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Consolidated
net sales and revenues for 1998 were $10.8 billion, a decrease of
4 percent over the prior year's $11.2 billion. Lower average prices
in the major products were the principal factor in this unfavorable
variance compared with 1997. In total, revenue changes as a result
of volume variances were unchanged from the prior year.
1998
net earnings were $294 million, or $1.48 basic earnings per common
share, a 14 percent decrease from $342 million, or $1.72 basic earnings
per common share in 1997. The 1998 results reflect an after-tax
charge of $45 million, or 23 cents per common share, primarily associated
with streamlining pulp and paper operations, the closure of the
Longview chlor-alkali facility and changes to the British Columbia
lumber operations. During the year, the company also incurred pretax
charges of $42 million on Year 2000 remediation work. 1997 earnings
included an after-tax net charge of $9 million, or 4 cents per common
share, related to the closure of operating facilities, offset in
part by the gain on sale of businesses. Diluted earnings per common
share, which are based upon the inclusion of outstanding stock options
in the weighted average number of shares outstanding, were $1.47
and $1.72 for 1998 and
1997, respectively.
The
timberlands segment's operating earnings for 1998 were $487 million
compared with $535 million in 1997. The current year's results were
hurt by a soft export market early in the year that weakened prices
for both domestic and export logs. Net sales for the year were $636
million compared with $797 million in 1997. Export log prices did
improve throughout the year and were above 1997 fourth-quarter levels
at year-end.
Operating
earnings for the wood products segment were $208 million before
the $25 million nonrecurring pretax charge associated with changes
in the British Columbia lumber operations. This compares with the
$212 million earned before nonrecurring pretax charges of $40 million
for the closure of two plywood facilities and an export sawmill
in 1997. This segment posted net sales of $4.5 billion for the year,
comparable to $4.6 billion in the prior year. Oriented strand board
enjoyed a strong year with both volumes and prices above 1997 levels.
Lower prices for lumber, however, offset the effects of higher volume
driven by domestic housing starts.
The
pulp, paper and packaging segment had operating earnings of $192
million in 1998 before the nonrecurring pretax $42 million charge
associated with streamlining pulp and paper operations and the closure
of the Longview, Washington, chlor-alkali facility. This
is comparable to the $192 million earned in 1997 before a pretax
nonrecurring charge of $28 million, which is the net of a $49 million
charge for facility closures, offset in part by a $21 million gain
on the sale of the Saskatoon, Saskatchewan, Canada, chemical business.
Sales for the segment were $4.3 billion for the year compared with
$4.6 billion in the prior year. Prices for most grades of pulp and
paper were below 1997 levels. The ownership restructuring of the
North Pacific Paper Corporation newsprint facility from a fully
consolidated subsidiary to a 50 percent owned equity affiliate in
February 1998 also unfavorably impacted segment sales for the year.
The
real estate and related assets segment posted operating earnings
of $124 million in 1998, compared with 1997 earnings of $66 million,
before the gain of $45 million on the sale of Weyerhaeuser Mortgage
Company. Improved operating performance and the strong housing market
contributed to the stronger earnings. Net sales and revenues were
$1.2 billion in 1998 compared with $1.1 billion in 1997. This increase
was primarily from the sale of single-family units, offset in part
by the elimination of loan origination and service fees generated
in previous years by the mortgage banking business. The sale of
commercial properties was essentially unchanged from year to year.
Weyerhaeuser's
costs
of products sold were $398 million or 5 percent less in 1998
than 1997. This is consistent with the reduction in Weyerhaeuser
net sales and maintains the costs
of products sold as a percentage of sales at 78 percent, the
same as 1997. Charges of $71 million in 1998 and $89 million in
1997 for the closure or disposition of facilities were included
in costs and expenses. The product inventory turnover rate was 11.8
turns for the year, slightly less than the 12.1 turns in 1997.
The
real estate and related assets segment costs and operating expenses
rose in 1998 on par with the increase in sales and revenues. Selling,
general and administrative expenses decreased by $43 million for
1998 due principally to the sale of the mortgage banking business.
Other
income (expense) is an aggregation of both recurring and occasional
income and expense items and, as a result, can fluctuate from year
to year. There were no significant individual items in 1998. Significant
items in 1997 for Weyerhaeuser were interest income of $18 million
from a favorable federal income tax decision, a loss of $8 million
from the sale of the wholesale nursery business and a gain of $21
million from the sale of the Saskatoon chemical facility. The real
estate and related assets segment had a gain of $45 million from
the sale of the mortgage banking business in 1997. >
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