated
with the fine paper business.
Year
Year-to-date Ended
___________
Q1 Q1 Q2 Q2 Q3 Q3 Q3 Q3 Q4
2006 2005 2006 2005 2006 2005 2006 2005 2005 2005
(6) Net foreign
exchange gains
(losses),
primarily from
fluctuations in
Canadian and
New Zealand
exchange rates: $(26) $13 $21 $(13) $17 $37 $12 $37 $(21) $16
(7) The third quarter of 2006 includes $23 million of income related to a
reduction of the reserve for hardboard siding claims and charges of $7
million for the impairment of fixed assets related to production
curtailments. The first quarter of 2005 includes a $12 million charge
related to the settlement of a linerboard antitrust lawsuit. The second
quarter of 2005 includes an $18 million charge related to alder litigation
and $57 million of income related to the recognition of a deferred gain
from previous timberlands sales. The third quarter of 2005 includes a
$115 million gain on the sale of an investment in a joint venture. The
fourth quarter of 2005 includes a $38 million charge related to the
settlement of linerboard antitrust litigation and $43 million of income
related to the cumulative effect of a change to begin capitalizing
Weyerhaeuser interest to assets of WRECO.
(8) The first quarter of 2006 includes income of $8 million related to a
warranty insurance recovery.
(9) The third and fourth quarters of 2005 include charges of $21 million
and $15 million, respectively, related to the early extinguishment of
debt.
(10) The third quarter of 2006 includes a $2 million charge and the fourth
quarter of 2005 includes a $15 million charge related to the impairment of
investments in equity affiliates.
(11) The first quarter of 2006 includes recognition of $9 million of
deferred income in connection with partnership restructurings.
(12) The second quarter of 2006 includes a one-time tax benefit of $48
million related to a change in Texas state income tax law, a reduction in
the Canadian federal income tax rate and a deferred tax adjustment related
to the Medicare Part D subsidy. The second quarter of 2005 includes a
charge of $44 million related to the repatriation of $1.1 billion of
eligible Canadian earnings under the provisions of the American Jobs
Creation Act of 2004. The third quarter of 2005 includes a one-time tax
benefit of $14 million related to a change in the Ohio state income tax
law.
(13) Discontinued operations includes the net operating results of the
company's coastal British Columbia operations and its North American and
European composites operations. The third quarter of 2006 includes a
pretax gain of $51 million and related tax expense of $20 million
associated with the sale of the North American composites operations and
an $8 million charge to write off additional goodwill associated with the
coastal British Columbia operations. The second quarter of 2005 includes a
gain of $110 million, including a tax benefit of $46 million, related to
the sale of the coastal British Columbia operations. The fourth quarter of
2005 includes a pretax gain of $57 million and related tax expense of $23
million associated with the sale of the French composites operations.
WEYERHAEUSER COMPANY
STATISTICAL INFORMATION (unaudited)
Net sales and revenues (in
millions): Q1 Q2 Q3
March March June June Sept. Sept.
26, 27, 25, 26, 24, 25,
2006 2005 2006 2005 2006 2005
Timberlands:
Logs $201 $182 $198 $195 $200 $188
Other products 62 82 71 63 46 65
263 264 269 258 246 253
Wood Products:
Softwood lumber 782 892 857 1,032 733 889
Plywood 135 183 147 196 134 184
Veneer 13 13 13 10 9 9
Composite panels 121 120 140 132 71 122
OSB 287 288 273 306 203 267
Hardwood lumber 99 94 105 102 96 95
Engineered I-Joists 169 150 202 202 162 186
Engineered Solid Section 204 179 231 228 190 226
Logs 7 27 5 24 5 6
Other products 256 270 327 340 302 325
2,073 2,216 2,300 2,572 1,905 2,309
Cellulose Fiber and White
Papers:
Pulp 394 376 402 355 404 381
Paper 613 599 601 611 604 604
Coated groundwood 40 42 44 47 42 45
Liquid packaging board 46 47 62 52 59 50
Other products 14 14 17 12 21 16
1,107 1,078 1,126 1,077 1,130 1,096
Containerboard, Packaging
and Recycling:
Containerboard 82 117 84 101 92 86
Packaging 911 898 1,002 969 997 929
Recycling 80 92 85 92 89 87
Bags 20 22 20 21 23 20
Other products 34 34 46 40 44 47
1,127 1,163 1,237 1,223 1,245 1,169
Real Estate and Related
Assets 690 655 746 648 749 596
Corporate and Other 116 149 117 151 123 146
Less: sales of
discontinued operations (120) (293) (138) (264) (70) (137)
$5,256 $5,232 $5,657 $5,665 $5,328 $5,432
Contribution (charge) to
pre-tax earnings: Q1 Q2 Q3
(in millions) March March June June Sept. Sept.
26, 27, 25, 26, 24, 25,
2006 2005 2006 2005 2006 2005
Timberlands (1) (2) (4) $198 $200 $224 $210 $178 $191
Wood Products (1) (2) (5) 117 131 131 204 11 124
Cellulose Fiber and White
Papers (1) (2) (6) (763) 19 23 16 115 (2)
Containerboard, Packaging
and Recycling (1) (2) (7) 22 48 74 99 96 36
Real Estate and Related
Assets (2) (8) 172 183 123 156 135 145
Corporate and Other (1)
(2) (3) (9) (102) (17) (40) 99 (78) 101
$(356) $564 $535 $784 $457 $595
Year
Net sales and revenues (in millions): Year-to-date Q4 Ended
Sept. 24, Sept. 25, Dec. 25, Dec. 25,
2006 2005 2005 2005
Timberlands:
Logs $599 $565 $196 $761
Other products 179 210 76 286
778 775 272 1,047
Wood Products:
Softwood lumber 2,372 2,813 811 3,624
Plywood 416 563 172 735
Veneer 35 32 12 44
Composite panels 332 374 123 497
OSB 763 861 303 1,164
Hardwood lumber 300 291 99 390
Engineered I-Joists 533 538 165 703
Engineered Solid Section 625 633 200 833
Logs 17 57 5 62
Other products 885 935 290 1,225
6,278 7,097 2,180 9,277
Cellulose Fiber and White Papers:
Pulp 1,200 1,112 370 1,482
Paper 1,818 1,814 603 2,417
Coated groundwood 126 134 46 180
Liquid packaging board 167 149 54 203
Other products 52 42 12 54
3,363 3,251 1,085 4,336
Containerboard, Packaging and
Recycling:
Containerboard 258 304 91 395
Packaging 2,910 2,796 914 3,710
Recycling 254 271 81 352
Bags 63 63 20 83
Other products 124 121 46 167
3,609 3,555 1,152 4,707
Real Estate and Related Assets 2,185 1,899 1,016 2,915
Corporate and Other 356 446 154 600
Less: sales of discontinued operations (328) (694) (143) (837)
$16,241 $16,329 $5,716 $22,045
Contribution (charge) to pre-tax Year
earnings: Year-to-date Q4 Ended
(in millions) Sept. 24, Sept. 25, Dec. 25, Dec. 25,
2006 2005 2005 2005
Timberlands (1) (2) (4) $600 $601 $183 $784
Wood Products (1) (2) (5) 259 459 26 485
Cellulose Fiber and White Papers (1)
(2) (6) (625) 33 (477) (444)
Containerboard, Packaging and Recycling
(1) (2) (7) 192 183 (188) (5)
Real Estate and Related Assets (2) (8) 430 484 250 734
Corporate and Other (1) (2) (3) (9) (220) 183 33 216
$636 $1,943 $(173) $1,770
WEYERHAEUSER COMPANY
STATISTICAL INFORMATION (unaudited)
FOOTNOTES TO CONTRIBUTION (CHARGE) TO PRE-TAX EARNINGS
(in millions)
Year
Year-to-date Ended
___________
Q1 Q1 Q2 Q2 Q3 Q3 Q3 Q3 Q4
2006 2005 2006 2005 2006 2005 2006 2005 2005 2005
(1) Closure charges by segment:
Timberlands $-- $ 3 $-- $-- $-- $-- $-- $3 $3 $6
Wood Products -- 1 1 1 10 6 11 8 91 99
Cellulose Fiber
and White Papers (1) -- 11 -- 4 22 14 22 427 449
Containerboard,
Packaging and
Recycling 2 4 5 2 3 1 10 7 130 137
Corporate
and Other -- -- -- -- 26 -- 26 -- 5 5
$1 $8 $17 $3 $43 $29 $61 $40 $656 $696
The above closure charges for the third quarter of 2006 includes a $26 million charge in the Corporate and Other segment for the impairment of corporate assets related to the Prince Albert pulp and paper facility.The first quarter and full year 2005 include $3 million of costs incurred within the company's discontinued operations.
Year
Year-to-date Ended
___________
Q1 Q1 Q2 Q2 Q3 Q3 Q3 Q3 Q4
2006 2005 2006 2005 2006 2005 2006 2005 2005 2005
(2) Share-based compensation charges (income) recognized by segment:
Timberlands $ 1 $-- $-- $-- $-- $-- $ 1 $-- $-- $--
Wood Products 2 -- -- -- -- -- 2 -- -- --
Cellulose Fiber
and White Papers 1 -- -- -- 1 -- 2 -- -- --
Containerboard,
Packaging and
Recycling 2 -- (1) -- 1 -- 2 -- -- --
Real Estate
and Related
Assets -- -- 2 -- -- -- 2 -- -- --
Corporate
and Other 15 2 (5) (6) 1 3 11 (1) 12 11
$21 $2 $(4) $(6) $ 3 $ 3 $20 $(1) $12 $11
Year
Year-to-date Ended
___________
Q1 Q1 Q2 Q2 Q3 Q3 Q3 Q3 Q4
2006 2005 2006 2005 2006 2005 2006 2005 2005 2005
(3) Net foreign
exchange gains
(losses)
included in
Corporate
and Other: $(26) $13 $20 $(12) $17 $38 $11 $39 $(20) $19
(4) Additional Timberlands notes:
(a) Hurricane related losses were $5 million in third quarter 2005
and $6 million in fourth quarter 2005.
(5) Additional Wood Products notes:
(a) Refer to footnote 1 to Consolidated Earnings regarding
countervailing duty and anti-dumping costs included in Wood
Products.
(b) The third quarter of 2006 includes $23 million of income related
to a reduction of the reserves for hardboard siding claims.
The second quarter of 2005 includes an $18 million charge
related to alder litigation. The third quarter of 2005 includes
$9 million of income related to the reduction of reserves for
alder litigation and an insurance settlement related to product
liability claims.
(c) The third quarter of 2006 includes a $51 million gain on the
sale of the company's North American composites operations.
(d) The third quarter of 2006 includes charges of $7 million for the
impairment of fixed assets related to production curtailments.
(e) The second quarter of 2005 includes a $6 million gain related to
a tenure reallocation agreement with the British Columbia
government.
(6) Additional Cellulose Fiber and White Papers notes:
(a) The first and second quarters of 2006 include charges of $746
million and $3 million, respectively, for the impairment of
goodwill associated with the fine paper business.
(7) Additional Containerboard, Packaging and Recycling notes:
(a) The second and third quarters of 2006 include charges of $18
million and $3 million, respectively, related to the
restructuring of the Containerboard, Packaging and Recycling
business model.
(b) The first and fourth quarters of 2005 include charges of
$12 million and $38 million, respectively, associated with the
settlement of linerboard antitrust lawsuits.
(c) The third quarter of 2005 had a charge of $1 million related to
hurricane damage.
(8) Additional Real Estate and Related Assets notes:
(a) The first quarter of 2006 includes income of $8 million related
to a warranty insurance recovery and income of $9 million
related to recognition of deferred income in connection with
partnership restructurings.
(b) The first, second and third quarters of 2006 includes net gains
(losses) on land and lot sales of $33 million, ($1) million and
$0, respectively. The first, second, third and fourth quarters
of 2005 include net gains (losses) on land and lot sales of $57
million, $21 million, ($1) and $2 million, respectively.
The fourth quarter of 2005 includes a $33 million charge for the
impairment of unimproved land.
(c) The second and third quarters of 2006 include charges for the
impairment of assets of $3 million and $14 million,
respectively.
(9) Additional Corporate and Other notes:
(a) The third quarter of 2006 includes a $2 million charge and the
fourth quarter of 2005 includes a $15 million charge related to
the impairments of investments in equity affiliates.
(b) The third quarter of 2006 includes a $9 million charge related
to the acquisition of OrganicID, a research and development
company.
(c) The third quarter of 2006 includes an $8 million charge to write
off additional goodwill associated with the coastal British
Columbia operations.
(d) The second quarter of 2005 includes a $64 million pretax gain on
the sale of the company's operations in coastal British Columbia
and $57 million of income related to the recognition of a
deferred gain from previous timberlands sales. The third quarter
of 2005 includes a $115 million gain on the sale of an
investment in a joint venture. The fourth quarter of 2005
includes a $57 million gain on the sale of the company's French
composites operations and $43 million of income for the
cumulative effect of a change to begin capitalizing Weyerhaeuser
interest to assets of Weyerhaeuser Real Estate Company.
WEYERHAEUSER COMPANY
STATISTICAL INFORMATION (unaudited)
Third party sales volumes: Q1 Q2 Q3
March March June June Sept. Sept.
26, 27, 25, 26, 24, 25,
2006 2005 2006 2005 2006 2005
Timberlands (thousands):
Logs - cunits 935 864 808 863 850 886
Wood Products (millions):
Softwood lumber - board
feet 1,921 2,057 2,113 2,355 1,974 2,179
Plywood - square feet
(3/8") 389 537 458 600 437 558
Veneer - square feet
(3/8") 61 60 63 59 48 51
Composite panels -
square feet (3/4") 302 299 324 317 139 308
Oriented strand board -
square feet (3/8") 1,000 908 1,069 1,041 989 1,008
Hardwood lumber - board
feet 103 102 110 114 100 105
Engineered I-Joists -
lineal feet 114 108 137 138 110 125
Engineered Solid Section
- cubic feet 9 9 11 10 9 10
Logs - cunits (in
thousands) 55 187 46 177 26 41
Cellulose Fiber and White
Papers (thousands):
Pulp - air-dry metric
tons 651 629 647 587 625 653
Paper - tons 753 736 662 742 641 757
Coated groundwood - tons 52 58 59 62 59 56
Liquid packaging board
- tons 56 60 71 65 72 64
Paper converting - tons 511 475 474 494 462 494
Containerboard, Packaging
and Recycling
(thousands):
Containerboard - tons 211 295 189 259 202 238
Packaging - MSF 18,342 17,354 19,168 18,600 18,425 18,560
Recycling - tons 733 692 719 695 678 665
Kraft bags and sacks -
tons 20 23 20 22 22 22
Real Estate and Related
Assets:
Single-family homes sold 1,472 1,378 1,325 1,525 906 1,608
Single-family homes
closed 1,161 1,189 1,483 1,279 1,439 1,257
Single-family homes sold
but not closed at end
of period 3,105 2,561 2,947 2,807 2,414 3,158
Total production volumes: Q1 Q2 Q3
March March June June Sept. Sept.
26, 27, 25, 26, 24, 25,
2006 2005 2006 2005 2006 2005
Timberlands (thousands):
Fee Depletion - cunits 2,132 2,248 2,083 2,231 2,040 2,098
Wood Products (millions):
Softwood lumber - board
feet 1,663 1,821 1,650 1,869 1,559 1,651
Plywood - square feet
(3/8") 241 303 245 302 237 296
Veneer - square feet
(3/8") (1) 455 517 455 529 494 486
Composite panels -
square feet (3/4") 278 267 288 282 100 268
Oriented strand board -
square feet (3/8") 1,073 1,007 1,062 1,019 1,009 1,017
Hardwood lumber - board
feet 82 92 83 96 82 91
Engineered I-Joists - LF 121 133 136 132 130 108
Engineered Solid Section
- CF 11 11 12 10 10 10
Cellulose Fiber and White
Papers (thousands):
Pulp - air-dry metric
tons 676 621 588 614 660 663
Paper - tons (2) 724 763 672 752 675 765
Coated groundwood - tons 56 55 56 59 59 60
Liquid packaging board
- tons 61 60 75 64 73 69
Paper converting - tons 498 475 461 487 485 483
Containerboard, Packaging
and Recycling
(thousands):
Containerboard - tons
(3) 1,575 1,503 1,533 1,581 1,544 1,597
Packaging - MSF 19,550 18,628 20,290 19,915 19,341 19,416
Recycling - tons (4) 1,716 1,624 1,684 1,673 1,641 1,716
Kraft bags and sacks -
tons 19 23 20 22 18 21
WEYERHAEUSER COMPANY
STATISTICAL INFORMATION (unaudited)
Year
Third party sales volumes: Year-to-date Q4 Ended
Sept. 24, Sept. 25, Dec. 25, Dec. 25,
2006 2005 2005 2005
Timberlands (thousands):
Logs - cunits 2,593 2,613 939 3,552
Wood Products (millions):
Softwood lumber - board feet 6,008 6,591 2,059 8,650
Plywood - square feet (3/8") 1,284 1,695 485 2,180
Veneer - square feet (3/8") 172 170 61 231
Composite panels - square feet
(3/4") 765 924 305 1,229
Oriented strand board - square
feet (3/8") 3,058 2,957 991 3,948
Hardwood lumber - board feet 313 321 106 427
Engineered I-Joists - lineal feet 361 371 113 484
Engineered Solid Section - cubic
feet 29 29 9 38
Logs - cunits (in thousands) 127 405 46 451
Cellulose Fiber and White Papers
(thousands):
Pulp - air-dry metric tons 1,923 1,869 633 2,502
Paper - tons 2,056 2,235 761 2,996
Coated groundwood - tons 170 176 56 232
Liquid packaging board - tons 199 189 69 258
Paper converting - tons 1,447 1,463 501 1,964
Containerboard, Packaging and
Recycling (thousands):
Containerboard - tons 602 792 254 1,046
Packaging - MSF 55,935 54,514 19,117 73,631
Recycling - tons 2,130 2,052 676 2,728
Kraft bags and sacks - tons 62 67 22 89
Real Estate and Related Assets:
Single-family homes sold 3,703 4,511 1,174 5,685
Single-family homes closed 4,083 3,725 1,922 5,647
Single-family homes sold but not
closed at end of period 2,414 3,158 2,410 2,410
Total production volumes: Year
Year-to-date Q4 Ended
Sept. 24, Sept. 25, Dec. 25, Dec. 25,
2006 2005 2005 2005
Timberlands (thousands):
Fee Depletion - cunits 6,255 6,577 2,153 8,730
Wood Products (millions):
Softwood lumber - board feet 4,872 5,341 1,645 6,986
Plywood - square feet (3/8") 723 901 254 1,155
Veneer - square feet (3/8") (1) 1,404 1,532 447 1,979
Composite panels - square feet
(3/4") 666 817 263 1,080
Oriented strand board - square
feet (3/8") 3,144 3,043 1,035 4,078
Hardwood lumber - board feet 247 279 85 364
Engineered I-Joists - LF 387 373 110 483
Engineered Solid Section - CF 33 31 10 41
Cellulose Fiber and White Papers
(thousands):
Pulp - air-dry metric tons 1,924 1,898 604 2,502
Paper - tons (2) 2,071 2,280 780 3,060
Coated groundwood - tons 171 174 60 234
Liquid packaging board - tons 209 193 71 264
Paper converting - tons 1,444 1,445 505 1,950
Containerboard, Packaging and
Recycling (thousands):
Containerboard - tons (3) 4,652 4,681 1,587 6,268
Packaging - MSF 59,181 57,959 20,130 78,089
Recycling - tons (4) 5,041 5,013 1,730 6,743
Kraft bags and sacks - tons 57 66 22 88
(1) Veneer production represents lathe production and includes volumes
that are further processed into plywood and engineered lumber
products by company mills.
(2) Paper production includes unprocessed rolls and converted paper
volumes.
(3) Containerboard production represents machine production and
includes volumes that are further processed into packaging and
kraft bags and sacks by company facilities.
(4) Recycling production includes volumes processed in Weyerhaeuser
recycling facilities that are consumed by company facilities and
brokered volumes.
WEYERHAEUSER COMPANY
STATISTICAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions)
March 26, June 25, Sept. 24,
Assets 2006 2006 2006
Weyerhaeuser
Current assets:
Cash and short-term
investments $105 $113 $114
Receivables, less
allowances 1,807 1,920 1,816
Inventories 2,036 1,899 1,983
Prepaid expenses 433 427 440
Assets of discontinued
operations 222 219 88
Total current
assets 4,603 4,578 4,441
Property and equipment 10,124 10,107 9,926
Construction in
progress 640 607 640
Timber and timberlands
at cost, less fee
stumpage charged to
disposals 3,702 3,696 3,665
Investments in and
advances to equity
affiliates 475 479 490
Goodwill 2,235 2,243 2,254
Deferred pension and
other assets 1,284 1,303 1,265
Restricted assets held
by special purpose
entitites 914 916 914
23,977 23,929 23,595
Real Estate and Related
Assets
Cash and short-term
investments 39 36 13
Receivables, less
allowances 143 141 145
Real estate in process
of development and for
sale 1,341 1,590 1,636
Land being processed
for development 1,298 1,282 1,355
Investments in
unconsolidated
entities, less
reserves 60 66 74
Other assets 353 420 422
Assets not owned,
consolidated under FIN
46R 170 154 132
3,404 3,689 3,777
Total assets $27,381 $27,618 $27,372
Liabilities and
Shareholders' Interest
Weyerhaeuser
Current liabilities:
Notes payable and
commercial paper $1 $2 $222
Current maturities of
long-term debt 693 551 492
Accounts payable 1,181 1,210 1,142
Accrued liabilities 1,252 1,326 1,098
Liabilities of
business held for
sale 22 19 18
Total current
liabilities 3,149 3,108 2,972
Long-term debt 6,938 7,075 7,082
Deferred income taxes 3,998 3,909 3,848
Deferred pension, other
postretirement
benefits
and other liabilities 1,651 1,674 1,628
Liabilities
(nonrecourse to
Weyerhaeuser) held by
special purpose
entities 763 765 762
16,499 16,531 16,292
Real Estate and Related
Assets
Notes payable and
commercial paper 63 125 385
Long-term debt 878 628 601
Other liabilities 568 707 766
Liabilites not owned,
consolidated under FIN
46R 144 127 107
1,653 1,587 1,859
Total liabilities 18,152 18,118 18,151
Shareholders' interest 9,229 9,500 9,221
Total liabilities and
shareholders' interest $27,381 $27,618 $27,372
STATEMENT OF CASH FLOWS Q1 Q2 Q3
SELECTED INFORMATION March March June June Sept. Sept.
(unaudited) 26, 27, 25, 26, 24, 25,
(in millions) 2006 2005 2006 2005 2006 2005
(Weyerhaeuser only,
excludes Real Estate &
Related Assets)
Net cash from
operations $(209) $(203) $565 $723 $95 $452
Cash paid for property
and equipment $(182) $(117) $(184) $(196) $(173) $(220)
Cash paid for
timberlands
reforestation $(12) $(12) $(9) $(6) $(6) $(6)
Cash received from
issuances of debt $- $- $- $1 $3 $-
Revolving credit
facilities, notes and
commercial paper
borrowings, net $(68) $19 $19 $23 $195 $(40)
Payments on debt $(158) $(404) $(10) $(206) $(58) $(986)
Proceeds from the sale
of operations $- $- $- $1,107 $187 $-
Repurchases of common
stock $- $- $- $- $(332) $-
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions)
Dec. 25,
Assets 2005
Weyerhaeuser
Current assets:
Cash and short-term investments $818
Receivables, less allowances 1,707
Inventories 1,885
Prepaid expenses 414
Assets of discontinued operations 223
Total current assets 5,047
Property and equipment 10,345
Construction in progress 527
Timber and timberlands at cost,
less fee stumpage charged to
disposals 3,705
Investments in and advances to
equity affiliates 486
Goodwill 2,982
Deferred pension and other assets 1,314
Restricted assets held by special
purpose entitites 916
25,322
Real Estate and Related Assets
Cash and short-term investments 286
Receivables, less allowances 42
Real estate in process of
development and for sale 1,055
Land being processed for
development 1,037
Investments in unconsolidated
entities, less reserves 61
Other assets 296
Assets not owned, consolidated
under FIN 46R 130
2,907
Total assets $28,229
Liabilities and Shareholders' Interest
Weyerhaeuser
Current liabilities:
Notes payable and commercial paper $3
Current maturities of long-term
debt 381
Accounts payable 1,227
Accrued liabilities 1,622
Liabilities of business held for
sale 25
Total current liabilities 3,258
Long-term debt 7,404
Deferred income taxes 4,032
Deferred pension, other
postretirement benefits
and other liabilities 1,591
Liabilities (nonrecourse to
Weyerhaeuser) held by
special purpose entities 764
17,049
Real Estate and Related Assets
Notes payable and commercial paper 3
Long-term debt 851
Other liabilities 417
Liabilites not owned, consolidated
under FIN 46R 109
1,380
Total liabilities 18,429
Shareholders' interest 9,800
Total liabilities and shareholders'
interest $28,229
STATEMENT OF CASH FLOWS Year-to-date Q4 Year
Ended
Sept. Sept. Dec. Dec.
SELECTED INFORMATION (unaudited) 24, 25, 25, 25,
(in millions) 2006 2005 2005 2005
(Weyerhaeuser only, excludes Real
Estate & Related Assets)
Net cash from operations $451 $972 $648 $1,620
Cash paid for property and
equipment $(539) $(533) $(310) $(843)
Cash paid for timberlands
reforestation $(27) $(24) $(8) $(32)
Cash received from issuances of
debt $3 $1 $- $1
Revolving credit facilities, notes
and commercial paper
borrowings, net $146 $2 $170 $172
Payments on debt $(226) $(1,596) $(603) $(2,178)
Proceeds from the sale of
operations $187 $1,107 $102 $1,209
Repurchases of common stock $(332) $- $(11) $(11)
Photo: http://www.newscom.com/cgi-bin/prnh/20040116/WYLOGO-ahttp://www.newscom.com/cgi-bin/prnh/20040116/WYLOGO-b
AP Archive: http://photoarchive.ap.org/
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SOURCE: Weyerhaeuser Company
CONTACT: Media, Bruce Amundson, +1-253-924-3047, or Analysts,
Kathryn McAuley, +1-253-924-2058, both of Weyerhaeuser Company
Web site: http://www.weyerhaeuser.com/