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 31, 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 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 23, 1996, 198,070,891 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 $8,913,190,095.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year
ended December 31, 1995 are incorporated by reference into Parts I, II
and IV.
Portions of the Notice of 1996 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 39, Description
of the Business of the Company, contained in the company's 1995 Annual
Report to Shareholders, is incorporated herein by reference.
Financial information with respect to industry segments, included in
Note 19 of Notes to Financial Statements contained in the company's
1995 Annual Report to Shareholders, is incorporated herein by
reference.
Timberlands and Wood Products
The company owns approximately 5.3 million acres of commercial
forestland in the United States (49% in the South and 51% 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 18.9 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
244 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, fertilization and operational
pruning, all of which increase the yield from its fee timberland
acreage.
<TABLE>
<CAPTION>
Inventory Thousands of Acres at December 31, 1995
--------- ------------------------------------------
Millions Fee Long-term License
of Cunits Ownership Leases Arrangements Total
--------- --------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C>
Geographic Area
Washington 44 1,492 - - 1,492
Oregon 18 1,217 - - 1,217
Southern 28 2,593 171 - 2,764
--------- --------- ---------- ------------ ------
Total United States 90 5,302 171 - 5,473
--------- --------- ---------- ------------ ------
Canada
Alberta 91 - - 6,846 6,846
British Columbia 10 35 - 3,572 3,607
Saskatchewan 53 - - 8,457 8,457
--------- --------- ---------- ------------ ------
Total Canada 154 35 - 18,875 18,910
--------- --------- ---------- ------------ ------
TOTAL 244 5,337 171 18,875 24,383
========= ========= ========== ============ ======
</TABLE>
<TABLE>
<CAPTION>
Thousands of Acres
Thousands of Acres Millions of ------------------------
------------------ Seedlings Stocking
Harvested Planted Planted Control Fertilization
--------- ------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
1995 Activity
Washington 27.5 28.4 15.8 1.5 55.9
Oregon 12.8 11.9 5.2 1.7 33.5
Southern 49.0 45.5 20.5 3.8 189.8
--------- ------- --------- --------- -------------
Total United States 89.3 85.8 41.5 7.0 279.2
========= ======= ========= ========= =============
</TABLE>
3
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business - Continued
- -----------------------------
On February 28, 1996, the company signed an agreement to acquire
ownership and long-term leases to 661,200 acres of private commercial
forestland and two sawmills in southeastern Louisiana and southern
Mississippi from Cavenham Forest Industries, a subsidiary of Hansen
Plc, for $500 million.
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 volumes by major product class are as follows (millions):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Raw materials - cubic ft. 535 564 547 545 538
Softwood lumber - board ft. 4,515 4,402 4,230 3,440 3,269
Softwood plywood and veneer -
sq. ft. (3/8") 2,324 2,685 2,435 2,227 2,135
Composite panels - sq. ft. (3/4") 648 660 626 590 685
Oriented strand board - sq. ft. (3/8") 1,931 1,803 1,672 1,484 1,205
Hardboard - sq. ft. (7/16") 201 167 140 133 114
Hardwood lumber - board ft. 293 254 240 218 219
Engineered wood products - lineal ft. 128 71 47 - -
Hardwood doors (thousands) 648 617 556 514 525
</TABLE>
Selected product prices:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Export logs (#2 sawlog-bark on) - $/MBF
Cascade - Douglas fir $1,365 $1,168 $1,224 $ 930 $ 686
Coastal - Hemlock 750 804 831 562 530
Coastal - Douglas fir 1,217 1,085 1,104 858 633
Lumber (common) - $/MBF
2x4 Douglas fir (kiln dried) 332 408 418 295 250
2x4 Douglas fir (green) 308 364 383 261 224
2x4 Southern yellow pine (kiln dried) 364 419 397 285 237
2x4 Spruce-pine-fir (kiln dried) 251 343 334 231 187
Plywood (1/2" CDX) - $/MSF
West 331 334 321 281 220
South 301 298 282 249 192
Oriented strand board (7/16"-24/16) North
Central price - $/MSF 245 265 236 217 147
</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 packaging, and manufactures and markets industrial and
agricultural packaging; Paperboard, which manufactures and markets
bleached paperboard, used for production of liquid containers, 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 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>
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Pulp - air-dry metric tons 2,060 2,068 1,886 1,238 1,433
Newsprint - metric tons 663 638 609 575 450
Paper - tons 1,006 998 990 966 869
Paperboard - tons 230 201 222 238 234
Containerboard - tons 259 254 290 318 418
Packaging - MSF 34,342 34,483 31,386 29,414 26,525
Recycling - tons 1,467 985 851 778 735
Personal care products -
standard cases - - - 17,017 14,929
</TABLE>
Selected product prices (per ton):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Pulp - NBKP-air-dry metric-U.S. $883 $566 $445 $551 $568
Paper - uncoated free sheet-U.S. 946 617 627 630 713
Linerboard - 42 lb.-Eastern U.S. 505 367 295 343 330
Newsprint - metric - West Coast U.S. 662 460 435 433 549
OCC 128 78 27 30 39
ONP 99 46 16 13 16
</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 engaged primarily in developing single-family
housing and residential lots for sale, including the development of
master-planned communities. Operations are mainly concentrated in
selected metropolitan areas in Southern California, Nevada,
Washington, Texas, Maryland and Virginia.
Volumes sold:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Single-family units (1) 3,114 3,934 3,879 3,917 4,410
Multi-family units (1) 117 475 1,141 60 317
Lots (1) 1,628 2,157 1,372 2,762 1,138
Commercial space (thousand sq. ft.) - 389 88 142 269
</TABLE>
(1) Includes one-half of joint venture sales.
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 billion involving approximately 136,000 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 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, was
dissolved in 1992.
Volume information (millions):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Loan servicing portfolio $10,952 $11,300 $ 8,400 $ 9,800 $10,600
Single-family loan originations 2,196 2,763 4,405 3,380 2,496
</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 1995 1994 1993 1992 1991
---------- ---------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Logs - cubic ft. - - 914 671 673 749 782
Softwood lumber - board ft. 3,483 27 3,419 3,249 3,135 2,782 2,687
Softwood plywood and
veneer - sq. ft. (3/8") 1,337 8 1,292 1,249 1,188 1,125 966
Composite panels - sq. ft.
(3/4") 607 6 583 594 564 540 493
Oriented strand board -
sq. ft. (3/8") 1,670 5 1,654 1,568 1,443 1,234 1,208
Hardboard - sq. ft. (7/16") 130 1 124 122 120 118 90
Hardwood lumber - board ft. 409 11 278 229 221 210 196
Hardwood doors (thousands) 717 1 643 597 522 469 448
</TABLE>
Principal manufacturing facilities are located as follows:
Softwood lumber and plywood Hardwood lumber
Alabama, Arkansas, Georgia, Idaho, Arkansas, Oklahoma, Oregon,
Mississippi, North Carolina, Pennsylvania, Washington and
Oklahoma, Oregon, Washington and Wisconsin
Alberta, British Columbia and
Saskatchewan, Canada Hardwood doors
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 of
Production Facil-
Capacity ilities 1995 1994 1993 1992 1991
---------- -------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Pulp - air-dry metric tons 2,130 8 2,159 2,041 2,096 1,506 1,527
Newsprint - metric tons 690 1 687 651 618 588 461
Paper - tons 1,075 5 1,060 982 1,007 971 889
Paperboard - tons 220 1 229 189 217 229 238
Containerboard - tons 2,540 5 2,329 2,357 2,269 2,240 2,224
Packaging - MSF 48,000 45 36,041 36,020 32,795 31,040 27,583
Recycling - tons - 36 2,754 2,042 1,847 1,692 1,415
Personal care products -
standard cases - - - - - 16,743 14,902
</TABLE>
Principal manufacturing facilities are located as follows:
Pulp Containerboard
Georgia, Mississippi, North Carolina, North Carolina, Oklahoma, Oregon
Washington and Alberta, British and Washington
Columbia and Saskatchewan, Canada
Packaging
Newsprint Arizona, California, Connecticut,
Washington Florida, Georgia, Hawaii, Illinois,
Indiana, Iowa, Kentucky, Maryland,
Paper Michigan, Minnesota, Mississippi,
Mississippi, North Carolina, Missouri, Nebraska, New Jersey,
Washington, Wisconsin and New York, North Carolina, Ohio,
Saskatchewan, Canada Oregon, Tennessee, Texas, Virginia,
Washington and Wisconsin
Paperboard
Washington Recycling
Arizona, California, Colorado,
Georgia, Illinois, Indiana, Iowa,
Kansas, Maryland, Minnesota,
Nebraska, New Jersey, North Carolina,
Oklahoma, Oregon, Pennsylvania,
Tennessee, Texas, Utah, 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>
Land Management Arkansas, North Carolina Residential and
and Washington commercial land
development
Pardee Construction California and Nevada Single-family and
Company multi-family housing
and land development
The Quadrant Washington Single-family housing,
Corporation residential and
commercial land
development,
commercial building
and commercial
property management
Scarborough Florida Residential and
Constructors, Inc. commercial land
development
Trendmaker Homes, Inc. Texas Single-family housing
and residential land
development
Winchester Homes, Inc. Maryland and Virginia Single-family housing
and residential land
development
Weyerhaeuser Real Washington Parent company
Estate Co.
</TABLE>
Financial Services
<TABLE>
<CAPTION>
Principal Operations Primary States of Operations Primary Activities
- ------------------------------------------------------------------------------
<S> <C> <C>
Weyerhaeuser Mortgage Branches in 14 states with Mortgage lending and
Company major concentrations in servicing, insurance
California, Hawaii, Nevada and investment sales
and Texas and service
Mortgage Securities California Mortgage securities
Corporations
Weyerhaeuser California Real estate investment
Financial sales and service
Investments, Inc.
Weyerhaeuser Venture Arizona, California, Equity investments and
Co. Nevada, Oregon and participating loans in
Washington residential real estate
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 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 14 of the 35 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 began
in February 1996 and is continuing.
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 contested LRAPA's issuance of
the Revised Draft NOV.
The company has undertaken a review of its 10 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. A settlement with the State of Washington
that resolves all PSD issues at the Longview/NORPAC complex was
entered on January 26, 1996. The company also entered into a
settlement with the State of Oklahoma regarding the resolution of
alleged PSD violations at the company's Valliant, Oklahoma,
containerboard manufacturing facility on November 14, 1995. The
company has entered into Special Orders by Consent (SOCs) with the
State of North Carolina to resolve alleged PSD issues at its New Bern,
North Carolina, pulp mill and its Plymouth, North Carolina, pulp and
paper complex.
The Washington State Department of Ecology investigated the accidental
release of chorine, 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.
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 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, as orally amended on February 1, 1996, the
geographical boundaries of the class were amended to run from below
the Columbus mill's wastewater discharge pipe just above the
confluence of the Black Warrior River and 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 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 31, 1995.
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 20 and 21 of Notes to Financial Statements
in the company's 1995 Annual Report to Shareholders, is incorporated
herein by reference.
Item 6. Selected Financial Data
- --------------------------------
Information with respect to selected financial data included in Note
21 of Notes to Financial Statements in the company's 1995 Annual
Report to Shareholders, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
- ---------------------------------------------------------------------
and Results of Operations
- -------------------------
On February 28, 1996, the company signed an agreement to acquire
ownership and long-term leases to 661,200 acres of private commercial
forestland and two sawmills in southeastern Louisiana and southern
Mississippi from Cavenham Forest Industries, a subsidiary of Hansen
Plc, for $500 million. This acquisition is not expected to have a
significant impact on the company's financial position or liquidity.
In the fourth quarter of 1995, pulp and paper prices began to weaken
dramatically as customers reduced purchases in order to reduce excess
inventories. These prices continued to decline in the first quarter
of 1996. This will result in significantly lower operating earnings
in the company's pulp, paper and packaging segment. This price
weakness is expected to continue until the excess inventory situation
corrects itself.
Additional information with respect to Management's Discussion and
Analysis included on pages 7, 14-17, 19, 24-27 and 32-44; contained in
the company's 1995 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 1995 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 44
Consolidated Statement of Earnings 45
Consolidated Balance Sheet 46-47
Consolidated Statement of Cash Flows 48-49
Consolidated Statement of Shareholders' Interest 50
Notes to Financial Statements 51-69
Selected Quarterly Financial Information 67
</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 1996 Annual Meeting of Shareholders and
Proxy Statement dated March 4, 1996 is incorporated herein by
reference.
The executive officers of the company are as follows:
<TABLE>
<CAPTION>
Name Title Age
- ---------------------- ------------------------- -----
<S> <C> <C>
William R. Corbin Executive Vice President 54
John W. Creighton, Jr. President 63
Richard C. Gozon Executive Vice President 57
Steven R. Hill Senior Vice President 48
Mack L. Hogans Senior Vice President 47
Norman E. Johnson Senior Vice President 62
Thomas M. Luthy Senior Vice President 58
William C. Stivers Senior Vice President 57
</TABLE>
Item 11. Executive Compensation
- --------------------------------
Information with respect to executive compensation included on pages 5
through 13 of the Notice of 1996 Annual Meeting of Shareholders and
Proxy Statement dated March 4, 1996 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 1996
Annual Meeting of Shareholders and Proxy Statement dated March 4, 1996
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Information with respect to certain relationships and related
transactions included on page 22 of the Notice of 1996 Annual Meeting
of Shareholders and Proxy Statement dated March 4, 1996 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 1995 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
Statement Schedules 16
Schedule II - Valuation and Qualifying Accounts 17
</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 1995 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
(c) Agreement with R. C. Gozon
11 - Statement Re: Computation of Per Share Earnings (incorporated
by reference to Note 1 of the 1995 Weyerhaeuser Company
Annual Report to Shareholders)
13 - Portions of the 1995 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 filed reports on Form 8-K dated November 28, 1995, and
February 14, 1996, respectively, reporting information under Item 5,
Other Events.
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 15, 1996.
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 15, 1996.
/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
George H. Weyerhaeuser Director
Chairman of the Board and Director
/s/ Martha R. Ingram
/s/ William C. Stivers --------------------
- ---------------------- Martha R. Ingram
William C. Stivers Director
Principal Financial Officer
/s/ John Kieckhefer
/s/ Kenneth J. Stancato -------------------
- ----------------------- John I. Kieckhefer
Kenneth J. Stancato Director
Principal Accounting Officer
/s/ William D. Ruckelshaus
/s/ William Clapp --------------------------
- ----------------- William D. Ruckelshaus
William Clapp Director
Diretor
/s/ Richard H. Sinkfield
/s/ W. John Driscoll ------------------------
- -------------------- Richard H. Sinkfield
W. John Driscoll Director
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 12, 1996. 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 12, 1996
16
<PAGE>
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Schedule II - Valuation and Qualifying Accounts
For the three years ended December 31, 1995
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
1995 $ 10 $ 2 $ 3 $ 9
======== ======== ========= ========
1994 $ 10 $ 4 $ 4 $ 10
======== ======== ========= ========
1993 $ 10 $ 7 $ 7 $ 10
======== ======== ========= ========
Real Estate and Financial Services
Reserves and allowances deducted from
related asset accounts:
Receivables
1995 $ 4 $ 1 $ (2)(1) $ 7
======== ======== ========= ========
1994 $ 7 $ 1 $ 4 $ 4
======== ======== ========= ========
1993 $ 6 $ 1 $ - $ 7
======== ======== ========= ========
Mortgage loans receivable
1995 $ 8 $ - $ 6 $ 2
======== ======== ========= ========
1994 $ 4 $ 4 $ - $ 8
======== ======== ========= ========
1993 $ 19 $ 9 $ 24(2) $ 4
======== ======== ========= ========
Real estate in process of development
and for sale
1995 $ 53 $ - $ 32 $ 21
======== ======== ========= ========
1994 $ 56 $ 7 $ 10 $ 53
======== ======== ========= ========
1993 $ 77 $ 4 $ 25 $ 56
======== ======== ========= ========
Land being processed for development
1995 $ 19 $ - $ 1 $ 18
======== ======== ========= ========
1994 $ 19 $ 3 $ 3 $ 19
======== ======== ========= ========
1993 $ 28 $ - $ 9 $ 19
======== ======== ========= ========
Investment in and advances to joint
ventures and limited partnerships
1995 $ 49 $ - $ 11 $ 38
======== ======== ========= ========
1994 $ 57 $ 2 $ 10 $ 49
======== ======== ========= ========
1993 $ 66 $ 9 $ 18 $ 57
======== ======== ========= ========
</TABLE>
(1) Includes allowances transferred in on partnership notes that were
consolidated.
(2) Includes reserves transferred from loans to real estate.
17
<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>
18
<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>
Weyerhaeuser Financial Investments, 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 Venture Company Nevada 100
Las Positas Land Co. California 100
WAMCO, Inc. Nevada 100
Weyerhaeuser Realty Investors, Inc. Washington 100
Weyerhaeuser Forestlands International, Inc. Washington 100
Weyerhaeuser International, Inc. Washington 100
Weyerhaeuser Canada Ltd. Canada 100
Saskatoon Chemicals Ltd. Canada 100
Weyerhaeuser Saskatchewan 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 Taiwan Ltd. Delaware 100
Weyerhaeuser, S.A. Panama 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>
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
Centennial Homes, Inc. Texas 100
Midway Properties, Inc. North Carolina 100
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
TMI, Inc. Texas 100
Weyerhaeuser Real Estate Company of Nevada Nevada 100
Winchester Homes, Inc. Delaware 100
SC-WHI, Inc. Delaware 100
The Wray Company Arizona 100
</TABLE>
20
<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. 33-60527, 33-
60531, 33-60529, 33-60521, 33-60525, 33-60519, 33-25928, 33-24385,
33-24979, 33-31622, 33-34460, 33-47392, 2-88109 and 333-01565 on Form
S-8.
ARTHUR ANDERSEN LLP
Seattle, Washington,
March 15, 1996
21
Pulp, Paper and Packaging Statistical Data
<TABLE>
<CAPTION>
Net Sales 1995 1994 1993 1992 1991
- --------------------- ------- ------ ------ ------ ------
(Millions of dollars)
<S> <C> <C> <C> <C> <C>
Pulp $ 1,616 $ 1,012 $ 823 $ 711 $ 803
Newsprint 508 356 322 326 288
Paper 1,001 664 648 673 655
Paperboard and containerboard 325 240 255 321 361
Packaging 1,863 1,495 1,302 1,323 1,175
Recycling 266 121 77 93 90
Chemicals 63 45 32 31 34
Personal care products _ _ _ 514 450
Miscellaneous products 40 133 120 117 147
------- ------ ------ ------ -------
$ 5,682 $ 4,066 $ 3,579 $ 4,109 $ 4,003
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Sales Volumes 1995 1994 1993 1992 1991
- ------------------------ ------- ------- ------- ------- -------
(Thousands)
<S> <C> <C> <C> <C> <C>
Pulp -- air-dry metric tons 2,060 2,068 1,886 1,238 1,433
Newsprint -- metric tons 663 638 609 575 450
Paper -- tons 1,006 998 990 966 869
Paperboard -- tons 230 201 222 238 234
Containerboard -- tons 259 254 290 318 418
Packaging -- MSF 34,342 34,483 31,386 29,414 26,525
Recycling -- tons 1,467 985 851 778 735
Personal care products --
standard cases - - - 17,017 14,929
</TABLE>
<TABLE>
<CAPTION>
Annual Production Capacity 1995 1994 1993 1992 1991
- --------------------------- -------- ------ ------- ------- ------- -------
(Thousands)
<S> <C> <C> <C> <C> <C> <C>
Pulp -- air-dry metric tons 2,130 2,159 2,041 2,096 1,506 1,527
Newsprint -- metric tons 690 687 651 618 588 461
Paper -- tons 1,075 1,060 982 1,007 971 889
Paperboard -- tons 220 229 189 217 229 238
Containerboard -- tons 2,540 2,329 2,357 2,269 2,240 2,224
Packaging -- MSF 48,000 36,041 36,020 32,795 31,040 27,583
Recycling -- tons - 2,754 2,042 1,847 1,692 1,415
Personal care products --
standard cases - - - - 16,743 14,902
</TABLE>
<TABLE>
<CAPTION>
Principal Manufacturing Facilities
- ----------------------------------
<S> <C>
Pulp 8
Newsprint 1
Paper 5
Paperboard 1
Containerboard 5
Packaging 45
Recycling 36
Chemicals 7
</TABLE>
7
<PAGE>
The Weyerhaeuser Pulp, Paper and Packaging sector reported record earnings
in 1995. This accomplishment reflects the strength of the rebound in pulp
and paper markets and implementation of business improvement plans. Sector
operating earnings for the year reached $1.2 billion as compared with
$211 million in 1994.
As one of the world's largest producers of pulp, paper and packaging products,
Weyerhaeuser benefited from the dramatic rise in prices during 1995. As the
cycle matures, only those companies that efficiently execute a strategy
focused on maximizing return on invested capital will achieve improvements in
profitability that create continued, sustained growth in shareholder value.
Weyerhaeuser, including its Pulp, Paper and Packaging sector, is taking the
essential steps to be such a company. The sector's highest priority is to
increase the return earned on invested capital across the cycle by improving
operating performance of in-place capital and exercising disciplined
allocation of new capital.
The sector has committed to business improvement plans designed to produce
$300 million in additional sustainable pretax operating earnings by the end
of 1997 based on 1994 prices and costs. In 1995, significant progress was
made on these plans that have positively impacted bottom-line results. The
plans encompass increasing volume, reducing waste, improving quality and
product mix and reducing cost through improved operational efficiency.
Progress in high performance work systems is driving these improvements.
Changes in the way we do our work are creating an environment of empowerment
and teamwork in which employees take ownership of their performance and the
performance of the business process. Through increased training, we will
improve work processes and alignment to truly empower people to help maximize
performance of mills and machines.
An efficient, up-to-date asset base is key to achieving excellence
14
<PAGE>
in manufacturing. Modernization projects were completed in 1995 at three major
pulp and paper complexes that enable core businesses - pulp, containerboard
and fine paper - to improve product quality to meet customer demands, to
increase volume and productivity and to substantially reduce costs. These
state-of-the-art upgrades also ensure responsible environmental performance.
An important part of sector growth will continue to come through strategic
acquisitions to enhance core businesses. The purchase of nine box plants
from Westvaco in 1995 fits well with the company's fully integrated paper
and packaging system, increases internal utilization of Weyerhaeuser
containerboard production and adds new markets and customer-service
capability while boosting packaging capacity.
Satisfying customer requirements remains a cornerstone for success. Sector
businesses serve customers around the world. Our presence in select
international markets brings distinct competitive advantages to the company.
Expansion will continue in markets where product specifications are more
demanding and market prices less volatile.
All sector businesses are developing closer partnerships with customers that
are based upon a shared quest for world-class quality. Thorough understanding
of customers' markets, goals and internal systems creates the framework for
such partnerships. Experience shows that this kind of partnership leads to
higher levels of innovation and differentiation from the competition. Most
importantly, the partnership can generate signficant savings for both
companies, enabling Weyerhaeuser to emerge as a preferred partner as customers
narrow their number of suppliers.
All major businesses realized outstanding achievements in 1995:
- The Pulp business, the world's largest producer of market pulp, attained
record financial performance as a result of strong market demand, signficantly
improved prices, effective control of operating costs and intense
15
<PAGE>
focus by employees upon business improvement plans.
- Containerboard Packaging, one of North America's largest fully integrated
producers of corrugated boxes, continued to grow and deliver solid financial
performance and returns on capital during a year of increasingly difficult
market conditions and fierce competition. A new containerboard machine at a
joint venture, the Cedar River Paper Company, started up three months early,
12 percent below budget and cost, and reached design production level in
five months. This facility also won the Occupational Safety and Health
Administration's STAR Worksite Award for safety. Nine box plants were
acquired from Westvaco. A linerboard machine at Plymouth, North Carolina,
was rebuilt to produce 100 percent recycled board. The Valliant, Oklahoma,
containerboard mill was honored by the company for surpassing two million
work hours without a single lost workday.
- The Fine Paper business nearly tripled its previous record profits and
registered solid returns on capital through a combination of higher prices,
record performance on all operating measures, product-mix enhancements and
implementation of business improvement plans. Product quality measures and
on-time delivery performance also reached record highs.
- The Recycling business, one of the largest recyclers in North America,
increased its volume of paper collected and processed by 35 percent, to
2.8 million tons. This business consistently ensures a steady stream of
recycled fiber to Weyerhaeuser mills and strategic third-party customers.
During the peak of 1995's volatile recycled fiber market, Weyerhaeuser's
Recycling business contributed greatly to the fiber security of company
mills while helping the paper industry progress toward its goal of 50 percent
paper recovery by the year 2000. Nine new facilities were added in 1995,
bringing the number of recycling collection centers to 36. The business
plans to improve upon capital returns while doubling volume by 1998.
16
<PAGE>
- The Newsprint business also benefited from the upswing in prices,
further growth with its key customers and operating improvements that
helped deliver strong increases in earnings and returns in 1995. Through
our newsprint joint venture, the North Pacific Paper Corporation (NORPAC),
this business is the leading foreign supplier to markets in Japan. The
U.S. Department of Commerce awarded NORPAC its prestigious E-Award for
excellence in export sales. An independent survey of domestic customers
also recognized NORPAC as the leader in quality, service and overall
customer satisfaction. Located in Longview, Washington, NORPAC also achieved
record levels of safety performance, recording a year without a lost-time
accident.
- The Bleached Paperboard business successfully grew its market share
throughout the Pacific Rim by increasing focus on customer requirements and
new product introductions. It is a leading supplier to liquid packaging
markets in Japan. A machine rebuild and the fiberline modernization at the
Longview site were completed and will further strengthen Weyerhaeuser's
competitive position.
The sector's goals are to be valued by its customers as a source of
world-class quality and distinctive customer service and to be recognized
by shareholders as a source of superior returns and the creation of
sustained value. These goals will be achieved by leading the industry in
product quality through a better understanding of customer needs, cost
efficiency through manufacturing excellence, and innovation in marketing,
sales and product development.
17
<PAGE>
Timberlands and Wood Products Statistical Data
<TABLE>
<CAPTION>
Net Sales 1995 1994 1993 1992 1991
- -------------------------------- ------- ------- ------- ------- -------
(Millions of dollars)
<S> <C> <C> <C> <C> <C>
Raw materials (logs, chips and
timber) $ 1,102 $ 1,091 $ 1,021 $ 872 $ 843
Softwood lumber 1,648 1,880 1,704 1,138 978
Softwood plywood and veneer 591 636 567 498 412
Oriented strand board, composite
and other panel products 752 750 623 495 383
Hardwood lumber 193 175 154 127 118
Engineered wood products 207 157 100 - -
Miscellaneous products 438 303 299 287 214
------- ------- ------- ------- -------
$ 4,931 $ 4,992 $ 4,468 $ 3,417 $ 2,948
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Sales Volumes 1995 1994 1993 1992 1991
- --------------------------------- ----- ----- ----- ----- -----
(Millions)
<S> <C> <C> <C> <C> <C>
Raw materials -- cubic feet 535 564 547 545 538
Softwood lumber -- board feet 4,515 4,402 4,230 3,440 3,269
Softwood plywood
and veneer -- square feet (3/8") 2,324 2,685 2,435 2,227 2,135
Composite panels --
square feet (3/4") 648 660 626 590 685
Oriented strand board --
square feet (3/8") 1,931 1,803 1,672 1,484 1,205
Hardboard -- square feet (7/16") 201 167 140 133 114
Hardwood lumber -- board feet 293 254 240 218 219
Engineered wood products --
lineal feet 128 71 47 - -
Hardwood doors (thousands) 648 617 556 514 525
</TABLE>
<TABLE>
<CAPTION>
Annual Production Capacity 1995 1994 1993 1992 1991
- -------------------- -------- ------ ------ ------ ------ ------
(Millions)
<S> <C> <C> <C> <C> <C> <C>
Logs -- cubic feet - 914 671 673 749 782
Softwood lumber -- board feet 3,483 3,419 3,249 3,135 2,782 2,687
Softwood plywood and
veneer -- square feet (3/8") 1,337 1,292 1,249 1,188 1,125 966
Composite panels --
square feet (3/4") 607 583 594 564 540 493
Oriented strand board --
square feet (3/8") 1,670 1,654 1,568 1,443 1,234 1,208
Hardboard --
square feet (7/16") 130 124 122 120 118 90
Hardwood lumber --
board feet 409 278 229 221 210 196
Hardwood doors (thousands) 717 643 597 522 469 448
</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 11
Hardwood doors 1
</TABLE>
19
<PAGE>
The company's Timberlands and Wood Products sector reported operating
earnings of $808 million in 1995. While below the record earnings of
$1.034 billion achieved in 1994, these results were, by historical standards,
very good.
The decrease from last year's record performance was caused by a drop in
domestic housing starts resulting from higher mortgage interest rates in the
first half of the year. Lower demand for wood products for North American new
home construction was somewhat offset by remodeling and commercial building.
The continued decline in western timber harvests coincided with the lower
demand for wood products and maintained log and timber prices.
The strong 1995 performance can be attributed to maintaining business focus
and attaining the 1995 targets defined in the sector's 1990 improvement
plans. Timberlands and Wood Products will continue this focus by relentlessly
pursuing superior understanding of customer requirements and continuous
improvements in operating performance. This strategy will also drive the
$300 million in new pretax operating profit improvements that the Timberlands
and Wood Products sector plans to put in place by the end of 1997.
In 1995, Wood Products concentrated on reducing its operating costs,
improving the recovery of products from raw materials and increasing overall
product value. This focus on cost, productivity and value forms the
cornerstone of the sector's improvement plans and encompasses thousands of
opportunities. For example, improving saw design and the saw-filing process
in a single mill eliminated over 700 truckloads of sawdust generated each
year while producing higher value lumber and chips and, as a result, improved
revenues. Replication of such practices throughout the system will make a
major impact on Weyerhaeuser's bottom line.
To improve productivity at mills, teams are concentrating on preventive
maintenance by identifying potential failures before they can occur. To
achieve this, Wood Products is installing
24
<PAGE>
advanced computer systems. As part of a systematic approach to maintenance,
networked personal computers are used to place all vital data at employee
fingertips - including safety procedures, work plans, preventive maintenance,
scheduling information and parts inventories. The benefits are improved
machine reliability, less unscheduled downtime, lower maintenance costs and
increased worker safety.
Markets for lumber softened from 1994 levels. However, by continuing to
focus on customers, target segments and improving recovery, Wood Products was
able to produce and market higher lumber volumes in all of its product
regions. Weyerhaeuser's Wood Products businesses continue to benefit from
the company's geographic diversification.
Structural-panel demand and prices were strong in 1995. This was largely
caused by the continued growth of engineered wood products and healthy demand
in the repair and remodel market and in nonresidential construction.
The Hardwood Lumber business delivered excellent returns in 1995, and the
company acquired new hardwood facilities. Weyerhaeuser purchased two
sawmills and 9,000 acres of forestlands from Diamond Wood Products in Oregon,
as well as a mill in Sedro Woolley, Washington.
The Building Materials Distribution business continues to maximize
Weyerhaeuser's strength as an integrated supplier of wood products to
North American markets. This business enables the company to meet a wide range
of customer requirements and allows Weyerhaeuser-made products to reach their
highest-value markets. The distribution business continued to expand its
geographic reach by adding five new centers in 1995.
Success in achieving profit improvements in all our businesses depends
heavily on success in achieving work systems improvements. These improvements
begin at the executive level, and for that reason, senior managers are
modeling desired teaming behaviors and becoming "champions for change."
25
<PAGE>
This is part of a larger strategy that includes benchmarking, training and
implementing best work practices to contain cost and improve efficiency. Such
training and benchmarking provide Weyerhaeuser people with a greater
understanding of what it takes to excel in customer satisfaction, which, in
turn, allows decision making at the level closest to the work process. The
systems that emerge from such strong employee involvement benefit both
customers and shareholders by giving all employees a greater role in meeting
customer requirements.
Weyerhaeuser's Timberlands operations, the world's largest private owner
of merchantable softwood timber, provides a substantial portion of the wood
fiber used in the company's manufacturing operations - from traditional
solid-wood products and engineered fiber products to a variety of paper,
pulp and packaging products.
Since its founding in 1900, Weyerhaeuser has managed its forestlands by the
principle of long-term stewardship. Forest-management practices have evolved
dramatically in the last 95 years, driven by advances in scientific knowledge
and shifts in public expectations. In 1966, for example, Weyerhaeuser began
to systematically apply science to its timberlands to encourage the
sustainable, vigorous growth of healthy, high-quality trees. The productivity
and quality produced by 30 years of intensive forest management will begin to
impact Weyerhaeuser's harvests within the next five years. By the year 2020,
the company will have a 25 percent increase in yields on its land in the
Pacific Northwest and a 70 percent increase in yields on its land base in the
South. These high-quality forests should generate tremendous shareholder
value in the future as they have done in the past.
Today the company's vision of stewardship is even broader. Weyerhaeuser is
aware of the need to address public expectations for managed industrial
forests and the need to do so in a way that protects shareholder value. As a
result, Weyerhaeuser is working with
26
<PAGE>
regulatory agencies to protect habitat for threatened and endangered species
living in Weyerhaeuser forests while protecting the economic value of the
land. In 1995, the company passed a major milestone when it obtained approval
from the U.S. Fish & Wildlife Service for a Habitat Conservation Plan on
210,000 acres of the company's Millicoma Tree Farm near Coos Bay, Oregon.
Under this plan, the company can both continue its harvesting operations and
complement federal efforts for the recovery of the northern spotted owl.
Also in 1995, the company further illustrated its leadership in habitat
conservation by conducting the research needed to develop multi-species
habitat management plans on 500,000 acres in Washington and Oregon. Working
with adjacent landowners and other interested stakeholders, the company
continues to conduct watershed analyses in major watersheds where it owns
property in Washington and Oregon. These efforts comprise a key part of the
solution to address concern over salmon habitat in Northwest forests, and
many will eventually be part of the company's multi-species habitat
management plans.
In 1994, Timberlands further strengthened its stewardship commitment with
the adoption of the Weyerhaeuser Forestry Resource Strategies. The Resource
Strategies provide broad operating guidelines for producing a sustainable
supply of wood while protecting the full range of natural resources found in
the company's forests, including soil, water and wildlife. In 1995,
Timberlands made substantial progress toward establishing specific
stewardship goals and measurement standards in each of its operating regions.
Intensive management of industrial forests has become a global industry.
To increase its competitive position, Weyerhaeuser is forming a joint-venture
partnership with institutional investors to acquire timberlands and related
assets around the world.
27
<PAGE>
Real Estate and Financial Services.
Sector earnings before the special charge were $13 million for the year
compared with 1994 earnings of $18 million. High home mortgage interest
rates in the early months of the year affected Weyerhaeuser's Real Estate
and Financial Services businesses in 1995.
The sector's business improvement plans are based on a dual strategy.
That strategy consists of liquidating assets that are impaired or poorly
performing and increasing the focus on primary businesses and markets.
Weyerhaeuser Real Estate Company is concentrating on home building and land
development in Southern California, Las Vegas, Houston, Washington, D.C.
and Puget Sound.
Weyerhaeuser Financial Services is increasing loan production by using
existing locations and expanded strategic alliances. Loan quality, customer
satisfaction and cost-effectiveness are being improved by applying
state-of-the-art technology to originating, processing and servicing loans.
In 1995, the company announced that it was taking a charge to earnings to
reflect revaluation of certain real estate assets within Weyerhaeuser Real
Estate Company and Weyerhaeuser Financial Services. The after-tax amount of
the charge was $184 million. The charge was recorded to comply with a
Financial Accounting Standards Board statement, which changes the method of
valuing long-lived assets and assets to be disposed of, and by the company's
decision to accelerate the disposition of some of the affected real estate
assets. The company plans to dispose of most of the impaired assets over the
next two years.
32
<PAGE>
1995 Events and Accomplishments
People
Safety remains the highest priority for Weyerhaeuser people. Lost-time
accidents decreased 30 percent - from a rate of 1.17 per 100 employees in
1994 to 0.86 per 100 employees in 1995. Over the past five years, the
lost-time accident rate has improved 70 percent, a tribute to the efforts and
vigilance of Weyerhaeuser employees everywhere.
Many Weyerhaeuser units achieved outstanding safety milestones in 1995.
The Valliant, Okla., containerboard mill surpassed two million work hours
without a single lost workday. The Mississippi/Alabama Timberlands team
completed nine years, more than 1.3 million workhours without a lost-time
accident or injury. North Carolina Timberlands surpassed five years, or
1.5 million workhours without a lost-time accident. A Weyerhaeuser joint
venture, the Cedar River Paper Company, won the U.S. Occupational Safety and
Health Administration's STAR Worksite Award for safety, and another joint
venture, the North Pacific Paper Corporation, achieved a new record for
safety performance and recorded a year without a lost-time accident.
In May, Weyerhaeuser President John W. Creighton, Jr., formed a task force
to help foster diversity in the workplace - a corporate area of emphasis
outlined in 1995.
Two pioneers of High Yield Forestry passed away: George R. Staebler, former
director of forestry research, and Royce O. Cornelius, former chief forest
engineer. Both were retired.
Norton Clapp, former Weyerhaeuser president and chairman of the board, died
in April. During his 36 years of service to Weyerhaeuser Company, Clapp
served as company secretary, vice president, president, director and chairman
of the board. Clapp served as president during a pivotal period in its
growth - from 1960 to 1966 - and made significant civic contributions both
locally and nationally.
Customers
Pulp, Paper and Packaging's box plant in Cedar Rapids, Iowa, achieved a major
quality milestone by registering under ISO 9000 standards. ISO, the only
internationally recognized quality standard, defines a model for quality
systems. The registration process requires extensive documentation of
quality processes, direct evidence of quality system effectiveness and
periodic audits to ensure conformance with registration requirements.
Wood Products carried its Manufacturing Excellence Award program into its
second year. The award encourages all manufacturing units to attain
top-quartile performance in their respective businesses and to raise
standards of manufacturing to world-class levels. Winners were the Elkin,
N.C., oriented strand board (OSB) mill, which also won the award in 1994;
the Grayling, Mich., OSB mill, and the Marshfield, Wis., Steam-Thru
particleboard facility, which was a finalist last year.
Weyerhaeuser Canada's Edson, Alta., OSB mill was awarded the Structural
Board Association's Ron Baker Memorial Award for Manufacturing Excellence.
The international award recognizes superior quality, productivity,
environmental sensitivity and safety. Weyerhaeuser's Drayton Valley, Alta.,
OSB mill finished second.
Secretary of Commerce Ron Brown presented the NORPAC newsprint mill in
Longview, Wash., with a Presidential "E" Award for Excellence in Exporting.
The company was recognized for its success in international markets.
President John W. Creighton, Jr., was named the 1995 recipient of the
prestigious Prime Minister's Trade Award by the Japanese government. The
award is given annually to an individual whose contributions have helped
improve the balance of trade and promote mutual understanding on trade issues.
Citizenship
Fortune magazine ranked Weyerhaeuser number one among forest products
companies for "responsibility to the community and environment" in its
1994 Corporate Reputation Survey. Weyerhaeuser demonstrated its environmental
leadership in 1995 by:
- Completing ten watershed analyses in Washington and Oregon. Weyerhaeuser
has completed 21 assessments in the Northwest covering 446,000 acres of its
forestland since 1993.
- Achieving capability to manufacture elemental chlorine-free pulp products
at all of its bleached kraft mills.
- Converting its containerboard machines in Plymouth, N.C., and North Bend,
Ore., to use 100 percent recycled wastepaper.
- Signing a Memorandum of Understanding with the U.S. Forest Service and
USFWS to protect the red-cockaded woodpecker by managing habitat on
Weyerhaeuser lands near the Croatan National Forest in eastern North Carolina.
- Receiving the American Forest & Paper Association's Environmental and
Energy Achievement Award for air-pollution control at the company's Grayling,
Mich., OSB mill.
- Signing a partnership agreement with the National Wild Turkey Federation
to promote conservation of the wild turkey on 2.6 million acres of
Weyerhaeuser forestlands in the South. The agreement formalizes a cooperative
relationship that Weyerhaeuser has had with the Federation for many years.
- Reaching agreement with five environmental groups to develop management
criteria for protecting wildlife habitat, water quality, unique wetlands
sites and rare plants on the company's lands on the Albemarle-Pamlico
Peninsula in North Carolina. The agreement with the Environmental Defense
Fund, National Audubon Society, Sierra Club, North Carolina Wildlife
Federation and North Carolina Coastal Federation brings to a close the
groups' legal challenge of the company's forestry practices on those lands.
The Washington State Department of Transportation, the Rocky Mountain Elk
Foundation and Weyerhaeuser Company jointly opened the Charles W. Bingham
Forest Learning Center. Located near the Mount St. Helens National Volcanic
Monument, the Forest Learning Center was dedicated on May 18, the fifteenth
anniversary of the volcano's eruption.
The Weyerhaeuser Company Foundation, the company's principal vehicle for
philanthropy, was recognized by the Professional Educators of North Carolina,
Inc., for outstanding service to education. In 1995, the Foundation surpassed
the $100 million mark for contributions made since 1948.
33
<PAGE>
1995 Financial Report
Highlights
<TABLE>
<CAPTION>
Dollar amounts in millions except per-share figures 1995 1994
- --------------------------------------------------- --------- --------
<S> <C> <C>
Net sales and revenues $11,788 $10,398
Net earnings before special charge 983 589
Less: special charge(1) 184 -
-------- --------
Net earnings 799 589
-------- --------
Cash flow from operations, before working capital changes 1,856 1,260
Capital expenditures (including acquisitions in 1995) 1,119 1,102
Total assets 13,253 13,158
Shareholders' interest 4,486 4,290
</TABLE>
<TABLE>
<CAPTION>
1995
-------------------------------------
Before (1) Special
Special Charge Charge Net 1994
-------------- ------------ ------- -------
Net earnings per common share:
<S> <C> <C> <C> <C>
First quarter $ 1.00 $ 1.00 .62
Second quarter 1.21 1.21 .62
Third quarter 1.37 (.90) .47 .71
Fourth quarter 1.25 1.25 .91
------------- ------------ ------- -------
$ 4.83 $ (.90) $ 3.93 $ 2.86
------------- ------------ ------- -------
</TABLE>
(1) The after-tax charge of $184 million ($290 million less income taxes of
$106 million) results from two related actions: (1) 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,"
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 assets.
The consolidated financial statements include: (1) Weyerhaeuser Company
(Weyerhaeuser), 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 including Weyerhaeuser Real Estate
Company, which is involved in real estate development and construction, and
Weyerhaeuser Financial Services, Inc., whose principal subsidiary is
Weyerhaeuser Mortgage Company.
Description of the Business of the Company, page 35. Financial Review, page
40. Report of Independent Public Accountants, page 44. Consolidated
Statement of Earnings, page 45. Consolidated Balance Sheet, page 46.
Consolidated Statement of Cash Flows, page 48. Consolidated Statement of
Shareholders' Interest, page 50. Notes to Financial Statements, page 51.
Historical Summary, page 68.
34
<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 39,400 employees, of whom 37,500 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 1,900 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 ser-
vices subsidiaries also operate in highly competitive mar-
kets, competing with numerous regional and national firms in
real estate development and construction and in financial
services.
In 1995, the company's sales to customers outside the United
States totaled $2.9 billion (including exports of $1.9 bil-
lion from the United States and $1 billion of Canadian
export and domestic sales), or 25 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 5.3 million acres of com-
mercial forestland in the United States (49 percent in the
South and 51 percent in the Pacific Northwest), most of it
highly productive and located extremely well to serve both
domestic and international markets. The company has, addi-
tionally, long-term license arrangements in Canada covering
approximately 18.9 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 244 million cunits (a cunit is 100 cubic feet
of solid wood), of which approximately 75 percent is soft-
wood 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, fertilization and operational pruning,
all of which increase the yield from its fee timberland
acreage.
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 whole-
salers, retailers and industrial users.
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993 1992 1991
- -------------------------- ------ ------ ------ ------ ------
Net sales:
<S> <C> <C> <C> <C> <C>
Raw materials (logs, chips
and timber) $1,102 $1,091 $1,021 $ 872 $ 843
Softwood lumber 1,648 1,880 1,704 1,138 978
Softwood plywood and veneer 591 636 567 498 412
Oriented strand board,
composite and other panels 752 750 623 495 383
Hardwood lumber 193 175 154 127 118
Engineered wood products 207 157 100 - -
Miscellaneous products 438 303 299 287 214
------ ------ ------ ------ ------
$4,931 $4,992 $4,468 $3,417 $2,948
====== ====== ====== ====== ======
Approximate contributions
to earnings (1) $ 808 $1,034 $ 891 $ 515 $ 155
====== ====== ====== ====== ======
</TABLE>
(1) After net restructuring charges of $152 million in 1991.
35
<PAGE>
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 packaging, and manufactures and
markets industrial and agricultural packaging; Paperboard,
which manufactures and markets bleached paperboard, used for
production of liquid containers, 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 1993, the Personal Care Products business, which manufac-
tured disposable diapers sold under the private-label brands
of many of North America's largest retailers, was sold
through an initial public offering of stock.
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993 1992 1991
- -------------------------- ------ ------ ------ ------ ------
Net sales:
<S> <C> <C> <C> <C> <C>
Pulp $1,616 $1,012 $ 823 $ 711 $ 803
Newsprint 508 356 322 326 288
Paper 1,001 664 648 673 655
Paperboard and containerboard 325 240 255 321 361
Packaging 1,863 1,495 1,302 1,323 1,175
Recycling 266 121 77 93 90
Chemicals 63 45 32 31 34
Personal care products - - - 514 450
Miscellaneous products 40 133 120 117 147
------ ------ ------ ------ ------
$5,682 $4,066 $3,579 $4,109 $4,003
====== ====== ====== ====== ======
Approximate contributions
to earnings (1) $1,181 $ 211 $ 61 $ 251 $ 108
====== ====== ====== ====== ======
</TABLE>
(1) After net restructuring charges of $129 million in 1991.
Real Estate
The company, through its real estate subsidiary,
Weyerhaeuser Real Estate Company, is engaged in developing
single-family housing and residential lots for sale,
including the development of master-planned communities.
Operations are mainly concentrated in selected metropolitan
areas in Southern California, Nevada, Washington, Texas,
Maryland and Virginia.
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993 1992 1991
- -------------------------- ------- ------- ------- ------- -------
Net sales and revenues:
<S> <C> <C> <C> <C> <C>
Single-family units $ 563 $ 686 $ 615 $ 569 $ 591
Multi-family units - 26 30 4 16
Residential lots 60 65 43 39 25
Commercial lots 29 7 41 6 17
Commercial buildings 4 35 3 5 30
Acreage 36 20 27 20 16
Other 31 72 70 47 49
------- ------- ------- ------- -------
$ 723 $ 911 $ 829 $ 690 $ 744
======= ======= ======= ======= =======
Approximate contributions
to earnings (1) $ (231) $ 7 $ 18 $ 13 $ (175)
======= ======= ======= ======= =======
</TABLE>
(1) After a special charge of $232 million to dispose of
certain real estate assets in 1995 and restructuring charges
of $155 million in 1991.
36
<PAGE>
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 billion
covering approximately 136,000 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
insurances.
GNA Corporation, a subsidiary that specialized in the sale
of life insurance annuities and mutual funds to the cus-
tomers 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 1995 1994 1993 1992 1991
- -------------------------- ------- ------- ------- ------- -------
Net sales and revenues:
<S> <C> <C> <C> <C> <C>
Interest $ 76 $ 84 $ 110 $ 144 $ 209
Investment income 3 2 116 452 454
Loan origination and servicing fees 84 88 127 103 98
Premiums 9 10 14 21 19
Other revenues 24 22 34 112 82
------- ------- ------- ------- -------
$ 196 $ 206 $ 401 $ 832 $ 862
======= ======= ======= ======= =======
Approximate contributions
to earnings (1) $ (46) $ 11 $ 76 $ 68 $ 60
======= ======= ======= ======= =======
</TABLE>
(1) After a special charge of $58 million to dispose of
certain real estate assets in 1995 and a $42 million gain on
sale of GNA Corporation in 1993.
Corporate and Other
Corporate and other includes nursery and garden supply prod-
ucts, 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 1995 1994 1993 1992 1991
- -------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net sales $ 256 $ 223 $ 269 $ 220 $ 216
======= ======= ======= ======= =======
Approximate contributions
to earnings (1) $ (217) $ (142) $ (46) $ (107) $ (148)
======= ======= ======= ======= =======
</TABLE>
(1) After net restructuring charges of $9 million in 1991 and a $70 million
gain on disposal of infant diaper business in 1993.
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. The National Marine Fisheries Service has proposed
listing coho salmon that spawn in Oregon coastal rivers
and some cutthroat trout as a threatened species.
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 protection of wetlands and threatened or
endangered species may affect future harvest and forest
management practices 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 has reduced timber sales from
certain federal lands in western Washington, western
Oregon and northern California by more than 75 percent
37
<PAGE>
from harvest levels in the 1980s. This reduction in
federal timber sales 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 provide the opportunity to
clarify the uncertainty surrounding federal policies for
protection of northern spotted owls on some private
lands. On February 7, 1995, the administration proposed a
special rule to clarify federal 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 1996 and 1997.
Because those regulatory changes may not be implemented,
and in order to avoid existing uncertainty under the ESA,
the company, in February 1995, developed a Habitat
Conservation Plan (HCP) and obtained from the United
States Fish and Wildlife Service an Incidental Take Permit
with respect to northern spotted owls on most of its
Oregon coastal timber lands. That HCP establishes 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
is seeking to develop HCPs or other arrangements with
federal and state fish and wildlife agencies for some
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 in-
creases 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. One additional effect may be the
continuation of some reduced usage of, and some
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
1996 or 1997 will have, a significant effect on the com-
pany'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 re-
cycled 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 extension 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 5 percent
of total capital expenditures in 1995. Based on its understanding
of current regulatory requirements, the company expects
that this percentage will range from 10 to 11 percent of
total capital expenditures in 1996 and 1997.
The company is involved in the environmental remediation
of numerous sites, including 41 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.
The company spent $39 million in 1995 and expects to spend
$29 million in 1996 on environmental remediation of these
sites. It is the company's policy to accrue for environ-
mental remediation costs when it is determined that it is
probable that such an obligation exists and the amount of
38
<PAGE>
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 $120
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.
An Environmental Protection Agency (EPA) regulation under
Title 5 of the Clean Air Act requires additional operating
permits at many of the company's manufacturing operations.
Although significant work is required to prepare the
permit applications in 1996 and 1997, 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. Using EPA
quantitation limits, the company's analysis of its
effluent discharge reveals no detectable levels of dioxin
at any of the company's pulp mills.
The EPA published proposed regulations on December 17,
1993, 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. The EPA
has indicated that it is considering reproposing the cluster
rules. If the cluster rules are reproposed, the company's
understanding of the potential effect is that it will significantly
reduce the amount and timing of capital expenditures to comply with
the rules.
39
<PAGE>
Financial Review
Results of Operations
1995 Compared With 1994
The company's consolidated net sales and revenues
increased 13 percent to a record $11.8 billion in 1995
compared with $10.4 billion in 1994. The pulp, paper and
packaging segment accounted for $5.7 billion of this
record performance, 40 percent over its sales of $4.1
billion in 1994, with strong year-to-year improvement in
all product lines. These markets have weakened in the
fourth quarter, and this weakness may persist in 1996 as
customers continue to reduce inventories. The timberlands
and wood products segment sales of $4.9 billion
approximated last year's. The real estate and financial
services segments had combined sales of $919 million, down
from last year's $1.1 billion, largely attributable to
declines in single-family home sales.
The company also achieved record earnings of $799 million,
or $3.93 per common share, in 1995, which was 36 percent
over the $589 million, or $2.86 per common share, recorded
in 1994. The 1995 earnings were net of an after-tax charge
of $184 million ($290 million pretax), or 90 cents per
common share, within the real estate and financial
services segments. The 1994 earnings included a net
contribution of $.03 per common share for the return of
countervailing duty by the U.S. government against
Canadian lumber imports and the expected cost of
postretirement benefits for Canadian employees.
Operating earnings in the timberlands and wood products
segment were $808 million, down from the record $1 billion
for the previous year. This was attributable to price
declines primarily in softwood lumber, caused by a drop in
domestic housing starts.
The pulp, paper and packaging segment posted record operat-
ing earnings of $1.2 billion in 1995 compared with $211
million earned in 1994. Significant price improvement over
the prior year and ongoing improvements in operations were
the key factors in recovery in this segment.
The company's real estate and financial services segments
recorded a combined operating loss of $277 million for the
year after reflecting the $290 million special charge that
came from two related actions: (1) 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," 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 assets. Before
these actions, the combined segments earned $13 million
compared with $18 million in 1994.
Weyerhaeuser's cost of products sold as a percentage of
net sales decreased to 69 percent in 1995 compared with 73
percent in 1994. The company continued to benefit from its
mill modernization program and implementation of its
business improvement plans, offset in part by the costs
associated with higher sales activity, principally in the
pulp, paper and packaging segment. Depreciation expense
increased over the prior year as a result of the
completion and start-up of several mill modernization
projects in late 1994 in the pulp, paper and packaging
segment. The expansion of the company's Performance Share
Plan to include all employees was the major contributor to
the $109 million increase in selling, general and
administrative expenses. Contributions made by the company
into this plan are invested in company stock on behalf of
each employee. The size of the contribution, if any, is
decided by the board of directors each year on the basis
of that year's profits and the company's performance
relative to its competition.
Excluding the revaluation charge, the decrease in costs
and operating expenses of the real estate and financial
services segments are in line with the reduced sales
activity.
Other income (expense) is an aggregation of both recurring
and occasional income and expense items and, as a result,
fluctuates from period to period. No individual income
(expense) item in 1995 was significant in relation to net
earnings.
Weyerhaeuser's interest expense incurred was up $34
million over the prior year as a result of prefunding 1995
debt maturities that were due late in the year as well as
an increase in the company's combined long- and short-term
debt levels. Capitalized interest was $16 million less
than the prior year as mill modernization projects at
Longview, Washington, and Plymouth, North Carolina, were
completed.
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
included 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
40
<PAGE>
$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 mod-
ernization projects, started in 1993, accounted for the
significant increase in capitalized interest from year to
year.
The significant changes from 1993 in other income were
attributable to the $70 million 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 record
operating earnings of $1 billion in 1994, which was a 16
percent increase over the $891 million reported in 1993.
Sales for this segment were $5 billion, up 12 percent over
the $4.5 billion reported in 1993. This segment posted
record performances during 1994 as the businesses continued to
accomplish their business improvement plans, timber
supplies remained tight and markets remained strong
throughout the year.
The pulp, paper and packaging segment's 1994 operating
earnings were $211 million, up substantially from 1993'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 were the key
factors in this recovery.
The combined real estate and financial services segments
earned $18 million in 1994 compared with 1993 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
Consolidated 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.
. $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 prepay-
ments 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 divested in the first quarter of 1993.
The real estate and financial services segments had oper-
ating 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.
41
<PAGE>
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
under lying 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 14 of Notes to Financial Statements.
Operations
The company's consolidated financial position was very
strong in 1995 as it generated $1.9 billion of cash flow
from operations before working capital changes compared
with $1.3 billion in 1994.
Cash flow from operations before changes in working
capital by business segment was as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993
- ----------------------------- --------- --------- ---------
<S> <C> <C> <C>
Timberlands and wood products $ 1,026 $ 1,226 $ 1,052
Pulp, paper and packaging 1,567 530 326
Real estate 23 16 29
Financial services 46 33 12
Corporate and other (806) (545) (437)
--------- --------- ---------
$ 1,856 $ 1,260 $ 982
========= ========= =========
</TABLE>
Weyerhaeuser's net working capital at December 31, 1995,
increased $321 million from the previous year-end. Signifi-
cant factors were an increase of $148 million in
inventories and prepaid expenses, excluding acquisitions,
and a net reduction of $196 million in current portion of
long-term debt, as the 9 1/4 percent and 9.36 percent notes
totaling $300 million, due in 1995, were paid.
Real estate and financial services segments cash flow from
operations was down in 1995. Loan origination activity
exceeded loan sales in the mortgage banking operations
compared with the previous year when sales exceeded
origination activity, creating a net change of $378
million from year to year.
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 re-
corded 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 1995,
including acquisitions, and $1.1 billion in 1994. They are
currently expected to approximate $900 million in 1996;
however, the expenditures could be increased or decreased
as a consequence of future economic conditions. The
company had approximately $269 million in capital
expenditures committed on major projects at year-end 1995
including construction of its new oriented strand board
mill in West Virginia as well as environmental and
productivity improvement projects at the New Bern, North
Carolina, and Kamloops, British Columbia, pulp and paper
complexes. In addition, near year-end, the company
announced that it had signed an agreement to acquire
241,000 acres of southern private commercial forestland.
The ultimate purchase price could range up to $275 million.
42
<PAGE>
Recent capital spending, including acquisitions, has been
in the following areas:
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993
- ----------------------------- ------- ------- -------
<S> <C> <C> <C>
Timberlands and wood products $ 508 $ 257 $ 241
Pulp, paper and packaging 562 794 652
Corporate and other 49 51 74
------- ------- -------
$1,119 $1,102 $ 967
======= ======= =======
</TABLE>
Capital assets acquired in 1995, using $77 million of cash
and $46 million of the company's treasury shares, were
three hardwood lumber mills, timber and timberlands, nine
corrugated packaging plants and five recycling collection
facilities.
The change from 1994 to 1995 in the financial services
segment was the result of the sale of adjustable-rate mort-
gages and partnership distributions in 1995 compared with
partnership investments made and the sale of mortgage-
backed certificates in 1994.
Financing
The increases in sales of debentures and industrial
revenue bonds and related payments on debentures,
commercial paper and other debt by Weyerhaeuser in 1995
compared with the prior year are a result of replacing
maturing and higher cost debt with lower-priced
instruments.
Real estate and financial services segments used the
proceeds from the sale of adjustable-rate mortgages and
mortgage loans to reduce total debt from the 1994 ending
balance.
Cash dividends paid on common shares amounted to $306
million in 1995 and $247 million in 1994. The increase in
1995, compared with 1994, is a result of increasing the
quarterly dividend on common shares from 30 cents to 40
cents in the second quarter. Although common share
dividends have exceeded the company's target payout ratio
in recent years, it is our intent, over time, to pay
dividends to our common shareholders in a range of 35 to
45 percent of common share earnings.
As a part of its 10 million share repurchase program an-
nounced in the second quarter of 1995, the company had ac-
quired 8.5 million common shares by year-end at a cost of
$379 million.
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 1995 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 environmen-
tal 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 the following
pronouncements of the Financial Accounting Standards Board
(FASB):
. Statement of Financial Accounting Standards (SFAS) No.
114, "Accounting by Creditors for Impairment of a Loan."
. SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosures," which amended
SFAS No. 114.
. SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."
. SFAS No. 122, "Accounting for Mortgage Servicing Rights --
an Amendment of FASB Statement No. 65."
These statements are described in Note 1, Summary of
Significant Accounting Policies, of Notes to Financial
Statements.
43
<PAGE>
In October 1995, the FASB issued SFAS No. 123, "Accounting
for Stock-Based Compensation," which requires companies to
change what they disclose about their employee stock-based
compensation plans, recommends that they change the
accounting for these plans to a fair-value based method and
requires those companies that do not change their
accounting to disclose what their earnings and earnings per
share would have been if they had changed. This disclosure
is applicable for financial statements for fiscal years
beginning after December 15, 1995. The company will
continue to account for these plans using the method of
accounting prescribed by Accounting Principles Board
Opinion No. 25 and will conform to the disclosure
requirements of SFAS No. 123 for the fiscal year 1996.
Accounting and Reporting Standards Committee
During the year, the Accounting and Reporting Standards
Committee, comprised of four 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.
Other
The company has embarked on a new series of business
improvement plans which targets $600 million in pretax
operating improvements measured in 1994 prices and costs by
year-end 1997.
In 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.
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 31, 1995, and December 25,
1994, and the related consolidated statements of earnings,
cash flows and shareholders' interest for each of the
three years in the period ended December 31, 1995. 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 statements 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 31, 1995, and December 25, 1994, and the results
of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
Seattle, Washington,
February 12, 1996 ARTHUR ANDERSEN LLP
44
<PAGE>
Consolidated Statement of Earnings
<TABLE>
<CAPTION>
For the three-year period ended December 31, 1995
Dollar amounts in millions except per-share figures 1995 1994 1993
- --------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
Net sales and revenues:
Weyerhaeuser $10,869 $ 9,281 $ 8,315
Real estate and financial services 919 1,117 1,230
------- ------- -------
Net sales and revenues 11,788 10,398 9,545
------- ------- -------
Costs and expenses:
Weyerhaeuser:
Costs of products sold 7,516 6,819 6,252
Depreciation, amortization and fee stumpage 580 504 444
Selling, general and administrative expenses 724 615 592
Research and development expenses 51 47 44
Taxes other than payroll and income taxes 155 151 137
------- ------- -------
9,026 8,136 7,469
------- ------- -------
Real estate and financial services:
Costs and operating expenses 681 851 836
Depreciation and amortization 41 30 43
Selling, general and administrative expenses 139 152 206
Taxes other than payroll and income taxes 8 9 9
Charge for impairment of long-lived assets (Note 1) 290 - -
------- ------- -------
1,159 1,042 1,094
------- ------- -------
Total costs and expenses 10,185 9,178 8,563
------- ------- -------
Operating income 1,603 1,220 982
Interest expense and other:
Weyerhaeuser:
Interest expense incurred 271 237 215
Less interest capitalized 20 36 23
Other income (expense), net (Note 3) (71) (42) 60
Real estate and financial services:
Interest expense incurred 140 154 173
Less interest capitalized 76 78 77
Other income (expense), net (Note 3) 27 19 54
------- ------- -------
Earnings before income taxes and extraordinary item 1,244 920 808
Income taxes (Note 4) 445 331 281
------- ------- -------
Earnings before extraordinary item 799 589 527
Extraordinary item, net of applicable
taxes of $34 (Note 5) - - 52
------- ------- -------
Net earnings $ 799 $ 589 $ 579
======= ======= =======
Per common share (Note 1):
Earnings before extraordinary item $ 3.93 $ 2.86 $ 2.58
Extraordinary item - - .25
------- ------- -------
Net earnings $ 3.93 $ 2.86 $ 2.83
======= ======= =======
Dividends paid $ 1.50 $ 1.20 $ 1.20
======= ======= =======
</TABLE>
See notes on pages 51 through 69.
45
<PAGE>
Consolidated Balance Sheet
<TABLE>
<CAPTION>
Dollar amounts in millions December 31, 1995 December 25, 1994
- -------------------------- ----------------- -----------------
<S> <C> <C>
Assets
Weyerhaeuser
Current assets:
Cash and short-term investments (Note 1) $ 34 $ 190
Receivables, less allowances
of $9 and $10 976 909
Inventories (Note 8) 960 746
Prepaid expenses 265 284
----------- ------------
Total current assets 2,235 2,129
Property and equipment (Note 9) 6,717 6,196
Construction in progress 509 603
Timber and timberlands at cost, less fee
stumpage charged to disposals 666 610
Other assets and deferred charges 232 212
----------- ------------
10,359 9,750
----------- ------------
Real estate and financial services
Cash and short-term investments, including
restricted deposits of $22 and $28 50 73
Receivables, less discounts and allowances
of $7 and $4 92 116
Mortgage notes held for sale (Note 15) 332 209
Mortgage loans receivable (Note 15) 155 263
Investments (Note 15) 70 247
Mortgage-backed certificates and other pledged
financial instruments (Notes 10 and 15) 185 211
Real estate in process of development and for
sale, less reserves of $21 and $54 (Note 11) 776 989
Land being processed for development, less
reserves of $18 and $19 688 738
Deferred acquisition costs 84 92
Investments in and advances to joint ventures
and limited partnerships, less reserves
of $38 and $49 113 237
Other assets 349 233
----------- ------------
2,894 3,408
----------- ------------
Total assets $ 13,253 $ 13,158
=========== ============
</TABLE>
See notes on pages 51 through 69.
46
<PAGE>
<TABLE>
<CAPTION>
Dollar amounts in millions December 31, 1995 December 25, 1994
- -------------------------- ----------------- -----------------
<S> <C> <C>
Liabilities and shareholders' interest
Weyerhaeuser
Current liabilities:
Notes payable $ 24 $ 6
Current maturities of long-term debt 125 321
Accounts payable (Note 1) 747 796
Accrued liabilities (Note 12) 707 695
----------- -----------
Total current liabilities 1,603 1,818
Long-term debt (Notes 14 and 15) 2,983 2,713
Deferred income taxes (Note 4) 1,196 986
Deferred pension and other liabilities
(Notes 6 and 7) 509 525
Minority interest in subsidiaries 111 103
Commitments and contingencies (Note 16)
----------- -----------
6,402 6,145
----------- -----------
Real estate and financial services
Notes payable and commercial paper (Note 13) 338 416
Collateralized mortgage obligation bonds
(Notes 10 and 15) 159 183
Long-term debt (Note 14) 1,594 1,770
Other liabilities 274 354
Commitments and contingencies (Note 16)
----------- -----------
2,365 2,723
----------- -----------
Total liabilities 8,767 8,868
----------- -----------
Shareholders' interest (Note 18):
Common shares: authorized 400,000,000 shares,
issued 206,072,890 shares, $1.25 par value 258 258
Other capital 415 416
Cumulative translation adjustment (90) (107)
Retained earnings 4,226 3,733
Treasury common shares, at cost: 7,302,878 and
455,387 (323) (10)
----------- -----------
Total shareholders' interest 4,486 4,290
----------- -----------
Total liabilities and shareholders' interest $ 13,253 $ 13,158
=========== ===========
</TABLE>
47
<PAGE>
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Consolidated
For the three-year period ended December 31, 1995 -----------------------
Dollar amounts in millions 1995 1994 1993
- --------------------------------- ------- ------- -------
<S> <C> <C> <C>
Cash flows provided by operations:
Net earnings (loss) $ 799 $ 589 $ 579
Non-cash charges to income:
Depreciation, amortization and fee stumpage 621 534 487
Deferred income taxes, net 103 127 94
Contributions to employee benefit plans - - 2
Extraordinary item, including current tax benefit - - (90)
Deferred income taxes on extraordinary item - - 38
Charge for impairment of long-lived assets 290 - -
Changes in working capital:
Accounts receivable (33) (125) (93)
Inventories, prepaid expenses, real estate and land (159) (6) (272)
Mortgage notes held for sale and mortgage loans
receivable (18) 360 23
Other liabilities (102) 198 168
(Gain) loss on disposition of assets 43 10 (16)
(Gain) on sales of businesses - - (112)
Other 12 (7) 44
------- ------- -------
Net cash provided by operations 1,556 1,680 852
------- ------- -------
Cash flows from investing in the business:
Property and equipment (928) (1,061) (927)
Timber and timberlands (68) (41) (40)
Property and equipment and timber and timberlands
from acquisitions (77) - -
Mortgage and investment securities acquired (28) (260) (776)
Proceeds from sale of:
Property, equipment, timber and timberlands 19 44 54
Businesses - 14 616
Mortgage and investment securities 214 140 510
Other 30 (102) (26)
------- ------- -------
Net cash flows from investing in the business (838) (1,266) (589)
------- ------- -------
Cash flows from financing activities:
Sale of debentures, notes and CMO bonds 723 174 1,291
Sale of industrial revenue bonds 150 134 135
Notes and commercial paper borrowings, net (439) (143) (660)
Proceeds from issuance of investment contracts - - 60
Cash dividends on common shares (306) (247) (246)
Intercompany cash dividends on common shares - - -
Payments on debentures, notes, bank credit
agreements, income debenture, capital leases
and CMO bonds (661) (362) (1,243)
Purchase of treasury common shares (379) - -
Exercise of stock options 19 16 21
Other (4) (2) 5
------- ------- -------
Net cash flows from financing activities (897) (430) (637)
------- ------- -------
Net increase (decrease) in cash and short-term
investments (179) (16) (374)
Cash and short-term investments at beginning of year 263 279 653
------- ------- -------
Cash and short-term investments at end of year $ 84 $ 263 $ 279
======= ======= =======
Cash paid during the year for:
Interest, net of amount capitalized $ 302 $ 279 $ 305
======= ======= =======
Income taxes $ 332 $ 141 $ 158
======= ======= =======
</TABLE>
See notes on pages 51 through 69.
48
<PAGE>
<TABLE>
<CAPTION>
Weyerhaeuser Company Real Estate and Financial Services
----------------------- ----------------------------------
1995 1994 1993 1995 1994 1993
------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C>
$ 981 $ 576 $ 511 $ (182) $ 13 $ 68
580 504 444 41 30 43
183 115 108 (80) 12 (14)
- - 2 - - -
- - (90) - - -
- - 38 - - -
- - - 290 - -
(60) (126) (55) 27 1 (38)
(148) (12) (164) (11) 6 (108)
- - - (18) 360 23
(82) 272 53 (20) (74) 115
43 15 (3) - (5) (13)
- - (70) - - (42)
14 (20) 34 (2) 13 10
------- ------- ------- ------- ------- -------
1,511 1,324 808 45 356 44
------- ------- ------- ------- ------- -------
(915) (1,047) (907) (13) (14) (20)
(68) (41) (40) - - -
(77) - - - - -
- - - (28) (260) (776)
19 20 27 - 24 27
- - 204 - 14 412
- - - 214 140 510
(50) (49) (6) 80 (53) (20)
------- ------- ------- ------- ------- -------
(1,091) (1,117) (722) 253 (149) 133
------- ------- ------- ------- ------- -------
583 22 931 140 152 360
150 134 135 - - -
(159) (83) (520) (280) (60) (140)
- - - - - 60
(306) (247) (246) - - -
- - 435 - - (435)
(480) (49) (824) (181) (313) (419)
(379) - - - - -
19 16 21 - - -
(4) (2) 5 - - -
------- ------- ------- ------- ------- -------
(576) (209) (63) (321) (221) (574)
------- ------- ------- ------- ------- -------
(156) (2) 23 (23) (14) (397)
190 192 169 73 87 484
------- ------- ------- ------- ------- -------
$ 34 $ 190 $ 192 $ 50 $ 73 $ 87
======= ======= ======= ======= ======= =======
$ 236 $ 201 $ 203 $ 66 $ 78 $ 102
======= ======= ======= ======= ======= =======
$ 346 $ 92 $ 161 $ (14) $ 49 $ (3)
======= ======= ======= ======= ======= =======
</TABLE>
49
<PAGE>
Consolidated Statement of Shareholders' Interest
<TABLE>
<CAPTION>
For the three-year period ended December 31, 1995
Dollar amounts in millions 1995 1994 1993
- ------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
Common stock issued:
Balance at end of year $ 258 $ 258 $ 258
------- ------- -------
Other capital:
Balance at beginning of year 416 411 404
Stock options exercised (3) 5 5
Contributions to employee investment plans - - 1
Other transactions (net) 2 - 1
------- ------- -------
Balance at end of year 415 416 411
------- ------- -------
Cumulative translation adjustment:
Balance at beginning of year (107) (73) (36)
Translation adjustment 17 (34) (37)
------- ------- -------
Balance at end of year (90) (107) (73)
------- ------- -------
Retained earnings:
Balance at beginning of year 3,733 3,391 3,058
Net earnings 799 589 579
Cash dividends on common shares (306) (247) (246)
------- ------- -------
Balance at end of year 4,226 3,733 3,391
------- ------- -------
Common stock held in treasury:
Balance at beginning of year (10) (21) (38)
Purchases of treasury common shares (379) - -
Stock options exercised 22 11 16
Contributions to employee investment plans - - 1
Used in acquisition of capital assets 44 - -
------- ------- -------
Balance at end of year (323) (10) (21)
------- ------- -------
Total shareholders' interest:
Balance at end of year $4,486 $4,290 $3,966
======= ======= =======
Shares of common stock (in thousands):
Issued at end of year 206,073 206,073 206,073
------- ------- -------
In treasury:
Balance at beginning of year 455 984 1,796
Purchases of treasury common shares 8,494 - -
Stock options exercised (648) (529) (744)
Contributions to employee investment plans - - (60)
Used in acquisition of capital assets (998) - -
Other transactions - - (8)
------- ------- -------
Balance at end of year 7,303 455 984
------- ------- -------
Outstanding at end of year 198,770 205,618 205,089
======= ======= =======
</TABLE>
See notes on pages 51 through 69.
50
<PAGE>
Notes to Financial Statements
For the three-year period ended December 31, 1995
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). GNA Corporation, a subsidiary of WFS, was
sold in April 1993.
Nature of Operations
The company's principal business segments, which account
for the majority of sales and earnings and 70 percent of
the asset base, are:
. Timberlands and wood products, which is engaged in the
management of 5.3 million acres of company-owned
forestland in the United States and 18.9 million acres of
forestland in Canada under long-term licensing
arrangements and the production of a full line of solid
wood products that are sold primarily through the
company's own sales organizations to wholesalers,
retailers and industrial users in North America, the
Pacific Rim and Europe.
. Pulp, paper and packaging, which manufactures and sells
pulp, newsprint, paper, paperboard and containerboard in
North American, Pacific Rim and European markets, and
packaging products for the domestic markets, and which
operates an extensive wastepaper recycling system that
serves company mills and worldwide markets.
Fiscal Year-End
The company's fiscal year ends on the last Sunday of the
year. Fiscal year 1995 had 53 weeks, and fiscal years 1994
and 1993 had 52 weeks.
Changes in Accounting Principles
In 1994, the company implemented the following pronounce-
ments by the Financial Accounting Standards Board (FASB):
. Statement of Financial Accounting Standards (SFAS) No.
106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," for its wholly owned subsidiary,
Weyerhaeuser Canada Ltd. The adoption of this pronouncement
did not have a significant impact on the company's results
of operations or its financial position.
. SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual accounting to 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.
. 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 1995, the company also 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.
. SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," which
requires companies to change their method of valuing long-
lived assets. The implementation of this pronouncement,
along with the company's decision to accelerate the dispo-
sition of some of those real estate assets, resulted in a
charge of $290 million to operations. The company currently
plans to dispose of most of the impaired assets over the
next two years. The carrying value of the affected assets
at December 31, 1995, is approximately $291 million.
. 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 origina-
tion and those acquired through purchasing transactions, as
previously required under SFAS No. 65. The change also
requires that the enterprise periodically evaluate
servicing rights for impairment. The adoption of this
pronouncement by WMC did not have a significant impact on
results of operations or financial position.
51
<PAGE>
Prospective Accounting Changes
In October 1995, the FASB issued SFAS No. 123, "Accounting
for Stock-Based Compensation," which requires companies to
change what they disclose about their employee stock-based
compensation plans, recommends that they change the
accounting for these plans to a fair-value based method
and requires those companies that do not change their
accounting to disclose what their earnings and earnings
per share would have been if they had changed. This
disclosure is applicable for financial statements for
fiscal years beginning after December 15, 1995. The
company will continue to account for these plans using the
method of accounting prescribed by Accounting Principles
Board Opinion No. 25 and will conform to the disclosure
requirements of SFAS No. 123 for the fiscal year 1996.
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 203,525,000, 205,543,000 and
204,866,000 for the years ended December 31, 1995,
December 25, 1994, and December 26, 1993, respectively.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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. 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 company is exposed to credit-related losses in the
event of nonperformance by counterparties to financial
instruments but does not expect any counterparties to fail
to meet their obligations. The company deals only with
highly rated counterparties.
The notional amount of these derivative financial in-
struments is $891 million at December 31, 1995. 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 inven-
tories; 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
$267 million and $237 million greater at December 31, 1995,
and December 25, 1994, 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.
52
<PAGE>
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.
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 $149 million and $151 million at December 31,
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 em-
ployees. 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
Real estate held for sale 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. Real estate held for development is stated at cost
to the extent it does not exceed the future undiscounted
net cash flows.
Weyerhaeuser Financial Services
The company's financial services businesses are engaged in
the mortgage banking industry, hold mortgage-backed
certificates and other financial instruments pledged as
collateral for collateralized mortgage obligation (CMO)
bonds, 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).
Mortgage-backed certificates are carried at par value
adjusted for any unamortized discount or premium.
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.
53
<PAGE>
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>
December 31, December 25, December 26,
Dollar amounts in millions 1995 1994 1993
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Net assets:
Working capital $ 72 $ 29 $ 100
Timber-cutting rights 2 2 2
Property and equipment, net 894 826 853
Other assets 40 42 36
------------ ------------ ------------
1,008 899 991
Other liabilities (253) (235) (232)
------------ ------------ ------------
Net assets $ 755 $ 664 $ 759
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993
- -------------------------- --------- --------- --------
<S> <C> <C> <C>
Net sales $ 1,582 $ 1,390 $ 972
Net earnings 282 186 116
</TABLE>
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
following 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 1995 1994 1993
- -------------------------- --------- --------- ---------
<S> <C> <C> <C>
Export sales from the United States:
Customers in Japan $ 1,173 $ 1,034 $ 952
Customers outside Japan 763 506 493
--------- --------- ---------
Total export sales 1,936 1,540 1,445
--------- --------- ---------
Total net sales and revenues $ 11,788 $ 10,398 $ 9,545
========= ========= =========
</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.
54
<PAGE>
Note 4. Income Taxes
Earnings before income taxes and extraordinary item are
comprised of the following:
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993
- -------------------------- -------- -------- --------
<S> <C> <C> <C>
Domestic earnings $ 845 $ 650 $ 738
Foreign earnings 399 270 70
-------- -------- --------
$ 1,244 $ 920 $ 808
======== ======== ========
</TABLE>
Provisions for income taxes include the following:
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993
- --------------------------- --------- --------- ---------
<S> <C> <C> <C>
Federal:
Current $ 177 $ 84 $ 145
Deferred 92 114 82
--------- --------- ---------
269 198 227
--------- --------- ---------
State:
Current 31 17 16
Deferred 4 7 11
--------- --------- ---------
35 24 27
--------- --------- ---------
Foreign:
Current 134 103 26
Deferred 7 6 1
--------- --------- ---------
141 109 27
--------- --------- ---------
Income taxes before extraordinary item 445 331 281
--------- --------- ---------
Income taxes apportionable to extraordinary item:
Current - - (4)
Deferred - - 38
--------- --------- ---------
- - 34
--------- --------- ---------
$ 445 $ 331 $ 315
========= ========= =========
</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>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Statutory tax on income before extraordinary item 35% 35% 35%
State income taxes, net of federal tax benefit 2 2 3
Foreign sales corporations (1) (1) (2)
Effect of tax rate change - - 2
All other, net - - (3)
------ ------ ------
Effective income tax rate 36% 36% 35%
====== ====== ======
</TABLE>
55
<PAGE>
The net deferred income tax (liabilities) assets include
the following components:
<TABLE>
<CAPTION>
Dollar amounts in millions December 31, 1995 December 25, 1994
- -------------------------- ----------------- -----------------
<S> <C> <C>
Current (included in prepaid expenses) $ 75 $ 68
Noncurrent (1,196) (986)
Real estate and financial services 72 (8)
----------------- -----------------
Total $ (1,049) $ (926)
================= =================
</TABLE>
The deferred tax (liabilities) assets are comprised of the
following:
<TABLE>
<CAPTION>
Dollar amounts in millions December 31, 1995 December 25, 1994
- -------------------------- ----------------- -----------------
<S> <C> <C>
Depreciation $ (1,220) $ (1,093)
Depletion (115) (99)
Capitalized interest and taxes -
real estate development (77) (79)
Other (140) (138)
------------- -------------
Total deferred tax (liabilities) (1,552) (1,409)
------------- -------------
Pension and retiree health care 121 121
Charges for impairment of long-lived assets 93 -
Environmental, obsolescence and
restructure reserves 78 85
Alternative minimum tax credit carryforward 20 64
Other 191 213
------------- -------------
Total deferred tax assets 503 483
------------- -------------
$ (1,049) $ (926)
============= =============
</TABLE>
As of December 31, 1995, the company has available
approximately $20 million of alternative minimum tax
credit carryforward, which does not expire, and foreign
tax credit carryforwards of $1 million, $4 million and $1
million expiring in 1998, 1999 and 2000, respectively.
The company intends to reinvest undistributed earnings of
certain foreign subsidiaries; therefore, no U.S. taxes
have been provided. These earnings totaled approximately
$734 million at the end of 1995. 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 $73 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 (income) includes the following
components:
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993
- -------------------------- -------- -------- --------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 37 $ 43 $ 39
Interest cost on projected benefit obligation 104 96 93
Actual return on plan assets (466) (9) (280)
Net amortization and deferrals 323 (121) 165
Pension expense due to sales, closures and other - - (1)
-------- -------- --------
$ (2) $ 9 $ 16
======== ======== ========
</TABLE>
The assumptions used were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Discount rate 7.75% 8.75% 7.5%
Rate of increase in compensation levels 4.5% 4.5% 4.5%
Expected long-term rate of return on plan assets 11.5% 11.5% 11.5%
</TABLE>
56
<PAGE>
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 31, 1995 December 25, 1994
------------------------ -----------------------
Assets Accumu- Assets Accumu-
Exceed lated Exceed lated
Accumu- Benefits Accumu- Benefits
lated Exceed lated Exceed
Dollar amounts in millions Benefits Assets Total Benefits Assets Total
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Accumulated benefit
obligation:
Vested $ 1,254 $ 28 $ 1,282 $ 1,044 $ 15 $ 1,059
Non-vested 27 - 27 23 - 23
------- ------- ------- ------- ------- --------
$ 1,281 $ 28 $ 1,309 $ 1,067 $ 15 $ 1,082
======= ======= ======= ======= ======= ========
Projected benefit obligation $ 1,413 $ 34 $ 1,447 $ 1,172 $ 15 $ 1,187
Fair value of plan assets (1,627) (24) (1,651) (1,238) (12) (1,250)
Unrecognized prior service
cost (57) (12) (69) (49) (3) (52)
Unrecognized net gain 316 5 321 168 2 170
Unrecognized net transition
asset 32 (2) 30 37 (1) 36
------- ------- ------- ------- ------- --------
Accrued pension cost $ 77 $ 1 $ 78 $ 90 $ 1 $ 91
======= ======= ======= ======= ======= ========
</TABLE>
The assets of the U.S. and Canadian pension plans, as of
December 31, 1995, and December 25, 1994, consist of a
highly diversified mix of equity, fixed income and real
estate securities.
Approximately 1,750 employees are covered by union-
administered multi-employer pension plans to which the com-
pany makes negotiated contributions based generally on
fixed amounts per hour per employee. Contributions to
these plans were $7 million in 1995, $7 million in 1994
and $6 million in 1993.
Note 7. Postretirement Benefits Other Than Pensions
The company sponsors defined benefit postretirement plans
for its U.S. employees that provide medical and life insur-
ance 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
3,700 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 1,800 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 4,700
persons who are retired or were eligible to retire as of
December 31, 1991, are subject to a different schedule.
. An hourly retiree life insurance plan in which approxi-
mately 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 1995.
57
<PAGE>
The following table sets forth the U.S. and Canadian plans'
combined accrued postretirement benefit obligation as of
December 31, 1995, and December 25, 1994:
<TABLE>
<CAPTION>
December 31, December 25,
Dollar amounts in millions 1995 1994
- -------------------------- ------------ ------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees:
Health $ 119 $ 120
Life 22 22
Fully eligible and other active plan
participants:
Health 87 77
Life 12 11
------------ ------------
240 230
Unrecognized actuarial gain/(loss) 9 13
------------ ------------
Accrued postretirement benefit obligation $ 249 $ 243
============ ============
</TABLE>
Net annual postretirement benefit costs included the
following components:
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994 1993
- -------------------------- ------- ------- -------
<S> <C> <C> <C>
Service cost benefits attributed to
service during the period:
Health $ 3 $ 4 $ 3
Life - 1 1
Interest cost on accumulated postretirement
benefit obligation:
Health 16 16 16
Life 3 2 3
Amortization of loss - health (1) - -
------- ------- -------
Net postretirement benefit cost $ 21 $ 23 $ 23
======= ======= =======
</TABLE>
For measurement purposes, an 11.0, 10.5 and 8.5 percent
annual rate of increase in the per capita cost of covered
health care benefits was assumed for 1993, 1994 and 1995,
respectively. Beginning in 1996, the rate is assumed to
decrease by 0.5 percent annually to a level of 5.5 percent
for the year 2001 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 31, 1995, by 10.3
percent, and the aggregate of the service and interest
cost components of net annual postretirement benefit cost
for 1995 by 11.9 percent.
Other assumptions used were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Discount rate 7.75% 8.5% 7.5%
Rate of increase in compensation levels:
Salaried 4.5% 4.5% 4.5%
Hourly 3.0% 3.0% 3.0%
</TABLE>
58
<PAGE>
Note 8. Inventories
<TABLE>
<CAPTION>
Dollar amounts in millions December 31, 1995 December 25, 1994
- -------------------------- ----------------- -----------------
<S> <C> <C>
Logs and chips $ 173 $ 108
Lumber, plywood and panels 135 115
Pulp, newsprint and paper 158 88
Containerboard, paperboard and packaging 107 56
Other products 117 112
Materials and supplies 270 267
----------------- -----------------
$ 960 $ 746
================= =================
</TABLE>
Note 9. Property and Equipment
<TABLE>
<CAPTION>
Dollar amounts in millions December 31, 1995 December 25, 1994
- -------------------------- ----------------- -----------------
<S> <C> <C>
Property and equipment, at cost:
Land $ 167 $ 159
Buildings and improvements 1,582 1,509
Machinery and equipment 9,253 8,557
Rail and truck roads and other 615 628
----------------- -----------------
11,617 10,853
Less allowance for depreciation
and amortization 4,900 4,657
----------------- -----------------
$ 6,717 $ 6,196
================= =================
</TABLE>
Note 10. Mortgage-Backed Certificates and Other Pledged
Financial Instruments, and Collateralized Mortgage
Obligation Bonds
The company's financial services businesses hold mortgage-
backed certificates and other financial instruments
pledged as collateral for the collateralized mortgage
obligation (CMO) bonds. 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 CMO bonds are the obligation of the issuer, and
neither the company nor any affiliated company has
guaranteed or is otherwise obligated with respect to the
bonds.
Note 11. Real Estate in Process of Development and for
Sale
Properties held by the company's real estate and financial
services businesses include:
<TABLE>
<CAPTION>
Dollar amounts in millions December 31, 1995 December 25, 1994
- -------------------------- ----------------- -----------------
<S> <C> <C>
Dwelling units $ 236 $ 282
Residential lots 222 265
Commercial lots 136 131
Commercial projects 125 281
Acreage 77 83
Other inventories 1 1
----------------- -----------------
797 1,043
Less reserves 21 54
----------------- -----------------
$ 776 $ 989
================= =================
</TABLE>
59
<PAGE>
Note 12. Accrued Liabilities
<TABLE>
<CAPTION>
December 31, December 25,
Dollar amounts in millions 1995 1994
- -------------------------- ------------ ------------
<S> <C> <C>
Payroll -- wages and salaries, incentive awards,
retirement and vacation pay $ 265 $ 217
Taxes -- Social Security and real and
personal property 50 63
Interest 82 67
Accrued income taxes 117 105
Other 193 243
------------ ------------
$ 707 $ 695
============ ============
</TABLE>
Note 13. Short-Term Debt
Borrowings
Real estate and financial services short-term borrowings
were $338 million with a weighted average interest rate of
4.3 percent at December 31, 1995, and $416 million with a
weighted average interest rate of 6 percent at December
25, 1994.
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 was available to the company, WRECO and WMC
at December 31, 1995, and December 25, 1994. No portion of
these lines has been availed of by the company, WRECO or
WMC at December 31, 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 $230 million and $235 million at
December 31, 1995, and December 25, 1994, respectively.
Borrowings against these lines were $115 million and $85
million as of December 31, 1995, and December 25, 1994, re-
spectively.
Note 14. Long-Term Debt
Debt
Weyerhaeuser long-term debt, including the current
portion, is as follows:
<TABLE>
<CAPTION>
December 31, December 25,
Dollar amounts in millions 1995 1994
- -------------------------- ------------ ------------
<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 - 150
9 1/4% notes - 200
9.05% notes due 2003 200 200
9.36% notes - 100
7.28% note due 1996 40 40
8 1/2% debentures due 2025 300 -
7.95% debentures due 2025 250 -
Industrial revenue bonds, rates from 2.8% (variable)
to 10.0% (fixed), due 1996-2028 717 571
Medium-term notes, rates from 6.43% to 8.98%,
due 1996-2005 428 428
Commercial paper/credit agreements 252 411
Other 21 34
------------ ------------
$ 3,108 $ 3,034
============ ============
</TABLE>
<TABLE>
<S> <C> <C>
Portion due within one year $ 125 $ 321
========= =========
</TABLE>
60
<PAGE>
Long-term debt maturities during the next five years are (millions):
<TABLE>
<S> <C>
1996 $ 125
1997 74
1998 47
1999 335
2000 98
</TABLE>
Real estate and financial services long-term debt,
including the current portion, is as follows:
<TABLE>
<CAPTION>
December 31, December 25,
Dollar amounts in millions 1995 1994
- -------------------------- ------------ ------------
<S> <C> <C>
Notes payable, unsecured; weighted average
interest rates are approximately 7.3% and 7.4% $ 780 $ 835
Bank and other borrowings, unsecured; weighted
average interest rates are approximately 5.7%
and 5.5% 505 460
Notes payable, secured; weighted average interest
rates are approximately 8.5% and 9.4% 46 46
Commercial paper/credit agreements 263 429
------------ ------------
$ 1,594 $ 1,770
============ ============
</TABLE>
<TABLE>
<S> <C> <C>
Portion due within one year $ 125 $ 58
========= =========
</TABLE>
Long-term debt maturities during the next five years are (millions):
<TABLE>
<S> <C>
1996 $ 125
1997 585
1998 156
1999 375
2000 128
</TABLE>
Lines of Credit
At December 31, 1995, 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.
At December 31, 1995, and December 25, 1994, 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 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 note
as of July 1, 1998, to a five-year term loan payable in
equal quarterly installments. At December 31, 1995, and
December 25, 1994, $20 million was outstanding under this
revolving credit agreement.
During 1992 WFS entered into a credit facility agreement,
which was subsequently amended in May 1994 and provides
for: (1) borrowings of up to $525 million at December 31,
1995, and $405 million at December 25, 1994, 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. $450 million and $405 million were outstanding
under this facility at December 31, 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 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 31, 1995, or
December 25, 1994, except as noted.
The company's compensating balance agreements were not
significant.
61
<PAGE>
Note 15. Fair Value of Financial Instruments
<TABLE>
<CAPTION>
December 31, 1995 December 25, 1994
----------------- -----------------
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) $ 3,108 $ 3,469 $ 3,034 $ 3,015
-------- ------- -------- -------
Real estate and financial services:
Financial assets:
Mortgage notes held for sale 332 332 209 207
Mortgage loans receivable 155 138 263 210
Investments 70 68 247 238
Mortgage-backed certificates and
other pledged financial
instruments 185 193 211 208
Financial liabilities:
Collateralized mortgage
obligation bonds 159 169 183 189
Long-term debt (including
current maturities) 1,594 1,623 1,770 1,722
</TABLE>
The methods and assumptions used to estimate fair value of
each class of financial instruments for which it is
practicable to estimate that value are as follows:
. Long-term debt, including real estate and financial
services, 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.
. Mortgage notes held for sale are estimated using the
quoted market prices for securities backed by similar loans
adjusted for differences in loan characteristics. The esti-
mated fair value is net of related hedge instruments, which
were estimated based upon quoted market prices for
securities.
. Mortgage loans receivable are estimated based on the
discounted value of estimated future cash flows using cur-
rent rates for loans with similar terms and risks.
. Investments are estimated using quoted market prices for
similar securities. Fair value for mortgage loans held as
investments is based on the discounted value of estimated
future cash flows using current rates.
. Mortgage-backed certificates and other pledged financial
instruments are estimated using the quoted market prices
for securities backed by similar loans and restricted
deposits held at cost, which is a reasonable estimate.
. Collateralized mortgage obligation bonds are estimated
using analysis of projected cash flows discounted at
market yields.
Note 16. 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, 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, as orally
amended on February 1, 1996, the geographical boundaries
of the class were amended to run from below the Columbus
mill's wastewater discharge pipe to just above the
confluence of the Black Warrior River and 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.
62
<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 $120
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. In estimating both its current accruals
for environmental remediation and the possible 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 envi-
ronmental 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 $869 million in recent
years but are expected to approximate $900 million in
1996; however, the 1996 expenditure level could be
increased or decreased as a consequence of future economic
conditions. The company had approximately $269 million in
capital expenditures committed on major projects at year-
end 1995. In addition, near year-end, the company announced
that it had signed an agreement to acquire 241,000 acres
of southern private commercial forestland. The ultimate
purchase price could range up to $275 million.
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 $146 million in mortgage loans at
fixed and floating prices, guarantees made on $69 million
of partnership borrowings, and limited recourse
obligations associated with $1.6 billion of sold mortgage
loans. The fair value of the recourse on these loans is
estimated to be $9 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.
63
<PAGE>
Note 17. Financial Instruments With Credit or Off-Balance
Sheet Risk
Receivables
WFS originates and holds loans in a number of states. The
remaining gross principal balance of mortgage notes held
for sale or investment and mortgage loans receivable by
geographic region are as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 1995 1994
- -------------------------- -------- --------
<S> <C> <C>
West $ 457 $ 550
South 45 63
East 45 86
Other 21 23
-------- --------
$ 568 $ 722
======== ========
</TABLE>
Note 18. 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 31, 1995, and December 25, 1994; and
. 40,000,000 preference shares having a par value of $1.00
per share, of which none were issued and outstanding at
December 31, 1995, and December 25, 1994.
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.
Common Shares
Common shares reserved for stock option plans were
5,972,195 shares at December 31, 1995, and 5,687,934
shares at December 25, 1994. As to the company's various
stock option plans, the following information is provided:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
At end of year:
Options outstanding 5,972,195 5,687,934 5,177,401
Options exercisable 4,817,145 4,375,234 3,981,751
During the year:
Options granted 1,155,050 1,312,700 1,195,650
Options exercised 859,373 623,258 878,755
Options forfeited 11,416 178,909 139,368
Average prices per share:
Options outstanding $38.17 $36.27 $32.32
Options granted $39.47 $47.53 $42.31
Options exercised $27.34 $28.06 $26.72
</TABLE>
In December 1986, the company adopted, and in February
1989 amended, 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 20 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 30 percent or more of the company's out-
standing 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.
64
<PAGE>
Note 19. 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 seg-
ments 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, packaging, 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,
container board 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.
65
<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 1995 1994 1993
- -------------------------- -------- -------- --------
<S> <C> <C> <C>
Sales to and revenues from unaffiliated customers:
Timberlands and wood products $ 4,931 $ 4,992 $ 4,468
Pulp, paper and packaging 5,682 4,066 3,579
Real estate 723 911 829
Financial services 196 206 401
Corporate and other 256 223 269
-------- -------- --------
11,788 10,398 9,546
-------- -------- --------
Intersegment sales and revenues:
Timberlands and wood products 558 357 352
Pulp, paper and packaging 168 82 6
Corporate and other 33 31 29
-------- -------- --------
759 470 387
-------- -------- --------
Total sales and revenues 12,547 10,868 9,933
Eliminations (759) (470) (388)
-------- -------- --------
$ 11,788 $ 10,398 $ 9,545
======== ======== ========
Approximate contribution (charge)
to earnings (1)(2):
Timberlands and wood products $ 808 $ 1,034 $ 891
Pulp, paper and packaging 1,181 211 61
Real estate (231) 7 18
Financial services (46) 11 76
Corporate and other (217) (142) (46)
-------- -------- --------
1,495 1,121 1,000
Interest expense (347) (315) (292)
Less capitalized interest 96 114 100
-------- -------- --------
Income before taxes and extraordinary item 1,244 920 808
Income taxes (445) (331) (281)
Extraordinary item - - 52
-------- -------- --------
$ 799 $ 589 $ 579
======== ======== ========
Depreciation, amortization and fee stumpage:
Timberlands and wood products $ 211 $ 189 $ 162
Pulp, paper and packaging 350 302 264
Real estate 5 7 9
Financial services 36 23 34
Corporate and other 19 13 18
-------- -------- --------
$ 621 $ 534 $ 487
======== ======== ========
Capital expenditures:
Timberlands and wood products $ 508 $ 257 $ 241
Pulp, paper and packaging 562 794 652
Real estate 10 10 15
Financial services 3 4 5
Corporate and other 36 37 54
-------- -------- --------
$ 1,119 $ 1,102 $ 967
======== ======== ========
Assets:
Timberlands and wood products $ 2,940 $ 2,713 $ 2,585
Pulp, paper and packaging 6,797 6,283 5,730
Real estate 1,543 1,716 1,863
Financial services 1,362 1,730 1,892
Corporate and other 1,151 1,439 1,393
-------- -------- --------
13,793 13,881 13,463
Eliminations (540) (723) (706)
-------- -------- --------
$ 13,253 $ 13,158 $ 12,757
======== ======== ========
</TABLE>
(1) 1995 "approximate contribution to earnings" includes
special charges of $232 million and $58 million for real
estate and financial services, respectively, to dispose of
certain real estate assets.
(2) Interest expense of $64 million, $76 million and $96
million in 1995, 1994 and 1993, respectively, is included
in the determination of "approximate contribution to
earnings" for financial services.
66
<PAGE>
Note 20. Selected Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>
Dollar amounts
in millions
except
per-share First Second Third Fourth
figures Quarter Quarter Quarter Quarter Year
- --------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales:
1995 (1) $ 2,686 $ 3,009 $ 3,037 $ 3,056 $11,788
1994 2,386 2,598 2,681 2,733 10,398
Operating income:
1995 (2) 419 472 243 469 1,603
1994 281 282 294 363 1,220
Earnings before income taxes:
1995 (2) 328 386 149 381 1,244
1994 204 202 224 290 920
Net earnings:
1995 (2) 207 246 95 251 799
1994 127 129 144 189 589
Net earnings per common share:
1995 (2) 1.00 1.21 .47 1.25 3.93
1994 .62 .62 .71 .91 2.86
Dividends per common share:
1995 .30 .40 .40 .40 1.50
1994 .30 .30 .30 .30 1.20
Market prices -- high/low:
1995 42 5/8-36 7/8 47 3/8-37 1/2 50 3/8-44 3/4 48-40 7/8 50 3/8-36 7/8
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
</TABLE>
(1) 1995 net sales of $2,745, $3,074 and $3,112 as
previously reported in Form 10-Q for the first, second and
third quarters, respectively, have been revised to
properly reflect the recording of intercompany sales and
related cost of sales.
(2) 1995 third quarter results include a special pretax
charge of $290 million, or $184 million after-tax ($.90
per common share), to dispose of certain real estate
assets.
67
<PAGE>
Note 21. Historical Summary
<TABLE>
<CAPTION>
Dollar amounts in millions
except per-share figures 1995 1994 1993 1992 1991
- ------------------------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Per common share:
Net earnings (loss) from continuing
operations, before extraordinary
item and effect of accounting
changes: $ 3.93 2.86 2.58 1.83 (.50)
Extraordinary item (2) $ - - .25 - -
Effect of accounting changes $ - - - - (.30)
-------- -------- ------- ------- -------
Net earnings (loss) $ 3.93 2.86 2.83 1.83 (.80)
======== ======== ======= ======= =======
Dividends paid $ 1.50 1.20 1.20 1.20 1.20
Shareholders' interest (end of year)$ 22.57 20.86 19.34 17.85 17.25
Financial position:
Total assets:
Weyerhaeuser $10,359 9,750 9,087 8,566 7,551
Real estate and financial services $ 2,894 3,408 3,670 9,720 9,435
-------- ------- -------- ------- -------
$13,253 13,158 12,757 18,286 16,986
======== ======= ======== ======= =======
Long-term debt (net of
current portion):
Weyerhaeuser:
Long-term debt $ 2,983 2,713 2,998 2,659 2,195
Capital lease obligations $ 2 - - - -
Convertible subordinated
debentures $ - - - 193 193
Limited recourse income debenture $ - - - 188 204
-------- -------- ------- ------- -------
$ 2,985 2,713 2,998 3,040 2,592
======== ======== ======= ======= =======
Real estate and financial services:
Collateralized mortgage
obligation bonds $ 139 161 241 440 702
Long-term debt $ 1,469 1,712 1,845 1,971 1,719
-------- -------- ------- ------- -------
$ 1,608 1,873 2,086 2,411 2,421
======== ======== ======= ======= =======
Redeemable preferred and preference
shares (thousands):
Weyerhaeuser $ - - - - -
Real estate and financial services $ - - - - -
Shareholders' interest $ 4,486 4,290 3,966 3,646 3,489
Percent earned on shareholders'
interest 18.2% 14.3% 15.2% 10.4% (4.4)%
Operating results:
Net sales and revenues:
Weyerhaeuser $10,869 9,281 8,315 7,744 7,167
Real estate and financial services $ 919 1,117 1,230 1,522 1,606
--------- ------- ------- ------- -------
$11,788 10,398 9,545 9,266 8,773
========= ======= ======= ======= =======
Net earnings (loss) from continuing
operations before extraordinary item
and effect of accounting changes:
Weyerhaeuser $ 981 576 459 332 (25)
Real estate and financial services $ (182)(1) 13 68 40 (76)
Less subsidiaries preferred
share dividends $ - - - - -
--------- ------- ------- ------- -------
$ 799 589 527 372 (101)(3)
Extraordinary item (2) $ - - 52 - -
Effect of accounting changes $ - - - - (61)
--------- ------- ------- ------- -------
Net earnings (loss) $ 799 589 579 372 (162)
========= ======= ======= ======= =======
Statistics (unaudited):
Number of employees 39,431 36,665 36,748 39,022 38,669
Salaries and wages $ 1,779 1,610 1,585 1,580 1,476
Employee benefits $ 408 357 347 323 321
Total taxes $ 736 618 577 443 173
Timberlands (thousands of acres):
Fee ownership 5,337 5,599 5,524 5,604 5,517
Long-term license arrangements 18,875 17,849 17,845 18,828 13,491
Number of shareholder accounts
at year-end:
Common 23,446 24,131 25,282 26,334 26,937
Preferred - - - - -
Preference - - - - -
Average common and common equivalent
shares outstanding (thousands) 203,525 205,543 204,866 203,373 201,578
</TABLE>
(1) 1995 results reflect a special charge for disposal of
certain real estate assets of $290 million less related
tax effect of $106 million, or $184 million.
(2) 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.
(3) 1991 results reflect restructuring and other charges
of $445 million less related tax effect of $162 million,
or $283 million.
(4)1989 results reflect net special items charges of
$401 million less related tax effect of $141 million,
or $260 million.
68
<PAGE>
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985
------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C>
1.87 1.56 2.68 2.12 1.27 .88
- - - - - -
- - - - - -
------- ------- ------- ------- ------- -------
1.87 1.56 2.68 2.12 1.27 .88
======= ======= ======= ======= ======= =======
1.20 1.20 1.15 .90 .87 .87
19.21 18.55 18.14 16.54 14.82 14.42
7,556 7,371 6,983 6,418 5,889 5,496
8,800 8,605 8,401 6,499 5,083 3,869
------- ------- ------- ------- ------- -------
16,356 15,976 15,384 12,917 10,972 9,365
======= ======= ======= ======= ======= =======
2,168 1,502 1,644 1,540 1,412 1,157
7 23 37 51 63 77
193 - - - - -
204 204 198 181 172 -
------- ------- ------- ------- ------- -------
2,572 1,729 1,879 1,772 1,647 1,234
======= ======= ======= ======= ======= =======
838 931 1,046 840 598 292
1,799 1,075 1,272 1,290 1,101 711
------- ------- ------- ------- ------- -------
2,637 2,006 2,318 2,130 1,699 1,003
======= ======= ======= ======= ======= =======
- - - - 14,700 14,700
- - - - - 72,000
3,864 4,148 4,044 3,714 3,251 3,324
9.8% 8.3% 14.6% 12.8% 8.4% 6.1%
7,447 8,355 7,861 6,988 5,650 5,206
1,619 1,826 1,467 1,397 1,241 1,070
------- ------- ------- ------- ------- -------
9,066 10,181 9,328 8,385 6,891 6,276
======= ======= ======= ======= ======= =======
340 377 516 379 180 132
54 (36) 50 68 97 81
- - - - - 13
------- ------- ------- ------- ------- -------
394 341(4) 566 447 277 200
- - - - - -
- - - - - -
------- ------- ------- ------- ------- -------
394 341 566 447 277 200
======= ======= ======= ======= ======= =======
40,621 45,214 46,976 45,123 41,757 38,922
1,531 1,563 1,423 1,277 1,143 1,134
318 325 292 250 225 259
446 403 511 467 310 266
5,621 5,693 5,833 5,871 5,962 5,979
13,491 13,324 13,324 12,064 12,064 3,590
28,187 29,847 30,379 32,535 31,682 37,135
- 12 25 26 1,825 2,192
- 443 351 106 7 2,242
203,673 204,331 207,785 202,544 195,456 194,828
</TABLE>
69
<PAGE>
Item 14., Exhibit 10(c)
Weyerhaeuser Corporate Headquarters
Tacoma WA 98477
Tel (206) 924 2345
May 9, 1994
Mr. Richard C. Gozon
533 Waterloo Road
Devon PA 19333
Dear Dick:
This summarizes our agreement concerning the terms of your
employment with Weyerhaeuser Company.
Weyerhaeuser Company (the "Company") will employ you as
Executive Vice President, Pulp, Paper & Packaging at an
annual salary of $340,000 commencing on your hire date.
Salary reviews are currently done on a 12-month cycle.
You will be a participant in the incentive compensation plan
for Weyerhaeuser senior executives. In this plan your
target bonus will be 50 percent of your base salary. For
1994 you will receive at least a prorata target bonus for
the portion of the year you are employed by Weyerhaeuser.
You will be a participant in the Company's long-term
incentive compensation plan. The Board of Directors has
approved a 30,000 share stock option grant to you under that
plan, conditioned on your coming to work for the Company.
This stock option will be granted to you on your first day
of employment with Weyerhaeuser. I will also recommend a
grant of at least 20,000 shares at the time of regular
management grants in early 1995. Thereafter your grants
will be determined by our regular granting process.
You will be eligible for the regular salaried benefits
outlined in the employee handbook provided to you under
separate cover. You also will be a member of Weyerhaeuser's
key group and eligible for the benefits accorded this group.
The enclosed summarizes the current program.
If you leave Weyerhaeuser after you reach age 65, your
Company pension and post-retirement health benefits will be
calculated based on at least ten years of service. The
difference between your target pension benefit (based on ten
years' credited service) and your actual pension benefit
under the Company's salaried retirement plan will be paid as
a non-qualified retirement
<PAGE>
Mr. Richard C. Gozon
May 9, 1994
Page 2
benefit from general Company assets. You may elect that
this difference be paid in any form allowable under the
plan. The Company's contribution to any post-retirement
health plan in effect at that time will be based on at least
10 years of service. The additional service provided under
this arrangement is not available if you leave the Company
before age 65.
The Company will reimburse your relocation expenses in
accordance with the "Relocation Policy Procedure Guide for
Salaried Employees," and a separate letter you have received
from Steve Hill.
The Company reserves the right to terminate your employment
at any time with or without cause. In the event the Company
does terminate your employment, you will be entitled to a
special severance benefit which will decrease based on the
number of months you are employed by the Company. This
benefit will be equal to your monthly base pay times the
number of months of base pay shown on the following
schedule:
<TABLE>
<CAPTION>
Months Employed Months of
by Weyerhaeuser Base Pay
----------------------- -------------
<C> <C>
0-24 24
25 23
26 22
27 21
28 20
29 19
30 18
31 17
32 16
33 15
34 14
35 13
36-time of severance 12
</TABLE>
The severance benefit described above will not be paid if
you resign, retire, die or are terminated for reasons of
willful violation of Company rules or for gross negligence
in job performance. The severance benefit will commence
upon notification of termination and will be paid on a
monthly basis. This benefit will be in lieu of any other
notice policy or severance plan offered by the Company.
<PAGE>
Mr. Richard C. Gozon
May 9, 1994
Page 3
You have provided us copies of your October 1993 agreement
with Alco Standard that included a "Non-Competition
Covenant" where you agreed to not by employed by a
competitor of theirs in the "paper distribution" business.
Your understanding is that they would not consider
Weyerhaeuser to be in the "paper distribution" business.
We agree that Weyerhaeuser's General Counsel, Bob Lane, can
make contact with Alco Standard's legal department to verify
that they do not see your employment with us as a breach of
this agreement. If they raise concerns, you and I agree
that you would not start employment with Weyerhaeuser until
Also Standard provides written consent that your employment
is not a breach of this agreement.
You have also disclosed to me that you hold options to
purchase Alco Standard stock and that under the terms of
your agreement with Alco Standard, you have 3 years to
exercise those shares. I have asked our General Counsel to
advise you and me on steps we should take to avoid actual or
perceived conflict of interest.
You and I agree that you will start your Weyerhaeuser
employment sometime next month.
If the arrangement described herein reflects your
understanding of our agreement, please indicate by signing
and returning the enclosed copy of this letter.
Sincerely,
WEYERHAEUSER COMPANY
/s/ John Creighton
- -----------------------
John W. Creighton, Jr.
President
jp422_2
Enclosures
The above terms and conditions
are agreed to this 16th day
of May, 1994.
/s/ Richard C. Gozon
---------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 84
<SECURITIES> 0
<RECEIVABLES> 1084<F1>
<ALLOWANCES> 16
<INVENTORY> 960
<CURRENT-ASSETS> 2235
<PP&E> 11617<F1>
<DEPRECIATION> 4900
<TOTAL-ASSETS> 13253
<CURRENT-LIABILITIES> 1603
<BONDS> 4736
<COMMON> 258
0
0
<OTHER-SE> 4228
<TOTAL-LIABILITY-AND-EQUITY> 13253
<SALES> 11788
<TOTAL-REVENUES> 11788
<CGS> 8197
<TOTAL-COSTS> 8197
<OTHER-EXPENSES> 1074
<LOSS-PROVISION> 4
<INTEREST-EXPENSE> 315
<INCOME-PRETAX> 1244
<INCOME-TAX> 445
<INCOME-CONTINUING> 799
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 799
<EPS-PRIMARY> 3.93
<EPS-DILUTED> 3.93
<FN>
<F1>Receivables and PP&E are stated at gross.
</FN>
</TABLE>
