SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the twenty-six weeks ended June 30, 1996 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 ___.
The number of shares outstanding of the registrant's class of common
stock, as of August 2, 1996 was 198,315,471 common shares ($1.25 par
value).
<PAGE>
Weyerhaeuser Company
- -2-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
Index to Form 10-Q Filing
For the Twenty-six Weeks Ended June 30, 1996
Page No.
------------------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Earnings 3
Consolidated Balance Sheet 4-5
Consolidated Statement of Cash Flows 6-7
Notes to Financial Statements 8-13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14-18
Part II. Other Information
Item 1. Legal Proceedings 18-20
Item 2. Changes in Securities (not applicable)
Item 3. Defaults upon Senior Securities (not applicable)
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information (not applicable)
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
The financial information included in this report has been prepared in
conformity with accounting practices and methods reflected in the
financial statements included in the annual report (Form 10-K) filed
with the Securities and Exchange Commission for the year ended
December 31, 1995. Though not examined by independent public
accountants, the financial information reflects, in the opinion of
management, all adjustments necessary to present a fair statement of
results for the interim periods indicated. The results of operations
for the twenty-six week period ending June 30, 1996 should not be
regarded as necessarily indicative of the results that may be expected
for the full year.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereto duly authorized.
WEYERHAEUSER COMPANY
By /s/ K. J. Stancato
-------------------------
K. J. Stancato
Duly Authorized Officer and
Principal Accounting Officer
August 9, 1996
<PAGE>
Weyerhaeuser Company
- -3-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
CONSOLIDATED EARNINGS
For the periods ended
June 30, 1996 and June 25, 1995
(Dollar amounts in millions except per share figures)
(Unaudited)
Thirteen weeks Twenty-six
ended weeks ended
------------------ ------------------
June 30, June 25, June 30, June 25,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales and revenues:
Weyerhaeuser $ 2,643 $ 2,783 $ 5,016 $ 5,287
Real estate and financial services 243 226 475 408
------- ------- ------- -------
Total net sales and revenues 2,886 3,009 5,491 5,695
------- ------- ------- -------
Costs and expenses:
Weyerhaeuser:
Costs of products sold 2,024 1,962 3,763 3,714
Depreciation, amortization
and fee stumpage 146 139 288 268
Selling, general and administra-
tive expenses 169 169 347 329
Research and development expenses 13 12 27 23
Taxes other than payroll and
income taxes 40 41 77 84
------- ------- ------- -------
2,392 2,323 4,502 4,418
Real estate and financial services:
Costs and operating expenses 184 171 348 301
Depreciation and amortization 4 9 9 18
Selling, general and administra-
tive expenses 42 32 79 63
Taxes other than payroll and
income taxes 2 2 4 4
------- ------- ------- -------
232 214 440 386
------- ------- ------- -------
Total costs and expenses 2,624 2,537 4,942 4,804
------- ------- ------- -------
Operating income 262 472 549 891
Interest expense and other:
Weyerhaeuser:
Interest expense incurred 72 65 137 130
Less interest capitalized 8 6 14 12
Other income (expense), net (31) (20) (24) (41)
Real estate and financial services:
Interest expense incurred 35 36 69 69
Less interest capitalized 16 19 34 37
Other income (expense), net 13 10 16 14
------- ------- ------- -------
Earnings before income taxes 161 386 383 714
Income taxes (Note 2) 58 140 138 261
------- ------- ------- -------
Net earnings $ 103 $ 246 $ 245 $ 453
======= ======= ======= =======
Per common share (Note 1):
Net earnings $ .52 $ 1.21 $ 1.24 $ 2.21
======= ======= ======= =======
Dividends paid $ .40 $ .40 $ .80 $ .70
======= ======= ======= =======
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
Weyerhaeuser Company
- -4-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
CONSOLIDATED BALANCE SHEET
June 30, 1996 and December 31, 1995
(Dollar amounts in millions)
June 30, Dec. 31,
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
Assets
- ------
Weyerhaeuser
Current assets:
Cash and short-term investments (Note 1) $ 40 $ 34
Receivables, less allowances 1,034 976
Inventories (Note 3) 971 960
Prepaid expenses 315 265
--------- ---------
Total current assets 2,360 2,235
Property and equipment (Note 4) 6,652 6,717
Construction in progress 679 509
Timber and timberlands at cost, less fee
stumpage charged to disposals 1,092 666
Other assets and deferred charges 243 232
--------- ---------
11,026 10,359
--------- ---------
Real estate and financial services
Cash and short-term investments,
including restricted deposits 46 50
Receivables, less discounts and allowances 97 92
Mortgage notes held for sale 420 332
Mortgage loans receivable 162 155
Investments 50 70
Mortgage-backed certificates and
other pledged financial instruments 187 185
Real estate in process of development and for sale,
less reserves 693 776
Land being processed for development,
less reserves 687 688
Deferred acquisition costs 12 84
Investments in and advances to joint ventures
and limited partnerships, less reserves 99 113
Rental properties, less accumulated depreciation 171 184
Other assets 124 165
--------- ---------
2,748 2,894
--------- ---------
Total assets $ 13,774 $ 13,253
========= =========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
Weyerhaeuser Company
- -5-
<TABLE>
<CAPTION>
June 30, Dec. 31
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
Liabilities and shareholders' interest
Weyerhaeuser
Current liabilities:
Notes payable $ 15 $ 24
Current maturities of long-term debt 119 125
Accounts payable (Note 1) 660 747
Accrued liabilities (Note 5) 607 707
--------- ---------
Total current liabilities 1,401 1,603
Long-term debt (Note 7) 3,807 2,983
Deferred income taxes 1,254 1,196
Deferred pension and other liabilities 456 509
Minority interest in subsidiaries 110 111
Commitments and contingencies (Note 9) -- --
--------- ---------
7,028 6,402
--------- ---------
Real estate and financial services
Notes payable and commercial paper 210 338
Collateralized mortgage obligation bonds 152 159
Long-term debt (Note 7) 1,575 1,594
Other liabilities 251 274
Commitments and contingencies (Note 9) -- --
--------- ---------
2,188 2,365
--------- ---------
Total liabilities 9,216 8,767
Shareholders' interest (Note 8)
Common shares: authorized 400,000,000 shares,
issued 206,072,890 shares, $1.25 par value 258 258
Other capital 408 415
Cumulative translation adjustment (89) (90)
Retained earnings 4,313 4,226
Treasury common shares, at cost:
7,541,019 and 7,302,878 (332) (323)
--------- ---------
Total shareholders' interest 4,558 4,486
--------- ---------
Total liabilities and shareholders' interest $ 13,774 $ 13,253
========= =========
</TABLE>
<PAGE>
Weyerhaeuser Company
- -6-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
CONSOLIDATED STATEMENT OF CASH FLOWS
For the twenty-six week periods ended June 30, 1996 and June 25, 1995
(Dollar amounts in millions)
(Unaudited)
Consolidated
-----------------
June 30, June 25,
1996 1995
--------- ---------
<S> <C> <C>
Cash flows provided by operations:
Net earnings $ 245 $ 453
Non-cash charges to income:
Depreciation, amortization and fee stumpage 297 286
Deferred income taxes, net 97 102
Changes in working capital:
Accounts receivable (59) (126)
Inventories, prepaid expenses, real estate and land 73 (95)
Mortgage notes held for sale and mortgage loans
receivable (87) (68)
Other liabilities (263) (50)
Loss on disposition of assets 4 8
Other (44) 23
--------- ---------
Net cash provided by operations 263 533
--------- ---------
Cash flows from investing in the business:
Property and equipment (371) (375)
Timber and timberlands (16) (41)
Property and equipment and timber and timberlands
from acquisitions (448) --
Mortgage and investment securities acquired (7) (25)
Proceeds from sale of:
Property and equipment 12 12
Mortgage and investment securities 109 18
Other (23) (11)
--------- ---------
Net cash flows from investing in the business (744) (422)
--------- ---------
Cash flows from financing activities:
Sale of debentures, notes and CMO bonds 6 574
Sale of industrial revenue bonds 33 100
Notes and commercial paper borrowings, net 855 (88)
Cash dividends on common shares (158) (144)
Payments on debentures, notes, bank credit agreements,
income debenture, capital leases, industrial revenue
bonds and CMO bonds (237) (425)
Purchase of treasury common shares (34) (109)
Exercise of stock options 18 10
Other -- (1)
--------- ---------
Net cash flows from financing activities 483 (83)
--------- ---------
Net increase (decrease) in cash and short-term investments 2 28
Cash and short-term investments at beginning of year 84 263
--------- ---------
Cash and short-term investments at end of period $ 86 $ 291
========= =========
Cash paid (received) during the period for:
Interest, net of amount capitalized $ 157 $ 138
========= =========
Income taxes $ 117 $ 88
========= =========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
Weyerhaeuser Company
- -7-
<TABLE>
<CAPTION>
Real Estate and
Weyerhaeuser Financial Services
- ------------------- -------------------
June 30, June 25, June 30, June 25,
1996 1995 1996 1995
- --------- --------- --------- ---------
<C> <C> <C> <C>
$ 237 $ 452 $ 8 $ 1
288 268 9 18
58 101 39 1
(57) (144) (2) 18
(23) (82) 96 (13)
-- -- (87) (68)
(250) (29) (13) (21)
3 8 1 --
(12) 5 (32) 18
- --------- --------- --------- ---------
244 579 19 (46)
- --------- --------- --------- ---------
(364) (368) (7) (7)
(16) (41) -- --
(448) -- -- --
-- -- (7) (25)
12 12 -- --
-- -- 109 18
(55) 34 32 (45)
- --------- --------- --------- ---------
(871) (363) 127 (59)
- --------- --------- --------- ---------
6 559 -- 15
33 100 -- --
899 (411) (44) 323
(158) (144) -- --
(131) (169) (106) (256)
(34) (109) -- --
18 10 -- --
-- (1) -- --
- --------- --------- --------- ---------
633 (165) (150) 82
- --------- --------- --------- ---------
6 51 (4) (23)
34 190 50 73
- --------- --------- --------- ---------
$ 40 $ 241 $ 46 $ 50
========= ========= ========= =========
$ 127 $ 108 $ 30 $ 30
========= ========= ========= =========
$ 134 $ 103 $ (17) $ (15)
========= ========= ========= =========
</TABLE>
<PAGE>
Weyerhaeuser Company
- -8-
WEYERHAEUSER COMPANY AND SUBSIDIARIES
____________
NOTES TO FINANCIAL STATEMENTS
For the twenty-six week periods ended June 30, 1996 and June 25, 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).
Nature of Operations
The company's principal business segments, which account for the
majority of sales, earnings and the asset base, are:
. Timberlands and wood products, which is engaged in the management
of 5.7 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.
Changes in Accounting Principles
In 1995 first quarter, the company implemented Statement of Financial
Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan," which requires creditors to measure impairment
based on the present value of expected future cash flows discounted at
the loan's effective interest rate, and SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan--Income Recognition and
Disclosures," which amended SFAS No. 114 to allow creditors to use
existing methods for recognizing interest on impaired loans and also
requires creditors to disclose certain information about how interest
income was recognized on impaired loans. The adoption of these
pronouncements did not have a significant impact on results of
operations or financial position.
In 1995 third quarter, the company implemented SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which 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
disposition 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 June 30, 1996 and December 31, 1995
was approximately $181 million and $291 million, respectively.
Prospective Accounting Changes
In October 1995, the Financial Accounting Standards Board (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.
<PAGE>
Weyerhaeuser Company
- -9-
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities,"
to provide accounting and reporting guidance for transfers and
servicing of financial assets and extinguishments of liabilities. The
statement uses the "financial-components approach" in which, after a
transfer of financial assets, an entity would recognize all financial
assets and services it controls and all liabilities it has incurred
and remove financial assets and liabilities from the balance sheet
when control is surrendered or when they are extinguished,
respectively. It is to be applied to transfers and servicing of
financial assets and extinguishment of liabilities occurring after
December 31, 1996. This statement supersedes several previous
statements, including No. 122, "Accounting for Mortgage Servicing
Rights--an Amendment of FASB Statement No. 65," which the company had
implemented in 1995. The company believes that the future adoption of
this statement will not have a significant impact on results of
operations or financial position.
Net Earnings Per Common Share
Net earnings per common share are based on the weighted average number
of common shares outstanding during the respective periods. Average
common equivalent shares (stock options) outstanding have not been
included, as the computation would not be dilutive. Weighted average
common shares outstanding were 198,313,429 and 205,243,409 at June 30,
1996 and June 25, 1995, 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.
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 amounts of these derivative financial instruments are
$1.1 billion and $.9 billion at June 30, 1996 and December 31, 1995,
respectively. 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.
<PAGE>
Weyerhaeuser Company
- -10-
Inventories
Inventories are stated at the lower of cost or market. Cost includes
labor, materials and production overhead. The last-in, first-out
(LIFO) method is used to cost the majority of domestic raw materials,
in process and finished goods inventories; either the first-in, first-
out (FIFO) or average cost method is used to cost all other
inventories.
Property and Equipment
The company's property accounts are maintained on an individual asset
basis. Betterments and replacements of major units are capitalized.
Maintenance, repairs and minor replacements are expensed.
Depreciation is provided generally on the straight-line or unit-of-
production method at rates based on estimated service lives.
Amortization of logging railroads and truck roads is provided
generally as timber is harvested and is based upon rates determined
with reference to the volume of timber estimated to be removed over
such facilities.
The cost and related depreciation of property sold or retired is
removed from the property and allowance for depreciation accounts and
the gain or loss is included in earnings.
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 $132 million and $149 million at
June 30, 1996 and December 31, 1995, respectively. Such balances
result from outstanding checks that had not yet been paid by the bank
and are reflected in accounts payable in the consolidated balance
sheets.
Income Taxes
Deferred income taxes are provided to reflect temporary differences
between the financial and tax bases of assets and liabilities using
presently enacted tax rates and laws.
Pension Plans
The company has pension plans covering most of its employees. The
U.S. plan covering salaried employees provides pension benefits based
on the employee's highest monthly earnings for five consecutive years
during the final ten years before retirement. Plans covering hourly
employees generally provide benefits of stated amounts for each year
of service. Contributions to U.S. plans are based on funding
standards established by the Employee Retirement Income Security Act
of 1974 (ERISA).
Postretirement Benefits Other Than Pensions
In addition to providing pension benefits, the company provides
certain health care and life insurance benefits for some retired
employees and accrues the expected future cost of these benefits for
its current eligible retirees and some employees. All of the
company's salaried employees and some hourly employees may become
eligible for these benefits when they retire.
Reclassifications
Certain reclassifications have been made to conform prior years' data
to the current format.
<PAGE>
Weyerhaeuser Company
- -11-
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.
Note 2: Income Taxes
<TABLE>
<CAPTION>
Provisions for income taxes include the following: Twenty-six Weeks Ended
----------------------
June 30, June 25,
Dollar amounts in millions 1996 1995
---------- ----------
<S> <C> <C>
Federal:
Current $ 24 $ 82
Deferred 96 92
---------- ----------
120 174
---------- ----------
State:
Current 4 15
Deferred 8 6
---------- ----------
12 21
---------- ----------
Foreign:
Current 13 62
Deferred (7) 4
---------- ----------
6 66
---------- ----------
Total $ 138 $ 261
========== ==========
</TABLE>
Income tax provisions for interim periods are based on the current
best estimate of the effective tax rate expected to be applicable for
the full year. The effective tax rate reflects anticipated tax
credits, foreign taxes and other tax planning alternatives.
For the periods ended June 30, 1996 and June 25, 1995, the company's
provision for income taxes as a percent of earnings before income
taxes is greater than the 35% federal statutory rate due principally
to the effect of state income taxes. The effective tax rates for the
twenty-six week periods ended June 30, 1996 and June 25, 1995 are 36%
and 36.5%, respectively.
<PAGE>
Weyerhaeuser Company
- -12-
Deferred taxes are provided for the temporary differences between the
financial and tax bases of assets and liabilities, applying presently
enacted tax rates and laws. The major sources of these temporary
differences include depreciable and depletable assets, real estate,
restructuring reserves, and pension and retiree health care
liabilities.
Note 3: Inventories
<TABLE>
<CAPTION>
June 30, Dec. 31,
Dollar amounts in millions 1996 1995
-------- --------
<S> <C> <C>
Logs and chips $ 122 $ 173
Lumber, plywood and panels 166 135
Pulp, newsprint and paper 169 158
Containerboard, paperboard and packaging 107 107
Other products 130 117
Materials and supplies 277 270
-------- --------
$ 971 $ 960
======== ========
</TABLE>
Note 4: Property and Equipment
<TABLE>
<CAPTION>
June 30, Dec. 31,
Dollar amounts in millions 1996 1995
-------- --------
<S> <C> <C>
Property and equipment, at cost:
Land $ 163 $ 167
Buildings and improvements 1,604 1,582
Machinery and equipment 9,353 9,253
Rail and truck roads and other 620 615
-------- --------
11,740 11,617
Less allowance for depreciation
and amortization 5,088 4,900
-------- --------
$ 6,652 $ 6,717
======== ========
</TABLE>
Note 5: Accrued Liabilities
<TABLE>
<CAPTION>
June 30, Dec. 31,
Dollar amounts in millions 1996 1995
-------- --------
<S> <C> <C>
Payroll - wages and salaries, incentive awards,
retirement and vacation pay $ 251 $ 265
Taxes - social security and real
and personal property 63 50
Interest 78 82
Accrued income taxes 58 117
Other 157 193
-------- --------
$ 607 $ 707
======== ========
</TABLE>
Note 6: Short-Term Debt
The company has short-term bank credit lines that provide for
borrowings of up to the total amount of $375 million and $725 million,
all of which could be availed of by the company, WRECO and WMC at
June 30, 1996 and December 31, 1995, respectively. No portion of
these lines has been availed of by the company, WRECO or WMC at
June 30, 1996 and December 31, 1995. None of the entities referred to
herein is a guarantor of the borrowings of the others.
<PAGE>
Weyerhaeuser Company
- -13-
WMC has short-term special credit lines that provide for borrowings of
up to $230 million at June 30, 1996 and December 31, 1995. Borrowings
against these lines were $81 million and $115 million as of June 30,
1996 and December 31, 1995, respectively.
Note 7: Long-Term Debt
At June 30, 1996 and 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. No portion of this line has been availed of by the company or
WMC at June 30, 1996 or December 31, 1995.
At June 30, 1996 and December 31, 1995, WMC had $10 million and
$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 June 30, 1996 and December 31, 1995,
$10 million and $20 million, respectively, were outstanding under this
agreement.
WFS entered into a credit facility agreement in 1992, which was
subsequently amended in May 1994 and provides for: (1) borrowings of
up to $525 million at June 30, 1996 and at December 31, 1995 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 facility.
$425 million and $450 million were outstanding under this facility at
June 30, 1996 and December 31, 1995, respectively.
To the extent that these credit commitments expire more than one year
after the balance sheet date and are unused, an equal amount of
commercial paper is classifiable as long-term debt. Amounts so
classified are:
<TABLE>
June 30, Dec. 31,
Dollar amounts in millions 1996 1995
-------- --------
<S> <C> <C>
Weyerhaeuser $ 1,152 $ 252
Real estate and financial services 309 263
</TABLE>
Total interest costs incurred by WRECO are capitalized and will
ultimately be accounted for as an element of operating costs.
The company's compensating balance agreements were not significant.
Note 8: Shareholders' Interest
Common shares reserved for stock option plans were 6,336,965 shares at
June 30, 1996 and 5,972,195 shares at December 31, 1995.
Note 9: Commitments and Contingencies
The company's capital expenditures, excluding acquisitions, have
averaged $869 million in recent years, but are expected to be
approximately $900 million in 1996; however, the 1996 expenditure
level could be increased or decreased as a consequence of future
economic conditions.
The company is a party to legal proceedings and environmental matters
generally incidental to its business. Although the final outcome of
any legal proceeding or environmental matter is subject to a great
many variables and cannot be predicted with any degree of certainty,
the company presently believes that the ultimate outcome resulting
from these proceedings and matters would not have a material effect on
the company's current financial position, liquidity or results of
operations; however, in any given future reporting period, such
proceedings or matters could have a material effect on results of
operations.
<PAGE>
Weyerhaeuser Company
- -14-
WEYERHAEUSER COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Net sales and revenues and earnings before interest expense and income
taxes by segment are:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
-------------------- ----------------------
June 30, June 25, June 30, June 25,
Dollar amounts in millions 1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales and revenues:
Timberlands and wood products $ 1,368 $ 1,271 $ 2,484 $ 2,458
Pulp, paper and packaging 1,201 1,431 2,418 2,700
Real estate 195 179 378 319
Financial services 48 47 97 89
Corporate and other 74 81 114 129
-------- -------- -------- --------
$ 2,886 $ 3,009 $ 5,491 $ 5,695
======== ======== ======== ========
Earnings before interest expense
and income taxes:
Timberlands and wood products $ 217 $ 188 $ 369 $ 429
Pulp, paper and packaging 35 305 197 513
Real estate 2 (4) 9 (3)
Financial services(1) 4 4 7 7
Corporate and other (33) (47) (76) (114)
-------- -------- -------- --------
$ 225 $ 446 $ 506 $ 832
======== ======== ======== ========
(1) Includes net interest expense of $19 million and $17 million for
thirteen weeks and $35 million and $32 million for twenty-six weeks
related to the financial services businesses.
</TABLE>
Results of Operations
The company reported net earnings of $103 million, or 52 cents per
common share for the second quarter of 1996 as compared with net
earnings of $246 million, or $1.21 per common share reported in the
second quarter of 1995. Net sales in the period were $2.9 billion,
down 4% from the $3.0 billion in the comparable 1995 quarter, but 11%
higher than the $2.6 billion recorded in the first quarter of 1996.
Year-to-date earnings were $245 million, down 46% from the previous
year's $453 million while earnings per common share were $1.24
compared to $2.21 in 1995. Net sales and revenues in the first half
of 1996 were $5.5 billion, 4% less than the $5.7 billion reported in
the previous year's first half.
The quarter's results reflected lower prices for most pulp, paper and
packaging products compared with the second quarter of 1995 and the
first quarter of 1996. There were pulp and paper shipment
improvements from the first to second quarter of 1996 along with
selective price increases in some paper products and a July 1 price
increase for most grades of pulp. If these trends continue, there
will be improvements in the pulp, paper and packaging segment in the
third quarter. However, considerable uncertainty remains around
growth in world markets, particularly in Europe, which is considered
to be the key to the rate of improvement.
The timberlands and wood products segment's net sales for the quarter
were $1.4 billion, an 8% increase over the 1995 second quarter sales
of $1.3 billion and 23% better than the $1.1 billion recorded in 1996
first quarter. The segment's operating earnings were $217 million for
the quarter, a 15% increase over the $188 million in the same quarter
last year and a 43% improvement over the $152 million in the first
quarter of the current year. The improvement in quarterly earnings
for this segment, compared to the second quarter of last year, are a
result of higher lumber prices and improved operating performance.
Structural panels realizations were lower than last year's levels as
the growing overcapacity in oriented strandboard continues to weaken
prices.
<PAGE>
Weyerhaeuser Company
- -15-
Third party sales and total production volumes for the major products
in this segment for the thirteen weeks and twenty-six weeks ended
June 30, 1996 and June 25, 1995, respectively, are as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Twenty-six Weeks
Ended Ended
------------------ ------------------
June 30, June 25, June 30, June 25,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Third party sales volumes (millions):
Raw materials--cubic feet 146 133 278 268
Softwood lumber--board feet 1,237 1,121 2,247 2,156
Softwood plywood and veneer--
square feet (3/8") 590 582 1,074 1,128
Composite panels--square feet (3/4") 171 146 324 305
Oriented strand board--
square feet (3/8") 535 489 995 947
Hardboard--square feet (7/16") 51 50 107 89
Hardwood lumber--board feet 92 68 181 134
Engineered wood products--
lineal feet 33 32 54 59
Hardwood doors (thousands) 168 176 314 330
Total production volumes (millions):
Logs--cubic feet 218 213 448 451
Softwood lumber--board feet 973 910 1,815 1,751
Softwood plywood and veneer--
square feet (3/8") 328 316 646 629
Composite panels--square feet (3/4") 155 134 292 280
Oriented strand board--
square feet (3/8") 454 411 845 813
Hardboard--square feet (7/16") 33 32 66 61
Hardwood lumber--board feet 90 64 173 124
Hardwood doors (thousands) 166 168 312 324
</TABLE>
The pulp, paper and packaging segment's net sales for the quarter were
$1.2 billion, down 16% from $1.4 billion in the 1995 second quarter,
but matching the 1996 first quarter performance. Operating earnings
were $35 million in the quarter compared to $305 million for the 1995
second quarter and $162 million in 1996 first quarter. These declines
in profitability can be attributed to the weakening in prices across
most product lines in this segment, which commenced in late 1995 and
continued into the first half of 1996, as customers chose to work off
inventories rather than place new orders.
The acquisition of nine corrugated packaging plants in the fourth
quarter of 1995 contributed to a 28% increase in packaging sales and
production volumes in the second quarter of 1996 over the same period
in 1995. The recycling business added nine centers in 1995, which
helped raise the current quarter's sales volumes by 46% and production
volumes by 33% over the 1995 second quarter.
<PAGE>
Weyerhaeuser Company
- -16-
Third party sales and total production volumes for the major products
in this segment for the thirteen weeks and twenty-six weeks ended
June 30, 1996 and June 25, 1995, respectively, are as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Twenty-six Weeks
Ended Ended
----------------- ------------------
June 30, June 25, June 30, June 25,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Third party sales volumes (thousands):
Pulp--air-dry metric tons 528 522 925 1,023
Newsprint--metric tons 169 170 304 330
Paper--tons 246 252 492 519
Paperboard--tons 56 60 102 116
Containerboard--tons 81 72 147 134
Packaging--MSF 10,872 8,498 20,888 16,686
Recycling--tons 516 354 959 619
Total production volumes (thousands):
Pulp--air-dry metric tons 436 504 961 1,046
Newsprint--metric tons 161 167 295 334
Paper--tons 240 262 501 525
Paperboard--tons 53 60 101 117
Containerboard--tons 598 583 1,162 1,196
Packaging--MSF 11,319 8,887 21,946 17,537
Recycling--tons 882 661 1,683 1,238
</TABLE>
The real estate and financial services segments earned a combined
$6 million in the current quarter compared to break-even a year ago.
This improves the current year-to-date earnings to $16 million from
the $4 million recorded in the first half of 1995. Revenues are up by
16% year-to-date over last year. Both earnings and revenue
improvements over the previous year are a result of several major
commercial project closings, an increase in single family closings in
the real estate segment and an increase due to a sale of capitalized
servicing rights in the company's mortgage banking business.
Total consolidated costs and expenses and interest expense incurred
were not materially different when comparing 1996 with 1995 from
quarter to quarter or year-to-date.
Other income (expense) is an aggregation of both recurring and
occasional non-operating income and expense items and, as a result,
fluctuates from period to period. No individual income or (expense)
item for the thirteen and twenty-six week periods ended June 30, 1996
and June 25, 1995 was significant in relation to pre-tax earnings.
Liquidity and Capital Resources
General
Earnings before interest expense and income taxes plus non-cash
charges for the twenty-six week periods ended June 30, 1996 and
June 25, 1995 were $480 million and $526 million, respectively, for
the timberlands and wood products segment, and $364 million and
$675 million, respectively, for the pulp, paper and packaging segment.
The company is committed to the maintenance of a sound, conservative
capital structure. This commitment is based upon two considerations:
the obligation to protect the underlying interests of its shareholders
and lenders and the desire to have access, at all times, to all major
financial markets.
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.
<PAGE>
Weyerhaeuser Company
- -17-
Operations
During the first half of the year, the company generated $599 million
of cash flow from consolidated operations before working capital
changes. This is down from the $872 million in the same period a year
ago, due primarily to reduced net earnings.
Weyerhaeuser's net working capital from operations increased
$330 million in the first half of 1996 as receivables and prepaid
expenses increased while accounts payable and accrued liabilities
decreased. In the same period last year, working capital increased
$255 million, primarily from increases in receivables and inventories
due to the increased business activity.
The 1996 first half increase in the net working capital from
operations of the real estate and financial services segments is
primarily attributed to an increase of $87 million in mortgages held
for sale, as originations exceeded sales, offset by reductions of
$96 million in real estate and land inventories.
Investing
Capital expenditures for 1996 year-to-date were $387 million,
excluding acquisitions, compared to $416 million in the same period
last year. Acquisitions of timber and timberlands and two sawmills in
the southern U.S. totaled $448 million in the first half of 1996. The
1996 spending by segment, excluding acquisitions was: $166 million
for timberlands and wood products; $198 million for pulp, paper and
packaging; and $23 million for other segments. The company currently
anticipates capital expenditures, excluding acquisitions, to
approximate $900 million for the year. However, this expenditure
level could increase or decrease as a consequence of future economic
conditions.
The company's financial services segment generated $109 million in the
1996 first half primarily from the sale of capitalized servicing
rights and adjustable rate mortgages.
The cash needed to meet these and other company needs was generated
from internal cash flow and short-term borrowing.
Financing
During the first half of 1996, the company paid $158 million in cash
dividends compared to $144 million in the prior year. The increase
from year to year is attributable to the quarterly dividend rate being
raised from 30 cents to 40 cents effective with the second quarter of
1995, resulting in an annualized rate of $1.60 per common share.
The company repurchased $34 million of common shares in the first half
as a part of the 10 million share repurchase program, which commenced
in the second quarter of 1995, bringing the total acquired to
9.3 million shares at June 30, 1996.
Weyerhaeuser's commercial paper borrowings increased by $899 million
in 1996, with a significant part of it used to fund the acquisition of
the southern timberlands, two sawmills and related working capital
described below. This increase is reclassified to, and accounts for
the increase in, long-term debt at June 30, 1996. The 1995 sales of
debentures and industrial revenue bonds and related payments on
debentures, commercial paper and other debt were a result of replacing
maturing and higher cost debt, on an accelerated basis, with lower
priced instruments.
The combined real estate and financial services segments utilized the
funds received from the sale of impaired assets, capitalized servicing
rights and adjustable rate mortgages to reduce commercial paper and
long-term debt by $150 million in the 1996 first half. In the same
period of 1995, these segments increased commercial paper borrowings
to finance construction activity, fund mortgage loan originations and
pay down higher cost long-term debt.
Other Items
In February 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. Approximately 50% of this acquisition, including the
two sawmills, was completed in the second quarter of 1996. The
balance of this transaction is expected to be completed in the third
quarter.
In July 1996, the company announced that it has agreed to sell its
Klamath Falls, Oregon hardboard, particleboard and plywood
manufacturing operations; 600,000 acres of predominantly pine
forestland; and its nursery and seed orchard
<PAGE>
Weyerhaeuser Company
- -18-
facilities for $309 million. The transaction, which is subject to certain
conditions, including regulatory review, is scheduled to close by the
end of August.
Neither of these transactions is expected to have a significant impact
on the company's financial position or liquidity.
Contingencies
The company is a party to legal proceedings and environmental matters
generally incidental to its business. Although the final outcome of
any legal proceeding or environmental matter is subject to a great
many variables and cannot be predicted with any degree of certainty,
the company presently believes that the ultimate outcome resulting
from these proceedings and matters would not have a material effect on
the company's current financial position, liquidity or results of
operations; however, in any given future reporting period such
proceedings or matters could have a material effect on results of
operations.
Part II. Other Information
Item 1. Legal Proceedings
Trial began in May 1992 in a federal income tax refund case that the
company filed in July 1989 in the United States Claims Court. The
complaint seeks a refund of federal income taxes that the company
contends it overpaid in 1977 through 1983. The alleged overpayments
are the result of the disallowance of certain timber casualty losses
and certain deductions claimed by the company arising from export
transactions. The refund sought was approximately $29 million, plus
statutory interest from the dates of the alleged overpayments. The
company settled the portion of the case relating to export
transactions and received a tax refund of approximately $10 million,
plus statutory interest. In September 1994, the United States Court
of Federal Claims issued an opinion on the casualty loss issues which
will result in the allowance of additional tax refunds of
approximately $2 million, plus statutory interest. Both the company
and the government appealed the decision. On August 2, 1996, the
Court of Appeals for the Federal Circuit issued its opinion on the
remaining timber casualty loss issues, ruling in favor of the company
on both the company's appeal and the government's appeal. It is not
known at this time whether the government will seek a rehearing or
appeal the decision.
On March 6, 1992, the company filed a complaint in the Superior Court
for King County, Washington, against a number of insurance companies.
The complaint seeks a declaratory judgment that the insurance
companies named as defendants are obligated under the terms and
conditions of the policies sold by them to the company to defend the
company and to pay, on the company's behalf, certain claims asserted
against the company. The claims relate to alleged environmental
damage to third-party sites and to some of the company's own property
to which allegedly toxic material was delivered or on which allegedly
toxic material was placed in the past. Since December 1992, the
company has agreed to settlements with all but one of the defendants.
The remaining defendant provided first layer excess coverage during a
three year period. That defendant's liability on groups of sites is
being tried in phases. Two trials against the remaining defendant,
affecting nine sites, began in October 1994 and February 1996 and
resulted in verdicts assigning 100 percent clean-up responsibility to
the defendant on three sites, partial responsibility on three others
and a finding of no liability as to the remaining three. The trial
court has ruled that the primary policy has been exhausted and imposed
an obligation on the remaining defendant to provide a defense on one
of the sites, a ruling that may be expanded to include other sites.
Trial for the remaining 16 sites has been set for June 1997.
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. On June 18, 1996, the company and LRAPA
entered into a Stipulated Final Order (SFO) to resolve all past and
ongoing alleged PSD issues, contested matters and alleged violations
associated with extended hours of operation at the Springfield
particleboard facility. In exchange for a full resolution of all past
and ongoing contested matters, the company agreed to pay a total civil
penalty of $19.5 thousand, of which $7.5 thousand was paid directly to
LRAPA. The remaining $12 thousand civil penalty was suspended. The
company also agreed to implement a Supplemental Environmental Project
(SEP) consisting of the funding of the preparation of a nitrogen
oxides (NOx) emission inventory for Lane County. The emission
inventory will be conducted by an outside environmental consultant at
a cost not to exceed $40 thousand.
<PAGE>
Weyerhaeuser Company
- -19-
The company conducted a review of its 10 pulp and paper facilities to
evaluate the facilities' compliance with federal PSD regulations. The
results of the reviews were disclosed to seven state agencies and the
Environmental Protection Agency (EPA) during 1994 and 1995. At the
Cosmopolis, Washington, Columbus, Mississippi, and Flint River,
Georgia, facilities, the state regulatory agencies agreed with the
company's conclusions regarding the status of each facility. For the
Cosmopolis facility, the Washington Department of Ecology agreed the
changes made at the facility did not require PSD review. For the
Columbus and Flint River facilities, the states concluded the original
PSD permits issued to the facilities require updating. The company
will update emissions data for the Columbus and Flint River facilities
as part of the Title V permitting process. No penalties were assessed
for the issues identified at Columbus and Flint River. Agreements
resolving the alleged PSD issues have been reached with the states of
Washington, Oklahoma and North Carolina, as noted below. No issues
were identified at the company's Rothschild, Wisconsin, facility. In
April 1995, EPA Region X issued a NOV to the company and to North
Pacific Paper Corporation (NORPAC), a joint venture in which the
company has an 80 percent ownership interest. The NOV addresses
alleged PSD violations at NORPAC's Longview, Washington, newsprint
manufacturing facility. A settlement resolving alleged PSD issues at
the Longview/NORPAC complex was reached with the State of Washington
on January 26, 1996. On November 14, 1995, the company entered into a
settlement with the State of Oklahoma to resolve alleged PSD
violations at the company's Valliant, Oklahoma, containerboard
manufacturing facility. The company also entered into Special Orders
by Consent with the State of North Carolina to resolve alleged PSD
issues at the New Bern, North Carolina, pulp mill and the Plymouth,
North Carolina, pulp and paper complex. No decision has been made by
the LRAPA or the Oregon Department of Environmental Quality (DEQ)
concerning alleged PSD and permit violations at the company's
Springfield, Oregon, containerboard manufacturing facility.
The Washington State Department of Ecology investigated the accidental
release of chlorine, chlorine dioxide and noncondensable 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 noncondensable 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.
The Washington State Department of Ecology has issued a $10 thousand
penalty to the company because of three accidental chlorine releases
which occurred at the company's pulp mill in Longview on March 18,
1996. The EPA is also investigating.
On April 9, 1993, the company entered into a SFO with the DEQ for
alleged air emissions in excess of permit levels and PSD noncompliance
at the company's North Bend, Oregon, containerboard facility. The SFO
established a compliance schedule for installing control technology.
A Supplemental SFO assessed a $247 thousand initial penalty and a $500
per day stipulated penalty until compliance was demonstrated. On
November 15, 1995, DEQ issued a letter, indicating that the company
had satisfied the requirements of the SFO and Supplemental SFO. No
further penalties were assessed against the company. Termination of
the SFO will occur after issuance of the federal air operating permit
to the North Bend containerboard facility. The North Bend
containerboard facility received its federal air operating permit on
July 1, 1996.
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. In late July, 1996, the company reached an oral
agreement to settle both the Mississippi action and the Alabama action
for $2.5 million. The oral agreement is subject to the execution of a
written settlement agreement and to the approval of the court in the
Alabama action.
<PAGE>
Weyerhaeuser Company
- -20-
On June 20, 1996, the Wisconsin Department of Natural Resources (WDNR)
issued a NOV for alleged air violations at the Marshfield, Wisconsin,
wood products manufacturing facility. No penalty was assessed in the
NOV. Since the WDNR lacks an administrative mechanism to assess
penalties for alleged regulatory non-compliance, it referred the NOV
to the Wisconsin Department of Justice for enforcement action on
July 2, 1996. The Wisconsin Department of Justice has not determined
whether it will accept the referral.
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
Reference is made to the 1996 Weyerhaeuser Company First Quarter and
Annual Meeting Report to Shareholders for information about the
matters voted upon and the votes cast with respect thereto at the
annual meeting of the Shareholders of Weyerhaeuser Company on
April 16, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) Not applicable.
(b) The registrant filed reports on Form 8-K dated February 14,
April 24, July 17, and July 26, 1996 reporting information under
Item 5, Other Events.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> JUN-30-1996
<CASH> 86
<SECURITIES> 0
<RECEIVABLES> 1131<F1>
<ALLOWANCES> 0
<INVENTORY> 971
<CURRENT-ASSETS> 2360
<PP&E> 6652<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 13774
<CURRENT-LIABILITIES> 1401
<BONDS> 5534
<COMMON> 258
0
0
<OTHER-SE> 4300
<TOTAL-LIABILITY-AND-EQUITY> 13774
<SALES> 5491
<TOTAL-REVENUES> 5491
<CGS> 4111
<TOTAL-COSTS> 4111
<OTHER-EXPENSES> 378
<LOSS-PROVISION> 2
<INTEREST-EXPENSE> 158
<INCOME-PRETAX> 383
<INCOME-TAX> 138
<INCOME-CONTINUING> 245
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 245
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
<FN>
<F1>Receivables are stated net of allowances and Property, Plant and Equipment
is stated net of accumulated depreciation.
</FN>
</TABLE>
