FEDERAL WAY, Wash., October 28, 2011 — Weyerhaeuser Company (NYSE: WY) today reported net earnings of $157 million for the third quarter, or 29 cents per diluted share, on net sales from continuing operations of $1.6 billion. This compares with net earnings of $1.116 billion on net sales from continuing operations of $1.5 billion for the same period last year.
Earnings for the third quarter of 2011 include after-tax gains of $91 million from special items, including an $83 million benefit related to foreign tax credits. Excluding these items, the company reported net earnings of $66 million, or 12 cents per diluted share. This compares with net earnings before special items of $81 million in the third quarter of 2010. Earnings for the third quarter of 2010 included special items of $1.035 billion, primarily income tax adjustments related to Weyerhaeuser's conversion to a real estate investment trust (REIT).
“All of our businesses faced challenging markets in the third quarter, as the U.S. housing market languished and we experienced a slowdown in demand from China,” said Dan Fulton, president and chief executive officer. "We remain focused on improving performance with today's level of demand, while being prepared to flex all of our operations as markets improve.”
(1) Discontinued operations include Weyerhaeuser's hardwoods and Westwood Shipping Lines businesses, which were sold in the third quarter of 2011.
(2) Weyerhaeuser's outstanding shares increased substantially during the third 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.
3Q 2011 Performance - The segment's earnings declined $50 million in the third quarter compared with the second. Earnings from disposition of non-strategic timberlands declined to $4 million, compared with $32 million in the second quarter. Average selling prices for Western logs were lower due to weakening Chinese and domestic markets. Selling prices for Southern logs also declined. The segment's silviculture and road costs increased seasonally. Fee harvest increased slightly compared with the second quarter, as a decline in Western harvest volume was offset by increased volume in the South.
4Q 2011 Outlook - Excluding earnings from disposition of non-strategic timberlands, Weyerhaeuser expects lower earnings from the Timberlands segment in the fourth quarter due to reduced fee harvest volumes and lower selling prices for Western logs. The company also anticipates seasonally higher road and silviculture costs.
3Q 2011 Performance - Results from continuing operations improved $10 million compared with the second quarter, as reduced log costs were partially offset by slightly lower sales volumes across most product lines. Operating results for the discontinued hardwoods operations declined $5 million compared with the second quarter. Weyerhaeuser completed the sale of the hardwoods operations in the third quarter.
Third quarter special charges of $46 million are primarily comprised of asset impairments due to the permanent closure of four engineered wood products facilities, restructuring costs, and charges related to the sale of the hardwoods operations. Second quarter included special charges of $9 million related to the sale of the hardwoods operations.
4Q 2011 Outlook - Excluding special items, Weyerhaeuser anticipates a larger loss from continuing operations in the fourth quarter due to seasonally weaker market conditions. The company expects lower selling prices for lumber and oriented strand board and reduced sales volumes and operating rates across all product lines.
3Q 2011 Performance - Third quarter earnings improved $55 million compared with second quarter. Maintenance costs decreased and production increased as the segment had no annual maintenance outages, compared with four planned outages in the second quarter. These improvements were partially offset by lower selling prices for pulp.
4Q 2011 Outlook - Weyerhaeuser expects slightly lower earnings from the Cellulose Fibers segment in the fourth quarter. The company anticipates lower selling prices for pulp and slightly higher shipment volumes.
3Q 2011 Performance - The segment's earnings increased $2 million compared with the second quarter. Home closings increased 11 percent to 508 single-family homes. Average margins on homes closed improved due to mix. Third quarter included no earnings from the sale of land and lots, compared with $4 million in the second quarter.
4Q 2011 Outlook - Weyerhaeuser anticipates higher earnings from single-family homebuilding operations in the fourth quarter due to seasonally higher home closing volume.
Corporate and Other results from continuing operations declined $5 million, as foreign exchange losses reduced the segment's results by $18 million compared with the second quarter. This was offset primarily by $7 million of additional gains related to share-based compensation, as a decline in the company's stock price resulted in a larger mark-to-market adjustment.
Third quarter includes pre-tax gains of $58 million from special items, primarily the sale of Westwood Shipping Lines.
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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