Willamette's earnings beat expectations

dwheeler at my-deja.com dwheeler at my-deja.com
Sat Jan 20 16:17:42 EST 2001

>From The Oregonian, Jan. 18, 2001, p B1

Willamette's earnings beat expectations

Despite the economy, the Portland-based timber firm records $85.96

By DYLAN RIVERA, The Oregonian

	Facing a softening market and a hostile takeover, Portland-based
Willamette Industries surprised Wall Street on Wednesday by announcing it
beat analysts' expectation by 4 cents a share for the fourth quarter.
	Willamette reported net earnings of $85.96 million, or 78 cents a
diluted share, compared with $83.61 million, or 75 cents a share, in the
same quarter in 1999. The consensus prediction by analysts polled by
First Call/Thomson Financial was for 74 cents a share.
	Near earnings for 2000 were $344.89 million, or $3.12 a share, up 34
percent from 1999. Sales were $4.65 billion, up 8.9 percent from 1999.
	Looming in the background was the hostile takeover bid by
Weyerhaeuser, the timber giant based in Federal Way, Wash., that launched
its effort in November.
	Willamette Chief Executive Duane C. McDougall said the earnings show
the company's leadership in the industry and support its argument that it
should not be sold to Weyerhaeuser.
	"We believe our efficient, high-quality asset base, our leading
customer service and the exceptional dedication and efforts of our
employees will allow us to continue to provide our shareholders with our
historically proven returns, which outperform the industry," he said.
	A Weyerhaeuser spokesman said the company's offer of $48 a share and
assumption of $1.7 billion in debt - for a total of $7.1 billion - is
unaffected by the earnings announcement. Some on Wall Street said the
pending hostile takeover did encourage Willamette to make the best of the
	McDougall said the company spent $8 million in the quarter, or 5
cents a share, defending itself from Weyerhaeuser. That could amount to
$60 million if the conflict continues through the first half of 2002,
which McDougall said he expects.
	"What a waste," he said.
	Weyerhaeuser spokesman Bruce Amundson said: "We certainly agree with
that, and that's why we'e urging their board to sit down and negotiate
with us to reach a mutually beneficial transaction."
	Willamette's quarter shows it's a top performer, even in a weakening
market. International Paper, Georgia-Pacific and Louisiana-Pacific have
said they will report earnings below expectations later this month, which
International paper 30 cents below estimates.
	"We were quite surprised by the magnitude of the earnings warnings
announced by others in the industry," McDougall said. "There's no
question that there have been many challenges this quarter. However, I
would argue we have met those challenges better than others."
	Some analysts speaking to McDougall in a conference call
congratulated him on a successful quarter. Others were skeptical of the
company's figures and asked for more detailed financial information.
	"If you had anything to do to goose your numbers a little bit, you
would probably has done it this quarter if you were Willamette," said
Mark Wilde, analyst with Deutsche Banc Alex. Brown.
	McDougall said the company spent more time than usual with auditors
to ensure accurate numbers.
	"We know we're under a high degree of scrutiny at this time,"
McDougall said. "Some of this sounds like jealousy."
	Company officials said they spent about 8 percent less on logs for
the quarter by reducing their dependence on purchased supply. Willamette,
the largest private landowner in Oregon, harvests most of its own timber
but must buy some to meet demand.
	"That's pretty exceptional," Said Steve Chercover, an analyst with
D.A. Davison & Co. in Portland. "I don't know if it's sustainable. It
will be interesting to see how log costs came down compared to their
	Although white and brown paper volumes are slower, as they normally
are in the fourth quarter, Willamette's orders are solid and inventories
are at normal year-end levels, McDougall said.
	Willamette shares on the New York Stock Exchange closed Wednesday at
$47.25, down 6 cents. The company's stock has hovered near $48 since
Weyerhaeuser's offer was made public in November.
	Weyerhaeuser shares closed at $49.75, down 62 cents on the NYSE.
	The earnings were affected by a tax rate decrease from 34.5 percent
to 33 percent, which improved earnings by 5 cents a share.

Posted as a courtesy by
Daniel B. Wheeler

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