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Consolidated
net sales and revenues were $11.1 billion in 1996, a decrease of
6 percent from the record $11.8 billion posted in 1995. This change
is the net of decreases of $1 billion in the pulp, paper and packaging
segment and $15 million in timberlands, offset in part by an increase
of $324 million in wood products. Pulp, paper, corrugated packaging
and recycled products experienced material unfavorable price variances
offset, in part, by favorable volume variances in the packaging
business related to the acquisition of nine facilities in late 1995.
Wood products benefited from favorable price and volume variances
in lumber.
Net
earnings for 1996 were $463 million, or $2.34 basic earnings per
common share, compared with record earnings of $799 million, or
$3.93 basic earnings per common share, in 1995. The 1995 earnings
were net of an after-tax charge of $184 million ($290 million pretax),
or 90 cents per common share, for the disposal of certain real estate
assets in the real estate and related assets segment. Lower prices
in the pulp, paper and packaging segment, which were in sharp contrast
with the record 1995 levels, accounted for the decline in 1996 earnings.
The
timberlands segment operating earnings were $503 million, down from
1995 earnings of $560 million.
Wood
products segment earnings were $302 million in 1996, up significantly
from 1995 earnings of $248 million. Tight supplies and disruptions
related to countervailing duties on imports from Canada contributed
to strong lumber results. The panel markets were negatively impacted
by the excess capacity of oriented strand board as new facilities
came on line in 1996.
The
pulp, paper and packaging segment reported operating earnings of
$307 million in 1996 compared with a record performance of $1.2
billion in 1995. The downturn in pulp and paper prices, which began
in the fourth quarter of 1995 as customers cut back on purchases
in order to reduce excess inventories, continued as prices were
significantly lower than the prior year.
The
real estate and related assets segment earned $43 million from operations
in 1996 compared with $13 million, before the charge for disposal
of certain real estate assets, in 1995. Real estate benefited from
several major commercial project closings and increased residential
property sales along with reduced costs as the result of the disposition
of certain impaired properties. Improved financial services results
reflected the sale of capitalized servicing rights and increased
loan originations in the company's mortgage banking business.
Weyerhaeuser's
costs of products sold, as a percentage of sales, increased to 75
percent in 1996 compared with 69 percent in 1995, reflecting the
significant decline in pulp, paper and packaging pricing. Additionally,
inventory turnover rates were lower in 1996 compared with the higher
rates experienced in the peak price periods of 1995.
The real estate
and related assets segment costs and operating expenses in 1996
rose 7 percent over the 1995 level, consistent with the 10 percent
increase in revenues from year to year. The decline in depreciation
and amortization
was directly related to the disposition of certain impaired assets
and sale of substantially all of the capitalized servicing rights
in the mortgage banking business. Selling, general and administrative
expenses increased over 1995 primarily due to the opening of additional
branch offices in 1996 by the mortgage banking business.
Other
income (expense) is an aggregation of both recurring and occasional
nonoperating income and expense items and, as a result, may fluctuate
from period to period. No individual income or expense item in 1995
or 1996 was significant in relation to net earnings.
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