Weyerhaeuser Reports 1st Quarter Net Earnings of $755 Million On Gain Realized in Connection With Domtar Transaction
FEDERAL WAY, Wash.,— Weyerhaeuser Company (NYSE: WY) today reported net earnings of $755 million for the first quarter of 2007, or $3.22 per diluted share, on sales of $3.9 billion.
First quarter 2007 earnings include the following after-tax items:
* A gain of $756 million, or $3.22 per diluted share, on the distribution of the fine paper business and related assets to Weyerhaeuser shareholders. The gain includes a Canadian tax benefit of $74 million.
* A charge of $49 million, or 20 cents per diluted share, for asset impairments and closure costs.
Excluding these charges, the company earned $48 million, or 20 cents per diluted share.
First 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 a new accounting pronouncement to expense planned major maintenance costs as incurred.
For first quarter 2006, Weyerhaeuser reported a net loss of $576 million, or $2.34 per diluted share, on net sales of $4.5 billion. First quarter 2006 earnings include the following after-tax items:
A charge of $746 million, or $3.03 per diluted share, for a write-off of goodwill associated with the fine paper business.
* Income of $12 million in the Real Estate business, or 5 cents per diluted share, associated with insurance recoveries and recognition of deferred income in connection with partnership restructurings.
SUMMARY OF FIRST QUARTER BUSINESS PERFORMANCE
Timberlands – Log prices improved due to lower supply in the West.
* Wood Products – Market conditions remained difficult.
* Containerboard, Packaging and Recycling – Higher fiber and energy costs, combined with lower demand affected performance.
* Cellulose Fibers – Prices continued to be strong for absorbent fibers, which is the segment’s focus following the completion of the Domtar transaction.
* Real Estate and Related Assets – The segment experienced fewer closings, lower margins, and decreased land and lot activity.
* Corporate and Other – Results reflect the gain from the Domtar transaction.
REVIEW OF STRATEGIC ALTERNATIVES FOR CBPR BUSINESS
Earlier this morning, the company announced that its board of directors has authorized a process to consider a broad range of strategic alternatives for its Containerboard, Packaging and Recycling business. Alternatives range from continuing to hold and operate the assets to a possible sale or combination. Weyerhaeuser will not speculate on the outcome of the review or whether it will result in any specific course of action.
STEVE ROGEL COMMENTS ON FIRST AND SECOND QUARTER
“During the first quarter, we delivered an installment on our commitment to focus Weyerhaeuser on those businesses where we have scale and scope to succeed,” said Steven R. Rogel, chairman, president and chief executive officer. “By completing the innovative Domtar transaction, we created significant value for shareholders through a tax-free transaction and by reducing our outstanding shares by more than 25 million. But the quarter also saw us facing significant market challenges. In response, we aggressively managed production, costs and inventory levels.
“As we look to the second quarter, we see continued challenges in many of our markets, especially in wood products where we expect to see a weaker than normal increase in seasonal demand,” Rogel said. “These conditions only underscore the need for us to continue to improve our operating performance and maintain our sharp focus on the strategic initiatives we’re implementing to create more value for our shareholders.”
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