Weyerhaeuser Reports 1st Quarter Loss

FEDERAL WAY, Wash., May 5, 2009—Weyerhaeuser Company (NYSE: WY) today reported a net loss of $264 million for the first quarter, or $1.25 per share, on net sales of $1.3 billion.

This compares with a net loss of $148 million, or $0.70 per share, on net sales from continuing operations of $2.0 billion for the same period last year.

SIGNIFICANT FIRST QUARTER 2009 AFTER-TAX ITEMS

Excluding these items, the company reported a net loss of $144 million, or $0.68 per share, in the first quarter of 2009.

SIGNIFICANT FIRST QUARTER 2008 AFTER-TAX ITEMS

Excluding these items, the company’s net loss was $51 million, or $0.24 per share, in the first quarter of 2008.

“The recession hit us hard and affected the results we announced this morning,” said Dan Fulton, president and chief executive officer. “Declining revenues during the quarter reflect reduced volume and depressed prices across all of our product lines. In response, we’ve curtailed production capacity and reduced timber harvest levels. While we achieved our $375 million in previously announced cost reductions ahead of schedule, our current performance is unacceptable. Our priority is to put into place a competitive cost structure that will allow our business portfolio to achieve top quartile results regardless of economic conditions.”

SUMMARY OF FIRST QUARTER FINANCIAL HIGHLIGHTS

SEGMENT RESULTS FOR FIRST QUARTER

(Contributions to Pre-Tax Earnings)

TIMBERLANDS

1Q 2009 Performance– Fee harvest declined, primarily due to market conditions. Log prices were lower in both export and domestic markets. This was partially offset by lower operating costs, primarily for fuel and silviculture activities. Segment earnings include losses related to international operations of $7 million in the first quarter and $10 million in the fourth quarter.

2Q 2009 Outlook– Weyerhaeuser expects second quarter 2009 earnings from the segment to be comparable to first quarter, as challenging market conditions persist. 

WOOD PRODUCTS

1Q 2009 Performance– Excluding the pre-tax items noted below, the segment’s results improved by $23 million, resulting in a lower loss in the first quarter.

• First quarter 2009 included charges of $71 million for closures, restructuring and asset impairments, and a $19 million reserve for an agreement in principle to settle alder litigation.
• Fourth quarter 2008 included charges of $733 million for the impairment of goodwill, and $28 million for closures, restructuring and impairment of other intangible assets.

Cost control measures and facility closures, combined with lower log costs, more than offset reduced sales volumes for all product lines and lower lumber and oriented strand board prices.  

2Q 2009 Outlook– Weyerhaeuser expects a smaller operating loss for the segment in second quarter due to cost reductions resulting from first quarter facility closures and other cost control measures. The company anticipates lower raw material costs and slightly higher sales volumes.

CELLULOSE FIBERS

1Q 2009 Performance – Excluding a fourth quarter charge of $94 million for the impairment of goodwill, the segment’s earnings declined $34 million in the first quarter.

First quarter earnings from operations decreased, primarily due to a significant decline in pulp price realizations and lower capacity utilization as the company slowed production to match declining demand for its products. This was partially offset by lower fiber, freight and maintenance costs.

2Q 2009 Outlook– Expenses associated with a planned major boiler maintenance project, other annual maintenance outages and lower pulp prices are expected to result in a second quarter loss.

REAL ESTATE

1Q 2009 Performance– Excluding the pre-tax items noted below, the segment’s loss increased $14 million in first quarter.

• Asset impairments, restructuring and investment-related charges were $72 million in the first quarter compared to $484 million in the fourth quarter.
• First quarter included a gain of $6 million from a land condemnation compared to a $130 million loss on land sales in the fourth quarter.

Homebuilding operations closed 429 units, a 43 percent decrease from fourth quarter, reflecting a seasonal decline and continued weak market conditions. The average price of home sales closed was slightly lower than the previous quarter, primarily due to mix. 

2Q 2009 Outlook– Despite extremely difficult housing market conditions, Weyerhaeuser expects second quarter home sale closings to increase slightly from first quarter levels, but at lower average sales prices.  Excluding impairments and restructuring charges, the segment’s loss from homebuilding operations is expected to approximate the first quarter.

About Weyerhaeuser

Weyerhaeuser Company, one of the world's largest forest products companies, was incorporated in 1900. In 2008, sales were $8 billion. It has offices or operations in 10 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 and development. Additional information about Weyerhaeuser's businesses, products and practices is available at http://www.weyerhaeuser.com.