SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the thirty-nine weeks ended September 24, 1995 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) Chicago Stock Exchange
New York Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
Rights to Purchase Cumulative Preference New York Stock Exchange
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 ___.
The number of shares outstanding of the registrant's class of common
stock, as of October 27, 1995 was 201,710,008 common shares ($1.25 par
value).
<PAGE>
Weyerhaeuser Company
- -2-
This page intentionally left blank.
<PAGE>
Weyerhaeuser Company
- -3-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
Index to Form 10-Q Filing
For the Thirty-nine Weeks Ended September 24, 1995
Page No.
--------------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Earnings 4-5
Consolidated Balance Sheet 6-7
Consolidated Statement of Cash Flows 8-9
Notes to Financial Statements 10-16
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 17-20
Part II. Other Information
Item 1. Legal Proceedings 21-22
Item 2. Changes in Securities (not applicable)
Item 3. Defaults upon Senior Securities (not applicable)
Item 4. Submission of Matters to a Vote of Security Holders (not applicable)
Item 5. Other Information (not applicable)
Item 6. Exhibits and Reports on Form 8-K 22
</TABLE>
The financial information included in this report has been prepared in
conformity with accounting practices and methods reflected in the
financial statements included in the annual report (Form 10-K) filed
with the Securities and Exchange Commission for the year ended
December 25, 1994. Though not examined by independent public
accountants, the financial information reflects, in the opinion of
management, all adjustments necessary to present a fair statement of
results for the interim periods indicated. The results of operations
for the thirty-nine week period ending September 24, 1995 should not
be regarded as necessarily indicative of the results that may be
expected for the full year.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereto duly authorized.
WEYERHAEUSER COMPANY
By /s/ K. J. Stancato
----------------------------
K. J. Stancato
Duly Authorized Officer and
Principal Accounting Officer
November 3, 1995
<PAGE>
Weyerhaeuser Company
- -4-
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
CONSOLIDATED EARNINGS
For the thirteen and thirty-nine week periods ended
September 24, 1995 and September 25, 1994
(Dollar amounts in millions except per share figures)
(Unaudited)
Thirteen weeks ended: Sept. 24, Sept. 25,
1995 1994
--------- ---------
[S] [C] [C]
Net sales and revenues:
Weyerhaeuser $ 2,895 $ 2,388
Real estate and financial services 217 293
--------- ---------
3,112 2,681
--------- ---------
Costs and expenses:
Weyerhaeuser:
Costs of products sold 2,010 1,784
Depreciation, amortization and fee stumpage 127 121
Selling, general and administrative expenses 194 159
Research and development expenses 12 11
Taxes other than payroll and income taxes 29 38
--------- ---------
2,372 2,113
--------- ---------
Real estate and financial services:
Costs and operating expenses 160 230
Depreciation and amortization 8 7
Selling, general and administrative expenses 36 35
Taxes other than payroll and income taxes 2 2
Charges for impairment of long-lived assets (Note 1) 291 --
--------- --------
497 274
--------- --------
2,869 2,387
--------- --------
Operating income 243 294
Interest expense and other:
Weyerhaeuser:
Interest expense incurred 71 60
Less interest capitalized 4 8
Other income (expense), net (14) (3)
Real estate and financial services:
Interest expense incurred 38 37
Less interest capitalized 20 19
Other income, net 5 3
--------- --------
Earnings before income taxes 149 224
Income Taxes (Note 2) 54 80
--------- --------
Net earnings $ 95 $ 144
========= ========
Per common share (Note 1):
Net earnings $ .47 $ .71
========= ========
Dividends paid $ .40 $ .30
========= ========
See Accompanying Notes to Financial Statements
<PAGE>
Weyerhaeuser Company
- -5-
<TABLE>
<CAPTION>
Thirty-nine weeks ended: Sept. 24, Sept. 25,
1995 1994
--------- ---------
<S> <C> <C>
Net sales and revenues:
Weyerhaeuser $ 8,306 $ 6,826
Real estate and financial services 625 839
--------- ---------
8,931 7,665
--------- ---------
Costs and expenses:
Weyerhaeuser:
Costs of products sold 5,836 5,063
Depreciation, amortization and fee stumpage 395 366
Selling, general and administrative expenses 535 451
Research and development expenses 35 34
Taxes other than payroll and income taxes 113 114
--------- ---------
6,914 6,028
--------- ---------
Real estate and financial services:
Costs and operating expenses 461 634
Depreciation and amortization 26 22
Selling, general and administrative expenses 99 118
Taxes other than payroll and income taxes 6 6
Charges for impairment of long-lived assets (Note 1) 291 --
--------- ---------
883 780
--------- ---------
7,797 6,808
--------- ---------
Operating income 1,134 857
Interest expense and other:
Weyerhaeuser:
Interest expense incurred 201 176
Less interest capitalized 16 26
Other income (expense), net (55) (33)
Real estate and financial services:
Interest expense incurred 107 115
Less interest capitalized 57 59
Other income, net 19 12
--------- ---------
Earnings before income taxes 863 630
Income taxes (Note 2) 315 230
--------- ---------
Net earnings $ 548 $ 400
========= =========
Per common share (Note 1):
Net earnings $ 2.68 $ 1.95
========= =========
Dividends paid $ 1.10 $ .90
========= =========
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
Weyerhaeuser Company
- -6-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
CONSOLIDATED BALANCE SHEET
September 24, 1995 and December 25, 1994
(Dollar amounts in millions)
Sept. 24, Dec. 25,
1995 1994
---------- ---------
(Unaudited)
<S> <C> <C>
Assets
- ------
Weyerhaeuser
Current assets:
Cash and short-term investments, including
restricted deposits in 1995 $ 182 $ 190
Receivables, less allowances 1,077 909
Inventories (Note 3) 874 746
Prepaid expenses 291 284
-------- ---------
Total current assets 2,424 2,129
Property and equipment (Note 4) 6,229 6,196
Construction in progress 759 603
Timber and timberlands at cost, less fee
stumpage charged to disposals 623 610
Other assets and deferred charges 207 212
-------- ---------
Total assets 10,242 9,750
-------- ---------
Real estate and financial services
Cash and short-term investments,
including restricted deposits 45 73
Receivables, less discounts and allowances 100 116
Mortgage and construction notes and
mortgage loans receivable 612 472
Investments 75 247
Mortgage-backed certificates and
other pledged financial instruments 192 211
Real estate in process of development,
less reserves 611 668
Land being processed for development,
less reserves 688 738
Deferred acquisition costs 89 92
Investments in and advances to joint ventures
and limited partnerships, less reserves 234 430
Other assets 450 361
-------- ---------
Total assets 3,096 3,408
-------- ---------
$13,338 $13,158
======== ========
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
Weyerhaeuser Company
- -7-
<TABLE>
<CAPTION>
Sept. 24, Dec. 25,
1995 1994
---------- ---------
(Unaudited)
<S> <C> <C>
Liabilities and shareholders' interest
Weyerhaeuser
Current liabilities:
Notes payable $ 7 $ 6
Current maturities of long-term debt 432 321
Accounts payable (Note 1) 756 796
Accrued liabilities (Note 5) 654 695
---------- ---------
Total current liabilities 1,849 1,818
Long-term debt (Note 7) 2,681 2,713
Deferred income taxes 1,173 986
Deferred pension and other liabilities 508 525
Minority interest in subsidiaries 106 103
Commitments and contingencies (Note 9) -- --
---------- ---------
Total liabilities 6,317 6,145
---------- ---------
Real estate and financial services
Notes payable and commercial paper 702 416
Collateralized mortgage obligation bonds 166 183
Long-term debt (Note 7) 1,395 1,770
Other liabilities 292 354
Commitments and contingencies (Note 9) -- --
---------- ---------
Total liabilities 2,555 2,723
---------- ---------
Shareholders' interest (Note 8)
Common shares: authorized 400,000,000 shares,
issued 206,072,890 shares, $1.25 par value 258 258
Other capital 413 416
Cumulative translation adjustment (83) (107)
Retained earnings 4,056 3,733
Treasury common shares, at cost:
4,066,962 and 455,387 (178) (10)
---------- ---------
Total shareholders' interest 4,466 4,290
---------- ---------
$13,338 $13,158
========== ========
</TABLE>
<PAGE>
Weyerhaeuser Company
- -8-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
CONSOLIDATED STATEMENT OF CASH FLOWS
For the thirty-nine week periods ended September 24, 1995 and
September 25, 1994
(Dollar amounts in millions)
(Unaudited)
Consolidated
--------------------
Sept. 24, Sept. 25,
1995 1994
--------- ----------
<S> <C> <C>
Cash flows provided by operations:
Net earnings $ 548 $ 400
Non-cash charges to income:
Depreciation, amortization and fee stumpage 421 388
Deferred income taxes, net 90 78
Changes in working capital:
Receivables (150) (108)
Inventories, prepaid expenses, real estate and land (170) (2)
Mortgages held for sale (145) 194
Other liabilities (80) 123
(Gain) loss on disposition of assets 17 3
Charges for impairment of long-lived assets 291 --
Other 24 (61)
--------- --------
Net cash provided by operations 846 1,015
--------- --------
Cash flows from investing in the business:
Property and equipment (588) (783)
Timber and timberlands (49) (19)
Mortgage and investment securities acquired (20) (32)
Proceeds from sale of:
Property and equipment 15 35
Business -- 14
Mortgage and investment securities 197 131
Other (4) (1)
--------- --------
Net cash flows from investing in the business (449) (655)
--------- --------
Cash flows from financing activities:
Sale of debentures, notes and CMO bonds 611 133
Sale of industrial revenue bonds 100 127
Notes and commercial paper borrowings, net (210) (188)
Cash dividends on common shares (225) (185)
Payments on debentures, notes, bank credit
agreements, capital leases, industrial
revenue bonds and CMO bonds (535) (343)
Purchase of treasury common shares (188) --
Exercise of stock options 17 15
Other (3) (1)
--------- --------
Net cash flows from financing activities (433) (442)
--------- --------
Net increase (decrease) in cash and short-term investments (36) (82)
Cash and short-term investments at beginning of year 263 279
--------- --------
Cash and short-term investments at end of period $ 227 $ 197
========= ========
Cash paid (received) during the period for:
Interest, net of amount capitalized $ 252 $ 232
========= ========
Income taxes $ 171 $ 132
========= ========
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
Weyerhaeuser Company
- -9-
<TABLE>
<CAPTION>
Real Estate and
Weyerhaeuser Financial Services
-------------------- --------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
1995 1994 1995 1994
--------- --------- --------- ---------
<C> <C> <C> <C>
$ 740 $ 389 $(192) $ 11
395 366 26 22
187 74 (97) 4
(167) (118) 17 10
(134) (6) (36) 4
-- -- (145) 194
(95) 195 15 (72)
17 7 -- (4)
-- -- 291 --
21 (28) 3 (33)
-------- -------- ------- --------
964 879 (118) 136
-------- -------- ------- --------
(577) (771) (11) (12)
(49) (19) -- --
-- -- (20) (32)
15 12 -- 23
-- -- -- 14
-- -- 197 131
(41) (7) 37 6
-------- -------- ------- --------
(652) (785) 203 130
-------- -------- ------- --------
566 17 45 116
100 127 -- --
(411) (66) 201 (122)
(225) (185) -- --
(176) (41) (359) (302)
(188) -- -- --
17 15 -- --
(3) (1) -- --
-------- -------- -------- --------
(320) (134) (113) (308)
-------- -------- -------- --------
(8) (40) (28) (42)
190 192 73 87
-------- -------- -------- --------
$ 182 $ 152 $ 45 $ 45
======== ======== ======== ========
$ 204 $ 175 $ 48 $ 57
======== ======== ======== ========
$ 186 $ 63 $ (15) $ 69
======== ======== ======== ========
</TABLE>
<PAGE>
Weyerhaeuser Company
- -10-
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
NOTES TO FINANCIAL STATEMENTS
For the thirty-nine week periods ended September 24, 1995 and
September 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 statements and notes to
financial statements are presented 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).
Changes in Accounting Principles
In 1994, the company implemented Statement of Financial Accounting
Standards (SFAS) No. 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual accounting be used for the cost of
benefits provided to former or inactive employees who have not yet
retired. The adoption of this pronouncement, which required a
cumulative catch-up charge to earnings, did not have a significant
impact on the company's results of operations or its financial
position.
In 1995, the company implemented 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, and 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. The
adoption of these pronouncements did not have a significant impact on
results of operations or financial position.
In 1994, the company implemented 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.
The adoption of this pronouncement did not have a significant impact
on the company's results of operations or its financial position.
In the 1995 third quarter, the company implemented SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which was issued by the Financial
Accounting Standards Board (FASB) in March 1995. The effect of the
implementation of this pronouncement, which caused the revaluation of
certain real estate assets, along with the company's decision to
accelerate the disposition of some of those real estate assets, was a
charge of $291 million to operations in the quarter. This revaluation
did not have a material impact on the company's current financial
position or liquidity.
<PAGE>
Weyerhaeuser Company
- -11-
Prospective Accounting Changes
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights--an Amendment of FASB Statement No. 65," which
modifies the treatment of the capitalization of servicing rights by
mortgage banking enterprises. The change constitutes a simplification
in procedures, eliminating the separate treatment of servicing rights
acquired through loan origination and those acquired through
purchasing transactions, as previously required under SFAS No. 65.
This pronouncement shall be applied prospectively in fiscal years
beginning after December 15, 1995. The company believes the future
adoption of this pronouncement by its mortgage banking subsidiary will
not have a significant impact on results of operations or financial
position.
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) outstanding have not been
included, as the computation would not be dilutive. Weighted average
common shares outstanding were 204,508,087 and 205,521,610 at
September 24, 1995 and September 25, 1994, respectively.
Fully diluted earnings-per-share amounts are not applicable because
the effect of the conversion of the stock options is not dilutive.
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 operations 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.
<PAGE>
Weyerhaeuser Company
- -12-
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 methods at rates based on estimated service lives.
Amortization of logging rail 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
gain or loss is recorded.
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.
Accounts Payable
The company's banking system provides for the daily replenishment of
major bank accounts as checks are presented. Accordingly, there were
negative book cash balances of $128 million and $151 million at
September 24, 1995 and December 25, 1994, respectively. Such balances
result from outstanding checks that had not yet been paid by the bank
and are reflected in accounts payable in the consolidated balance
sheets.
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 ten 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 periods'
data to the current format.
<PAGE>
Weyerhaeuser Company
- -13-
WRECO
WRECO recognizes income from the sales of single family housing units
when construction has been completed, required down payments 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 fair value. The
determination of fair value is based on market pricing of comparable
assets when available, or the present value of expected future cash
flows from these assets. Changes in future market conditions,
interest rates and company plans may affect estimates of fair value.
Land, land development and construction costs, including capitalized
carrying costs, are accumulated and allocated to individual units in
proportion to relative sales value.
WFS
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 increases in
interest rates. Hedge positions are also used to protect the
pipeline of loan applications in process from increases 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.
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 life.
<PAGE>
Weyerhaeuser Company
- -14-
Note 2: Income Taxes
<TABLE>
<CAPTION>
Provisions for income taxes include the following: Thirty-nine Weeks
Ended
--------------------
Sept. 24, Sept. 25,
Dollar amounts in millions 1995 1994
--------- ---------
<S> <C> <C>
Federal:
Current $ 114 $ 81
Deferred 74 61
-------- --------
188 142
-------- --------
State:
Current 21 17
Deferred 6 4
-------- --------
27 21
-------- --------
Foreign:
Current 90 54
Deferred 10 13
-------- --------
100 67
-------- --------
Total $ 315 $ 230
======== ========
</TABLE>
Income tax provisions for interim periods are based on the current
best estimate of the effective tax rate expected to be applicable for
the full year. The effective tax rate reflects anticipated tax
credits, foreign taxes and other tax planning alternatives.
For the periods ended September 24, 1995 and September 25, 1994, the
company's provision for income taxes as a percent of earnings before
income taxes is greater than the 35% federal statutory rate due
principally to the effect of state income taxes. The effective tax
rate for the thirty-nine week periods ended September 24, 1995 and
September 25, 1994 was 36.5%.
Deferred taxes are provided for the temporary differences between the
financial and tax bases of assets and liabilities, applying presently
enacted tax rates and laws. The major sources of these temporary
differences include depreciable and depletable assets, real estate,
and pension and retiree health care liabilities.
<TABLE>
Note 3: Inventories
<CAPTION>
Sept. 24, Dec. 25,
Dollar amounts in millions 1995 1994
--------- ---------
<S> <C> <C>
Logs and chips $ 137 $ 108
Lumber, plywood and panels 113 115
Pulp, newsprint and paper 116 88
Containerboard, paperboard and containers 101 56
Other products 135 112
Materials and supplies 272 267
--------- ---------
$ 874 $ 746
========= =========
</TABLE>
<PAGE>
Weyerhaeuser Company
- -15-
<TABLE>
Note 4: Property and Equipment
<CAPTION>
Sept. 24, Dec. 25,
Dollar amounts in millions 1995 1994
--------- --------
<S> <C> <C>
Property and equipment, at cost:
Land $ 164 $ 159
Buildings and improvements 1,535 1,509
Machinery and equipment 8,774 8,557
Rail and truck roads and other 618 628
--------- --------
11,091 10,853
Less allowance for depreciation
and amortization 4,862 4,657
--------- --------
$ 6,229 $ 6,196
========= ========
</TABLE>
<TABLE>
Note 5: Accrued Liabilities
<CAPTION>
Sept. 24, Dec. 25,
Dollar amounts in millions 1995 1994
--------- --------
<S> <C> <C>
Payroll - wages and salaries, incentive awards,
retirement and vacation pay $ 235 $ 217
Taxes - social security and real
and personal property 62 63
Interest 48 67
Income taxes 85 105
Other 224 243
--------- --------
$ 654 $ 695
========= ========
</TABLE>
Note 6: Short-Term Debt
The company has short-term bank credit lines that provide for
borrowings of up to the total amount of $725 million, all of which
could be availed by the company, WRECO and WMC at September 24, 1995
and December 25, 1994.
No portion of these lines has been availed of by the company, WRECO or
WMC at September 24, 1995 or December 25, 1994. 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 $245 million at September 24, 1995 and $235 million at
December 25, 1994. Borrowings against these lines were $136 million
and $85 million as of September 24, 1995 and December 25, 1994,
respectively.
<PAGE>
Weyerhaeuser Company
- -16-
Note 7: Long-Term Debt
At September 24, 1995 and 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 by WMC. Borrowings are at LIBOR or
other such interest rates as mutually agreed to between the borrower
and lending banks.
No portion of this line has been availed of by the company or WMC at
September 24, 1995 or December 25, 1994.
At September 24, 1995 and December 25, 1994, WMC had $15 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 million 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 September 24, 1995 and December 25, 1994,
$10 million and $20 million, respectively, were outstanding under this
agreement.
During 1994, WFS amended a three-year term loan facility that was
entered into in 1992 which provides for: (1) borrowings of up to
$525 million and $405 million at September 24, 1995 and December 25,
1994, respectively, 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. $525 million and $405 million were outstanding under
this facility at September 24, 1995 and December 25, 1994,
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
commercial paper is classifiable as long-term debt. Amounts so
classified are:
<TABLE>
<CAPTION>
Sept. 24, Dec. 25,
Dollar amounts in millions 1995 1994
--------- --------
<S> <C> <C>
Weyerhaeuser $ -- $ 411
Real estate and financial services 344 429
</TABLE>
Total interest costs incurred by WRECO are capitalized and will
ultimately be accounted for as an element of operating costs.
The company's compensating balance agreements were not significant.
Note 8: Shareholders' Interest
Common shares reserved for stock option plans and for conversion of
issued and outstanding convertible subordinated debentures were
6,105,000 shares at September 24, 1995 and 5,688,000 shares at
December 25, 1994.
Note 9: Commitments and Contingencies
The company's capital expenditures have averaged about $855 million in
recent years but are expected to be approximately $1.1 billion in
1995; however, the 1995 expenditure level could be increased or
decreased as a consequence of changes in economic conditions.
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.
<PAGE>
Weyerhaeuser Company
- -17-
WEYERHAEUSER COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
<TABLE>
Net sales and revenues and earnings before interest expense and income
taxes by segment are:
<CAPTION>
Thirteen Weeks Thirty-nine
Ended Weeks Ended
-------------------- --------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
Dollar amounts in millions 1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales and revenues:
Timberlands and wood products $ 1,263 $ 1,279 $ 3,721 $ 3,710
Pulp, paper and packaging 1,573 1,054 4,397 2,952
Real estate 169 243 488 682
Financial services 48 50 137 157
Corporate and other 59 55 188 164
--------- --------- -------- --------
$ 3,112 $ 2,681 $ 8,931 $ 7,665
========= ========= ======== ========
Earnings before interest expense and
income taxes:
Timberlands and wood products $ 196 $ 246 $ 625 $ 772
Pulp, paper and packaging 364 64 877 99
Real estate(1) (236) 2 (239) 6
Financial services(1) (2) (57) 2 (50) 9
Corporate and other (51) (38) (165) (106)
-------- -------- --------- ---------
$ 216 $ 276 $ 1,048 $ 780
======== ======== ========= =========
(1) 1995 third quarter and year-to-date results include charges of
$233 million and $58 million for Real estate and Financial services,
respectively, for the implementation of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of."
(2) Includes interest expense of $18 million and $18 million for thirteen
weeks and $50 million and $56 million for thirty-nine weeks related to
the financial services businesses.
</TABLE>
Results of Operations
Consolidated third quarter net sales were $3.1 billion, 16 percent
over the $2.7 billion reported in the same quarter of 1994. Net
earnings for the current quarter were $95 million, or 47 cents per
common share, compared to $144 million or 71 cents per common share
reported in the 1994 third quarter. The current quarter results
include an after-tax charge of $184.5 million, or 90 cents per common
share, for the implementation of Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."
1995 thirty-nine week consolidated sales were $8.9 billion, which is a
17 percent increase over the $7.7 billion in the same period last
year. Net earnings for the 1995 thirty-nine week period were
$548 million, or $2.68 per common share, for a 37 percent increase
over the $400 million earnings and $1.95 per common share reported in
1994.
The timberlands and wood products segment reported operating earnings
of $196 million for the current quarter, up from the $188 million
reported last quarter, but less than the $246 million in operating
earnings in the same quarter a year ago. Year-to-date, this segment
has earned $625 million, compared to last year's earnings of
$772 million. Log exports for the quarter were lower than in both the
preceding quarter and the same quarter a year ago, while the domestic
markets experienced some gains this quarter over previous quarters due
to an improvement in the housing market and a stronger wood chip
market.
<PAGE>
Weyerhaeuser Company
- -18-
Third party sales and total production volumes for the major products
in this segment were as follows:
<TABLE>
Thirteen Weeks Ended Year-to-date
-------------------- --------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Third party sales volumes
(millions):
Raw materials--cubic feet 136 134 404 421
Softwood lumber--board feet 1,262 1,167 3,452 3,266
Softwood plywood and veneer--
square feet (3/8") 701 744 1,999 2,009
Composite panels--square feet (3/4") 173 165 478 497
Oriented strand board--
square feet (3/8") 453 464 1,335 1,358
Hardboard--square feet (7/16") 55 43 143 126
Hardwood lumber--board feet 69 66 203 189
Hardwood doors (thousands) 155 160 485 458
Total production volumes
(millions):
Logs--cubic feet 225 161 676 493
Softwood lumber--board feet 835 787 2,586 2,415
Softwood plywood and veneer--
square feet (3/8") 320 313 949 938
Composite panels--square feet (3/4") 149 149 429 448
Oriented strand board--
square feet (3/8") 408 387 1,221 1,169
Hardboard--square feet (7/16") 31 30 92 93
Hardwood lumber--board feet 67 57 191 170
Hardwood doors (thousands) 161 160 485 447
</TABLE>
Strong earnings performances continued in the pulp, paper and
packaging segment with operating earnings of $364 million on sales of
$1.6 billion in the quarter compared to earnings of $64 million and
sales of $1.1 billion reported in the same quarter of 1994. Year-to-
date, this segment reported $877 million of operating earnings in
contrast to the $99 million earned in the same period last year.
Sales for the thirty-nine week period were $4.4 billion, nearly a
50 percent increase over the 1994 year-to-date performance. Compared
to the year ago quarter, all businesses in the segment are
experiencing strong pricing. When compared with the 1995 second
quarter, market pulp continues to improve while some of the other
businesses slowed, primarily the recycling business which is
experiencing weaker prices and the packaging business where volumes
have weakened in line with general industry trends.
Third party sales and total production volumes for the major products
in this segment were as follows:
<TABLE>
Thirteen Weeks Ended Year-to-date
-------------------- --------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Third party sales volumes
(thousands):
Pulp--air-dry metric tons 628 517 1,827 1,564
Newsprint--metric tons 163 154 493 472
Paper--tons 242 255 761 756
Paperboard--tons 55 54 171 155
Containerboard--tons 58 58 192 188
Packaging--MSF 8,471 8,934 25,157 25,954
Recycling--tons 390 252 1,009 715
Total production volumes
(thousands):
Pulp--air-dry metric tons 561 522 1,607 1,550
Newsprint--metric tons 165 162 499 480
Paper--tons 259 251 784 754
Paperboard--tons 53 44 170 147
Containerboard--tons 598 593 1,794 1,755
Packaging--MSF 8,840 9,352 26,377 27,122
Recycling--tons 683 518 1,921 1,506
</TABLE>
<PAGE>
Weyerhaeuser Company
- -19-
The company's real estate and financial services segments posted a
combined loss of $293 million during the current quarter.
$291 million of this loss came from two related actions: (1) the
implementation of SFAS No. 121, which required the company to change
its method of valuing long-lived assets, and (2) the company's
decision to accelerate the disposition of some of the affected real
estate assets. Before these actions, these segments reported a loss
of $2 million compared to a $4 million profit in the same quarter a
year ago. The real estate segment results have been impacted by
decreased single family closings. Falling interest rates during the
quarter have increased loan originations in the mortgage banking
business and contributed to earnings; however, the seasonality of home
sales and higher interest rates in the first quarter have resulted in
year-to-date earnings equaling the 1994 first half results.
The increase in the company's cost of products sold in both the
thirteen and thirty-nine week periods, compared to the same periods a
year ago, is in line with higher sales activity, principally in the
pulp, paper and packaging segment. The increase in depreciation
expense in the thirty-nine week period, when compared to the prior
year, is the result of the completion and start-up of several mill
modernization projects in the pulp, paper and packaging segment in
late 1994.
Excluding the SFAS No. 121 charges, the decrease in costs and
operating expenses of the real estate and financial services segments
are in line with the reduced sales activities in those segments in
both the thirteen and thirty-nine week periods.
Other income (expense) 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 for the thirteen and thirty-nine week periods ended September 24,
1995 and September 25, 1994 was significant in relation to net
earnings.
Liquidity and Capital Resources
The long-term debt level was relatively unchanged during the third
quarter. Year-to-date, it has increased by a net $79 million from the
sale of $100 million of industrial revenue bonds and $566 million of
debentures and other debt which is partially offset by the call of
$150 million of 9 3/8 percent debentures, retirement of $411 million
of commercial paper and a $26 million reduction of other debt. The
1995 year-to-date increase in net working capital of $264 million
consists primarily of increases in receivables and inventories due to
increased business activity and increases in accounts payable and
accrued liabilities, partially offset by an increase in the current
maturities of long-term debt.
The year-to-date change in cash provided by operations in the real
estate and financial services segments from 1994 to 1995 was due
primarily to origination activity exceeding sales of mortgages in the
company's mortgage banking business. The non-cash charges for
impairment of long-lived assets are reflected on the balance sheet as
reductions of real estate held for development, land being processed
for development and investments in joint ventures and limited
partnerships. Notes payable and commercial paper borrowings increased
during the year for payment of long-term debt and the financing of
construction activity in the real estate segment and to reflect
reclassification of long-term debt in the financial services segment.
The company paid $225 million in cash dividends in the first three
quarters of 1995 compared to $185 million in the same period of 1994.
This increase reflects the raising of the company's quarterly dividend
from 30 cents to 40 cents effective with the second quarter of 1995.
Capital expenditures for 1995 year-to-date amounted to $637 million
compared to $802 million in the same period of 1994. The 1995
expenditures by segment were $260 million by timberlands and wood
products, $346 million for pulp, paper and packaging and $31 million
by other segments. Expenditures in the pulp, paper and packaging
segment were significantly lower than the $605 million spent during
the same period in 1994, reflecting the completion of the company's
modernization projects at Longview, Washington and Plymouth, North
Carolina. The company currently anticipates capital expenditures in
1995 to approximate $1.1 billion.
The cash needed to meet these and other company needs was generated
principally from internal cash flow.
Earnings before interest expense and income taxes plus non-cash
charges for the thirty-nine week periods ended September 24, 1995 and
September 25, 1994 were $769 million and $905 million, respectively,
for the timberlands and wood products segment, and $1.1 billion and
$313 million, respectively, for the pulp, paper and packaging segment.
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 all major
financial markets.
<PAGE>
Weyerhaeuser Company
- -20-
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.
Accounting Pronouncements
In the 1995 third quarter, the company implemented SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which was issued by the Financial
Accounting Standards Board (FASB) in March 1995. The effect of the
implementation of this pronouncement, which caused the revaluation of
certain real estate assets, along with the company's decision to
accelerate the disposition of some of those real estate assets, was a
charge of $291 million to operations in the quarter. This revaluation
did not have a material impact on the company's current financial
position or liquidity.
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights--an Amendment of FASB Statement No. 65," which
modifies the treatment of the capitalization of servicing rights by
mortgage banking enterprises. The change constitutes a simplification
in procedures, eliminating the separate treatment of servicing rights
acquired through loan origination and those acquired through
purchasing transactions, as previously required under SFAS No. 65.
This pronouncement shall be applied prospectively in fiscal years
beginning after December 15, 1995. The company believes the future
adoption of this pronouncement by its mortgage banking subsidiary will
not have a significant impact on results of operations or financial
position.
Other Items
. The company has embarked on a new series of business improvement
plans which targets $600 million in pre-tax operating improvements
measured in 1994 prices and costs by year-end 1997. This exceeds,
by $200 million, the original goal of $400 million.
. In April 1995, the company announced that it is in private
discussions with potential financial investors about the
possibility of forming a joint-venture partnership that would make
investments in timberlands and related assets around the world.
The size of the venture, of which the company would be a
50 percent owner, would depend upon the specific investments made,
but could ultimately reach $1.5 billion over time. The company's
contribution to the joint venture would be U. S. timberlands with
a market value of approximately $260 million and cash, while the
investors group would provide cash contributions of an equal
amount.
. The ten million share repurchase program announced at the
company's 1995 annual meeting has been initiated and 4.3 million
shares were purchased in the second and third quarters.
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.
<PAGE>
Weyerhaeuser Company
- -21-
Part II. Other Information
Item 1. 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 has
appealed 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. Trial on several
additional sites is set for February 1996.
The company received from the Lane County, Oregon Regional Air
Pollution Control Authority (LRAPA) a draft Notice of Violation which
seeks penalties for alleged Prevention of Significant Deterioration
(PSD) violations at the company's Springfield, Oregon particleboard
operations. LRAPA informed the company in July 1995 that it will
withdraw its draft Notice of Violation (NOV) and will not seek fines
or penalties. On September 15, 1995, however, LRAPA issued a revised
draft NOV (the Revised Draft NOV), which alleged that the Springfield
particleboard facility had violated a condition of its Air Contaminant
Discharge Permit (ACDP). The allegations in the Revised Draft NOV are
based upon the same facts and circumstances relied upon by LRAPA in
the prior draft NOV.
The company has 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 seven state agencies and the Environmental Protection Agency (EPA).
The company is currently working with the states to negotiate
settlements for the alleged violations. In April 1995, EPA Region X
issued a Notice of Violation to the company and to North Pacific Paper
Corporation (NORPAC), a joint venture in which the company has an
80 percent ownership interest. The Notice of Violation addresses
alleged PSD violations at NORPAC's Longview, Washington newsprint
manufacturing facility. In accordance with instructions from EPA, the
company and the Washington State Department of Ecology are working to
resolve the issues raised in the Notice of Violation. A proposed
settlement with the State of Washington that resolves all PSD issues
at the Longview/NORPAC complex is currently pending. The company is
also negotiating with the State of Oklahoma regarding the resolution
of alleged PSD violations at the company's Valliant, Oklahoma
containerboard manufacturing facility. A proposed settlement with the
State of Oklahoma that resolves all PSD issues at the Valliant
containerboard facility is currently pending. The company is also
negotiating with the State of North Carolina regarding the resolution
of alleged PSD violations at the company's New Bern, North Carolina
and Plymouth, North Carolina manufacturing facilities.
The Washington State Department of Ecology investigated the accidental
release of chlorine, chlorine dioxide and non-condensable gasses in
July 1994 at the company's pulp mill in Longview, and issued a
$10 thousand penalty for the chlorine release and a $5 thousand
penalty for the non-condensable gasses release which have been paid by
the company. In June 1995, EPA issued an Administrative Complaint
against the company, seeking penalties of $225 thousand and alleging a
failure to timely report the chlorine release. The company has
appealed.
<PAGE>
Weyerhaeuser Company
- -22-
Part II. Other Information
Item 1. 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 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 submitted an
initial PSD review to the state in December 1993. A revised report
was delivered to the state in March 1995.
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. By order dated April 5, 1995, venue
of the Alabama action was transferred to Sumter County, Alabama. 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. By
order dated April 12, 1995, the geographical boundaries of the class
were amended to run from below the Columbus mill's wastewater
discharge pipe to the point where the Black Warrior River joins the
Tennessee Tombigbee Waterway. The class is estimated to range from
approximately 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 and the case was subsequently settled.
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 6. Exhibits and Reports on Form 8-K
(a) Not applicable.
(b) The registrant filed a report on Form 8-K dated August 16, 1995,
reporting information under Item 5, Other Events.
<PAGE>
Weyerhaeuser Company
- -23-
This page intentionally left blank.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-24-1995
<CASH> 227
<SECURITIES> 0
<RECEIVABLES> 1177<F1>
<ALLOWANCES> 0
<INVENTORY> 874
<CURRENT-ASSETS> 2424
<PP&E> 6229<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 13338
<CURRENT-LIABILITIES> 1849
<BONDS> 4242
<COMMON> 258
0
0
<OTHER-SE> 4208
<TOTAL-LIABILITY-AND-EQUITY> 13338
<SALES> 8931
<TOTAL-REVENUES> 8931
<CGS> 6297
<TOTAL-COSTS> 6297
<OTHER-EXPENSES> 831
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 235
<INCOME-PRETAX> 863
<INCOME-TAX> 315
<INCOME-CONTINUING> 548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 548
<EPS-PRIMARY> 2.68
<EPS-DILUTED> 2.68
<FN>
<F1>Receivables are stated net of allowances and Property, Plant and
Equipment is stated net of accumulated depreciation.
</FN>
</TABLE>
