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Weyerhaeuser Management Discusses Q2 2012 Results - Earnings Call Transcript

Joining me this morning are Dan Fulton, President and Chief Executive Officer; and Patty Bedient, Executive Vice President and Chief Financial Officer.

As summarized on Chart 1, Weyerhaeuser reported second quarter 2012 net earnings of $84 million or $0.16 per diluted share on net sales of $1.8 billion. Earnings for the second quarter include after-tax gain of $37 million from special items. These items are detailed in Chart 2, a GAAP reconciliation of earnings before special items. A gain of $33 million or $0.06 per share for postretirement plan amendments, no further gains are anticipated from these benefit changes which were effective June 30; and a gain of $4 million or $0.01 per share for the sale of properties. Excluding special items, the company reported net earnings of $47 million or $0.09 per diluted share.

To provide a better understanding of business operating results, during the second quarter, we began reporting the elimination of intersegment profit on inventory and the LIFO reserve as part of unallocated items. Previously, these amounts were reported in the business segments. For consistency, segment contributions to pretax earnings for first quarter 2012 as well as prior periods have been adjusted to reclassify these as part of unallocated items. These adjustments are detailed on Chart 14. There is no change to Weyerhaeuser's consolidated net earnings for first quarter 2012 or prior years.

Next, turning to our business segments, my comments reviewing the second quarter of 2012 refer to changes from the first quarter of 2012 for all segments, beginning with Timberlands, Charts 3 and 4. Timberlands contributed $77 million to pretax earnings, $7 million more than in Q1. Fee harvest volume seasonally increased in the West and South. In the West, log prices declined nearly $5 per cubic meter as the domestic -- as domestic volumes comprised a higher proportion of sales. Domestic log demand was strong. Third-party volumes increased 19% and domestic log prices was 2%. Japanese log volumes increased. Japanese log prices were slightly lower. The log export mix shifted towards China where volumes were higher and price is lower. Southern sales volumes increased and log prices rose 2%. Logging costs were higher in the West due to more cable logging on steep terrain and silviculture costs were lower in the South.

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