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| WY > SEC Filings for WY > Form 10-Q on 2-Nov-2012 | All Recent SEC Filings |
2-Nov-2012
Quarterly Report
FORWARD-LOOKING STATEMENTS
This report contains statements concerning our future results and performance
that are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements:
• are based on various assumptions we make and
• may not be accurate because of risks and uncertainties surrounding the assumptions that we make.
Factors listed in this section - as well as other factors not included - may
cause our actual results to differ significantly from our forward-looking
statements. There is no guarantee that any of the events anticipated by our
forward-looking statements will occur. Or if any of the events occur, there is
no guarantee what effect they will have on our operations or financial
condition.
We will not update our forward-looking statements after the date of this report.
FORWARD-LOOKING TERMINOLOGY
Some forward-looking statements discuss our plans, strategies and intentions.
They use words such as expects, may, will, believes, should, approximately,
anticipates, estimates, and plans. In addition, these words may use the positive
or negative or other variations of those terms.
STATEMENTS
We make forward-looking statements of our expectations regarding fourth quarter
2012, including:
• slightly improved selling prices and comparable sales volumes for Western
logs, slightly lower Southern log realizations due to mix and a small
seasonal increase in fee harvest volume, increased silviculture costs,
earnings from non-strategic land sales expected to be flat and comparable
earnings in our Timberlands segment;
• a seasonal decline in pricing and demand and lower earnings in our Wood Products segment;
• lower selling prices for fluff pulp, increased sales volumes, lower maintenance expense, somewhat higher energy costs and comparable earnings in our Cellulose Fiber segment; and
• a seasonal increase in home closings, lower average margins due to mix, higher selling expenses due to additional volume and slightly lower earnings from single-family homebuilding operations in our Real Estate segment.
We base our forward-looking statements on a number of factors, including the
expected effect of:
• the economy;
• regulations;
• adverse litigation outcomes and the adequacy of reserves;
• changes in accounting principles;
• contributions to pension plans;
• projected benefit payments;
• projected tax rates and credits; and
• other related matters.
RISKS, UNCERTAINTIES AND ASSUMPTIONS
The major risks and uncertainties - and assumptions that we make - that affect
our business and may cause actual results to differ from these forward-looking
statements include, but are not limited to:
• the effect of general economic conditions, including employment rates,
housing starts, interest rate levels, availability of financing for home
mortgages and strength of the U.S. dollar;
• market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;
• performance of our manufacturing operations, including maintenance requirements;
• the successful execution of our internal performance plans, including restructurings and cost reduction initiatives;
• the level of competition from domestic and foreign producers;
• the effect of weather;
• the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters;
• raw material prices;
• energy prices;
• transportation costs;
• the effect of forestry, land use, environmental and other governmental regulations;
• federal tax policies;
• legal proceedings;
• performance of pension fund investments and related derivatives;
• the effect of timing of retirements and changes in the market price of our common stock on charges for share-based compensation;
• changes in accounting principles; and
• other factors described under "Risk Factors" in our annual report on Form 10-K.
EXPORTING ISSUES
We are a large exporter, affected by changes in:
• economic activity in Europe and Asia - particularly Japan and China;
• currency exchange rates - particularly the relative value of the U.S. dollar to the euro and Canadian dollar and the relative value of the euro and yen; and
• restrictions on international trade or tariffs imposed on imports.
RESULTS OF OPERATIONS
In reviewing our results of operations, it is important to understand these
terms:
• Price realizations refer to net selling prices - this includes selling price
plus freight, minus normal sales deductions.
• Net contribution to earnings can be positive or negative and refers to earnings (loss) attributable to Weyerhaeuser shareholders before interest expense and income taxes.
In reviewing our results of operations, it is important to understand net sales
and revenues and operating income included in Consolidated Results and
individual segment discussions below exclude the results of discontinued
operations. Refer to Note 4: Discontinued Operations .
In the following discussion, unless otherwise noted, references to increases or
decreases in income and expense items, price realizations, shipment volumes, and
net contributions to earnings are based on the quarter and year-to-date periods
ended September 30, 2012, compared to the quarter and year-to-date periods ended
September 30, 2011.
CONSOLIDATED RESULTS
How We Did in Third Quarter and Year-to-Date 2012
NET SALES AND REVENUES / OPERATING INCOME / NET EARNINGS - WEYERHAEUSER COMPANY
Here is a comparison of net sales and revenues to unaffiliated customers,
operating income and net earnings for the quarters and year-to-date periods
ended September 30, 2012 and 2011:
AMOUNT OF AMOUNT OF
QUARTER ENDED CHANGE YEAR-TO-DATE ENDED CHANGE
DOLLAR AMOUNTS IN MILLIONS,
EXCEPT PER-SHARE FIGURES SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011 SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011
Net sales and revenues $ 1,772 $ 1,569 $ 203 $ 5,059 $ 4,601 $ 458
Operating income $ 202 $ 100 $ 102 $ 479 $ 463 $ 16
Earnings of discontinued
operations, net of tax $ - $ 24 $ (24 ) $ - $ 12 $ (12 )
Net earnings attributable to
Weyerhaeuser common
shareholders $ 117 $ 157 $ (40 ) $ 242 $ 266 $ (24 )
Net earnings per share
attributable to Weyerhaeuser
common shareholders, basic and
diluted $ 0.22 $ 0.29 $ (0.07 ) $ 0.45 $ 0.49 $ (0.04 )
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Comparing Third Quarter 2012 with Third Quarter 2011
Net sales and revenues
Net sales and revenues increased $203 million - 13 percent - primarily due to
the following:
• Wood Products segment sales increased $213 million, primarily due to
higher sales volumes across all major product lines and improved selling
prices for lumber, oriented strand board (OSB) and plywood;
• Real Estate segment sales increased $19 million as increased home closings more than offset lower average prices for homes closed; and
• Timberlands segment sales increased $15 million, primarily due to increased timberlands exchanges.
These increases were partially offset by a decrease of $44 million in Cellulose Fibers segment sales, primarily due to lower pulp price realizations.
Net earnings attributable to Weyerhaeuser common shareholders
Our net earnings attributable to Weyerhaeuser common shareholders decreased $40
million - 25 percent - primarily from:
• a $117 million change in income taxes due to the change in discrete tax
items and higher income in our TRS in third quarter 2012 compared to third
quarter 2011;
• a $24 million decrease in net earnings of discontinued operations; and
• a $21 million increase in selling, general and administrative expenses, primarily due to increased share-based compensation expense in Unallocated Items as the result of a higher stock price in 2012 compared to 2011.
These decreases in our net earnings were partially offset by:
• gross margin increased $62 million, primarily due to higher price
realizations of lumber, OSB and plywood in our Wood Products segment
partially offset by lower pulp price realizations in our Cellulose Fibers
segment;
• charges for restructuring, closures and asset impairments decreased $31 million; and
• a $31 million increase in other operating income, primarily due to change in foreign exchange as a result of a stronger Canadian dollar relative to the U.S. dollar in 2012.
Comparing Year-to-Date 2012 with Year-to-Date 2011
Net sales and revenues
Net sales and revenues increased $458 million - 10 percent - primarily due to
the following:
• Wood Products segment sales increased $492 million, primarily due to
higher sales volumes across all major product lines and improved selling
prices for lumber, OSB and plywood; and
• Real Estate segment sales increased $101 million, primarily due to the sale of a 3,200 acre master planned community in Houston, Texas.
These increases were partially offset by a $144 million decrease in Cellulose
Fibers segment sales, primarily due to lower pulp price realizations.
Net earnings attributable to Weyerhaeuser common shareholders
Our net earnings attributable to Weyerhaeuser common shareholders decreased $24
million - 9 percent - primarily from:
• a pretax gain of $152 million on the sale of 82,000 acres of non-strategic
timberlands in 2011; and
• a $67 million increase in income taxes primarily due to the change in discrete tax items.
These decreases in our net earnings were partially offset by:
• a $103 million pretax gain recognized in 2012 related to a previously
announced postretirement plan amendment;
• a $36 million decrease in interest expense due to lower charges associated with the early extinguishment of debt and lower interest due to a lower level of debt;
• gross margin increased $31 million, primarily due to higher price realizations of lumber, OSB and plywood in our Wood Products segment partially offset by lower pulp price realizations in our Cellulose Fibers segment and fewer timberland exchanges and lower mineral income in our Timberlands segment; and
• charges for restructuring, closures and asset impairments decreased $26 million.
TIMBERLANDS
How We Did Third Quarter and Year-to-Date 2012
Here is a comparison of net sales and revenues to unaffiliated customers,
intersegment sales, and net contribution to earnings for the quarters and
year-to-date periods ended September 30, 2012 and 2011:
NET SALES AND REVENUES / NET CONTRIBUTION TO EARNINGS - TIMBERLANDS
AMOUNT OF
QUARTER ENDED CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011 SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011
Net sales and revenues to
unaffiliated customers:
Logs:
West $ 132 $ 144 $ (12 ) $ 408 $ 406 $ 2
South 60 53 7 166 143 23
Canada 5 4 1 14 12 2
Subtotal logs sales and
revenues 197 201 (4 ) 588 561 27
Pay as cut timber sales 8 9 (1 ) 28 25 3
Timberlands exchanges(1) 24 2 22 39 62 (23 )
Higher and better-use land
sales(1) 4 5 (1 ) 13 11 2
Minerals, oil and gas 8 14 (6 ) 22 43 (21 )
Products from international
operations(2) 26 21 5 80 59 21
Other products - - - 9 9 -
Subtotal net sales and revenues
to unaffiliated customers 267 252 15 779 770 9
Intersegment sales:
United States 103 102 1 330 321 9
Other 59 52 7 168 158 10
Subtotal intersegment sales 162 154 8 498 479 19
Total sales and revenues $ 429 $ 406 $ 23 $ 1,277 $ 1,249 $ 28
Net contribution to earnings $ 80 $ 61 $ 19 $ 227 $ 420 $ (193 )
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(1) Sales of higher and better use timberland and non-strategic timberlands are conducted through Forest Products subsidiaries.
(2) Includes logs, plywood and hardwood lumber harvested or produced by our international operations, primarily in South America.
Comparing Third Quarter 2012 with Third Quarter 2011
Net sales and revenues - unaffiliated customers
Net sales and revenues to unaffiliated customers increased $15 million - 6
percent - primarily from the following:
• a $22 million increase in timberlands exchanges;
• Southern log sales increased $7 million due to higher log prices and a 7 percent increase in sales volumes as the result of increased harvest levels in response to increased third party demand; and
• a $5 million increase in sales from our international operations due to a 13 percent increase in plywood prices and a 27 percent increase in plywood sales volumes.
The above items were partially offset by:
• Western log sales decreased $12 million primarily due to lower export and
domestic log prices, partially offset by increased sales volumes of 7
percent; and
• a $6 million decrease in minerals, oil and gas revenue primarily due to lower natural gas prices.
Net contribution to earnings
Net contribution to earnings increase $19 million - 31 percent - primarily from:
• a $21 million increase in land exchanges and higher and better-use land sales;
• a $6 million increase due to higher sales volumes and demand for domestic logs, harvest levels increased 11 percent in both the West and South; and
• a $5 million increase due to higher log prices in the South.
These increases were partially offset by a $13 million decrease due to lower export and domestic log prices in the West.
Comparing Year-to-Date 2012 with Year-to-Date 2011
Net sales and revenues - unaffiliated customers
Net sales and revenues to unaffiliated customers increased $9 million - 1
percent - notable items include:
• Southern log sales increased $23 million due to increased sales volumes of 13
percent as a result of increased harvest levels in response to increased
third party demand; and
• a $21 million increase in sales from our international operations, primarily due to increased plywood prices of 11 percent and a 39 percent increase in plywood sales volumes.
The above items were partially offset by:
• a $23 million decrease in timberlands exchanges; and
• a $21 million decrease in minerals, oil and gas revenue primarily due to lower natural gas prices.
Net contribution to earnings
Net contribution to earnings decreased $193 million - 46 percent - primarily
from:
• a $152 million decrease due to the sale of 82,000 acres of non-strategic
timberlands in 2011;
• a $34 million decrease as the mix of export log sales compared to domestic log sales decreased in the West and both domestic and export log prices were lower in the West;
• a $21 million decrease in mineral income as a result of lower natural gas prices;
• a $15 million decrease due to fewer timberlands exchanges and higher and better-use land sales; and
• an $11 million increase in operating costs, primarily due to increased logging and maintenance costs.
The above items were partially offset by:
• a $31 million increase, primarily due to higher sales volumes and demand for
domestic and export logs, harvest levels increased 7 percent in the West and
18 percent in the South; and
• a $7 million increase in earnings from our international operations, primarily due to higher plywood prices and sales volumes.
Our Outlook
We expect comparable earnings from the Timberlands segment in fourth quarter. We
expect seasonally higher fee harvest volumes and slightly improved selling
prices for Western logs in export and domestic markets, offset by increased
silviculture costs, primarily in the South.
THIRD-PARTY LOG SALES VOLUMES AND FEE HARVEST VOLUMES
AMOUNT OF
QUARTER ENDED CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE
VOLUMES IN THOUSANDS SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011 SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011
Third party log sales - cubic
meters:
West 1,480 1,385 95 4,339 3,871 468
South 1,430 1,336 94 4,012 3,552 460
Canada 133 116 17 392 333 59
International 99 88 11 259 239 20
Total 3,142 2,925 217 9,002 7,995 1,007
Fee harvest volumes - cubic
meters:
West 1,784 1,604 180 5,294 4,962 332
South 2,809 2,535 274 8,311 7,070 1,241
International 198 270 (72 ) 531 589 (58 )
Total 4,791 4,409 382 14,136 12,621 1,515
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WOOD PRODUCTS
How We Did Third Quarter and Year-to-Date 2012
Here is a comparison of net sales and revenues to unaffiliated customers and net
contribution to earnings for the quarters and year-to-date periods ended
September 30, 2012 and 2011:
NET SALES AND REVENUES / NET CONTRIBUTION TO EARNINGS - WOOD PRODUCTS
AMOUNT OF
QUARTER ENDED CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011 SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011
Net sales and revenues:
Structural lumber $ 363 $ 281 $ 82 $ 1,024 $ 831 $ 193
Engineered solid section 76 63 13 211 180 31
Engineered I-joists 53 43 10 143 124 19
Oriented strand board 169 96 73 418 264 154
Softwood plywood 34 18 16 83 48 35
Other products produced 41 37 4 127 108 19
Other products purchased for
resale 80 65 15 220 179 41
Net sales and revenues from
continuing operations $ 816 $ 603 $ 213 $ 2,226 $ 1,734 $ 492
Net contribution to earnings
from continuing operations 59 (80 ) 139 82 (166 ) 248
Net contribution to earnings
from discontinued operations - (17 ) 17 - (25 ) 25
Net contribution to earnings $ 59 $ (97 ) $ 156 $ 82 $ (191 ) $ 273
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Overall performance in our Wood Products segment improved year over year. We
continue to focus on reducing costs and increasing revenues by broadening our
customer base; introducing new products; growing our specialty, as well as
commodity building products business; and improving our operational
capabilities. These improvement efforts and better market conditions, have
resulted in higher production rates in all primary product lines.
Comparing Third Quarter 2012 with Third Quarter 2011
Net sales and revenues
Net sales and revenues increased $213 million - 35 percent - primarily from the
following:
• Structural lumber shipment volumes increased 8 percent and average price
realizations increased 19 percent.
• OSB shipment volumes increased 15 percent and average price realizations increased 52 percent.
• Engineered solid section shipment volumes increased 24 percent.
• Engineered I-joists shipment volumes increased 26 percent.
• Softwood plywood shipment volumes increased 38 percent and average price realizations increased 37 percent.
• Other products purchased for resale increased 23 percent.
Net contribution to earnings
Net contribution to earnings increased $156 million primarily from:
• a $122 million increase as higher lumber, OSB and plywood price realizations
more than offset lower prices for engineered I-joists and engineered solid
section;
• a $36 million decrease in restructuring, closures and asset impairments;
• a $7 million increase in sales volumes across all products; and
• 2011 included a $17 million loss from discontinued operations.
These increases were partially offset by:
• an $11 million increase in freight expense due to higher shipment volumes; and
• a $7 million increase in selling, general and administrative expenses, primarily due to increased sales.
Comparing Year-to-Date 2012 with Year-to-Date 2011
Net sales and revenues
Net sales and revenues increased $492 million - 28 percent - primarily from the
following:
• Structural lumber shipment volumes increased 10 percent and average price
realizations increased 12 percent.
• OSB shipment volumes increased 26 percent and average price realizations increased 25 percent.
• Engineered solid section shipment volumes increased 27 percent.
• Engineered I-joists shipment volumes increased 17 percent.
• Softwood plywood shipment volumes increased 35 percent and average price realizations increased 28 percent.
• Other products produced increased 18 percent.
• Other products purchased for resale increased 23 percent.
The above items were partially offset by a decrease of 8 percent in engineered solid section average price realizations.
Net contribution to earnings
Net contribution to earnings increased $273 million primarily from:
• a $204 million increase as higher lumber, OSB and plywood price realizations
more than offset lower prices for engineered I-joists and engineered solid
section;
• a $39 million decrease in restructuring, closures and asset impairments;
• a $17 million increase in sales volumes across all products;
• by-product sales increased $16 million as the result of higher lumber production volumes;
• manufacturing and other costs decreased $9 million, primarily due to increased operating rates;
• log costs decreased $9 million, primarily due to lower domestic prices in the West and South; and
• 2011 included a $25 million loss from discontinued operations.
These increases were partially offset by:
• a $36 million increase in freight expense due to higher shipment volumes; and
• an $8 million increase in selling, general and administrative expenses, primarily due to increased sales.
Our Outlook
We anticipate lower earnings from the Wood Products segment in fourth quarter
due to seasonal declines in pricing and demand for most products.
THIRD-PARTY SALES VOLUMES
AMOUNT OF
QUARTER ENDED CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE
SEPTEMBER
VOLUMES IN MILLIONS SEPTEMBER 2012 SEPTEMBER 2011 2012 VS. 2011 2012 SEPTEMBER 2011 2012 VS. 2011
Structural lumber - board
feet 1,013 934 79 3,006 2,723 283
Engineered solid section -
cubic feet 4.2 3.4 0.8 11.7 9.2 2.5
. . .
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