SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
X OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 25, 1994 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-4825
WEYERHAEUSER COMPANY
A Washington Corporation (IRS Employer Identification
No. 91-0470860)
Tacoma, Washington 98477
Telephone (206) 924-2345
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
--------------------------------------- ---------------------------
Common Shares ($1.25 par value) Midwest Stock Exchange
New York Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
Rights to Purchase Cumulative New York Stock Exchange
Preference Shares, Fourth Series
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes_X_ No___.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ].
As of February 24, 1995, 205,637,877 shares of the registrant's common
stock ($1.25 par value) were outstanding and the aggregate market
value of the registrant's voting shares held by non-affiliates was
approximately $8,713,905,038.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year
ended December 25, 1994 are incorporated by reference into Parts I, II
and IV.
Portions of the Notice of 1995 Annual Meeting of Shareholders and
Proxy Statement are incorporated by reference into Part III.
<PAGE>
Weyerhaeuser Company and Subsidiaries
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I Page
----
<S> <C>
Item 1. Business 3
Item 2. Properties 7
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 11
PART II
Item 5. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters 12
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Information 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 12
PART III
Item 10. Directors and Executive Officers of the Registrant 13
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners
and Management 13
Item 13. Certain Relationships and Related Transactions 13
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 14
Signatures 15
Report of Independent Public Accountants on
Financial Statement Schedules 16
Schedule II Valuation and Qualifying Accounts 17
</TABLE>
2
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business
- -----------------
Weyerhaeuser Company (the company) was incorporated in the state of
Washington in January 1900, as Weyerhaeuser Timber Company. It is
principally engaged in growing and harvesting of timber and the
manufacture, distribution and sale of forest products, real estate
development and construction, and financial services. Its principal
business segments include timberlands and wood products; pulp, paper
and packaging; real estate; and financial services.
Information with respect to the description and general development of
the company's business, included on pages 35 through 40, Description
of the Business of the Company, contained in the company's 1994 Annual
Report to Shareholders, is incorporated herein by reference.
Financial information with respect to industry segments, included in
Note 21 of Notes to Financial Statements contained in the company's
1994 Annual Report to Shareholders, is incorporated herein by
reference.
Timberlands and Wood Products
The company owns approximately 5.6 million acres of commercial
forestland in the United States (51% in the South and 49% in the
Pacific Northwest), most of it highly productive and located
extremely well to serve both domestic and international markets. The
company has, additionally, long-term license arrangements in Canada
covering approximately 17.8 million acres (of which 14 million acres
are considered to be productive forestland). The combined total
timber inventory on these U.S. and Canadian lands is approximately
246 million cunits (a cunit is 100 cubic feet of solid wood), of which
approximately 75% is softwood species. The relationship between cubic
measurement and the quantity of end products that may be produced from
timber varies according to the species, size and quality of timber,
and will change through time as the mix of these variables changes.
To sustain the timber supply from its fee timberlands, the company is
engaged in extensive planting, suppression of nonmerchantable species,
precommercial and commercial thinning and fertilization and
operational pruning, all of which increase the yield from its fee
timberland acreage.
<TABLE>
<CAPTION>
Inventory Thousands of Acres at December 25, 1994
--------- -----------------------------------------------
Millions Fee Long-term License
of Cunits Ownership Leases Arrangements Total
--------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C>
Geographic Area
Washington 44 1,522 - - 1,522
Oregon 17 1,210 - - 1,210
Southern 27 2,855 156 - 3,011
--------- --------- --------- ------------ --------
Total United States 88 5,587 156 - 5,743
Canada
Alberta 91 - - 5,797 5,797
British Columbia 10 12 - 3,595 3,607
Saskatchewan 57 - - 8,457 8,457
--------- --------- --------- ------------ --------
Total Canada 158 12 - 17,849 17,861
--------- --------- --------- ------------ --------
TOTAL 246 5,599 156 17,849 23,604
========= ========= ========= ============ ========
</TABLE>
<TABLE>
<CAPTION>
Thousand Acres Millions Thousand Acres
------------------ Seedlings -------------------------------
Harvested Planted Planted Stocking Control Fertilization
--------- ------- ------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
1994 Activity
Washington 29.7 29.0 14.6 5.0 54.5
Oregon 15.5 14.1 6.2 6.1 44.5
Southern 43.0 40.8 20.8 14.1 195.2
--------- ------- ------- ---------------- -------------
Total United States 88.2 83.9 41.6 25.2 294.2
========= ======= ======= ================ =============
</TABLE>
3
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business - Continued
- -----------------------------
The company's wood products businesses produce and sell softwood
lumber, plywood and veneer; composite panels; oriented strand board;
hardboard; hardwood lumber and plywood; doors; treated products; logs;
chips and timber. These products are sold primarily through the
company's own sales organizations. Building materials are sold to
wholesalers, retailers and industrial users.
Sales by volumes by major product class are as follows (millions):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Raw materials - cubic ft. 564 547 545 538 540
Softwood lumber - board ft. 4,402 4,230 3,440 3,269 3,417
Softwood plywood and veneer - sq.ft. (3/8") 2,685 2,435 2,227 2,135 2,212
Composite panels - sq. ft. (3/4") 660 626 590 685 641
Oriented strand board - sq.ft. (3/8") 1,803 1,672 1,484 1,205 1,185
Hardboard - sq. ft. (7/16") 167 140 133 114 126
Hardwood lumber - board ft. 254 240 218 219 209
Hardwood doors (thousands) 617 556 514 525 697
</TABLE>
Selected product prices:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Export logs (#2 sawlog-bark on) - $/MBF
Cascade - Douglas fir $1,170 $1,224 $ 937 $ 686 $ 641
Coastal - Hemlock 804 831 565 530 558
Coastal - Douglas fir 1,087 1,104 858 633 588
Lumber (common) - $/MBF
2x4 Douglas fir (kiln dried) 408 418 295 250 241
2x4 Douglas fir (green) 364 383 261 224 223
2x4 southern yellow pine (kiln dried) 419 397 285 237 233
2x4 spruce-pine-fir (kiln dried) 343 334 231 187 186
Plywood (1/2" CDX) - $/MSF
West 334 321 281 220 209
South 298 282 249 192 184
Oriented strand board (7/16"-24/16)
North Central price - $/MSF 265 236 217 147 129
</TABLE>
4
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business - Continued
- -----------------------------
Pulp, Paper and Packaging
The company's pulp, paper and packaging businesses include: Pulp,
which manufactures chemical wood pulp for world markets; Newsprint,
which manufactures newsprint at the company's North Pacific Paper
Corporation mill and markets it to West Coast and Japanese newspaper
publishers; Paper, which manufactures and markets a range of both
coated and uncoated fine papers through paper merchants and printers;
Containerboard Packaging, which manufactures linerboard and
corrugating medium, which is primarily used in the production of
corrugated shipping containers, and manufactures and markets
corrugated shipping containers for industrial and agricultural
packaging; Paperboard, which manufactures bleached paperboard that is
used for production of liquid containers and is marketed to West Coast
and Pacific Rim customers; Recycling, which operates an extensive
wastepaper collection system and markets it to company mills and
worldwide customers; and Chemicals, which produces chlorine, caustic
and tall oil, which are used principally by the company's pulp, paper
and packaging operations. In February 1993, the Personal Care
Products business, which manufactured disposable diapers marketed
under the private-label brands of many of North America's largest
retailers was sold through an initial public offering of stock.
Sales volumes by major product class are as follows (thousands):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Pulp - air-dry metric tons 2,068 1,886 1,238 1,433 1,194
Newsprint - metric tons 638 609 575 450 453
Paper - tons 998 990 966 869 893
Paperboard - tons 201 222 238 234 220
Containerboard - tons 254 290 318 418 444
Packaging - MSF 34,483 31,386 29,414 26,525 25,022
Recycling - tons 985 851 778 735 648
Personal care products - standard cases - - 17,017 14,929 11,471
</TABLE>
Selected product prices (per ton):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Pulp - NBKP-air-dry metric-U.S. $ 566 $ 445 $ 551 $ 568 $ 800
Paper - uncoated free sheet-U.S. 617 627 630 713 859
Linerboard - 42 lb.-Eastern U.S. 367 295 343 330 360
Newsprint - metric - West Coast U.S. 460 435 433 549 561
</TABLE>
5
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business - Continued
- -----------------------------
Real Estate
The company, through its real estate subsidiary, Weyerhaeuser Real
Estate Company, is a builder/developer of for-sale housing and
apartments, develops commercial and residential lots for sale to
retail customers and other builders, builds commercial buildings for
sale to institutional investors, and is an investor in joint ventures
and limited partnerships.
Volumes sold:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Single-family units1 3,934 3,879 3,917 4,410 5,113
Multi-family units1 475 1,141 60 317 358
Lots1 2,157 1,372 2,762 1,138 3,008
Commercial space (thousand sq. ft.) 389 88 142 269 235
1Includes one-half of joint venture sales.
</TABLE>
Financial Services
The company, through its financial services subsidiary, Weyerhaeuser
Financial Services, Inc., is involved in a range of financial
services. The principal operating unit is Weyerhaeuser Mortgage
Company, which has origination offices in 14 states, with a servicing
portfolio of $11.3 billion covering approximately 139,000 loans
throughout the country. Mortgages are resold in the secondary market
through mortgage-backed securities to financial institutions and
investors. Through its insurance services organization, it also
offers a broad line of property, life and disability insurance. GNA
Corporation, a subsidiary that specialized in the sale of life
insurance annuities and mutual funds to the customers of financial
institutions, was sold in April 1993. Republic Federal Savings & Loan
Association, a subsidiary that operated in Southern California through
1991, was dissolved in 1992.
Volume information (millions):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Loan servicing portfolio $11,300 $ 8,400 $ 9,800 $10,600 $11,600
Single-family loan originations 2,763 4,405 3,380 2,496 2,131
</TABLE>
6
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 2. Properties
- -------------------
Timberlands and Wood Products
Facilities and annual production are summarized by major product class
as follows (millions):
<TABLE>
<CAPTION>
Number
Production of
Capacity Facilities 1994 1993 1992 1991 1990
--------- ---------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Logs - cubic ft. - - 671 673 749 782 817
Softwood lumber - board ft. 3,353 27 3,249 3,135 2,782 2,687 2,719
Softwood plywood and veneer - sq. ft. (3/8") 1,278 8 1,249 1,188 1,125 966 1,076
Composite panels - sq. ft. (3/4") 609 6 594 564 540 493 505
Oriented strand board - sq. ft. (3/8") 1,570 5 1,568 1,443 1,234 1,208 1,156
Hardboard - sq. ft. (7/16") 130 1 122 120 118 90 119
Hardwood lumber - board ft. 270 8 229 221 210 196 202
Hardwood doors (thousands) 717 1 597 522 469 448 556
</TABLE>
Principal manufacturing facilities are located as follows:
Softwood lumber and plywood Hardwood lumber
Alabama, Arkansas, Georgia, Idaho, Arkansas, Oklahoma, Pennsylvania,
Mississippi, North Carolina, Washington, and Wisconsin
Oklahoma, Oregon, Washington, and
Alberta,British Columbia, and Hardwood doors
Saskatchewan, Canada Wisconsin
Composite panels
Georgia, North Carolina, Oregon and
Wisconsin
Oriented strand board
Michigan, North Carolina, and
Alberta, Canada
Hardboard
Oregon
7
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 2. Properties - Continued
- -------------------------------
Pulp, Paper and Packaging
Facilities and annual production are summarized by major product class
as follows (thousands):
<TABLE>
<CAPTION>
Number
Production of
Capacity Facilities 1994 1993 1992 1991 1990
--------- ---------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Pulp - air-dry metric tons 2,130 8 2,041 2,096 1,506 1,527 1,386
Newsprint - metric tons 675 1 651 618 588 461 459
Paper - tons 1,047 5 982 1,007 971 889 900
Paperboard - tons 220 1 189 217 229 238 217
Containerboard - tons 2,380 5 2,357 2,269 2,240 2,224 2,171
Packaging - MSF 39,000 37 36,020 32,795 31,040 27,583 26,146
Recycling - tons - 27 2,042 1,847 1,692 1,415 1,204
Personal care products
- standard cases - - - - 16,743 14,902 11,471
</TABLE>
Principal manufacturing facilities are located as follows:
Pulp Containerboard
Georgia, Mississippi, North Carolina North Carolina, Oklahoma,
Washington, and Alberta, British Columbia, Oregon, and Washington
and Saskatchewan, Canada
Packaging
Arizona, California, Florida,
Newsprint Georgia, Hawaii, Illinois,
Washington Indiana, Iowa, Kentucky, Maine,
Michigan, Minnesota,
Paper Mississippi, Missouri, Nebraska,
Mississippi, North Carolina, New Jersey, New York, North
Washington, Wisconsin, and Carolina, Ohio, Oregon,
Saskatchewan, Canada Tennessee, Texas, Virginia,
Washington, and Wisconsin
Paperboard
Washington
Recycling
Arizona, California, Colorado,
Indiana, Iowa, Kansas, Maryland,
Minnesota, New Jersey, North
Carolina, Oklahoma, Oregon,
Pennsylvania, Tennessee, Texas,
Virginia, Washington, and
British Columbia, Canada
Chemicals
Georgia, Mississippi, North
Carolina, Oklahoma, Washington,
and Saskatchewan, Canada
8
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 2. Properties - Continued
- -------------------------------
Real Estate
<TABLE>
<CAPTION>
Principal Operations Primary States of Operations Primary Activities
- ----------------------------------------------------------------------------
<S> <C> <C>
Centennial Homes, Inc. Texas Single-family housing
and residential land
development
Land Management Arkansas, North Residential and
Carolina and commercial land
Washington development and
acreage management
Pardee Construction California and Single-family and
Company Nevada multi-family housing
and land development
The Quadrant Washington Single-family and
Corporation multi-family housing,
residential and
commercial land
development and
commercial building
Scarborough Florida Residential and
Constructors, Inc. commercial land
development
Winchester Homes, Inc. Maryland and Single-family housing
Virginia and residential land
development
Weyerhaeuser Venture Co. Arizona, Equity investments and
California, participating loans in
Colorado, Nevada, residential real
Oregon and estate
Washington
Weyerhaeuser Real Estate Co. Washington Parent company
</TABLE>
<TABLE>
<CAPTION>
Financial Services
Principal Operations Primary States of Operations Primary Activities
- ----------------------------------------------------------------------------
<S> <C> <C>
Weyerhaeuser Mortgage Branches in 14 Mortgage lending and
Company states with major servicing, insurance
concentrations in and investment sales
California, Hawaii and service
and Nevada
Mortgage Securities California Mortgage securities
Corporations
WFS (Republic) Inc. California Investment sales and
service
Weyerhaeuser Delaware Parent company
Financial Services, Inc.
</TABLE>
9
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 3. Legal Proceedings
- --------------------------
Trial began in May 1992 in a federal income tax refund case that the
company filed in July 1989 in the United States Claims Court. The
complaint seeks a refund of federal income taxes that the company
contends it overpaid in 1977 through 1983. The alleged overpayments
are the result of the disallowance of certain timber casualty losses
and certain deductions claimed by the company arising from export
transactions. The refund sought was approximately $29 million, plus
statutory interest from the dates of the alleged overpayments. The
company settled the portion of the case relating to export
transactions and received a tax refund of approximately $10 million,
plus statutory interest. In September 1994, the United States Court
of Federal Claims issued an opinion on the casualty loss issues which
will result in the allowance of additional tax refunds of
approximately $2 million, plus statutory interest. The company
currently intends to appeal the decision.
On March 6, 1992, the company filed a complaint in the Superior Court
for King County, Washington against a number of insurance companies.
The complaint seeks a declaratory judgment that the insurance
companies named as defendants are obligated under the terms and
conditions of the policies sold by them to the company to defend the
company and to pay, on the company's behalf, certain claims asserted
against the company. The claims relate to alleged environmental
damage to third-party sites and to some of the company's own property
to which allegedly toxic material was delivered or on which allegedly
toxic material was placed in the past. Since December 1992, the
company has agreed to settlements with all but one of the defendants.
In July 1993, the trial court dismissed fourteen of the thirty-five
sites named in the complaint. In May 1994, the Washington State
Supreme Court reversed the trial court's dismissal of those sites.
Trial on two sites against the sole remaining defendant began in
October 1994 and resulted in a jury verdict which awarded damages to
the company with respect to one of the sites.
The company has undertaken a review of all its wood products
facilities for compliance with the Prevention of Significant
Deterioration (PSD) regulations and has disclosed PSD compliance
issues to certain state agencies and the Environmental Protection
Agency (EPA). The company and the State of Mississippi Department of
Environmental Quality have entered into a consent agreement concerning
PSD regulations at company facilities in Philadelphia and Bruce,
Mississippi, involving penalties of $170 thousand. The State of
Alabama has issued a compliance order with penalties totaling $100
thousand for noncompliance with PSD regulations at the company's
Millport facility. The company and North Carolina's Division of
Environmental Management have entered into a consent agreement for its
Elkin, North Carolina facility involving penalties of $140 thousand
and concluded a separate consent agreement for its Moncure, North
Carolina facility involving penalties of $140 thousand. The company
has signed a consent agreement including penalties of $140 thousand
relating to PSD issues at the company's Wright City, Oklahoma facility
with the State of Oklahoma Department of Environmental Quality. The
company has signed consent agreements with the State of Arkansas
concerning PSD related issues for facilities in Dierks and Mountain
Pine, involving $375 thousand in total penalties for both facilities.
Region V of the EPA has issued a Notice of Violation for permit
violations at the company's Grayling, Michigan facility. The company
has negotiated a settlement of those alleged permit violations and
other PSD related issues with the Michigan Department of Natural
Resources that involves penalties of approximately $499 thousand. The
company has entered into negotiations with the Lane County, Oregon
Regional Air Pollution Control Authority concerning a draft Notice of
Violation which would seek penalties for alleged PSD violations at the
company's Springfield, Oregon particleboard operations. In September
1992, the EPA issued a Section 114 Request for Information concerning
PSD compliance at the company's oriented strand board and medium
density fiberboard mills. In June 1993, the EPA issued a similar
Section 114 request for the company's plywood and particleboard mills.
The EPA issued a notice of violation in August 1994 for nine company
facilities (including the Plymouth, North Carolina and Adel, Georgia
wood products facilities and all of the facilities mentioned above
except the Grayling, Michigan, Springfield, Oregon and Bruce,
Mississippi wood products facilities) as part of its national PSD
enforcement action against the company and other forest product
companies.
The company has also undertaken a review of its ten major pulp and
paper facilities to evaluate the facilities' compliance with PSD
regulations and has disclosed the potential of PSD compliance issues
to six state agencies and the EPA. The company is currently working
with the states to negotiate settlements for the alleged violations.
The Washington State Department of Ecology has investigated the
accidental release of chlorine, chlorine dioxide and non-condensable
gasses at the company's pulp mill in Longview, in July 1994 and has
issued a $10 thousand penalty for the chlorine release and a
$5 thousand penalty for the non-condensable gasses release. The EPA
is also investigating the accidental chlorine release.
10
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 3. Legal Proceedings - Continued
- --------------------------------------
On April 9, 1993, the company entered into a Stipulated Final Order
(SFO) with the Oregon Department of Environmental Quality for alleged
air emissions in excess of permit levels and PSD noncompliance at the
company's North Bend, Oregon containerboard facility. The SFO
establishes a compliance schedule for installing control technology.
A supplemental SFO assessed upfront penalties of $247 thousand and
penalties of 500 dollars per day until compliance is demonstrated.
The SFO required demonstrated compliance by December 1993 and a
historical evaluation of the facility's PSD status. The company has
submitted a plant site PSD review to the state and is awaiting its
review.
In August 1992, the EPA issued an administrative complaint for the
assessment of $215 thousand in civil penalties against the company's
Longview, Washington facility. The penalties are based upon alleged
violations of the record keeping and storage provisions of the
polychlorinated biphenyls (PCB) rules contained in the Toxic
Substances Control Act. The company and the EPA settled the complaint
for a maximum penalty of $118 thousand, 50% of which was paid when the
settlement was signed. Payment of the remaining 50% was deferred and
will be eliminated based on the expenditure of more than $118 thousand
by the company to dispose of PCB contaminated transformers.
On November 2, 1992, an action was filed against the company in the
Circuit Court for the First Judicial District of Hinds County,
Mississippi, on behalf of a purported class of riparian property
owners in Mississippi and Alabama whose properties are located on the
Tennessee Tombigbee Waterway, Aliceville Lake, Cedar Creek and the
Magoway Creek. The complaint seeks $1 billion in compensatory and
punitive damages for diminution in property value, personal injuries
and mental anguish allegedly resulting from the discharge of purported
hazardous substances, including dioxins and furans, by the company's
pulp and paper mill in Columbus, Mississippi, and the alleged
fraudulent concealments of such discharge. The complaint also seeks
an injunction prohibiting future releases and the removal of hazardous
substances allegedly released in the past. On August 20, 1993, a
companion action was filed in Greene County, Alabama, on behalf of a
similar purported class of riparian owners with essentially the same
claims as the Mississippi case. On January 20, 1995, the court in the
Alabama action certified a class of all persons who, as of the date
the action commenced, were riparian owners, lessees and licensees of
properties located on the Tennessee Tombigbee Waterway in Greene,
Sumter, Pickens and Marengo counties, Alabama, and Lowndes and Noxubee
counties, Mississippi, to determine whether the company is liable to
the members of the class for compensatory and/or punitive damages and
to determine the amount of punitive damages, if any, to be awarded to
the class as a whole. The class is estimated to exceed 400 members
and may range from 1,000 to 1,500 members. Neither the Mississippi
action nor the Alabama action is presently scheduled for trial.
The company was sued in the United States District Court for the
District of Alaska by two corporations with which the company had
entered into financing arrangements, a marketing agreement, and a
technical assistance agreement. The plaintiffs claimed the company
breached contractual and common law duties by allegedly failing to
adequately market and ship the plaintiffs' products, misrepresenting
its marketing and shipping capabilities, and acting to further its
interests at the plaintiffs' expense. The plaintiffs in the First
Amended Complaint, filed in May 1992, sought an unstated amount of
damages described as more than $50 million in compensatory damages
plus not less than $75 million in punitive damages. The claim for
punitive damages was dismissed by the trial court. In March 1994, a
jury returned a verdict against the company awarding damages of $1.2
million. Both the company and the plaintiffs have appealed.
The company is also a party to various proceedings relating to the
clean-up of hazardous waste sites under the Comprehensive
Environmental Response Compensation and Liability Act, commonly known
as "Superfund," and similar state laws. The EPA and/or various state
agencies have notified the company that it may be a potentially
responsible party with respect to other hazardous waste sites as to
which no proceedings have been instituted against the company. The
company is also a party to other legal proceedings generally
incidental to its business. Although the final outcome of any legal
proceeding is subject to a great many variables and cannot be
predicted with any degree of certainty, the company presently believes
that any ultimate outcome resulting from the legal proceedings
discussed herein, or all of them combined, would not have a material
effect on the company's current financial position, liquidity or
results of operations; however, in any given future reporting period,
such legal proceedings could have a material effect on results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year ended December 25, 1994.
11
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART II
Item 5. Market Price of and Dividends on the Registrant's Common Equity
- -----------------------------------------------------------------------
and Related Stockholder Matters
- -------------------------------
Information with respect to market information, stockholders and
dividends included in Notes 22 and 23 of Notes to Financial Statements
in the company's 1994 Annual Report to Shareholders, is incorporated
herein by reference.
Item 6. Selected Financial Data
- --------------------------------
Information with respect to selected financial data included in Note
23 of Notes to Financial Statements in the company's 1994 Annual
Report to Shareholders, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
- -----------------------------------------------------------------------
Results of Operations
- ---------------------
Information with respect to Management's Discussion and Analysis
included on pages 25 through 32 and pages 35 through 45, contained in
the company's 1994 Annual Report to Shareholders, is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Information
- ----------------------------------------------------------
Financial statements and supplementary information, contained in the
company's 1994 Annual Report to Shareholders are incorporated herein
by reference:
<TABLE>
<CAPTION>
Page(s) in
Annual Report
to Shareholders
---------------
<S> <C>
Report of Independent Public Accountants 46
Consolidated Statement of Earnings 47
Consolidated Balance Sheet 48-49
Consolidated Statement of Cash Flows 50-51
Consolidated Statement of Shareholders' Interest 52
Notes to Financial Statements 53-77
Selected Quarterly Financial Information 75
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
- --------------------
Not applicable.
12
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
Information with respect to Directors of the company included on pages
1 through 4 of the Notice of 1995 Annual Meeting of Shareholders and
Proxy Statement dated March 6, 1995 is incorporated herein by
reference.
The executive officers of the company are as follows:
<TABLE>
<CAPTION>
Name Title Age
---- ----- ---
<S> <C> <C>
Charles W. Bingham Executive Vice President 61
William R. Corbin Executive Vice President 53
John W. Creighton, Jr. President 62
Richard C. Gozon Executive Vice President 56
Steven R. Hill Senior Vice President 47
Norman E. Johnson Senior Vice President 61
William C. Stivers Senior Vice President 56
</TABLE>
Item 11. Executive Compensation
- --------------------------------
Information with respect to executive compensation included on pages 5
through 13 of the Notice of 1995 Annual Meeting of Shareholders and
Proxy Statement dated March 6, 1995 is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
Information with respect to security ownership of certain beneficial
owners and management included on pages 4 and 5 of the Notice of 1995
Annual Meeting of Shareholders and Proxy Statement dated March 6, 1995
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
Information with respect to certain relationships and related
transactions included on pages 15 and 16 of the Notice of 1995 Annual
Meeting of Shareholders and Proxy Statement dated March 6, 1995 is
incorporated herein by reference.
13
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- ------------------------------------------------------------------------
Financial Statements
The consolidated financial statements of the company, together with
the report of independent public accountants, contained in the
company's 1994 Annual Report to Shareholders, are incorporated in
Part II, Item 8 of this Form 10-K by reference.
<TABLE>
<CAPTION>
Page Number(s)
Financial Statement Schedules In Form 10-K
- ----------------------------- --------------
<S> <C>
Report of Independent Public Accountants on Financial 16
Statement Schedules
Schedule II - Valuation and Qualifying Accounts 17-18
</TABLE>
All other financial statement schedules have been omitted because they
are not applicable or the required information is included in the
consolidated financial statements, or the notes thereto, contained in
the company's 1994 Annual Report to Shareholders and incorporated
herein by reference.
Exhibits:
3 - Articles of Incorporation and Bylaws
10 - Material Contracts
(a) Agreement with N. E. Johnson
(b) Agreement with W. R. Corbin
11 - Statement Re: Computation of Per Share Earnings
(incorporated by reference to Note 1 of the 1994
Weyerhaeuser Company Annual Report to Shareholders)
13 - Portions of the 1994 Weyerhaeuser Company Annual
Report to Shareholders specifically incorporated by
reference herein
22 - Subsidiaries of the Registrant
23 - Consent of Independent Public Accountants
27 - Financial Data Schedules
Reports on Form 8-K
The registrant has not filed a report on Form 8-K during the last
fiscal quarter of the period for which this Form 10-K is filed.
14
<PAGE>
Weyerhaeuser Company and Subsidiaries
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on
March 10, 1995.
Weyerhaeuser Company
/s/ John W. Creighton, Jr.
--------------------------
John W. Creighton, Jr.
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant in the capacities indicated on March 10, 1995.
/s/ John W. Creighton, Jr. /s/ Don C. Frisbee
- --------------------------------- ---------------------------------
John W. Creighton, Jr. Don C. Frisbee
President, Principal Executive Director
Officer and Director
/s/ P. M. Hawley
---------------------------------
/s/ George H. Weyerhaeuser Philip M. Hawley
- --------------------------------- Director
George H. Weyerhaeuser
Chairman of the Board and Director
---------------------------------
E. Bronson Ingram
Director
/s/ William C. Stivers
- ---------------------------------
William C. Stivers
Principal Financial /s/ John Kieckhefer
Officer ---------------------------------
John I. Kieckhefer
Director
/s/ Kenneth J. Stancato
- ---------------------------------
Kenneth J. Stancato /s/ William Ruckelshaus
Principal Accounting ---------------------------------
Officer William D. Ruckelshaus
Director
/s/ William Clapp /s/ Richard H. Sinkfield
- --------------------------------- ---------------------------------
William H. Clapp Richard H. Sinkfield
Director Director
/s/ W. John Driscoll
- ---------------------------------
W. John Driscoll
Director
15
<PAGE>
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
Report of Independent Public Accountants on Financial Statement
Schedules
To Weyerhaeuser Company:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Weyerhaeuser
Company's annual report to shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated February 7,
1995. Our audit was made for the purpose of forming an opinion on
those statements taken as a whole. The schedule listed on page 14
is the responsibility of the company's management and is presented
for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Seattle, Washington,
February 7, 1995
16
<PAGE>
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Schedule II - Valuation and Qualifying Accounts
For the three years ended December 25, 1994
Dollar amounts in millions
Balance at Charged Deductions Balance
Beginning to from at End
Description of Period Income Reserve of Period
- ----------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C>
Weyerhaeuser
Reserve deducted from related asset
accounts:
Doubtful accounts - Accounts receivable
1994 $ 10 $ 4 $ 4 $ 10
===== ===== ===== =====
1993 $ 10 $ 7 $ 7 $ 10
===== ===== ===== =====
1992 $ 10 $ 7 $ 7 $ 10
===== ===== ===== =====
Real Estate and Financial Services
Reserve and allowances deducted from
related asset accounts:
Doubtful accounts - Receivables
1994 $ 3 $ - $ 2 $ 1
===== ===== ===== =====
1993 $ 4 $ 1 $ 2 $ 3
===== ===== ===== =====
1992 $ 11 $ 3 $ 10 $ 4
===== ===== ===== =====
Unamortized discount - Receivables
1994 $ 4 $ 1 $ 2 $ 3
===== ===== ===== =====
1993 $ 2 $ - $ (2) 1 $ 4
===== ===== ===== =====
1992 $ 2 $ 1 $ 1 $ 2
===== ===== ===== =====
Real estate in process of development
1994 $ 30 $ 4 $ 2 $ 32
===== ===== ===== =====
1993 $ 77 $ 4 $ 51 $ 30
===== ===== ===== =====
1992 $ 94 $ - $ 17 $ 77
===== ===== ===== =====
Land being processed for development
1994 $ 19 $ 3 $ 3 $ 19
===== ===== ===== =====
1993 $ 28 $ - $ 9 $ 19
===== ===== ===== =====
1992 $ 58 $ - $ 30 $ 28
===== ===== ===== =====
Investment in and advances to joint
ventures and limited partnerships
1994 $ 57 $ 2 $ 10 $ 49
===== ===== ===== =====
1993 $ 66 $ 9 $ 18 $ 57
===== ===== ===== =====
1992 $ 90 $ 1 $ 25 $ 66
===== ===== ===== =====
Note:
1Includes $2 million of discount on a partnership note consolidated by
Weyerhaeuser Venture Company.
</TABLE>
17
<PAGE>
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Schedule II - Valuation and Qualifying Accounts - Continued
For the three years ended December 25, 1994
Dollar amounts in millions
Balance at Charged Deductions Balance
Beginning to from at End
Description of Period Income Reserve of Period
- ----------- ---------- ------- ---------- ---------
<S> <C> <C> <C> <C>
Real Estate and Financial
Services - Continued
Allowance for loan losses - mortgage
loans receivable
1994 $ 4 $ 4 $ - $ 8
===== ===== ===== =====
1993 $ 19 $ 9 $ 24 1 $ 4
===== ===== ===== =====
1992 $ 27 $ 6 $ 14 $ 19
===== ===== ===== =====
Properties acquired from loan
foreclosures - other assets
1994 $ 26 $ 3 $ 8 $ 21
===== ===== ===== =====
1993 $ - $ - $ (26) 1 $ 26
===== ===== ===== =====
Note:
1 Includes reserves transferred from loans to properties acquired
from loan foreclosures.
</TABLE>
18
<PAGE>
Weyerhaeuser Company and Subsidiaries
Exhibit 22
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
Percentage
State or Ownership of
Country of Immediate
Name Incorporation Parent
---- ------------- -------------
<S> <C> <C>
Columbia & Cowlitz Railway Company Washington 100%
DeQueen and Eastern Railroad Company Arkansas 100
Fisher Lumber Company California 100
Golden Triangle Railroad Mississippi 100
Green Arrow Motor Express Company Delaware 100
J.H. Hamlen & Son, Inc. Arkansas 100
Mississippi & Skuna Valley Railroad Company Mississippi 100
Mountain Tree Farm Company Washington 50
North Pacific Paper Corporation Delaware 80
Norpac Sales Corporation Guam 100
Oregon, California & Eastern Railway Company Nevada 100
Pacific Veneer, Ltd. Washington 90
Shemin Nurseries, Inc. Delaware 100
Texas, Oklahoma & Eastern Railroad Company Oklahoma 100
United Structures, Inc. California 100
Westwood Shipping Lines, Inc. Washington 100
Weycomp Claims Management Service, Inc. Texas 100
Weyerhaeuser Construction Company Washington 100
Weyerhaeuser Financial Services, Inc. Delaware 100
CMO Finance Corp. Nevada 100
MJ Finance Corporation California 100
Mortgage Securities II Corporation Nevada 100
Mortgage Securities III Corporation Nevada 100
Mortgage Securities IV Corporation Nevada 100
R4 Participant Corporation Nevada 100
ver Bes' Insurance Company Vermont 100
de Bes' Insurance Ltd. Bermuda 100
Weyerhaeuser Mortgage Company California 100
Mason-McDuffie Mortgage Corporation Delaware 100
Mason-McDuffie Service Corporation California 100
Westwood Associates California 100
Westwood Insurance Agency California 100
Westwood Insurance Agency of Arizona, Inc. Arizona 100
WMC Mortgage Co. International California 100
WMC Finance Corp. I California 100
</TABLE>
19
<PAGE>
Weyerhaeuser Company and Subsidiaries
Exhibit 22
Subsidiaries of the Registrant - Continued
<TABLE>
<CAPTION>
Percentage
State or Ownership of
Country of Immediate
Name Incorporation Parent
---- ------------- ------------
<S> <C> <C>
WFS (Republic), Inc. Nevada 100%
Abfall Finance Corp. California 100
Brookview, Inc. Nevada 100
The Giddings Mortgage Investment Company California 100
Gudig Abfall, Inc. California 100
Kachura Finance Corp. California 100
Laurel Real Estate Development, Inc. California 100
McGNT Finance Corp. California 100
Pass-Through Finance Corp. California 100
RFS Development Corporation California 100
RFS Finance Corp. California 100
RFS Insurance Agency California 100
RFS Service Corporation California 100
R. J. Plaza II, Inc. Nevada 100
Trimark Development Company California 100
Trimark Realty Advisors, Inc. California 100
Woodland Hills Properties-W., Inc. Nevada 100
Monthill, Inc. California 100
Placer Business Center, Inc. California 100
Terman Properties, Inc. California 100
WVC II, Inc. Nevada 100
Weyerhaeuser International, Inc. Washington 100
Weyerhaeuser Canada Ltd. Canada 100
Saskatoon Chemicals Ltd. Canada 100
Weyerhaeuser China, Ltd. Washington 100
Weyerhaeuser GMBH Germany 100
Weyerhaeuser (Far East) Limited Hong Kong 100
Weyerhaeuser Italia, S.r.l. Italy 100
Weyerhaeuser Japan Ltd. Japan & Delaware 100
Weyerhaeuser Korea, Ltd. Korea 100
Weyerhaeuser, S.A. Panama 100
Weyerhaeuser International Sales Corp. Guam 100
Weyerhaeuser (Mexico) Inc. Washington 100
Weyerhaeuser Midwest, Inc. Washington 100
Weyerhaeuser Overseas Finance Co. Delaware 100
Weyerhaeuser Real Estate Company Washington 100
The Babcock Company Florida 100
Centennial Homes, Inc. Texas 100
Midway Properties, Inc. North Carolina 100
</TABLE>
20
<PAGE>
Weyerhaeuser Company and Subsidiaries
Exhibit 22
Subsidiaries of the Registrant - Continued
<TABLE>
<CAPTION>
Percentage
State or Ownership of
Country of Immediate
Name Incorporation Parent
---- ------------- -----------
<S> <C> <C>
Pardee Construction Company California 100%
Marmont Realty Company California 100
Pardee Construction Company of Nevada Nevada 100
Pardee Investment Company California 100
Parvada, Inc. Nevada 100
The Quadrant Corporation Washington 100
Quadrant Real Estate Services, Inc. Washington 100
South Jersey Assets, Inc. New Jersey 100
Scarborough Constructors, Inc. Florida 100
Trendmaker, Inc. Texas 100
Weyerhaeuser Real Estate Company of Nevada Nevada 100
Weyerhaeuser Venture Company Nevada 100
Las Positas Land Co. California 100
WAMCO, Inc. Nevada 100
Weyerhaeuser Realty Investors, Inc. Washington 100
Winchester Homes, Inc. Delaware 100
SC-WHI, Inc. Delaware 100
The Wray Company Arizona 100
</TABLE>
21
<PAGE>
Weyerhaeuser Company and Subsidiaries
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by reference in
this Form 10-K, into Weyerhaeuser Company's previously filed
Registration Statement No. 33-52789 on Form S-3 and Nos. 2-61042,
2-81463, 33-25928, 33-24385, 33-24979, 33-31622, 33-32605, 33-34460,
33-41414, 33-47392 and 2-88109 on Form S-8.
ARTHUR ANDERSEN LLP
Seattle, Washington,
March 10, 1995
22
Timberlands and Wood Products
The company's Timberlands and Wood Products businesses
reported record operating earnings of $1,034 million in 1994
compared with $891 million in 1993 -- a 16 percent increase.
These earnings were achieved through improvements made in
our Timberlands and Wood Products businesses over
the past five years while timber supplies were tight and
markets strong. > Although U.S. single-family home
construction is expected to slow, multi-family starts are
expected to increase in 1995, keeping total housing starts
near the 1994 level. Strong demand in repair, remodeling,
industrial and export markets should also benefit our
businesses in 1995. > In spite of a weak economy,
housing starts in Japan were strong, increasing from 1.48
million in 1993 to 1.56 million units in 1994. >
Timberlands Businesses. All of the Timberlands businesses'
domestic and export log markets were strong in 1994 --
especially for Douglas fir. Timber harvest from public
lands continued to decline in 1994, resulting in demand
pressure on private lands, both West and South. Increased
demand for timber in the Southern United States continues as
builders and building materials dealers increasingly look to
the South to compensate for the declines in the West. >
Near the end of 1994, the company entered into a long-term
cooperative alliance with SAFCOL, a South African forest
products company, to market logs internationally
and wood products in North America. > We began
geographic planning in a portion of our Southern operations
in 1994 in preparation for increasing future timber-harvest
volumes from company lands.
> Safety. The Timberlands businesses all kept a clear
focus on safety improvement objectives in 1994. Oregon
Timberlands passed a landmark -- 1 million work hours without
a lost-time accident in October -- and Southern Timberlands'
Mississippi/Alabama timberlands operations completed eight
years without a lost-time accident during the year.
Washington Timberlands also made substantial improvements in
safety
<TABLE>
<CAPTION>
NET SALES 1994 1993 1992 1991 1990
-----------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C> <C>
Raw materials (logs, chips and timber) $ 1,091 $ 1,021 $ 872 $ 843 $ 834
Softwood lumber 1,950 1,669 1,097 938 1,016
Softwood plywood and veneer 635 567 498 412 411
Oriented strand board, composite
and other panels 750 623 495 383 381
Hardwood lumber 175 154 127 118 117
Hardwood plywood and doors 159 141 116 117 135
Treated products 105 84 67 65 80
Miscellaneous products 127 209 145 72 99
-----------------------------------------------
$ 4,992 $ 4,468 $ 3,417 $ 2,948 $ 3,073
===============================================
</TABLE>
25
<PAGE>
performance in 1994. > Environmental Stewardship.
During 1994, Weyerhaeuser adopted a uniform set of goals for
the productive management and enhancement of all forest
resources on Weyerhaeuser lands across the United States.
> These "Forestry Resource Goals" guide our efforts at
protecting
the wide range of natural resources found in our private
forests while we continue to profitably grow,
harvest and utilize trees. The new goals address water
quality, wildlife habitat, soil productivity and
scenic values. > The company's six regional forest
councils are now developing implementation plans and
measurable targets for each goal. Weyerhaeuser Canada Ltd.
is also developing a goal-setting process for operations in
public forests in Canada. > In line with the forestry
goals, we initiated numerous projects during 1994 to address
public concerns and continue to profitably manage our
resource.
<TABLE>
<CAPTION>
SALES VOLUMES 1994 1993 1992 1991 1990
--------------------------------------
(Millions)
<S> <C> <C> <C> <C> <C>
Raw materials -- cubic feet 564 547 545 538 540
Softwood lumber -- board feet 4,402 4,230 3,440 3,269 3,417
Softwood plywood and veneer --
square feet (3/8") 2,685 2,435 2,227 2,135 2,212
Composite panels -- square feet (3/4") 660 626 590 685 641
Oriented strand board -- square feet (3/8") 1,803 1,672 1,484 1,205 1,185
Hardboard -- square feet (7/16") 167 140 133 114 126
Hardwood lumber -- board feet 254 240 218 219 209
Hardwood doors (thousands) 617 556 514 525 697
</TABLE>
We have reached agreement with the U.S. Fish and Wildlife
Service on a permit for a long-term
Habitat Conservation Plan for the protection of the northern
spotted owl on the company's 209,000-acre Millicoma Tree
Farm near Coos Bay, Ore. Authorized under the Endangered
Species Act, habitat
conservation plans are agreements between landowners and the
federal government to minimize impacts on listed species in
a specific area during normal land-use activities. > A
pilot Habitat Management Plan for 107,000 acres in
southwestern Washington was commenced by Washington
Timberlands in 1994 to protect fish and wildlife on those
lands. > Ten watershed analyses were completed on
Weyerhaeuser's Washington and Oregon timberlands during the
year. And our Oregon Timberlands operations implemented the
state of Oregon's demanding new stream-protection rules in
addition to
participating in the development of the company's new
resource goals. > In Arkansas, Weyerhaeuser is
participating in the Ouachita Mountains Ecosystem Management
Research Project in cooperation with
26
<PAGE>
the U.S. Forest Service, area universities and others. This
project involves landscape-scale research
in four watersheds owned largely by the Ouachita National
Forest and Weyerhaeuser and is planned to cover at least
four years of fieldwork. Studies are designed to evaluate
forestry-habitat-wildlife
relationships and to develop models for managing wildlife at
a landscape scale. Other topics of research include forest
hydrology, aquatic ecology, vegetation and the human
dimensions of forest management. > Wood Products
Businesses. The Wood Products businesses' outstanding
operating performance
in 1994 was facilitated by improved alignment of resources
with key customers in strategic geographies, better
partnering with suppliers, and clarification of customer
requirements through a structured
value-determination process. In addition, numerous
important gains were made in safety performance including
the milestone -- 2 million hours without a lost-time accident
- -- reached by the Millport, Ala., wood products facility. >
The company's lumber businesses -- Western, Southern and
Canadian -- made significant contributions to our 1994
performance. Western Lumber topped four straight years of
operating performance improvements in 1994 as well as four
years of safety performance improvements. > The Southern
Lumber business posted record sales, earnings and
productivity. The business was
very successful in reducing converting costs in its
manufacturing operations. The business will continue to
focus on safety improvements, lower converting costs, and
improved recovery in the coming year.
> Canadian Lumber reported record profitability in 1994
while continuing to focus on manufacturing excellence. The
business's improvement plan will focus on improving
consistency and reducing variability in mill operations in
1995. > The Engineered Fiber Products business, producer
of oriented strand board, particleboard and other panels,
posted record profits in 1994. Expansion of the Elkin,
N.C.,
<TABLE>
<CAPTION>
ANNUAL PRODUCTION CAPACITY 1994 1993 1992 1991 1990
------------------------------------------------
(Millions)
<S> <C> <C> <C> <C> <C> <C>
Logs -- cubic feet - 671 673 749 782 817
Softwood lumber -- board feet 3,353 3,249 3,135 2,782 2,687 2,719
Softwood plywood and veneer --
square feet (3/8") 1,278 1,249 1,188 1,125 966 1,076
Composite panels -- square feet (3/4") 609 594 564 540 493 505
Oriented strand board -- square feet (3/8") 1,570 1,568 1,443 1,234 1,208 1,156
Hardboard -- square feet (7/16") 130 122 120 118 90 119
Hardwood lumber -- board feet 270 229 221 210 196 202
Hardwood doors (thousands) 717 597 522 469 448 556
27
<PAGE>
OSB mill yielded process flow improvements and environmental
benefits. The business received
approval for its 500 million-square-foot/year OSB mill in
Braxton County, W. Va., scheduled for start-up in late 1996.
> Plywood reported record profits and production in 1994
and is currently
finalizing installation of pollution-abatement equipment in
compliance with air-quality regulations.
> Building Materials Distribution (BMD) expanded into nine
new markets in 1994 and increased
sales by nearly 11 percent. Facility personnel worked with
customers to develop specific customer
plans and to add new customer services. Through the
company's strategic alliance with Trus Joist MacMillan,
sales of engineered wood products were expanded to all
distribution centers, and volumes grew significantly. >
The BMD business was one of the company's Wood Products
businesses
honored by Lowe's "Supplier of the Year" award in 1994. The
business plans to strengthen its national
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MANUFACTURING FACILITIES
<S> <C>
Softwood lumber, plywood and veneer 35
Composite panels 6
Oriented strand board 5
Hardboard 1
Hardwood lumber 8
Hardwood doors 1
</TABLE>
dealer program in 1995 and will implement a major
information systems upgrade. Enhanced communications
technologies within the business will include a businesswide
local access network (LAN),
electronic invoicing, bar coding, and inventory-management
software and training. > The Hardwoods business,
producer of hardwood lumber and doors, shipped record
volumes in all product lines, bolstered by strong demand for
furniture in the U.S. market. The business sustained its
industry leadership and expects excellent demand, both
domestic and export, in 1995. > In 1995 the company's
Timberlands and Wood Products businesses will continue
efforts toward: - prudent management of the company's
timber and capital resources to sustain top-quartile
financial performance; - achieving an accident-free work
environment; - empowering employees to achieve business
goals; - relentless pursuit of customer satisfaction; -
attaining industry leadership in manufacturing excellence; -
ensuring that information,
skills and reliable methods are in place to achieve full
environmental compliance; and - alignment with public values
to ensure continued ability to grow, harvest and utilize our
timber resource.
28
<PAGE>
Pulp, Paper and Packaging
The long downturn for Pulp, Paper and Packaging businesses
ended between the fourth quarter of
1993 and early 1994. The sector has been recovering rapidly
since. For the year, sector operating earnings reached $211
million as compared with $61 million in 1993, with strong
improvement each
quarter. > Strong paper demand and economic recovery in
Europe led to a strong turnaround in the Pulp business in
1994. Tight supply caused by little new capacity during the
prolonged downturn led
to significant price improvements through the year as
markets strengthened. With the completion of major
maintenance and modernization projects, the business is
extremely well positioned for 1995.
> The Containerboard Packaging business continued a robust
recovery through 1994. The expanding U.S. economy resulted
in strong corrugated box demand and pricing. In 1995
increased containerboard volume will allow the business to
continue to grow with its strategic customer alliances as
better understanding of customer product-quality and service
needs are gained. Significant profit improvement in the
business is expected through modernization and improved
reliability of processes. > Fine Paper prices recovered
strongly in the third quarter of 1994 and by year-end had
approached late-1980s levels in both lightweight coated and
uncoated freesheet. In 1995 the business will focus on
maximizing paper output to meet the increasing demand for
printing papers, upgrading paper mix, and making continued
improvements in reliability of manufacturing processes.
While producing higher volumes, the business
<TABLE>
<CAPTION>
NET SALES 1994 1993 1992 1991 1990
------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C> <C>
Pulp $1,012 $ 823 $ 711 $ 803 $ 865
Newsprint 356 322 326 288 293
Paper 664 648 673 655 751
Paperboard and containerboard 240 255 321 361 366
Container and packaging products 1,495 1,302 1,323 1,175 1,183
Recycling 121 77 93 90 88
Chemicals 45 32 31 34 28
Personal care products - - 514 450 338
Miscellaneous products 133 120 117 147 140
------------------------------------------
$4,066 $3,579 $4,109 $4,003 $4,052
==========================================
</TABLE>
29
<PAGE>
will take steps to reduce waste and optimize costs. >
The improving U.S. economy and the strong Japanese yen were
the key factors affecting our Newsprint business in 1994.
Tight newsprint supply
and continued growth in demand from publishers led to price
improvement in the second half of 1994.
In conjunction with our joint-venture partner, the Newsprint
business has reaffirmed its commitment
to increasing newsprint volume flow to Japan while attaining
a low-cost domestic supplier position
in 1995. > Weyerhaeuser's Recycling business added six
new facilities in 1994. The Recycling business's extensive
paper collection system now has 27 facilities and annually
handles more than
2 million tons of recycled fiber. The growth rate of the
business is expected to increase as we continue to pursue
our goal of building one of the largest, most efficient
recycling systems in North America.
<TABLE>
<CAPTION>
SALES VOLUMES 1994 1993 1992 1991 1990
------------------------------------------
(Thousands)
<S> <C> <C> <C> <C> <C>
Pulp -- air-dry metric tons 2,068 1,886 1,238 1,433 1,194
Newsprint -- metric tons 638 609 575 450 453
Paper -- tons 998 990 966 869 893
Paperboard -- tons 201 222 238 234 220
Containerboard -- tons 254 290 318 418 444
Packaging -- MSF 34,483 31,386 29,414 26,525 25,022
Recycling -- tons 985 851 778 735 648
Personal care products --
standard cases - - 17,017 14,929 11,471
</TABLE>
> Safety. All businesses gave specific attention to
safety improvements across the system in 1994.
The Columbus, Miss., pulp and paper complex achieved 2
million hours without a lost-time accident, and the
Plymouth, N.C., pulp and paper complex passed 1 million
hours without a lost-time accident early in the year.
Numerous other milestones were reached at individual plants
and mills. Still, there
is much more to be done, and safety improvements will
continue to be given the highest priority.
> Modernizations. Pulp, Paper and Packaging's $1 billion
multi-year facility modernization program will be completed
in 1995. The program, which includes projects at Plymouth,
N.C. ($500 million); Longview, Wash. ($400 million); and
Kamloops, British Columbia ($80 million), constitutes one of
the
30
<PAGE>
<TABLE>
<CAPTION>
ANNUAL PRODUCTION CAPACITY 1994 1993 1992 1991 1990
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(Thousands)
Pulp -- air-dry metric tons 2,130 2,041 2,096 1,506 1,527 1,386
Newsprint -- metric tons 675 651 618 588 461 459
Paper -- tons 1,047 982 1,007 971 889 900
Paperboard -- tons 220 189 217 229 238 217
Containerboard -- tons 2,380 2,357 2,269 2,240 2,224 2,171
Packaging -- MSF 39,000 36,020 32,795 31,040 27,583 26,146
Recycling -- tons - 2,042 1,847 1,692 1,415 1,204
Personal care products --
standard cases - - - 16,743 14,902 11,471
</TABLE>
company's largest modernization efforts in its history.
Installation of state-of-the-art systems at all three
facilities will allow for the elimination of elemental
chlorine from the kraft pulp-manufacturing process,
significant improvement of air quality, enhanced product
quality to meet ever-increasing customer
requirements, increased output, and reduced manufacturing
costs. > Key Priorities. Key priorities
leading to the attainment of the Pulp, Paper and Packaging
sector business plans in 1995 include:
- - continued commitment to Total Quality; - pursuit of
customer service excellence; - achievement of
superior, waste-free manufacturing through improved
reliability of processes; - focusing management
systems on continuous improvement, cost reductions and
improved return on net assets; - intensified
efforts to establish and maintain an accident-free work
environment supporting a diverse, competent and involved
work force; and - maintaining a leadership position in the
production of environmentally
responsible pulp, paper and packaging products.
<TABLE>
<CAPTION>
PRINCIPAL MANUFACTURING FACILITIES
<S> <C>
Pulp 8
Newsprint 1
Paper 5
Paperboard 1
Containerboard 5
Packaging 37
Recycling 27
Chemicals 7
</TABLE>
31
<PAGE>
Real Estate and Financial Services
Rising interest rates and an abrupt dropoff in mortgage
refinancing activity were the chief factors
affecting Weyerhaeuser's real estate and financial services
businesses in 1994. The sector earnings were $18 million
for the year compared with 1993 earnings of $94 million.
Earnings in 1993 included four months of contributions from
GNA Corporation and the $42 million gain on the sale of GNA.
> WRECO home-building subsidiaries sold 4,409 units in
1994, down from 5,020 in 1993. Weyerhaeuser Real
Estate Company was further downsized with the sale of three
operations: Scarborough Corporation of
New Jersey, Westminster Homes in North Carolina, and the
utility contracting business of Scarborough Constructors of
Florida. > For the mortgage business, the dramatic
slowdown in refinancing activity
in 1994, following three consecutive years of improvement,
resulted in significant industry overcapacity and price
competition. Higher interest rates in 1995 could further
slow home sales and financing.
<TABLE>
<CAPTION>
VOLUMES SOLD 1994 1993 1992 1991 1990
-------------------------------------
<S> <C> <C> <C> <C> <C>
Single-family units(1) 3,934 3,879 3,917 4,410 5,113
Multi-family units(1) 475 1,141 60 317 358
Lots(1) 2,157 1,372 2,762 1,138 3,008
Commercial space (thousand square feet) 389 88 142 269 235
-------------------------------------
(1)Includes one-half of joint-venture sales.
</TABLE>
<TABLE>
<CAPTION>
NET SALES AND REVENUES -- WRECO 1994 1993 1992 1991 1990
------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C> <C>
Single-family units $686 $615 $569 $591 $644
Multi-family units 26 30 4 16 15
Residential lots 65 43 39 25 35
Commercial lots 7 41 6 17 10
Commercial buildings 35 3 5 30 23
Acreage 20 27 20 16 31
Other 72 70 47 49 53
------------------------------------
$911 $829 $690 $744 $811
====================================
</TABLE>
<TABLE>
<CAPTION>
NET SALES AND REVENUES -- WFS 1994 1993 1992 1991 1990
------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C> <C>
Interest $ 84 $110 $144 $209 $278
Investment income 2 116 452 454 369
Loan origination and servicing fees 88 127 103 98 89
Premiums 10 14 21 19 23
Other revenues 22 34 112 82 49
------------------------------------
$206 $401 $832 $862 $808
====================================
</TABLE>
32
<PAGE>
Description of the Business of the Company
Weyerhaeuser Company (the company) was incorporated in the
state of Washington in January 1900 as Weyerhaeuser Timber
Company. It is principally engaged in the growing and
harvesting of timber and the manufacture, distribution and
sale of forest products, real estate development and
construction, and financial services.
The company has 37,000 employees, of whom 35,000 are
employed in its timber-based businesses, and of this number,
approximately 17,000 are covered by collective bargaining
agreements, which generally are negotiated on a multi-year
basis.
Approximately 2,000 of the company's employees are
involved in the activities of its real estate and financial
services subsidiaries.
The major markets, both domestic and foreign, in which the
company sells its products are highly competitive, with
numerous strong sellers competing in each. Many of the
company's products also compete with substitutes for wood
and wood fiber products. The real estate and financial
services subsidiaries also operate in highly competitive
markets, competing with numerous regional and national firms
in real estate development and construction and in financial
services.
In 1994, the company's sales to customers outside the
United States totaled $2.5 billion (including exports of
$1.5 billion from the United States and $1 billion export
from and domestic sales within Canada), or 24 percent of
total consolidated sales and revenues. The company believes
these sales contributed a higher proportion of aggregate
operating profits (see Note 2 of Notes to Financial
Statements).
All sales to customers outside the United States are subject
to risks related to international trade and to political,
economic and other factors that vary from country to
country.
Principal Business Segments
Timberlands and Wood Products
The company owns approximately 5.6 million acres of
commercial forestland in the United States (51 percent in
the South and 49 percent in the Pacific Northwest), most of
it highly productive and located extremely well to serve
both domestic and international markets. The company has,
additionally, long-term license arrangements in Canada
covering approximately 17.8 million acres (of which 14
million acres are considered to be productive forestland).
The combined total timber inventory on these U.S. and
Canadian lands is approximately 246 million cunits (a cunit
is 100 cubic feet of solid wood), of which approximately 75
percent is softwood species. The relationship between cubic
measurement and the quantity of end products that may be
produced from timber varies according to the species, size
and quality of timber, and will change through time as the
mix of these variables changes. To sustain the timber
supply from its fee timberlands, the company is engaged in
extensive planting, suppression of non-merchantable species,
precommercial and commercial thinning, fertilization and
operational pruning, all of which increase the yield from
its fee timberland acreage.
The company's wood products businesses pro-
duce and sell softwood lumber, plywood and veneer; composite
panels; oriented strand board; hardboard; hardwood lumber
and plywood; doors; treated products; logs; chips and
timber. These products are sold primarily through the
company's own sales organizations. Building materials are
sold to wholesalers, retailers and industrial users.
35
<PAGE>
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992 1991 1990
--------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales:
Raw materials (logs, chips and timber) $1,091 $1,021 $ 872 $ 843 $ 834
Softwood lumber 1,950 1,669 1,097 938 1,016
Softwood plywood and veneer 635 567 498 412 411
Oriented strand board, composite and other panels 750 623 495 383 381
Hardwood lumber 175 154 127 118 117
Hardwood plywood and doors 159 141 116 117 135
Treated products 105 84 67 65 80
Miscellaneous products 127 209 145 72 99
--------------------------------------
$4,992 $4,468 $3,417 $2,948 $3,073
======================================
Approximate contributions to earnings(1) $1,034 $ 891 $ 515 $ 155 $ 300
======================================
(1)After net restructuring charges of $152 million in 1991.
</TABLE>
Pulp, Paper and Packaging
The company's pulp, paper and packaging businesses include:
Pulp, which manufactures chemical wood pulp for world
markets; Newsprint, which manufactures newsprint at the
company's North Pacific Paper Corporation mill and markets
it to West Coast and Japanese newspaper publishers; Paper,
which manufactures and markets a range of both coated and
uncoated fine papers through paper merchants and printers;
Containerboard Packaging, which manufactures linerboard and
corrugating medium, which is primarily used in the
production of corrugated shipping containers, and
manufactures and markets corrugated shipping containers for
industrial and agricultural packaging; Paperboard, which
manufactures bleached paperboard that is used for production
of liquid containers and is marketed to West Coast and
Pacific Rim customers; Recycling, which operates an
extensive wastepaper collection system and markets it to
company mills and worldwide customers; and Chemicals, which
produces chlorine, caustic and tall oil, which are used
principally by the company's pulp, paper and packaging
operations.
The Personal Care Products business, which manufactured
disposable diapers sold under the private-label brands of
many of North America's largest retailers, was sold in
February 1993 through an initial public offering of stock.
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992 1991 1990
--------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales:
Pulp $1,012 $ 823 $ 711 $ 803 $ 865
Newsprint 356 322 326 288 293
Paper 664 648 673 655 751
Paperboard and containerboard 240 255 321 361 366
Container and packaging products 1,495 1,302 1,323 1,175 1,183
Recycling 121 77 93 90 88
Chemicals 45 32 31 34 28
Personal care products - - 514 450 338
Miscellaneous products 133 120 117 147 140
--------------------------------------
$4,066 $3,579 $4,109 $4,003 $4,052
======================================
Approximate contributions to earnings(1) $ 211 $ 61 $ 251 $ 108 $ 484
======================================
(1)After net restructuring charges of $129 million in 1991.
</TABLE>
36
<PAGE>
Real Estate
The company, through its real estate subsidiary,
Weyerhaeuser Real Estate Company, is a builder/developer of
for-sale housing and apartments, de-
velops commercial and residential lots for sale to retail
customers and other builders, builds commercial buildings
for sale to institutional investors, and is an investor in
joint ventures and limited partnerships.
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992 1991 1990
--------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales and revenues:
Single-family units $ 686 $ 615 $ 569 $ 591 $ 644
Multi-family units 26 30 4 16 15
Residential lots 65 43 39 25 35
Commercial lots 7 41 6 17 10
Commercial buildings 35 3 5 30 23
Acreage 20 27 20 16 31
Other 72 70 47 49 53
--------------------------------------
$ 911 $ 829 $ 690 $ 744 $ 811
======================================
Approximate contributions to earnings(1) $ 7 $ 18 $ 13 $ (175) $ 35
======================================
(1)After restructuring charges of $155 million in 1991.
</TABLE>
Financial Services
The company, through its financial services subsidiary,
Weyerhaeuser Financial Services, Inc., is involved in a
range of financial services. The principal operating unit
is Weyerhaeuser Mortgage Company, which has origination
offices in 14
states, with a servicing portfolio of $11.3 billion covering
approximately 139,000 loans throughout the country.
Mortgages are resold in the secondary market through
mortgage-backed securities to finan-
cial institutions and investors. Through its insurance
services organization, it also offers a broad line of
property, life and disability insurances.
GNA Corporation, a subsidiary that specialized in the sale
of life insurance annuities and mutual funds to the
customers of financial institutions, was sold in April 1993.
Republic Federal Savings & Loan Association, a subsidiary
that operated in Southern California through 1991, was
dissolved in 1992.
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992 1991 1990
--------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales and revenues:
Interest $ 84 $ 110 $ 144 $ 209 $ 278
Investment income 2 116 452 454 369
Loan origination and servicing fees 88 127 103 98 89
Premiums 10 14 21 19 23
Other revenues 22 34 112 82 49
--------------------------------------
$ 206 $ 401 $ 832 $ 862 $ 808
======================================
Approximate contributions to earnings(1) $ 11 $ 76 $ 68 $ 60 $ 47
======================================
(1)After $42 million gain on sale of GNA Corporation in
1993.
</TABLE>
37
<PAGE>
Corporate and Other
Corporate and other includes nursery and garden supply
products, which are sold primarily to retailers and
landscapers by the company's sales force; marine
transportation; and miscellaneous corporate activities.
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992 1991 1990
--------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 223 $ 269 $ 220 $ 216 $ 323
======================================
Approximate contributions to earnings(1) $ (142) $ (46) $ (107) $ (148) $ (115)
======================================
(1)After net restructuring charges of $9 million in 1991 and
a $70 million gain on disposal of infant diaper business in
1993.
</TABLE>
Environmental Matters
In 1990 the northern spotted owl was listed as a threatened
species under the Endangered Species Act (ESA). In 1992 the
marbled murrelet was listed as a threatened species under
the ESA. Certain Snake River salmon runs have been listed
as threatened or endangered under the ESA. Petitions have
been filed to list certain Pacific Northwest salmon runs and
other fish populations as threatened or endangered under the
ESA. A consequence of
these listings has been, and a possible consequence of
future listings may be, reductions in the sale and harvest
of timber on federal timberlands in the
Pacific Northwest. Requirements to protect habitat for
threatened and endangered species on non-federal timberlands
has resulted, and may in the future result, in restrictions
on timber harvest on some non-federal timberlands in the
Pacific
Northwest, including some timberlands of the company. The
listing of the red-cockaded woodpecker as an endangered
species under the ESA has had some impact on the harvest of
public and private timber in the southeastern United States,
but has had little impact on the company's timberlands.
Forest practice acts in some of the states in which the
company has timber increasingly impact present or future
harvests and forest management activities. In addition, the
statutory requirements with respect to the preservation of
wetlands and threatened or endangered species may affect
future harvest and forest management activities on some of
the company's Southern timberlands.
In April 1994, the Clinton administration adopted its plan
with respect to management of federal timberlands in the
Pacific Northwest. This plan will reduce timber sales from
certain federal lands in western Washington, western Oregon
and northern California by more than 75 percent from harvest
levels in the 1980s to approximately 1.1 billion board feet
per year or less. This reduction in federal timber harvest
will seriously reduce log supplies to many independent
sawmills that have been important suppliers of wood chips to
the company's pulp and paper mills in Washington and Oregon.
The company anticipates that there will be alternate sources
of wood chips or other fiber.
The administration also has stated that reduced timber
harvest on federal lands will allow modifications to the
current federal requirements for protection of northern
spotted owls on some private lands. On February 7, 1995, the
administration announced that it is proposing a special rule
to ease those harvest restrictions on some private lands in
Washington and California. The company believes that the
regulatory changes might ultimately allow it to harvest fee
timber in some areas where it has not been operating because
of uncertainties regarding regulations intended to protect
the northern spotted owl. Whether those regulatory changes
will be implemented is uncertain. If those regulatory
changes are not implemented, the company may not harvest
some timber that it otherwise might harvest in late 1995 and
1996.
38
<PAGE>
Because those regulatory changes may not be implemented,
and in order to avoid existing uncertainty under the ESA,
the company, in February 1995, obtained from the United
States Fish and Wildlife Service an Incidental Take Permit
and associated Habitat Conservation Plan (HCP) with respect
to northern spotted owls on a portion of its Oregon coastal
timberlands. That HCP estab-
lishes a protocol for the harvest of timber and the
protection of the northern spotted owl on those timberlands
and is expected to remain in effect for at least 50 years.
The company believes the most effective way to manage its
timberlands for the
growth and harvest of timber and the protection of wildlife
and fish habitat is to develop comprehensive plans for the
management of all the resources on those timberlands.
Accordingly, the company may develop HCPs or other
arrangements with
federal and state fish and wildlife agencies for other parts
of its Pacific Northwest timberlands that
would address the protection of wildlife and fish habitat
for both listed and non-listed species.
The combination of the forest management and harvest
restrictions and impacts described in the preceding four
paragraphs has increased operating costs, resulted in
increases in the value of timber and logs from the company's
Pacific Northwest timberlands, and contributed to increases
in the prices paid for wood products and wood chips. The
company does not know whether these effects will continue.
If wood products prices remain at their present levels,
there may be an increase in substitution of other products
for lumber and plywood.
The company does not believe that the restrictions and
impacts described in the above paragraphs have had, or in
1995 or 1996 will have, a significant effect on the
company's total harvest of timber, although they may have
such an effect in the future.
In addition to the foregoing, the company is subject to
federal, state or provincial and local air, water and land
pollution control, solid and hazardous waste management,
disposal and remediation laws and regulations in all areas
in which it has operations, and to market demands with
respect to chemical content of some products and use of
recycled fiber. Compliance with these laws, regulations and
demands usually involves capital expenditures as well as
operating costs. The company cannot easily quantify future
amounts of capital expenditures required to comply with
these laws, regulations and demands, or the impact on
operating costs, because in some instances compliance
standards
have not been developed or have not become final or
definitive. In addition, compliance with standards
frequently serves other purposes such as exten-
sion of facility life, increase in capacity, changes in raw
material requirements, or increase in economic value of
assets or products. While it is difficult to isolate the
environmental component of most manufacturing capital
projects, the company estimates that capital expenditures
for environmental compliance were approximately 8 percent of
total capital expenditures in 1992 and 1993 and 11 percent
in 1994. Based on its understanding of current regulatory
requirements, the company expects that this percentage will
range from 9 to 11 percent of total capital expenditures in
1995 and 1996.
The company is involved in the environmental remediation
of numerous sites, including 36 Superfund sites where the
company has been named as a potentially responsible party.
Some of the sites are on property presently or formerly
owned by the company where the company has the sole
obligation to remediate the site or shares that obligation
with one or more parties, and others are third-party sites
involving several parties who have a joint and several
obligation to remediate the site. The company's liability
with respect to these sites ranges from insignificant at
some sites to substantial at others, depending on the
quantity, toxicity and nature of materials deposited by the
company at the site and, with respect to some sites, the
number and economic viability of the other responsible
parties.
39
<PAGE>
The company spent $57 million in 1993,
$32 million in 1994, and expects to spend $43 million in
1995 on environmental remediation of
these sites. It is the company's policy to accrue for
environmental remediation costs when it is determined that
it is probable that such an obligation exists and the amount
of the obligation can be reasonably estimated. Based on
currently available information and analysis, the company
believes that it is reasonably possible that costs
associated with all identified sites may exceed current
accruals by amounts that may prove insignificant or that
could range, in the aggregate, up to approximately
$140 million over several years. This estimate of the upper
end of the range of reasonably possible additional costs is
much less certain than the estimates upon which accruals are
currently based and utilizes assumptions less favorable to
the company among the range of reasonably possible outcomes.
The company has completed a review of all its wood
products facilities for compliance with the Prevention of
Significant Deterioration (PSD) regulations under the Clean
Air Act, has disclosed PSD compliance issues to various
appropriate state
agencies and the Environmental Protection Agency (EPA), and
is negotiating compliance settlements with those agencies.
The company is currently in the process of completing a
similar review of all of its pulp and paper facilities for
PSD compliance in 1995.
A new regulation under Title 5 of the Clean
Air Act will require additional operating permits
at many of the company's manufacturing operations. Although
significant work is required to prepare the permit
applications in 1995 and 1996, the company anticipates that
it will be able to obtain the necessary permits.
The company has continued to make substantial progress in
reducing the minute amount of dioxin that had previously
been detected in wastewater effluent, sludge and pulp from
the company's
bleached kraft pulp mills.
The EPA has published proposed regulations, known as the
"cluster rules," which would establish maximum achievable
control technology standards for non-combustion sources
under the Clean Air Act, and the development of revised
wastewater effluent limitations under the Clean Water Act.
The company's operations are well positioned to meet the
proposed limits for dioxin. However, if the cluster rules
are adopted as proposed, they will require the company to
commit additional capital to further reduce air emissions
and wastewater
discharges by 1999. Preliminary estimates of that
additional capital range as high as $400 million, which may
further increase the annual percentage of the company's
total capital expenditures devoted to environmental
compliance, although that is not anticipated prior to 1996.
40
<PAGE>
Financial Review
Results of Operations
1994 Compared With 1993
The company's 1994 consolidated sales and revenues were
$10.4 billion, a 9 percent increase over the $9.5 billion
reported last year. Net earnings were $589 million, or
$2.86 per common share, compared with 1993 net earnings of
$579 million, or $2.83 per common share. 1994 earnings
include the return of countervailing duty by the U.S.
government against Canadian lumber imports and
the expected cost of postretirement benefits for Canadian
employees. The net effect of these two items contributed
$.03 per common share. 1993 earnings included gains of $132
million, or $.65 per common share, from the sale of assets
and extinguishment of debt, and a $15 million, or $.08 per
common share, charge to earnings to reflect the revised 1993
federal corporate tax rate in the company's deferred tax
accounts.
The continuation in 1994 of the company's
major modernization projects, started in 1993, accounted for
the significant increase in capitalized interest from year
to year.
The significant changes from the prior year in other
income for the company and real estate and
financial services are attributable to the $70 mil-
lion pretax gain on the disposal of the company's investment
in the infant diaper business and the real estate and
financial services pretax gain of
$42 million on the sale of GNA Corporation, both in 1993.
The timberlands and wood products segment posted operating
earnings of $1 billion in 1994, which is a 16 percent
increase over the $891 million reported in 1993. Sales for
this segment were $5 bil-
lion, up 12 percent over the $4.5 billion reported last
year. This segment posted record performances during the
year as the businesses continued to accomplish their
business improvement plans, timber supplies remained tight
and markets re-
mained strong throughout the year.
The pulp, paper and packaging segment's 1994 operating
earnings were $211 million, up substantially from last
year's $61 million. This segment reported sales of $4.1
billion for the year, an increase of 14 percent over the
$3.6 billion in 1993. Strong demand coupled with continued
price improvement over the prior year in both the domestic
and export pulp, paper and packaging markets are the key
factors in this recovery.
The combined real estate and financial services segments
earned $18 million in 1994 compared
with last year's earnings of $94 million, which included a
pretax gain of $42 million on the sale of GNA Corporation as
well as one quarter of GNA operating results.
1993 Compared With 1992
Sales and revenues in 1993 were $9.5 billion, an increase of
3 percent over 1992. Net earnings were $579 million, or
$2.83 per common share, up from 1992 net earnings of $372
million, or $1.83 per common share. Included in 1993 net
earnings were after-tax gains of:
- $52 million, or $.25 per common share, from the
extinguishment of debt, which was reported as
an extraordinary item.
- $44 million, or $.22 per common share, from the sale of
the infant diaper business.
41
<PAGE>
- $36 million, or $.18 per common share,
from the sale of GNA Corporation, a wholly owned subsidiary.
And a charge of $20 million, or $.10 per common share,
which reflected the revised 1993 federal corporate tax rate
in the company's deferred and current tax accounts. This
charge consisted of $.08 per common share due to the effect
of the higher rate on the accumulated temporary differences
at December 27, 1992, and $.02 per common share related to
1993.
The net sales and revenues and related costs and expenses
of real estate and financial services were substantially
less in 1993 when compared with 1992 as a result of the sale
of GNA Corporation.
During 1993 the company refinanced a significant amount of
debt, which resulted in a short-term increase in interest
expense. The increase in capitalized interest over the
prior year coincided with expanded activity in the company's
major capital projects.
The significant decrease in financial services interest
expense was due to the liquidation of Republic Federal
Savings & Loan Association during 1992 and the sale of GNA
Corporation in early 1993. In addition, accelerated
prepayments caused by mortgage refinancings significantly
reduced collateralized mortgage obligation bonds.
Significant items in relation to net earnings included in
other income for 1993 were a $70 million pretax gain on the
disposal of the company's investment in the infant diaper
business through a public offering in a new company, Paragon
Trade Brands, Inc., and the real estate and financial
services pretax gain of $42 million on the sale of GNA
Corporation.
The timberlands and wood products operating earnings for
1993 were $891 million, an increase of 73 percent over the
$515 million recorded in 1992. Prices for logs and lumber
exceeded 1992 levels due to increasing demand for housing
construction materials and raw material supply shortages
resulting from reduced harvests in the Western
public forests.
The pulp, paper and packaging segment had a $61 million
operating profit in 1993, significantly below the $251
million posted in 1992. Prices for most of the products in
this segment were at levels well below the previous year.
The personal care products business included in this segment
was di-
vested in the first quarter of 1993.
The real estate and financial services segments had
operating earnings of $94 million in 1993 compared with $81
million in 1992.
As a part of the GNA Corporation sales transaction, the
company assumed $225 million of GNA debt.
1992 Compared With 1991
Sales and revenues in 1992 were $9.3 billion, up 6 percent
from 1991. Net earnings were $372 million, or $1.83 per
common share, compared with a 1991 loss of $162 million, or
$.80 per common share. 1991 results reflected an after-tax
special-items charge to earnings of $344 million. 1992
research and development expenses decreased 24 percent from
1991 as a result of the implementation of certain of the
company's restructuring and business improvement plans.
Interest expense incurred for 1992 was down by $68 million,
or 14 percent, primarily due to the dissolution of the
company's savings and loan operations in Southern California
during the year. Significant changes in other income in
1992, compared with 1991, included a $25 million partial
settlement accrued in 1992 with respect to a lawsuit for the
refund of federal income taxes, and earnings of $2 million
in the company's real estate joint-venture and limited-
partnership activities in 1992, after losses of $17 million
in 1991, attributable to the restructuring or sale of a
number of these investments.
In 1992 the company purchased two pulp
mills, three sawmills, timberlands in Georgia, and a
forest management license in Alberta, Canada, from Procter &
Gamble.
42
<PAGE>
The 1992 timberlands and wood products operating earnings
were $515 million, compared with $155 million in 1991, which
included a restructuring charge of $152 million. This
segment's improved earnings were driven, in part, by strong
raw material and converted wood products prices. The
curtailment of wood supply from public lands in the western
United States, along with increased demand generated by the
slowly improving U.S. economy, exerted upward pressure on
the value of wood products in both the domestic and export
markets.
Pulp, paper and packaging operating earnings were $251
million for 1992, compared with $108 million in the previous
year, which included a restructuring charge of $129 million.
While pulp pricing showed some temporary strength due to the
mid-year strike in the company's Canadian pulp mills, the
overall trend from a year ago was down. Newsprint and paper
suffered continued weak prices throughout 1992.
Real estate posted operating earnings of $13 mil-
lion in 1992 after recording a loss of $175 million in 1991,
which included a $155 million restructuring charge.
Financial services operating earnings were $68 million in
1992, up 13 percent from the 1991 results of $60 million.
While this segment benefited from lower interest rates for
most of the year, earnings were affected as a result of
reduced investment
returns. The dissolution of the company's wholly owned
subsidiary Republic Federal Savings & Loan Association,
which operated primarily in Southern California, was
completed during 1992.
Liquidity and Capital Resources
General
The company is committed to the maintenance of
a sound, conservative capital structure. This commitment is
based upon two considerations: the obligation to protect
the underlying interests of its shareholders and lenders,
and the desire to have access, at all times, to major
financial markets.
The important elements of the policy governing the
company's capital structure are as follows:
- To view separately the capital structures of Weyerhaeuser
Company, Weyerhaeuser Real Estate Company and Weyerhaeuser
Financial Services,
Inc., given the very different nature of their assets and
business activities. The amount of debt and equity
associated with the capital structure of each will reflect
the basic earnings capacity, real value and unique liquidity
characteristics of the assets dedicated to that business.
- The combination of maturing short-term debt and the
structure of long-term debt will be managed judiciously to
minimize liquidity risk. Long-term debt maturities are
shown in Note 16 of Notes to Financial Statements.
Operations
The company's financial position in 1994 remained strong as
it generated $1.3 billion of cash flow from operations
before changes in working capital, compared with $982
million in 1993.
43
<PAGE>
Cash flow from operations before changes in working capital
by business segment was as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
-----------------------
<S> <C> <C> <C>
Timberlands and wood products $1,226 $1,052 $ 668
Pulp, paper and packaging 530 326 513
Real estate 16 29 42
Financial services 33 12 80
Corporate and other (545) (437) (264)
-----------------------
$1,260 $ 982 $1,039
=======================
</TABLE>
Weyerhaeuser Company's working capital decreased
$512 million from the prior year-end. Major factors
affecting the decline were an increase in the current
portion of long-term debt as the 9 1/4 percent and 9.36
percent notes totaling $300 million became due in 1995,
increases in accounts payable and accrued liabilities
amounting to $283 million, and an increase in accounts
receivable of $126 million.
In the real estate and financial services seg-
ments, the mortgage operations built an inventory of
mortgage loans receivable in 1993, which was reversed in
1994 as loan sales exceeded originations.
Significant non-recurring items that impacted the cash
flow from operations in 1993 were the $52 million gain on
extinguishment of debt, net of income tax, which was
recorded as an extraordinary item; the pretax gain of $70
million from the sale of the company's infant diaper
business; and the pretax gain of $42 million from the sale
of GNA Corporation.
Investing
Capital expenditures amounted to $1.1 billion in 1994 and
$967 million in 1993. They are currently expected to
approximate $1.2 billion in 1995; however, the expenditures
could be increased or decreased as a consequence of future
economic conditions. The company had approximately
$306 million in capital expenditures committed on major
projects at year-end 1994 representing construction
activities at its Longview, Wash., and Plymouth, N.C., pulp
and paper facilities and a new oriented strand board mill in
West Virginia.
Recent capital spending, including acquisitions, has been in
the following areas:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
------------------------
<S> <C> <C> <C>
Timberlands and wood products $ 257 $ 241 $ 246
Pulp, paper and packaging 794 652 932
Corporate and other 51 74 28
------------------------
$1,102 $ 967 $1,206
========================
</TABLE>
Financial services had a decrease from 1993 to 1994 in
mortgage and investment securities ac-
quired and the related proceeds from the sale of mortgage
and investment securities principally as a result of the
sale of GNA Corporation.
The company had proceeds of $616 million from the sale of
its infant diaper business and the sale of GNA Corporation
in 1993.
44
<PAGE>
Financing
The reductions in both the sales of debentures and the
related payments on debentures, commercial paper and other
debt by Weyerhaeuser in 1994 as compared with the prior year
are a result of the debt restructuring activity in 1993.
Cash dividends paid on common shares
amounted to $247 million in 1994 and $246 million in 1993.
Although common share dividends have exceeded our target
payout ratio in recent years, it is the company's intent,
over time, to pay dividends to its common shareholders in a
range of 35 to 45 percent of common share earnings.
To ensure its ability to meet future commitments,
Weyerhaeuser Company, Weyerhaeuser Real Estate Company and
Weyerhaeuser Mortgage Company, a subsidiary of Weyerhaeuser
Financial Services, Inc., have established at year-end 1994
unused bank lines of credit in the maximum aggregate sum of
approximately $2.5 billion. None of the entities is a
guarantor of the borrowings of the others under any of these
credit facilities.
Contingencies
The company is a party to legal proceedings and
environmental matters generally incidental to its business.
Although the final outcome of any legal proceeding or
environmental matter is subject to a great many variables
and cannot be predicted with any degree of certainty, the
company presently believes that the ultimate outcome
resulting from these proceedings and matters would not have
a material effect on the company's current financial
position, liquidity or results of operations; however, in
any given future reporting period, such proceedings or
matters could have a material effect on results of
operations.
Accounting Matters
Pronouncements
During the year, the company implemented:
- Statement of Financial Accounting Standards (SFAS) No.
106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," for its wholly owned subsidiary,
Weyerhaeuser Canada Ltd.
- SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual accounting to be used for
the cost of benefits provided to former and inactive
employees who have not yet retired.
- SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," which addresses accounting and
reporting for invest-
ments in equity securities that have readily determinable
fair values and for all investments in debt securities.
- SFAS No. 119, "Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments," which
requires more complete disclosures on derivative financial
instruments.
None of these implementations had a significant impact on
the company's results of operations or its financial
position.
Accounting and Reporting Standards Committee
During the year, the Accounting and Reporting Standards
Committee, comprised of three outside directors, reviewed
with the company's management and with its independent
public accountants the scope and results of the company's
internal and external audit activities and the adequacy of
the company's internal accounting controls. The committee
also reviewed current and emerging accounting and reporting
requirements and practices affecting the company.
45
<PAGE>
Report of Independent Public Accountants
To the shareholders of Weyerhaeuser Company:
We have audited the accompanying consolidated balance sheets
of Weyerhaeuser Company (a Washington
corporation) and subsidiaries as of December 25, 1994, and
December 26, 1993, and the related consolidated statements
of earnings, cash flows and shareholders' interest for each
of the three years in the period ended December 25, 1994.
These financial statements are the responsibility of the
company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial state-
ments are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Weyerhaeuser Company and subsidiaries as of
December 25, 1994, and December 26, 1993, and the results of
their operations and their cash flows for each of the three
years in the period ended December 25, 1994, in conformity
with generally accepted accounting principles.
Seattle, Washington,
February 7, 1995. ARTHUR ANDERSEN LLP
46
<PAGE>
<TABLE>
Consolidated Statement of Earnings
<CAPTION>
For the three-year period ended December 25, 1994
Dollar amounts in millions except per-share figures 1994 1993 1992
----------------------
<S> <C> <C> <C>
Net sales and revenues:
Weyerhaeuser $ 9,281 $ 8,315 $ 7,744
Real estate and financial services 1,117 1,230 1,522
-----------------------
Net sales and revenues 10,398 9,545 9,266
-----------------------
Costs and expenses:
Weyerhaeuser:
Costs of products sold 6,819 6,252 5,919
Depreciation, amortization and fee stumpage 504 444 447
Selling, general and administrative expenses 615 592 592
Research and development expenses 47 44 43
Taxes other than payroll and income taxes 151 137 122
-----------------------
8,136 7,469 7,123
-----------------------
Real estate and financial services:
Costs and operating expenses 851 836 979
Depreciation and amortization 30 43 56
Selling, general and administrative expenses 152 206 252
Taxes other than payroll and income taxes 9 9 12
-----------------------
1,042 1,094 1,299
-----------------------
Total costs and expenses 9,178 8,563 8,422
-----------------------
Operating income 1,220 982 844
Interest expense and other:
Weyerhaeuser:
Interest expense incurred 237 215 190
Less interest capitalized 36 23 13
Other income (expense), net (Note 3) (42) 60 35
Real estate and financial services:
Interest expense incurred 154 173 220
Less interest capitalized (Note 16) 78 77 72
Other income (expense), net (Note 3) 19 54 9
-----------------------
Earnings before income taxes and extraordinary item 920 808 563
Income taxes (Note 4) 331 281 191
-----------------------
Earnings before extraordinary item 589 527 372
Extraordinary item, net of applicable taxes of $34 - 52 -
-----------------------
Net earnings $ 589 $ 579 $ 372
=======================
Per common share (Note 1):
Earnings before extraordinary item $ 2.86 $ 2.58 $ 1.83
Extraordinary item - .25 -
-----------------------
Net earnings $ 2.86 $ 2.83 $ 1.83
=======================
Dividends paid $ 1.20 $ 1.20 $ 1.20
=======================
See notes on pages 53 through 77.
</TABLE>
47
<PAGE>
<TABLE>
Consolidated Balance Sheet
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
------------------------------------
<S> <C> <C>
Assets
Weyerhaeuser
Current assets:
Cash and short-term investments, including restricted deposits of
$14 in 1993 $ 39 $ 73
Receivables, less allowances of $10 in 1994 and 1993 909 783
Inventories (Note 8) 746 762
Prepaid expenses 284 281
---------------------------
Total current assets 1,978 1,899
Property and equipment (Note 9) 6,196 5,606
Construction in progress 603 666
Timber and timberlands at cost, less fee stumpage charged
to disposals 610 605
Other assets and deferred charges 212 192
---------------------------
Total assets 9,599 8,968
---------------------------
Real estate and financial services
Cash and short-term investments, including restricted deposits of
$28 and $34 73 87
Receivables, less discounts and allowances of $4 and $7 116 135
Mortgage and construction notes and mortgage loans
receivable (Note 10) 472 847
Investments (Note 11) 247 60
Mortgage-backed certificates and other pledged financial
instruments (Note 12) 211 350
Real estate in process of development, less reserves of $32 and
$30 (Note 13) 668 738
Land being processed for development, less reserves of
$19 in 1994 and 1993 738 700
Deferred acquisition costs 92 40
Investments in and advances to joint ventures and limited
partnerships, less reserves of $49 and $57 430 327
Other assets 361 386
---------------------------
Total assets 3,408 3,670
---------------------------
$ 13,007 $ 12,638
===========================
See notes on pages 53 through 77.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
------------------------------------------------------------
<S> <C> <C>
Liabilities and shareholders' interest
Weyerhaeuser
Current liabilities:
Notes payable $ 6 $ 5
Current maturities of long-term debt 321 14
Accounts payable 645 492
Accrued liabilities (Note 14) 695 565
---------------------------
Total current liabilities 1,667 1,076
Long-term debt (Note 16) 2,713 2,998
Deferred income taxes (Note 4) 986 905
Deferred pension and other liabilities (Notes 6 and 7) 525 535
Minority interest in subsidiaries 103 109
Commitments and contingencies (Note 18)
---------------------------
Total liabilities 5,994 5,623
---------------------------
Real estate and financial services
Notes and commercial paper (Note 15) 416 289
Collateralized mortgage obligation bonds (Note 12) 183 307
Long-term debt (Note 16) 1,770 1,997
Other liabilities 354 456
Commitments and contingencies (Note 18)
---------------------------
Total liabilities 2,723 3,049
---------------------------
Shareholders' interest (Note 20):
Common shares: authorized 400,000,000 shares, issued 206,072,890
shares, $1.25 par value 258 258
Other capital 416 411
Cumulative translation adjustment (107) (73)
Retained earnings 3,733 3,391
Treasury common shares, at cost: 455,387 and 983,952 (10) (21)
---------------------------
Total shareholders' interest 4,290 3,966
---------------------------
$ 13,007 $ 12,638
===========================
</TABLE>
49
<PAGE>
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
Consolidated
------------------------------
For the three-year period ended December 25, 1994
Dollar amounts in millions 1994 1993 1992
------------------------------
<S> <C> <C> <C>
Cash flows provided by operations:
Net earnings $ 589 $ 579 $ 372
Non-cash charges to income:
Depreciation, amortization and fee stumpage 534 487 503
Deferred income taxes, net 127 94 125
Contributions to employee benefit plans - 2 32
Extraordinary item, including current tax benefit - (90) -
Deferred income taxes on extraordinary item - 38 -
Changes in working capital:
Accounts receivable (125) (93) (191)
Inventories, prepaid expenses, real estate and land 20 (246) (175)
Mortgages held for sale 360 23 165
Other liabilities 166 177 289
(Gain) loss on disposition of assets 10 (16) 10
(Gain) on sales of businesses - (112) (3)
Other (33) 18 (17)
-----------------------------
Net cash provided by operations 1,648 861 1,110
-----------------------------
Cash flows from investing in the business:
Property and equipment (1,061) (927) (575)
Timber and timberlands (41) (40) (42)
Mortgage and investment securities acquired (260) (776) (4,557)
Acquisition of businesses - - (589)
Proceeds from sale of:
Property, equipment, timber and timberlands 44 54 56
Businesses 14 616 -
Mortgage and investment securities 140 510 4,276
Other (102) (26) (18)
---------------------------
Net cash flows from investing in the business (1,266) (589) (1,449)
---------------------------
Cash flows from financing activities:
Sale of debentures, notes and CMO bonds 174 1,291 782
Sale of industrial revenue bonds 134 135 152
Savings deposits, net - - (618)
Notes and commercial paper borrowings, net (143) (660) 422
Proceeds from issuance of investment contracts - 60 430
Cash dividends on common shares (247) (246) (244)
Intercompany cash dividends on common shares - - -
Payments on debentures, notes, bank credit agreements, income debenture,
capital leases and CMO bonds (362) (1,243) (693)
Exercise of stock options 16 21 27
Other (2) 5 (10)
-----------------------------
Net cash flows from financing activities (430) (637) 248
-----------------------------
Net increase (decrease) in cash and short-term investments (48) (365) (91)
Cash and short-term investments at beginning of year 160 525 616
-----------------------------
Cash and short-term investments at end of year $ 112 $ 160 $ 525
=============================
Cash paid during the year for:
Interest, net of amount capitalized $ 279 $ 305 $ 332
=============================
Income taxes $ 141 $ 158 $ (17)
=============================
See notes on pages 53 through 77.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
Weyerhaeuser Company Real Estate and Financial Services
-------------------------------- ----------------------------------
1994 1993 1992 1994 1993 1992
- ------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 576 $ 511 $ 331 $ 13 $ 68 $ 41
504 444 447 30 43 56
115 108 97 12 (14) 28
- 2 32 - - -
- (90) - - - -
- 38 - - - -
(126) (55) (120) 1 (38) (71)
(12) (164) (32) 32 (82) (143)
- - - 360 23 165
240 62 (78) (74) 115 367
15 (3) 10 (5) (13) -
- (70) - - (42) (3)
(20) 34 8 (13) (16) (25)
--------------------------------------------------------------------
1,292 817 695 356 44 415
--------------------------------------------------------------------
(1,047) (907) (564) (14) (20) (11)
(41) (40) (42) - - -
- - - (260) (776) (4,557)
- - (589) - - -
20 27 52 24 27 4
- 204 - 14 412 -
- - - 140 510 4,276
(49) (6) 59 (53) (20) (77)
--------------------------------------------------------------------
(1,117) (722) (1,084) (149) 133 (365)
--------------------------------------------------------------------
22 931 117 152 360 665
134 135 152 - - -
- - - - - (618)
(83) (520) 504 (60) (140) (82)
- - - - 60 430
(247) (246) (244) - - -
- 435 22 - (435) (22)
(49) (824) (223) (313) (419) (470)
16 21 27 - - -
(2) 5 (10) - - -
--------------------------------------------------------------------
(209) (63) 345 (221) (574) (97)
--------------------------------------------------------------------
(34) 32 (44) (14) (397) (47)
73 41 85 87 484 531
--------------------------------------------------------------------
$ 39 $ 73 $ 41 $ 73 $ 87 $ 484
====================================================================
$ 201 $ 203 $ 182 $ 78 $ 102 $ 150
====================================================================
$ 92 $ 161 $ (10) $ 49 $ (3) $ (7)
====================================================================
</TABLE>
51
<PAGE>
<TABLE>
Consolidated Statement of Shareholders' Interest
<CAPTION>
For the three-year period ended December 25, 1994
Dollar amounts in millions 1994 1993 1992
------------------------------
<S> <C> <C> <C>
Common stock issued:
Balance at end of year $ 258 $ 258 $ 258
------------------------------
Other capital:
Balance at beginning of year 411 404 387
Stock options exercised 5 5 5
Contributions to employee investment plans - 1 12
Other transactions (net) - 1 -
------------------------------
Balance at end of year 416 411 404
------------------------------
Cumulative translation adjustment:
Balance at beginning of year (73) (36) (6)
Translation adjustment (34) (37) (30)
------------------------------
Balance at end of year (107) (73) (36)
------------------------------
Retained earnings:
Balance at beginning of year 3,391 3,058 2,930
Net earnings 589 579 372
Cash dividends on common shares (247) (246) (244)
------------------------------
Balance at end of year 3,733 3,391 3,058
------------------------------
Common stock held in treasury:
Balance at beginning of year (21) (38) (79)
Stock options exercised 11 16 22
Contributions to employee investment plans - 1 19
------------------------------
Balance at end of year (10) (21) (38)
------------------------------
Total shareholders' interest:
Balance at end of year $ 4,290 $ 3,966 $ 3,646
==============================
Shares of common stock (in thousands):
Issued at end of year 206,073 206,073 206,073
------------------------------
In treasury:
Balance at beginning of year 984 1,796 3,814
Stock options exercised (529) (744) (1,096)
Contributions to employee investment plans - (60) (919)
Other transactions - (8) (3)
------------------------------
Balance at end of year 455 984 1,796
------------------------------
Outstanding at end of year 205,618 205,089 204,277
==============================
See notes on pages 53 through 77.
</TABLE>
52
<PAGE>
Notes to Financial Statements
For the three-year period ended December 25, 1994
NOTE 1:
Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts
of Weyerhaeuser Company and all of its majority-owned
domestic and foreign subsidiaries. Significant intercompany
transactions and accounts are eliminated.
Certain of the consolidated financial state-
ments and notes to financial statements are pre-
sented in two groupings: (1) Weyerhaeuser Company
(Weyerhaeuser, or the company), which is principally engaged
in the growing and harvesting of
timber and the manufacture, distribution and sale of forest
products, and (2) real estate and financial services, which
includes Weyerhaeuser Real Estate Company (WRECO), which is
involved in real estate development and construction, and
Weyerhaeuser Financial Services, Inc. (WFS), whose principal
subsidiary is Weyerhaeuser Mortgage Company (WMC). Republic
Federal Savings & Loan Association, a subsidiary of WFS, was
dissolved in 1992, and GNA Corporation, a subsidiary of WFS,
was sold in April 1993.
Changes in Accounting Principles
Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," was implemented for the
company's wholly owned subsidiary, Weyerhaeuser Canada Ltd.,
in 1994 and did not have a significant impact on the
company's results of operations or its financial position.
In November 1992, the Financial Accounting Standards Board
(FASB) issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," which requires accrual accounting
to be used for the cost of benefits provided to former
and inactive employees who have not yet retired. The
company adopted this pronouncement in the first quarter of
1994 by recording a cumulative catch-
up charge to earnings, which did not have a significant
impact on results of operations or financial position.
In May 1993, the FASB issued SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," which
addresses accounting
and reporting for investments in equity securities that have
readily determinable fair values, and for all investments in
debt securities, and was effective for fiscal years
beginning after December 15, 1993. The adoption of this
pronouncement in 1994 did not have a significant effect on
the company's results of operations or its financial
position.
In October 1994, the FASB issued SFAS No. 119, "Disclosure
about Derivative Financial Instru-
ments and Fair Value of Financial Instruments," which
requires more complete disclosures on deriva-
tive financial instruments. This pronouncement, which was
effective for fiscal years ending after December 15, 1994,
was implemented by the company in 1994.
Prospective Accounting Changes
In May 1993, the FASB issued SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," which requires
creditors to measure impairment based on the present value
of expected future cash flows discounted at the loan's
effective interest rate.
In October 1994, the FASB issued SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures," which amended SFAS No.
114 to allow creditors to use existing methods for
recognizing interest on impaired loans and also requires
creditors to disclose certain information about how interest
income was recognized on impaired loans.
Both of these pronouncements become effective for
financial statements for fiscal years beginning after
December 15, 1994. The company believes that the future
adoption of these pronouncements will not have a significant
impact on results of operations or financial position.
53
<PAGE>
Net Earnings Per Common Share
Net earnings per common share are based on the weighted
average number of common shares outstanding during the
respective periods. Average common equivalent shares (stock
options) outstand-
ing have not been included, as the computation would not be
dilutive. Weighted average common shares outstanding were
205,543,000, 204,866,000 and 203,373,000 for the years ended
December 25, 1994, December 26, 1993, and December 27, 1992,
respectively.
Fully diluted earnings-per-share amounts are not
applicable because the effect of the conversion of the stock
options is not dilutive.
Fair Value of Financial Instruments
The company has, where appropriate, estimated the fair value
of financial instruments. These fair value amounts may be
significantly affected by the assumptions used, including
the discount rate and estimates of cash flow. Accordingly,
the estimates presented are not necessarily indicative of
the
amounts that could be realized in a current market exchange.
Where these estimates approximate carrying value, no
separate disclosure of fair value is shown.
Derivatives
The company has only limited involvement with derivative
financial instruments and does not use them for trading
purposes. They are used to manage well-defined interest
rate and foreign exchange risks. These include:
- Foreign exchange contracts, which are hedges for foreign
denominated accounts receivable and payable, have gains or
losses recognized at settlement date.
- Interest rate swaps entered into with major banks or
financial institutions in which the company pays a fixed
rate and receives a floating rate with the interest payments
being calculated on a notional amount. The premiums
received by the company on the sale of these swaps are
treated as deferred income and amortized against interest
expense over the term of the agreements.
- Hedging transactions entered into by the company's
mortgage banking subsidiary to protect
both the completed loan inventory and loans in process
against changes in interest rates. The financial
instruments used to manage interest rate risk are forward
sales commitments, interest rate futures and options.
The company's use of derivatives does not have a
significant effect on the company's results of opera-
tions or its financial position.
Cash and Short-Term Investments
For purposes of cash flow and fair value reporting, short-
term investments with original maturities of 90 days or less
are considered as cash equivalents. Short-term investments
are stated at cost, which approximates market.
Inventories
Inventories are stated at the lower of cost or market. Cost
includes labor, materials and production overhead. The last-
in, first-out (LIFO) method is used to cost the majority of
domestic raw materials, in process and finished goods
inventories; either the first-in, first-out (FIFO) or
average cost method is used to cost all other inventories.
Had the FIFO method been used to cost all inventories, the
amounts at which product inventories are stated would have
been $237 million and $239 million greater at December 25,
1994, and December 26, 1993, respectively.
Property and Equipment
The company's property accounts are maintained on an
individual asset basis. Betterments and replacements of
major units are capitalized. Maintenance, repairs and minor
replacements are expensed. Depreciation is provided
generally on the straight-line or unit-of-production method
at rates based on estimated service lives. Amortization of
logging railroads and truck roads is provided generally as
timber is harvested and is based upon rates determined with
reference to the volume of timber estimated to be removed
over such facilities.
The cost and related depreciation of property sold or
retired is removed from the property and allowance for
depreciation accounts and the gain or loss is included in
earnings.
54
<PAGE>
Timber and Timberlands
Timber and timberlands are carried at cost less fee stumpage
charged to disposals. Fee stumpage is the cost of standing
timber and is charged to fee timber disposals as fee timber
is harvested, lost as the result of casualty or sold.
Stumpage rates are determined with reference to the cost of
timber and the related volume of timber estimated to be
recoverable. Timber carrying costs are expensed as
incurred.
Income Taxes
Deferred income taxes are provided to reflect temporary
differences between the financial and tax bases of assets
and liabilities using presently enacted tax rates and laws.
Pension Plans
The company has pension plans covering most of its
employees. The U.S. plan covering salaried employees
provides pension benefits based on the employee's highest
monthly earnings for five consecutive years during the final
10 years before retirement. Plans covering hourly employees
generally provide benefits of stated amounts for each year
of service. Contributions to U.S. plans are based on
funding standards established by the Employee Retirement
Income Security Act of 1974 (ERISA).
Postretirement Benefits Other Than Pensions
In addition to providing pension benefits, the company
provides certain health care and life insurance benefits for
some retired employees and accrues the expected future cost
of these benefits for its current eligible retirees and some
employees. All of the company's salaried employees and some
hourly employees may become eligible for these benefits when
they retire.
Reclassifications
Certain reclassifications have been made to conform prior
years' data to the current format.
Weyerhaeuser Real Estate Company
WRECO recognizes income from the sales of single-family
housing units when construction has been completed, required
down payments have been received, and title has passed to
the customer. Income from the sales of multi-family,
commercial properties, developed lots and undeveloped land
is recognized when required down payments are received and
other income recognition criteria are satisfied.
Real estate is stated at the lower of cost or net
realizable value. The determination of net realizable value
is based on WRECO's plans for its property and its financial
ability to carry out such plans. Changes in future market
demand, interest rates and company plans may affect net
realizable value. Land, land development and construction
costs, including capitalized carrying costs, are accumulated
and allocated to individual units in proportion to relative
sales value.
Weyerhaeuser Financial Services
WMC and its subsidiaries are primarily engaged in the
mortgage banking industry and also offer insurance services.
- Mortgage notes held for sale are stated at the lower of
cost or market, which is computed by the aggregate method
(unrealized losses are offset by unrealized gains). Hedging
transactions are entered into to protect the inventory value
from changes in interest rates. Hedge positions are also
used to protect the pipeline of loan applications in process
from changes in interest rates. Hedging gains and losses
realized during the commitment and warehousing period are
deferred to the extent of unrealized gains on the related
mortgage loans held for sale.
- The costs associated with purchasing mortgage servicing
rights are deferred. Excess service fees result from loan
sales in which WMC retains the loan servicing rights and are
based on the present value of future servicing revenue less
a normal servicing fee, based upon the estimated remaining
life of the loans sold.
55
<PAGE>
The Mortgage Securities Corporations were formed for the
limited purpose of issuing collateralized mortgage
obligation bonds (CMO bonds) secured by Government National
Mortgage Association and Federal National Mortgage
Association certificates. The CMO bonds are the sole
obligation of the issuer, and neither the company nor any
affiliated company has guaranteed or is otherwise obligated
with respect to the CMO bonds.
- The mortgage-backed certificates are carried at par value
adjusted for any unamortized discount or premium. These
discounts or premiums are amortized using a method that
approximates the effective interest method over the
estimated life of the underlying mortgage loans.
- CMO bonds are carried at unamortized cost. Discounts and
premiums are amortized using a method that approximates the
effective interest method over their estimated lives.
In March 1992, Republic Federal Savings &
Loan Association, which was a federally chartered savings
and loan institution that operated primarily in Southern
California, sold the remainder of its branches, ceased
accepting deposits as a federally chartered savings and loan
institution, and filed an application with the Office of
Thrift Supervision to undergo a voluntary dissolution, which
was approved in the fourth quarter of 1992. During its
operation:
- Interest income was recorded on the accrual method;
however, interest was not accrued on loans that were more
than 90 days contractually delinquent and on certain other
loans that management felt may not be recoverable.
- Gains or losses on U.S. government and other securities
were recognized upon realization.
- Discounts on loans purchased were amortized into income
over the expected average loan lives.
In April 1993, WFS completed the sale of
GNA Corporation. As a part of that transaction,
Weyerhaeuser assumed $225 million of outstanding GNA debt.
GNA Corporation and its life insurance subsidiaries provided
annuities, insurance and securi-
ties marketed through financial institutions. During its
operation:
- Payments received on investment and limited payment
contracts were recorded directly as deposits.
- Investment income was recorded when earned.
NOTE 2:
Foreign Operations and Export Sales
The following net assets, net sales and net earnings,
related to operations outside the United States, principally
Canada, are included in the company's consolidated financial
statements:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993 December 27, 1992
-------------------------------------------------------
<S> <C> <C> <C>
Net assets:
Working capital $ 29 $ 100 $ 112
Timber-cutting rights 2 2 2
Property and equipment, net 826 853 870
Other assets 42 36 36
----------------------------------------------
899 991 1,020
Other liabilities (235) (232) (417)
----------------------------------------------
Net assets $ 664 $ 759 $ 603
==============================================
</TABLE>
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
--------------------------------
<S> <C> <C> <C>
Net sales $ 1,263 $ 972 $ 875
Net earnings 186 116 17
--------------------------------
</TABLE>
56
<PAGE>
The company is engaged in the sale of products for export
from the United States. These sales consist principally of
pulp, newsprint, paperboard, containerboard, logs, lumber
and wood chips to Japan; pulp, containerboard, lumber and
plywood to Europe; and logs to China and Korea. The fol-
lowing table compares the company's export sales from the
United States to customers in Japan and elsewhere with its
total net sales and revenues.
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
------------------------------
<S> <C> <C> <C>
Export sales from the United States:
Customers in Japan $ 1,123 $ 952 $ 912
Customers outside Japan 417 493 589
------------------------------
Total export sales 1,540 1,445 1,501
------------------------------
Total net sales and revenues $ 10,398 $ 9,545 $ 9,266
==============================
</TABLE>
NOTE 3:
Other Income (Expense), Net
Other income (expense), net, is an aggregation of both
recurring and occasional non-operating income and expense
items and, as a result, fluctuates from period to period.
No individual income or (expense) item is significant other
than the $70 million gain on the disposal of the company's
investment in the infant diaper business in 1993 and the
real estate and financial services gain of $42 million on
the sale of GNA Corporation in 1993.
NOTE 4:
Income Taxes
Earnings before income taxes and extraordinary item are
comprised of the following:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
------------------------------
<S> <C> <C> <C>
Domestic earnings $ 650 $ 738 $ 537
Foreign earnings 270 70 26
------------------------------
$ 920 $ 808 $ 563
==============================
</TABLE>
57
<PAGE>
Provisions for income taxes include the following:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Federal:
Current $ 84 $ 145 $ 47
Deferred 114 82 105
-----------------------------
198 227 152
-----------------------------
State:
Current 17 16 15
Deferred 7 11 10
-----------------------------
24 27 25
-----------------------------
Foreign:
Current 103 26 4
Deferred 6 1 10
-----------------------------
109 27 14
-----------------------------
Income taxes before extraordinary item 331 281 191
-----------------------------
Income taxes apportionable to extraordinary item:
Current - (4) -
Deferred - 38 -
-----------------------------
- 34 -
-----------------------------
$ 331 $ 315 $ 191
=============================
</TABLE>
The corporate income tax rate was increased from 34
percent to 35 percent, retroactive to January 1, 1993, by
legislation enacted during the third quarter of 1993. This
change in tax law increased income taxes in 1993 by $15
million due to the effect of the higher tax rate on the
accumulated temporary differences at December 27, 1992, and
$5 million due to the effect of adjusting the annual
effective tax rate used in prior quarters.
A reconciliation between the federal statutory tax rate and
the company's effective tax rate before the extraordinary
item follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------
<S> <C> <C> <C>
Statutory tax on income before extraordinary item 35% 35% 34%
State income taxes, net of federal tax benefit 2 3 3
Foreign sales corporations (1) (2) (3)
Partial settlement -- lawsuit - - (2)
Effect of tax rate change - 2 -
All other, net - (3) 2
---------------------
Effective income tax rate 36% 35% 34%
=====================
</TABLE>
58
<PAGE>
The deferred tax (liabilities) assets are comprised of the
following:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Depreciation $ (1,093) $ (998)
Depletion (99) (86)
Capitalized interest and taxes -- real estate development (79) (76)
Other (138) (127)
----------------------------
Total deferred tax (liabilities) (1,409) (1,287)
----------------------------
Pension and retiree health care 121 118
Environmental, obsolescence and restructure reserves 85 80
Alternative minimum tax credit carryforward 64 70
Other 213 210
----------------------------
Total deferred tax assets 483 478
----------------------------
$ (926) $ (809)
============================
</TABLE>
As of December 25,1994, the company has available
approximately $64 million of alternative minimum tax credit
carryover, which does not expire, and foreign tax credit
carryovers of $1 million and $4 million expiring in 1998 and
1999, respectively. In addition, the company has entities
that are not included in the consolidated federal income tax
return which have a net operating loss carryover of $21
million expiring in 2009.
The company intends to reinvest undistributed earnings of
certain foreign subsidiaries; therefore, no U.S. taxes have
been provided. These earnings totaled approximately $461
million at the end of 1994. While it is not practicable to
determine the income tax liability that would result from
repatriation, it is estimated that withholding taxes payable
upon repatriation would approximate $46 million.
NOTE 5:
Extraordinary Item
In 1993 the company realized a net gain of $52 million ($86
million less related tax effect of $34 million) as a result
of extinguishing certain debt obligations.
NOTE 6:
Pension Plans
Net annual pension cost includes the following components:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 43 $ 39 $ 34
Interest cost on projected benefit obligation 96 93 86
Actual return on plan assets (9) (280) (123)
Net amortization and deferrals (121) 165 17
Pension expense due to sales, closures and other - (1) -
-----------------------------
$ 9 $ 16 $ 14
=============================
</TABLE>
59
<PAGE>
The assumptions used were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------
<S> <C> <C> <C>
Discount rate 8.75% 7.5% 8.5%
Rate of increase in compensation levels 4.5% 4.5% 6.0%
Expected long-term rate of return on plan assets 11.5% 11.5% 11.5%
-----------------------
</TABLE>
The following table sets forth the plans' funded status and
amounts recognized in the company's consolidated balance
sheet for its U.S. and Canadian pension plans:
<TABLE>
<CAPTION>
December 25, 1994 December 26, 1993
------------------------------------------------------------------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Dollar amounts in millions Benefits Assets Total Benefits Assets Total
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Accumulated benefit obligation:
Vested $ 1,044 $ 15 $ 1,059 $ 1,122 $ 21 $ 1,143
Non-vested 23 - 23 25 - 25
---------------------------------------------------------------------------
$ 1,067 $ 15 $ 1,082 $ 1,147 $ 21 $ 1,168
===========================================================================
Projected benefit obligation $ 1,172 $ 15 $ 1,187 $ 1,270 $ 22 $ 1,292
Fair value of plan assets (1,238) (12) (1,250) (1,292) (18) (1,310)
Unrecognized prior service cost (49) (3) (52) (39) (3) (42)
Unrecognized net gain 168 2 170 105 3 108
Unrecognized net transition asset 37 (1) 36 42 (2) 40
---------------------------------------------------------------------------
Accrued pension cost $ 90 $ 1 $ 91 $ 86 $ 2 $ 88
===========================================================================
</TABLE>
The assets of the U.S. and Canadian pension plans, as of
December 25, 1994, and December 26, 1993, consist of a
highly diversified mix of equity, fixed income and real
estate securities.
Approximately 1,550 employees are covered by union-
administered multi-employer pension plans to which the
company makes negotiated contributions based generally on
fixed amounts per hour per employee. Contributions to these
plans were $7 million in 1994, $6 million in 1993 and $5
million in 1992.
NOTE 7:
Postretirement Benefits Other Than Pensions
The company sponsors defined benefit post-
retirement plans for its U.S. employees that provide medical
and life insurance coverage as follows:
- Two salaried retiree medical plans that cover
substantially all salaried employees who retire under the
company's retirement plan and their spouses. Plan I covers
those retired or eligible to retire as of January 1, 1990,
and provides full health coverage. Plan II includes those
salaried employees not eligible for Plan I, under which the
company provides a fixed dollar amount per year of service
toward the premium, with the retiree paying the remainder.
The company reserves the right to revise the fixed dollar
amount.
- An hourly retiree medical plan that covers approximately
3,750 active hourly employees and their spouses. For some,
the coverage stops at age 65, while others have lifetime
coverage. In some units the retiree must pay a portion of
the premium, while in others the company pays the full cost.
There are approximately 1,500 retired hourly employees and
their spouses currently covered under these programs.
- A salaried retiree life insurance plan that starts at 80
percent of salary at retirement and reduces to six thousand
dollars in 20 percent increments. Approximately 5,200
persons who are retired or were eligible to retire as of
December 31, 1991, are subject to a different schedule.
60
<PAGE>
- An hourly retiree life insurance plan in which
approximately 11,000 active hourly employees are eligible
and approximately 2,000 hourly retirees have coverage. Most
of these are covered by fixed dollar amount coverage that is
graded down after retirement. Some units have pay-related
insurance on which the company pays the full cost.
The company sponsors three defined benefit and two defined
contribution postretirement plans for its Canadian employees
that provide medical and life insurance. Collectively, 320
retired employees are covered and 510 active employees are
eligible for coverage in these five plans as of year-end
1994.
The following table sets forth the U.S. and Canadian plans
combined accrued postretirement benefit costs as of December
25, 1994, and December 26, 1993:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees:
Health $ 120 $ 128
Life 22 22
Fully eligible and other active plan participants:
Health 77 96
Life 11 11
---------------------------
230 257
Unrecognized actuarial gain/(loss) 13 (31)
---------------------------
Accrued postretirement benefit cost $ 243 $ 226
===========================
</TABLE>
Net annual postretirement benefit costs included the
following components:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
------------------------
<S> <C> <C> <C>
Service cost benefits attributed to service during the period:
Health $ 4 $ 3 $ 3
Life 1 1 1
Interest cost on accumulated postretirement benefit obligation:
Health 16 16 18
Life 2 3 2
Amortization of loss -- health - - 1
------------------------
Net postretirement benefit cost $ 23 $ 23 $ 25
========================
</TABLE>
For measurement purposes, an 11.5, 11.0 and 10.5 percent
annual rate of increase in the per
capita cost of covered health care benefits was assumed for
1992, 1993 and 1994, respectively; the rate is assumed to
decrease by 0.5 percent annually to a level of 6.0 percent
for the year 2003 and all years thereafter. The effect of a
one percent increase in the assumed health care cost trend
rates would increase the accumulated postretirement
benefit obligation as of December 25, 1994, by 11.3 percent,
and the aggregate of the service and interest cost
components of net annual post-
retirement benefit cost for 1994 by 13.2 percent.
61
<PAGE>
Other assumptions used were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------
<S> <C> <C> <C>
Discount rate 8.5% 7.5% 8.5%
Rate of increase in compensation levels:
Salaried 4.5% 4.5% 6.0%
Hourly 3.0% 3.0% 3.0%
----------------------
</TABLE>
NOTE 8:
Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
--------------------------------------
<S> <C> <C>
Logs and chips $ 108 $ 103
Lumber, plywood and panels 115 92
Pulp, newsprint and paper 88 124
Containerboard, paperboard and containers 56 71
Other products 112 122
Materials and supplies 267 250
---------------------------
$ 746 $ 762
===========================
</TABLE>
NOTE 9:
Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Property and equipment, at cost:
Land $ 159 $ 158
Buildings and improvements 1,509 1,417
Machinery and equipment 8,557 7,839
Rail and truck roads and other 628 620
----------------------------
10,853 10,034
Less allowance for depreciation and amortization 4,657 4,428
----------------------------
$ 6,196 $ 5,606
============================
</TABLE>
62
<PAGE>
NOTE 10:
Mortgage and Construction Notes and Mortgage Loans
Receivable
Mortgage and construction notes and mortgage loans
receivable are summarized as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Mortgage notes held for sale $ 209 $ 521
Construction mortgage notes 14 44
Mortgage loans receivable 257 286
---------------------------
480 851
Less allowance for loan losses 8 4
---------------------------
Carrying value $ 472 $ 847
===========================
Fair value $ 417 $ 819
===========================
</TABLE>
The fair value of mortgage notes held for sale is
estimated using the quoted market prices for securi-
ties backed by similar loans adjusted for differences in
loan characteristics. The estimated fair value is net of
related hedge instruments, which were estimated based upon
quoted market prices for securities.
The fair value of construction mortgage notes and mortgage
loans receivable is based on the discounted value of
estimated future cash flows using current rates for loans
with similar terms and risks.
NOTE 11:
Investments
Investments are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Mortgage loans $ 230 $ 42
Other 17 18
---------------------------
Carrying value $ 247 $ 60
===========================
Fair value $ 238 $ 56
===========================
</TABLE>
Fair value is estimated using quoted market
prices for similar securities. The fair value of mort-
gage loans held as investments is based on the discounted
value of estimated future cash flows using current rates.
63
<PAGE>
The company, through its financial services busi-
ness, has investments in debt and equity securities that
management intends to hold to maturity.
These consist primarily of mortgage-backed securi-
ties that were issued in prior years as collateral against
the company's collateralized mortgage obligation bonds (Note
12). In accordance with SFAS No. 119, these securities are
included in the balance sheet at amortized cost with gains
and losses being recorded as realized.
NOTE 12:
Mortgage-Backed Certificates and Other Pledged Financial
Instruments, and Collateralized Mortgage Obligation Bonds
Mortgage-backed certificates and other financial instruments
pledged as collateral for the collateralized mortgage
obligation bonds are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Mortgage-backed certificates, net of unamortized discount or premium $ 192 $ 287
Other 19 63
---------------------------
Carrying value $ 211 $ 350
===========================
Fair value $ 208 $ 366
===========================
</TABLE>
These assets are held by banks as trustees. Principal and
interest collections on the certificates are used to meet
the interest payments and reduce the outstanding principal
balance of the bonds.
The fair value of mortgage-backed certificates
is estimated using the quoted market prices for securities
backed by similar loans; restricted deposits are held at
cost, which is a reasonable estimate of fair value.
Collateralized mortgage obligation bonds are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
CMO bonds with maturities ranging from 2006 to 2019, weighted average
interest rates are approximately 9.1% $ 191 $ 318
Unamortized discount (8) (11)
---------------------------
Carrying value $ 183 $ 307
===========================
Fair value $ 189 $ 331
===========================
</TABLE>
64
<PAGE>
Bond principal payments during the next five years are
(millions):
<TABLE>
<C> <C>
1995 $ 22
1996 20
1997 17
1998 15
1999 13
</TABLE>
The above maturities are calculated based on anticipated
prepayments on the certificates. The bonds are the
obligation of the issuer, and neither the company nor any
affiliated company has guar-
anteed or is otherwise obligated with respect to the bonds.
The fair value of collateralized mortgage obligation bonds
is estimated using analysis of projected cash flows
discounted at market yields.
NOTE 13:
Real Estate in Process of Development
Real estate in process of development includes the
following:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Dwelling units $ 220 $ 259
Residential lots 253 256
Commercial lots 131 144
Commercial projects 12 17
Acreage listed for sale 83 89
Other inventories 1 3
---------------------------
700 768
Less reserves 32 30
---------------------------
$ 668 $ 738
===========================
</TABLE>
65
<PAGE>
NOTE 14:
Accrued Liabilities
Accrued liabilities are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Payroll -- wages and salaries, incentive awards,
retirement and vacation pay $ 217 $ 239
Taxes -- Social Security and real and personal property 63 59
Interest 67 67
Accrued income taxes 105 12
Other 243 188
--------------------------
$ 695 $ 565
==========================
</TABLE>
NOTE 15:
Short-Term Debt
Borrowings
Real estate and financial services short-term borrowings
were $416 million with a weighted average interest rate of 6
percent at December 25, 1994, and $289 million with a
weighted average interest rate of 1 percent at December 26,
1993.
Lines of Credit
The company has short-term bank credit lines that provide
for borrowings of up to the total amount
of $725 million, all of which can be availed of by
the company, WRECO and WMC at December 25, 1994, and $200
million, all of which could be
availed of by the company and WRECO, and $150 million, which
could be availed of by WMC
at December 26, 1993. No portion of these lines has been
availed of by the company, WRECO or WMC at December 25,
1994, and December 26, 1993. None of the entities referred
to herein is a guarantor of the borrowings of the others.
WMC has short-term special credit lines that provide for
borrowings of up to $235 million
and $265 million at December 25, 1994, and December 26,
1993, respectively. Borrowings
against these lines were $85 million and $254 million as of
December 25, 1994, and December 26, 1993, respectively.
66
<PAGE>
NOTE 16:
Long-Term Debt
Debt
Weyerhaeuser long-term debt obligations, including the
current portion, are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
--------------------------------------
<S> <C> <C>
8 3/8% debentures due 2007 $ 150 $ 150
7.50% debentures due 2013 250 250
7.25% debentures due 2013 250 250
7 1/8% debentures due 2023 250 250
9 3/8% notes due 1998 150 150
9 1/4% notes due 1995 200 200
9.05% notes due 2003 200 200
9.36% notes due 1995 100 100
7.28% note due 1996 40 40
Industrial revenue bonds, rates from 5.44%
(variable) to 10.0% (fixed), due 1995-2028 571 467
Medium-term notes, rates from 6.43% to
8.98%, due 1996-2005 428 428
Commercial paper/credit agreements 411 378
Other 34 149
----------------------------
Carrying value $ 3,034 $ 3,012
============================
Fair value $ 3,015 $ 3,267
============================
Portion due within one year $ 321 $ 14
============================
</TABLE>
Long-term debt maturities during the next five years are
(millions):
<TABLE>
<C> <C>
1995 $ 321
1996 123
1997 71
1998 196
1999 493
</TABLE>
Real estate and financial services long-term debt, including
the current portion, is as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions December 25, 1994 December 26, 1993
-------------------------------------
<S> <C> <C>
Notes payable, unsecured; weighted average interest rates
are approximately 7.4% $ 835 $ 957
Bank and other borrowings, unsecured; weighted average
interest rates are approximately 5.5% and 3.3% 460 360
Notes payable, secured; weighted average interest rates
are approximately 9.4% and 9.6% 46 63
Commercial paper/credit agreements 429 617
---------------------------
Carrying value $ 1,770 $ 1,997
===========================
Fair value $ 1,722 $ 2,043
===========================
Portion due within one year $ 58 $ 152
============================
</TABLE>
67
<PAGE>
Long-term debt maturities during the next five years are
(millions):
<TABLE>
<C> <C>
1995 $58
1996 160
1997 525
1998 136
1999 534
</TABLE>
The fair value of the company's long-term debt is
estimated based on quoted market prices for the same issues
or on the discounted value of the future cash flows expected
to be paid using incremental rates of borrowing for similar
liabilities.
Lines of Credit
At December 25, 1994, the company's lines of
credit include a five-year competitive advance and revolving
credit facility agreement entered into in July 1994 with a
group of banks that provides for borrowings of up to the
total amount of $1.55 billion, all of which can be availed
of by the company, and $1 billion, which can be availed of
by WMC. Borrowings are at LIBOR or other such interest
rates as mutually agreed to between the borrower and lending
banks. This credit facility agreement replaces a similar
agreement for $1.65 billion entered into 1990, which was in
place at December 26, 1993.
At December 25, 1994, and December 26, 1993, WMC had $35
million outstanding against a one-year evergreen credit
commitment entered into in 1990.
WMC has a revolving credit agreement with a bank to
provide for: (1) borrowings of up to $35 mil-
lion for two years at prime rate, LIBOR or such other rate
as may be agreed upon by WMC and the banks, (2) a commitment
fee based on the unused credit, and (3) conversion of the
notes as of July 1, 1997, to a five-year term loan payable
in equal
quarterly installments. At December 25, 1994, and
December 26, 1993, $20 million and $30 million,
respectively, were outstanding under the revolving credit
agreement.
During 1992 WFS entered into a three-year
term loan facility that was amended in May 1994 and provides
for: (1) borrowings of up to $405 mil-
lion at December 25, 1994, and $295 million at December 26,
1993, at LIBOR or other such rates as may be agreed upon by
WFS and the banks, and (2) a commitment fee on the unused
portion of the credit. $405 million and $295 million were
outstanding under this facility at December 25, 1994, and
December 26, 1993, respectively.
To the extent that these credit commitments expire more
than one year after the balance sheet date and are unused,
an equal amount of com-
mercial paper is classifiable as long-term debt. Amounts so
classified are shown in the tables in this note.
No portion of these lines has been availed of
by the company, WRECO, WMC or WFS at December 25, 1994, or
December 26, 1993, except as noted.
In 1993 WFS completed the sale of GNA Corporation. As a
part of this transaction, the com-
pany assumed $225 million of outstanding GNA debt.
Total interest costs incurred by WRECO
during each of the three years ended December 25, 1994, have
been capitalized and will be accounted for as an element of
operating costs.
The company's compensating balance agreements were not
significant.
68
<PAGE>
NOTE 17:
Fair Value of Financial Instruments
The carrying and fair values of significant financial
instruments are:
<TABLE>
<CAPTION>
December 25, 1994 December 26, 1993
-------------------------------------------
Carrying Fair Carrying Fair
Dollar amounts in millions Value Value Value Value
-------------------------------------------
<S> <C> <C> <C> <C>
Weyerhaeuser:
Financial liabilities:
Long-term debt (including current maturities) $ 3,034 $ 3,015 $ 3,012 $ 3,267
------------------------------------------
Real estate and financial services:
Financial assets:
Mortgage and construction notes and mortgage
loans receivable 472 417 847 819
Investments 247 238 60 56
Mortgage-backed certificates and other pledged
financial instruments 211 208 350 366
Financial liabilities:
Collateralized mortgage obligation bonds 183 189 307 331
Long-term debt (including current maturities) 1,770 1,722 1,997 2,043
------------------------------------------
</TABLE>
The carrying amounts shown in this table are included in
the consolidated balance sheet under the indicated captions.
The carrying and fair value amounts, along with the methods
and assumptions used to estimate the fair value of each
class of
financial instruments, are included in the notes to
financial statements under the indicated captions.
NOTE 18:
Legal Proceedings, Commitments and Contingencies
Legal Proceedings
On November 2, 1992, an action was filed against the company
in the Circuit Court for the First
Judicial District of Hinds County, Miss., on behalf of a
purported class of riparian property owners
in Mississippi and Alabama whose properties are located on
the Tennessee Tombigbee Waterway, Aliceville Lake, Cedar
Creek and the Magoway Creek. The complaint seeks $1 billion
in compensatory and punitive damages for diminution in
property value, personal injuries and mental anguish
allegedly resulting from the discharge of pur-
ported hazardous substances, including dioxins and furans,
by the company's pulp and paper mill in Columbus, Miss., and
the alleged fraudulent concealments of such discharge. The
complaint also seeks an injunction prohibiting future
releases and the removal of hazardous substances allegedly
released in the past. On August 20, 1993, a companion
action was filed in Green County, Ala., on behalf of a
similar purported class of riparian
owners with essentially the same claims as the Mississippi
case. On January 20, 1995, the court
in the Alabama action certified a class of all persons who,
as of the date of the action commenced, were riparian
owners, lessees and licensees of properties located on the
Tennessee Tombigbee Waterway
in Greene, Sumter, Pickens and Marengo counties, Alabama,
and Lowndes and Noxubee counties, Mississippi, to determine
whether the company is liable to the members of the class
for compensa-
tory and/or punitive damages and to determine the amount of
punitive damages, if any, to be awarded to the class as a
whole. The class is estimated to exceed 400 members and may
range from 1,000 to 1,500 members. Neither the Mississippi
action
nor the Alabama action is presently scheduled for trial.
69
<PAGE>
Environmental
It is the company's policy to accrue for environmental
remediation costs when it is determined that it is probable
that such an obligation exists and the amount of the
obligation can be reasonably estimated. Based on currently
available information and analysis, the company believes
that it is reasonably possible that costs associated with
all identified sites may exceed current accruals by amounts
that may prove insignificant or that could range, in the
aggregate, up to approximately $140 million over several
years. This estimate of the upper end of the range of
reasonably possible additional costs is much less certain
than the estimates upon which accruals are currently based,
and utilizes assumptions less favor-
able to the company among the range of reasonably possible
outcomes. In estimating both its current accruals for
environmental remediation and the pos-
sible range of additional future costs, the company has
assumed that it will not bear the entire cost of remediation
of every site to the exclusion of other known potentially
responsible parties who may be jointly and severally liable.
The ability of other potentially responsible parties to
participate has been taken into account, based generally on
each party's financial condition and probable contribution
on a per-site basis. No amounts have been recorded for
potential recoveries from insurance carriers.
The company is a party to legal proceedings and
environmental matters generally incidental to its business.
Although the final outcome of any legal proceeding or
environmental matter is subject to a great many variables
and cannot be predicted with any degree of certainty, the
company presently believes that the ultimate outcome
resulting from
these proceedings and matters would not have a material
effect on the company's current financial position,
liquidity or results of operations; however, in any given
future reporting period, such proceedings or matters could
have a material effect on results of operations.
Other Items
The company's capital expenditures, excluding acquisitions,
have averaged about $855 million in recent years but are
expected to approximate $1.2 billion in 1995; however, the
1995 expenditure level could be increased or decreased as a
consequence of future economic conditions. The company had
approximately $306 million in capital expenditures committed
on major projects at year-end 1994.
During the normal course of business, the company's real
estate and financial services subsidiaries have entered into
certain financial commitments comprised primarily of
agreements to fund up to $835 million in mortgage loans at
fixed and floating prices, guarantees made on $137 million
of partnership borrowings, and limited recourse obligations
associated with $922 million of sold mortgage loans. The
fair value of the recourse on these loans is estimated to be
$8 million, which is based upon market spreads for sales of
similar loans without recourse or estimates of the credit
risk of the associated recourse obligation.
70
<PAGE>
NOTE 19:
Financial Instruments With Credit or Off-Balance Sheet Risk
Receivables
WRECO's accounts receivable and notes and contracts
receivable by geographic region, less discounts and
allowances, are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993
----------------
<S> <C> <C>
West $ 50 $ 53
South 20 21
East 10 32
---------------
$ 80 $ 106
===============
</TABLE>
WRECO's policy for requiring collateral is that a secured
interest will be established on receivables generated from
the sale of inventory and land and that the collateral will
be subject to foreclosure in the event of the purchaser's
default. Collateral
is not required for short-term, general accounts receivable.
WFS originates and holds loans in a number of states. The
remaining gross principal balance of mortgage notes held for
sale or investment, construction mortgage notes, mortgage
loans receivable and other trust deeds receivable by
geographic region are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993
---------------
<S> <C> <C>
West $ 550 $ 757
South 63 47
East 86 94
Other 23 16
---------------
$ 722 $ 914
===============
</TABLE>
NOTE 20:
Shareholders' Interest
Preferred and Preference Shares
The company is authorized to issue:
- 7,000,000 preferred shares having a par value of $1.00
per share, of which none were issued and outstanding at
December 25, 1994, and December 26, 1993; and
- 40,000,000 preference shares having a par value of $1.00
per share, of which none were
issued and outstanding at December 25, 1994, and
December 26, 1993.
The preferred and preference shares may be issued in one
or more series with varying rights and preferences including
dividend rates, redemption rights, conversion terms, sinking
fund provisions, values in liquidation and voting rights.
When issued, the outstanding preferred and preference shares
rank senior to outstanding common shares as to dividends and
assets available on liquidation.
The company has reserved but not issued 2,000,000 shares
of cumulative preference shares, fourth series, for the
exercise of the rights described under Common Shares.
71
<PAGE>
Common Shares
Common shares reserved for stock option plans were 5,688,000
shares at December 25, 1994, and 5,177,000 shares at
December 26, 1993. As to the company's various stock option
plans, the following information is provided:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------
<S> <C> <C> <C>
At end of year:
Options outstanding 5,687,934 5,177,401 4,999,874
Options exercisable 4,375,234 3,981,751 3,865,624
During the year:
Options granted 1,312,700 1,195,650 1,134,250
Options exercised 623,258 878,755 1,261,212
Options forfeited 178,909 139,368 288,112
Average prices per
share:
Options outstanding $ 36.27 $ 32.32 $ 28.85
Options granted $ 47.53 $ 42.31 $ 36.18
Options exercised $ 28.06 $ 26.72 $ 24.06
----------------------------------
</TABLE>
In December 1986, the company adopted a Shareholder Rights
Plan (the "Plan") and declared a dividend distribution of
0.6667 right on each outstanding common share. Each right
entitles its holder to purchase after the distribution date
and until December 1996 one one-hundredth of a share of the
company's cumulative preference shares, fourth series, at a
price of $70, subject to adjustment. The distribution date
is the earlier of 20 business days after the announcement
that a person or group has acquired 20 percent or more of
Weyerhaeuser's outstanding common shares or 20 business days
after a person or group commences a tender or exchange offer
that could result in the person or group owning 30 percent
or more of the company's outstanding common shares.
Following the distribution date, if anyone owning 20 percent
or more of the company's outstanding common shares merges
with the company, with the company as the survivor, and the
company's common shares are not changed or exchanged, or
engages in certain self-dealing transactions with the
company, or if an event occurs that results in such 20
percent owner's interest being increased by more than one
percent (e.g., a reverse stock split), or if anyone acquires
40 percent or more of the company's outstanding common
shares, each right holder, other than such person or group,
will be able, upon payment of the right's exercise price, to
acquire shares of the company's common stock or other
securities or assets having an aggregate market value equal
to twice the right's purchase price. If, after the company
announces that someone owns 20 percent or more of the
company's outstanding common shares, the company is acquired
in a merger or other business combination, and the company
is not the survivor, or the company engages in a merger or
other business combination transaction in which the company
is the surviving corporation but the company's common shares
are changed or exchanged, or if 50 percent of the company's
earning power or assets is sold in one or several related
transactions, each right holder, other than any 20 percent
shareholder, will receive shares of the acquiring company's
common stock having a market value equal to twice the
right's exercise price. Subject to certain time periods and
conditions, the Plan may be amended and the rights may be
redeemed at a price of $.05 per right, subject to
adjustment.
72
<PAGE>
NOTE 21:
Business Segments
The company is principally engaged in the growing and
harvesting of timber and the manufacture, distribution and
sale of forest products. The four principal business
segments are timberlands and wood products (including
softwood lumber, plywood and veneer; composite panels;
oriented strand board; hardboard; logs; chips; timber;
doors; hardwood lumber and plywood; and treated products);
pulp, paper and packaging (including pulp, newsprint, paper,
containerboard, paperboard and shipping containers,
recycling and chemicals); real estate development and
construction; and financial services.
The timber-based businesses involve a high degree of
integration among timber operations; building materials
conversion facilities; and pulp, newsprint, paper,
containerboard and paperboard primary manufacturing and
secondary conversion facilities, including extensive
transfers of raw materials, semi-finished materials and end
products between and among these groups. Accounting for
segment profitability involves allocations of joint raw
materials and conversion costs and the use of transfer
prices that attempt to approximate current market values.
73
<PAGE>
The following table sets forth an analysis of the company's
operations by the four principal business segments:
<TABLE>
<CAPTION>
Dollar amounts in millions 1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Sales to and revenues from unaffiliated customers:
Timberlands and wood products $ 4,992 $ 4,468 $ 3,417
Pulp, paper and packaging 4,066 3,579 4,109
Real estate 911 829 690
Financial services 206 401 832
Corporate and other 223 269 220
-----------------------------
10,398 9,546 9,268
-----------------------------
Intersegment sales and revenues:
Timberlands and wood products 357 352 340
Pulp, paper and packaging 82 6 29
Corporate and other 31 29 30
-----------------------------
470 387 399
-----------------------------
Total sales and revenues 10,868 9,933 9,667
Eliminations (470) (388) (401)
-----------------------------
$10,398 $ 9,545 $ 9,266
=============================
Approximate contribution to earnings:
Timberlands and wood products $ 1,034 $ 891 $ 515
Pulp, paper and packaging 211 61 251
Real estate 7 18 13
Financial services 11 76 68
Corporate and other (142) (46) (107)
-----------------------------
1,121 1,000 740
Interest expense (315) (292) (262)
Less capitalized interest 114 100 85
-----------------------------
Income before taxes and extraordinary item 920 808 563
Income taxes (331) (281) (191)
Extraordinary item - 52 -
-----------------------------
$ 589 $ 579 $ 372
=============================
Depreciation, amortization and fee stumpage:
Timberlands and wood products $ 189 $ 162 $ 150
Pulp, paper and packaging 302 264 255
Real estate 7 9 7
Financial services 23 34 49
Corporate and other 13 18 42
-----------------------------
$ 534 $ 487 $ 503
=============================
Capital expenditures:
Timberlands and wood products $ 257 $ 241 $ 246
Pulp, paper and packaging 794 652 932
Real estate 10 15 8
Financial services 4 5 3
Corporate and other 37 54 17
-----------------------------
$ 1,102 $ 967 $ 1,206
=============================
Assets:
Timberlands and wood products $ 2,713 $ 2,585 $ 2,377
Pulp, paper and packaging 6,283 5,730 5,612
Real estate 1,716 1,863 1,694
Financial services 1,730 1,892 8,148
Corporate and other 1,288 1,274 1,201
-----------------------------
13,730 13,344 19,032
Eliminations (723) (706) (874)
-----------------------------
$13,007 $12,638 $18,158
=============================
Interest expense of $76 million and $96 million in 1994 and
1993, and $151 million before the elimination of
intercompany interest of $3 million in 1992, is included in
the determination of "approximate contribution to earnings"
for financial services. Certain reclassifications have been
made to conform prior years' data to the current format.
</TABLE>
74
<PAGE>
NOTE 22:
Selected Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>
Dollar amounts in millions except
per-share figures First Quarter Second Quarter Third Quarter Fourth Quarter Year
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales:
1994 $ 2,386 $ 2,598 $ 2,681 $ 2,733 $ 10,398
1993 2,341 2,388 2,225 2,591 9,545
Operating income:
1994 281 282 294 363 1,220
1993 280 292 183 226 981
Earnings before income taxes and
extraordinary item:
1994 204 202 224 290 920
1993 265 272 130 141 808
Net earnings(1):
1994 127 129 144 189 589
1993 229 181 67 102 579
Net earnings per common share(1):
1994 .62 .62 .71 .91 2.86
1993 1.12 .89 .32 .50 2.83
Dividends per common share:
1994 .30 .30 .30 .30 1.20
1993 .30 .30 .30 .30 1.20
Market prices -- high/low:
1994 50 1/4 - 42 1/8 45 - 39 1/2 46 1/8 - 39 7/8 39 1/8 - 35 7/8 50 1/4 - 35 7/8
1993 45 1/2 - 36 1/4 46 1/2 - 38 3/4 44 - 38 1/4 45 5/8 - 36 7/8 46 1/2 - 36 1/4
---------------------------------------------------------------------------------------
(1)First quarter 1993 results reflect an extraordinary net
gain as a result of extinguishing certain debt obligations
of $52 million, or $.25 per common share.
</TABLE>
75
<PAGE>
NOTE 23:
Historical Summary
<TABLE>
<CAPTION>
Dollar amounts in millions except per-share figures 1994 1993 1992 1991 1990
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Per common share:
Net earnings (loss) from continuing operations, before
extraordinary item and effect of accounting changes: $ 2.86 2.58 1.83 (.50) 1.87
Extraordinary item(1) $ - .25 - - -
Effect of accounting changes $ - - - (.30) -
--------------------------------------------
Net earnings (loss) $ 2.86 2.83 1.83 (.80) 1.87
============================================
Dividends paid $ 1.20 1.20 1.20 1.20 1.20
Shareholders' interest (end of year) $ 20.86 19.34 17.85 17.25 19.21
Financial position:
Total assets:
Weyerhaeuser $ 9,599 8,968 8,438 7,551 7,556
Real estate and financial services $ 3,408 3,670 9,720 9,435 8,800
--------------------------------------------
$ 13,007 12,638 18,158 16,986 16,356
============================================
Long-term debt (net of current portion):
Weyerhaeuser:
Long-term debt $ 2,713 2,998 2,659 2,195 2,168
Capital lease obligations $ - - - - 7
Convertible subordinated debentures $ - - 193 193 193
Limited recourse income debenture $ - - 188 204 204
--------------------------------------------
$ 2,713 2,998 3,040 2,592 2,572
============================================
Real estate and financial services:
Collateralized mortgage obligation bonds $ 161 241 440 702 838
Long-term debt $ 1,712 1,845 1,971 1,719 1,799
--------------------------------------------
$ 1,873 2,086 2,411 2,421 2,637
============================================
Redeemable preferred and preference shares (thousands):
Weyerhaeuser $ - - - - -
Real estate and financial services $ - - - - -
Shareholders' interest $ 4,290 3,966 3,646 3,489 3,864
Percent earned on shareholders' interest 14.3% 15.2% 10.4% (4.4)% 9.8%
Operating results:
Net sales and revenues:
Weyerhaeuser $ 9,281 8,315 7,744 7,167 7,447
Real estate and financial services $ 1,117 1,230 1,522 1,606 1,619
--------------------------------------------
$ 10,398 9,545 9,266 8,773 9,066
============================================
Net earnings (loss) from continuing operations before
extraordinary item and effect of accounting changes:
Weyerhaeuser $ 576 459 332 (25) 340
Real estate and financial services $ 13 68 40 (76) 54
Less subsidiaries preferred share dividends $ - - - - -
--------------------------------------------
$ 589 527 372 (101) (2) 394
Extraordinary item(1) $ - 52 - - -
Effect of accounting changes $ - - - (61) -
--------------------------------------------
Net earnings (loss) $ 589 579 372 (162) 394
============================================
Statistics (unaudited):
Number of employees 36,665 36,748 39,022 38,669 40,621
Salaries and wages $ 1,610 1,585 1,580 1,476 1,531
Employee benefits $ 357 347 323 321 318
Total taxes $ 618 577 443 173 446
Timberlands (thousands of acres):
Fee ownership 5,599 5,524 5,604 5,517 5,621
Long-term license arrangements 17,849 17,845 18,828 13,491 13,491
Number of shareholder accounts at year-end:
Common 24,131 25,282 26,334 26,937 28,187
Preferred - - - - -
Preference - - - - -
Average common and common equivalent shares
outstanding (thousands) 205,543 204,866 203,373 201,578 203,673
-------------------------------------------
(1)1993 results reflect an extraordinary net gain as a
result of extinguishing certain debt obligations of $86
million less related tax effect of $34 million, or $52
million.
(2)1991 results reflect restructuring and other charges of
$445 million less related tax effect of $162 million, or
$283 million.
(3)1989 results reflect net special items charges of $401
million less related tax effect of $141 million, or $260
million.
</TABLE>
76
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985 1984
----------------------------------------------------
<C> <C> <C> <C> <C> <C>
1.56 2.68 2.12 1.27 .88 1.01
- - - - - -
- - - - - -
----------------------------------------------------
1.56 2.68 2.12 1.27 .88 1.01
====================================================
1.20 1.15 .90 .87 .87 .87
18.55 18.14 16.54 14.82 14.42 14.50
7,371 6,983 6,418 5,889 5,496 5,641
8,605 8,401 6,499 5,083 3,869 2,504
----------------------------------------------------
15,976 15,384 12,917 10,972 9,365 8,145
====================================================
1,502 1,644 1,540 1,412 1,157 1,066
23 37 51 63 77 94
- - - - - -
204 198 181 172 - -
----------------------------------------------------
1,729 1,879 1,772 1,647 1,234 1,160
====================================================
931 1,046 840 598 292 99
1,075 1,272 1,290 1,101 711 434
----------------------------------------------------
2,006 2,318 2,130 1,699 1,003 533
====================================================
- - - 14,700 14,700 14,700
- - - - 72,000 223,000
4,148 4,044 3,714 3,251 3,324 3,188
8.3% 14.6% 12.8% 8.4% 6.1% 7.1%
8,355 7,861 6,988 5,650 5,206 5,550
1,826 1,467 1,397 1,241 1,070 892
-----------------------------------------------------
10,181 9,328 8,385 6,891 6,276 6,442
=====================================================
377 516 379 180 132 175
(36) 50 68 97 81 74
- - - - 13 23
-----------------------------------------------------
341 (3) 566 447 277 200 226
- - - - - -
- - - - - -
-----------------------------------------------------
341 566 447 277 200 226
=====================================================
45,214 46,976 45,123 41,757 38,922 40,919
1,563 1,423 1,277 1,143 1,134 1,167
325 292 250 225 259 274
403 511 467 310 266 269
5,693 5,833 5,871 5,962 5,979 5,915
13,324 13,324 12,064 12,064 3,590 3,595
29,847 30,379 32,535 31,682 37,135 40,361
12 25 26 1,825 2,192 2,317
443 351 106 7 2,242 2,213
204,331 207,785 202,544 195,456 194,828 196,518
----------------------------------------------------
</TABLE>
77
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-25-1994
<PERIOD-END> DEC-25-1994
<CASH> 112
<SECURITIES> 0
<RECEIVABLES> 1,039<F1>
<ALLOWANCES> 14
<INVENTORY> 746
<CURRENT-ASSETS> 1,978
<PP&E> 10,853<F1>
<DEPRECIATION> 4,657
<TOTAL-ASSETS> 13,007
<CURRENT-LIABILITIES> 1,667
<BONDS> 4,666
<COMMON> 258
0
0
<OTHER-SE> 4,032
<TOTAL-LIABILITY-AND-EQUITY> 13,007
<SALES> 10,398
<TOTAL-REVENUES> 10,398
<CGS> 7,670
<TOTAL-COSTS> 7,670
<OTHER-EXPENSES> 694
<LOSS-PROVISION> 6
<INTEREST-EXPENSE> 277
<INCOME-PRETAX> 920
<INCOME-TAX> 331
<INCOME-CONTINUING> 589
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 589
<EPS-PRIMARY> 2.86
<EPS-DILUTED> 2.86
<FN>
<F1>Receivables and PP&E are stated at gross.
</FN>
</TABLE>
