Apr 26, 2004. /Lesprom Network/. Weyerhaeuser Company has reported first quarter 2004 net earnings of $121 million, or 54 cents per share, on net sales of $5 billion. This compares with a loss of $54 million, or 24 cents per share, on net sales of $4.6 billion for the first quarter of 2003. First quarter 2004 earnings include the following after-tax items: A charge of $32 million, or 14 cents per share, associated with the settlement of litigation. A charge of $10 million, or 4 cents per share, for integration and restructuring activities. A gain of $22 million, or 10 cents per share, on the sale of the Slave Lake, Alberta, oriented strand board mill. First quarter 2003 earnings included the following after-tax items: A charge of $52 million, or 23 cents per share, for a lawsuit involving Pacific Northwest alder logs. A charge of $19 million, or 8 cents per share, associated with integration and restructuring activities. A charge of $15 million, or 7 cents per share, for the closure of facilities. A charge of $11 million, or 5 cents per share, for the cumulative effect of a required change in the accounting principle relating to asset retirement obligations. Other significant 2004 first quarter financial matters: Weyerhaeuser Company debt was $11.6 billion at quarter end. Total company debt, which includes Real Estate and Related Assets, was approximately $12.6 billion at the end of the quarter. Capital spending, excluding Real Estate and Related Assets, for the first quarter was approximately $90 million. "In addition to the continued strength of single-family housing starts and the wood products market, we are seeing improvement in our pulp, paper and containerboard markets," said Steven R. Rogel, chairman, president and chief executive officer. "The improved efficiencies of our operations are becoming more apparent due to the combination of strong market conditions, synergies from the Willamette acquisition and asset rationalization. Many of our operations are running at record production rates and we're maintaining strong order files. However, we are experiencing transportation disruptions in truck, rail and ocean service that are continuing into the second quarter and are making it increasingly challenging to meet customer needs." TIMBERLANDS Fourth quarter 2003 earnings include a pre-tax gain of $61 million on the sale of nonstrategic timberlands in Tennessee and the Carolinas. Most of the improvement from the fourth quarter occurred in the West due to increased prices for domestic and export logs, and reduced logging costs in addition to slightly higher fee harvest from all operating regions. Second quarter earnings are expected to be slightly higher than the first quarter due to higher export and domestic log sales volumes, and seasonally higher fee harvest. WOOD PRODUCTS First quarter earnings include a $33 million pre-tax gain on the sale of the company's oriented strand board mill at Slave Lake, Alberta, and a pre-tax charge of $49 million for the settlement of litigation. Fourth quarter 2003 results include a pre-tax charge of $14 million for facility closure costs. Continued strength in the housing market prompted an early quarter recovery in prices. Quarter to quarter improvement in prices for softwood lumber and engineered lumber contributed to the increase in earnings. The segment incurred $26 million in countervailing and anti-dumping duties and related costs on Canadian softwood lumber the company sold into the United States in the first quarter. This compares to $22 million in the fourth quarter. Second quarter results are expected to be significantly higher than first quarter due to continued high demand and the resulting effects on prices for all wood products. PULP AND PAPER Fourth quarter 2003 results include a pre-tax charge of $30 million associated with the closure of a paper machine. In the first quarter, paper grade pulp prices continued to increase. Paper shipments increased significantly from fourth quarter levels primarily due to a general improvement in U.S. economic activity and lower paper imports. Market downtime was eliminated in the first quarter compared with 96,000 tons in the fourth quarter. These factors helped improve operating results during the first quarter. The company expects the segment to return to profitability in the second quarter. Prices for pulp and paper are expected to increase in the second quarter. Shipments are expected to remain stable for both of these product lines. CONTAINERBOARD PACKAGING AND RECYCLING Higher costs for old corrugated containers (OCC) and lower prices for boxes resulted in lower first quarter earnings. First quarter market downtime was 32,000 tons compared with 71,000 tons in the fourth quarter. Box shipments increased both seasonally and compared with the first quarter last year. Improving economic conditions are expected to result in greater demand for boxes in the second quarter. As a result, the company expects higher second quarter earnings due primarily to increasing prices and shipments, partially offset by higher OCC costs. REAL ESTATE AND RELATED ASSETS First quarter earnings include a $22 million pre-tax gain on an acreage sale. Fourth quarter 2003 earnings include a $7 million pre-tax gain on an acreage sale. Housing sales remain strong with a backlog of homes sold, but not closed, exceeding six months. Second quarter earnings from new home sales are expected to be comparable to the first quarter. No major acreage sales are planned in the second quarter.