Earnings for the second quarter of 2011 include after-tax charges of $22 million for special items. Excluding these items, the company reported net earnings of $32 million, or 6 cents per diluted share. This compares with net earnings before special items of $42 million in the second quarter of 2010.

Net cash provided by operations for the second quarter of 2011 was $116 million, compared with $189 million for the second quarter of 2010. The company’s cash balance decreased by $582 million in the second quarter, primarily due to repayment of debt. Weyerhaeuser ended the quarter with $881 million in cash and cash equivalents.

“We are confident that our ongoing efforts to sharpen our focus and reduce costs are positioning us to achieve our goal of generating superior sustainable returns for our shareholders,” said Dan Fulton, president and chief executive officer. “The recently announced agreements to sell our hardwoods and Westwood Shipping Lines operations demonstrate the focus we are placing on our strategic direction.”

 

WEYERHAEUSER FINANCIAL HIGHLIGHTS (millions, except per share data)	2Q 2011	1Q 2011	2Q 2010
Net sales
From continuing operations	$1,610	$1,422	$1,641
From discontinued operations	$163	$156	$164
Total net sales	$1,773	$1,578	$1,805
Net earnings	$10	$99	$14
Weighted average shares outstanding, diluted	541	540	212
Earnings per diluted share	$0.02	$0.18	$0.07
Net earnings before special items	$32	$3	$42
Earnings per diluted share before special items	$0.06	$0.00	$0.20
Net cash from operations	$116	($109)	$189
Net change in cash and cash equivalents	($582)	($4)	($314)
Cash and cash equivalents at end of period	$881	$1,463	$1,846

Net sales from discontinued operations include the net sales of Weyerhaeuser’s hardwoods and Westwood Shipping Lines businesses. These operations are reported as discontinued due to the expected sale of the businesses.

Weyerhaeuser’s outstanding shares increased substantially from the second quarter of 2010 due to a special dividend of approximately 324 million shares of common stock and $560 million in cash, paid on Sept. 1, 2010 in conjunction with the company’s conversion to a REIT.

TIMBERLANDS

 

FINANCIAL HIGHLIGHTS (millions)	2Q 2011	1Q 2011	Change
Net sales	$288	$230	$58
Contribution to pre-tax earnings before special items	$112	$89	$23
Pre-tax gain from special items	$0	$152	($152)
GAAP contribution to pre-tax earnings	$112	$241	($129)

2Q 2011 Performance – The segment’s earnings before special items improved $23 million in the second quarter compared with the first. Fee harvest volumes rose, and average selling prices for western logs increased due to strong Chinese export demand through the first half of the quarter. These improvements were partially offset by higher fuel costs.

First quarter results included a special item pre-tax gain of $152 million from the sale of 82,000 acres of non-strategic timberlands. Excluding that transaction, earnings from dispositions of non-strategic timberlands totaled $19 million in the first quarter, compared with $34 million in the second quarter.

3Q 2011 Outlook – Weyerhaeuser expects significantly lower earnings from the Timberlands segment in the third quarter. The company anticipates lower selling prices and harvest volumes in the West and seasonally higher silviculture and road expenses. The company also expects reduced earnings from dispositions of non-strategic timberlands.

WOOD PRODUCTS

 

FINANCIAL HIGHLIGHTS (millions)	2Q 2011	1Q 2011	Change
Net sales	$702	$624	$78
Charge to pre-tax earnings before special items	($52)	($36)	($16)
Pre-tax charge from special items	($9)	$0	($9)
GAAP charge to pre-tax earnings	($61)	($36)	($25)

2Q 2011 Performance –The segment’s results before special items declined $16 million compared with the first quarter due to lower selling prices for lumber and oriented strand board and higher log costs. These factors were partially offset by improved sales volumes across nearly all product lines.

Second quarter includes special charges of $9 million related to the expected sale of the hardwoods business. Second quarter results before special items include operating earnings of $1 million from that business, compared with breakeven results in the first quarter.

3Q 2011 Outlook – Excluding the hardwoods transaction, Weyerhaeuser anticipates a comparable loss from the segment in the third quarter. The company expects lower selling prices for lumber and oriented strand board and lower sales volumes across most product lines, offset by lower log costs and modest cost improvements.

CELLULOSE FIBERS

 

FINANCIAL HIGHLIGHTS (millions)	2Q 2011	1Q 2011	Change
Net sales	$526	$506	$20
Contribution to pre-tax earnings before special items	$80	$86	($6)
Pre-tax gain from special items	$0	$0	$0
GAAP contribution to pre-tax earnings	$80	$86	($6)

2Q 2011 Performance – Second quarter earnings declined $6 million compared with first quarter. Maintenance costs increased and production declined as the segment completed four planned annual maintenance outages, compared with two in the first quarter. This was partially offset by improved average selling prices. Sales volumes declined slightly, as market demand weakened late in the second quarter.

3Q 2011 Outlook – Weyerhaeuser expects significantly higher earnings from the Cellulose Fibers segment in the third quarter. The company anticipates substantially lower maintenance costs and increased production, partially offset by lower selling prices for pulp.

REAL ESTATE

 

FINANCIAL HIGHLIGHTS (millions)	2Q 2011	1Q 2011	Change
Net sales	$191	$160	$31
Contribution (charge) to pre-tax earnings before special items	$8	($1)	$9
Pre-tax gain from special items	$0	$0	$0
GAAP contribution (charge) to pre-tax earnings	$8	($1)	$9

2Q 2011 Performance – The segment’s earnings increased $9 million compared with the first quarter, primarily due to seasonally higher home sale closings. Home sale closings increased 26 percent compared with the first quarter to 459 single-family homes. Average margins on homes closed improved slightly, but average prices declined due to mix.

Second quarter earnings include $4 million from the sale of land and lots, compared with $1 million in the first quarter.

3Q 2011 Outlook – Weyerhaeuser anticipates slightly higher earnings from single-family homebuilding operations in the third quarter due to a seasonal increase in home sale closings.

OTHER ITEMS

Interest expense for the second quarter includes a pre-tax special charge of $26 million associated with the early extinguishment of approximately $518 million of long-term debt due March 2012.

Second quarter results for the Corporate and Other segment include net pre-tax charges of $11 million for discontinued operations, including operating earnings of $2 million for Westwood Shipping Lines and charges of $13 million for other operations. First quarter results include operating earnings of $2 million for Westwood Shipping Lines.

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world's largest forest products companies, began operations in 1900. We grow and harvest trees, build homes and make a range of forest products essential to everyday lives. We manage our timberland on a sustainable basis in compliance with internationally recognized forestry standards. At the end of 2010, we employed approximately 14,000 employees in 10 countries. We have customers worldwide and generated $6.6 billion in sales in 2010. Our stock trades on the New York Stock exchange under the symbol WY. Additional information about us is available at http://www.weyerhaeuser.com.

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