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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000106535-01-500006.txt : 20010319
<SEC-HEADER>0000106535-01-500006.hdr.sgml : 20010319
ACCESSION NUMBER: 0000106535-01-500006
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010316
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: WEYERHAEUSER CO
CENTRAL INDEX KEY: 0000106535
STANDARD INDUSTRIAL CLASSIFICATION: LUMBER & WOOD PRODUCTS (NO FURNITURE) [2400]
IRS NUMBER: 910470860
STATE OF INCORPORATION: WA
FISCAL YEAR END: 1228
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-04825
FILM NUMBER: 1570170
BUSINESS ADDRESS:
STREET 1: 33663 WEYERHAEUSER WAY SOUTH
CITY: FEDERAL WAY
STATE: WA
ZIP: 98003
BUSINESS PHONE: 2539242345
MAIL ADDRESS:
STREET 1: 33663 WEYERHAEUSER WAY SOUTH
CITY: FEDERAL WAY
STATE: WA
ZIP: 98003
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>f10k2000.txt
<DESCRIPTION>10-K
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO
X SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2000, 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)
Federal Way, Washington 98063-9777
Telephone (253) 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
Exchangeable Shares (no par value) Toronto Stock Exchange
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. [X].
As of March 2, 2001, 214,583,863 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 $11,662,633,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended December
31, 2000, are incorporated by reference into Parts I, II and IV.
Portions of the Notice of 2001 Annual Meeting of Shareholders and Proxy
Statement are incorporated by reference into Part III.
<PAGE>
Weyerhaeuser Company and Subsidiaries
TABLE OF CONTENTS
- -------------------------------------------------------------------------
PART I Page
----
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 7A. Quantitative and Qualitative Disclosures About Market
Risk 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 14
Item 12. Security Ownership of Certain Beneficial Owners and
Management 14
Item 13. Certain Relationships and Related Transactions 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 15
Signatures 17
Report of Independent Public Accountants on Financial
Statement Schedules 18
Schedule II Valuation and Qualifying Accounts 19
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
the growing and harvesting of timber and the manufacture, distribution and sale
of forest products, real estate development and construction, and other real
estate related activities. Its business segments are timberlands; wood
products; pulp, paper and packaging; and real estate and related assets.
Information with respect to the description and general development of the
company's business, included on pages 40 through 44, Description of the Business
of the Company, contained in the company's 2000 Annual Report to Shareholders,
is incorporated herein by reference.
Financial information with respect to industry segments and geographical areas,
included in Notes 19 and 20 of Notes to Financial Statements contained in the
company's 2000 Annual Report to Shareholders, is incorporated herein by
reference.
Timberlands
The company is engaged in the management of 5.9 million acres of company-owned
and .5 million acres of leased commercial forestland in North America, most of
it highly productive and located extremely well to serve both domestic and
international markets. The company also has renewable, long-term licenses on
31.6 million acres of forestland located in five provinces throughout Canada
that are managed by our Canadian operations. The standing timber inventory on
these lands is approximately 588 million cunits (a cunit is 100 cubic feet of
solid wood). 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 2000
--------- ------------------------------------------
Millions Long-
of Fee term License
Cunits Ownership Leases Arrangements Total
--------- ----------- ------ ------------ ---------
Geographic Area
<S> <C> <C> <C> <C> <C>
United States
West 52 1,949 - - 1,949
South 45 3,325 422 - 3,747
--------- ----------- ------ ------------ ---------
Total United States 97 5,274 422 - 5,696
--------- ----------- ------ ------------ ---------
Canada
Alberta 99 - - 7,500 7,500
British Columbia 202 663 - 5,749 6,412
New Brunswick 1 - - 177 177
Ontario 71 1 - 6,665 6,666
Saskatchewan 118 - - 11,557 11,557
--------- ----------- ------ ------------ ---------
Total Canada 491 664 - 31,648(1) 32,312
--------- ----------- ------ ------------ ---------
International(2) 3 167 99 141 407
--------- ----------- ------ ------------ ---------
TOTAL 591 6,105 521 31,789 38,415
========= =========== ====== ============ =========
</TABLE>
- -------------------------------------------
(1) Includes approximately 20 million acres of productive forestland.
(2) Reflects Weyerhaeuser ownership only, excluding timberlands owned and
managed through joint ventures.
3
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 1. Business - Continued
- -----------------------------
<TABLE>
<CAPTION>
Millions of Thousands of Acres
------------------------
Thousands of Acres Seedlings Stocking
---------------------
Harvested(1) Planted Planted Control Fertilization
------------ ------- ----------- -------- -------------
2000 Activity
<S> <C> <C> <C> <C> <C>
United States
West 35.3 33.6 18.0 10.4 104.5
South 73.5 65.1 36.0 2.4 326.3
------------ ------- ----------- -------- -------------
Total United
States 108.8 98.7 54.0 12.8 430.8
------------ ------- ----------- -------- -------------
Canada
Alberta 27.9 22.1 13.5 9.2 -
British
Columbia 22.8 22.8 8.6 .5 1.0
Ontario 36.1 19.7 11.7 1.6 -
Saskatchewan 32.3 11.4 7.3 5.1 -
------------ ------- ----------- -------- -------------
Total Canada 119.1 76.0 41.1 16.4 1.0
------------ ------- ----------- -------- -------------
International(2) 3.0 21.0 8.6 2.6 2.4
------------ ------- ----------- -------- -------------
TOTAL 230.9 195.7 103.7 31.8 434.2
============ ======= =========== ======== =============
</TABLE>
<TABLE>
<CAPTION>
Sales volumes (millions):
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Raw materials - cubic ft. 640 287 259 235 254
</TABLE>
<TABLE>
<CAPTION>
Selected product prices:
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Export logs (#2 sawlog-bark on) - $/MBF
Cascade - Douglas fir $ 925 $ 829 $ 807 $ 978 $1,330
Coastal - Hemlock 545 532 519 628 611
Coastal - Douglas fir 925 828 808 981 1,246
</TABLE>
Wood Products
The company's wood products businesses produce and sell softwood lumber, plywood
and veneer; oriented strand board, composite and other panels; engineered wood;
hardwood lumber and treated products. These products are sold primarily
through the company's own sales organizations. Building materials are sold to
wholesalers, retailers and industrial users. The raw materials required to
produce these products are purchased from third parties, transferred at market
price from the company's timberlands, or obtained from long-term licensing
arrangements.
- -------------------------------------------
(1) Includes 1.4 thousand acres of right-of-way and other harvest that does not
require planting.
(2) Reflects Weyerhaeuser ownership only, excluding timberlands owned and
managed through joint ventures.
4
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 1. Business - Continued
- -----------------------------
Sales volumes (millions)(1):
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Softwood lumber - board ft. 7,303 5,734 4,995 4,869 4,745
Softwood plywood and veneer - sq.
ft. (3/8") 2,133 1,902 1,842 2,042 2,172
Composite panels - sq. ft. (3/4") 379 410 586 551 604
Oriented strand board - sq. ft. (3/8") 3,634 2,716 2,697 2,462 2,083
Hardwood lumber - board ft. 423 397 339 362 349
Raw materials - cubic ft. 369 305 315 325 304
</TABLE>
<TABLE>
<CAPTION>
Selected product prices:
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Lumber (common) - $/MBF
2x4 Douglas fir (kiln dried) $ 341 $ 408 $ 340 $ 418 $ 422
2x4 Douglas fir (green) 314 384 315 381 386
2x4 Southern yellow pine (kiln dried) 339 413 395 453 422
2x4 Spruce-pine-fir (kiln dried) 257 342 288 354 351
Plywood (1/2" CDX) - $/MSF
West 300 369 305 312 307
South 264 320 280 261 256
Oriented strand board (7/16"-24/16)
North Central price - $/MSF 206 262 203 142 184
</TABLE>
Pulp, Paper and Packaging
The company's pulp, paper and packaging businesses include: Pulp, which
manufactures chemical wood pulp for world markets; 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, 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; and Recycling, which
operates an extensive wastepaper collection system and markets it to company
mills and worldwide customers.
Sales volumes (thousands)(1):
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Pulp - air-dry metric tons 2,129 2,273 2,012 1,982 1,868
Paper - tons(2) 1,589 1,460 1,181 1,146 1,007
Paperboard - tons 255 248 236 243 205
Containerboard - tons 1,055 576 323 389 346
Packaging - MSF 53,602 46,483 44,299 44,508 42,323
Newsprint - metric tons(3) - - 62 684 629
Recycling - tons 3,177 2,785 2,546 2,229 2,011
</TABLE>
- -------------------------------------------
(1) Reflects the acquisition of MacMillan Bloedel in November 1999.
(2) Reflects the acquisition of the Dryden, Ontario, fine paper mill in October
1998.
(3) Reflects the ownership restructuring of the North Pacific Paper Corporation
(NORPAC) newsprint facility from a fully consolidated subsidiary to an equity
affiliate in February 1998.
5
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 1. Business - Continued
- -----------------------------
<TABLE>
<CAPTION>
Selected product prices (per ton):
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Pulp - NBKP-air-dry metric-U.S. $ 681 $ 520 $ 516 $ 566 $ 579
Paper - uncoated free sheet-U.S. 730 646 665 740 745
Linerboard - 42 lb.-Eastern U.S. 453 383 354 326 367
Newsprint - metric-West Coast U.S. 562 512 588 550 636
Recycling - old corrugated containers 79 67 54 76 53
Recycling - old newsprint 57 33 22 15 18
</TABLE>
Real Estate and Related Assets
The company's real estate and related assets businesses are principally engaged
in real estate development and construction through the company's real estate
subsidiary, Weyerhaeuser Real Estate Company, and in other real estate related
activities through the company's financial services subsidiary, Weyerhaeuser
Financial Services, Inc. Development and construction consists of developing
single-family housing and residential lots for sale, including the development
of master-planned communities.
Volume information:
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Units sold:
Single-family units(1) 3,369 3,561 3,089 2,914 2,773
Multi-family units(1) 216 - 276 324 234
Residential lots(1) 1,391 4,297 2,455 1,988 2,522
Amounts in millions:
Loan servicing portfolio(2) $ - $ - $ - $ - $4,354
Single-family loan originations(2) $ - $ - $ - $1,168 $3,436
</TABLE>
- -------------------------------------------
(1) Includes one-half of joint venture sales.
(2) Reflects the sale of the company's wholly owned subsidiary, Weyerhaeuser
Mortgage Company, in the second quarter of 1997.
6
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 2. Properties
- -------------------
Timberlands
Timberlands annual log production (in millions):
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Logs - cubic ft. 792 521 495 476 412
Fee harvest - cubic ft. 721 634 585 541 496
</TABLE>
Wood Products
Production capacities, facilities and annual production, which reflect the
acquisition of MacMillan Bloedel in November 1999 and the sale of the Marshfield
Door business in 2000, are summarized by major product as follows (millions):
<TABLE>
<CAPTION>
Production Number of
Capacity Facilities 2000 1999 1998 1997 1996
---------- ---------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Softwood lumber -
board ft. 5,783 37 5,645 4,532 4,025 3,968 3,701
Softwood plywood
and veneer - sq.
ft. (3/8") 1,511 9 1,340 1,065 960 1,092 1,243
Composite panels -
sq. ft. (3/4")(1) 137 2 206 281 510 478 535
Oriented strand
board - sq.
ft. (3/8") 3,780 9 3,438 2,452 2,179 2,041 1,687
Hardwood lumber -
board ft. 424 13 397 376 342 345 333
Logs - cubic ft. - - 493 572 526 519 500
</TABLE>
Principal manufacturing facilities are located as follows:
Softwood lumber and plywood Engineered wood
Alabama, Arkansas, Georgia, Alabama, California,
Louisiana, Mississippi, Georgia, Kentucky,
North Carolina, Oklahoma, Oregon, Louisiana, Minnesota, Ohio,
Washington; Alberta, British Columbia, Oregon, West Virginia;
Ontario and Saskatchewan, Canada; Alberta and British
and Durango, Mexico Columbia, Canada
Oriented strand board Hardwood lumber
Michigan, North Carolina, West Virginia; Arkansas, Michigan,
Alberta, New Brunswick, Ontario and Oklahoma, Oregon,
Saskatchewan, Canada Pennsylvania, Washington,
Wisconsin; and British
Composite panels Columbia, Canada
British Columbia, Canada; and Durango, Mexico
- ------------------------------------------
(1) Reflects sale of Marshfield, Wisconsin mill in 2000.
7
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 2. Properties-Continued
- -----------------------------
Pulp, Paper and Packaging
Production capacities, facilities and annual production, which reflect the
acquisition of MacMillan Bloedel in November 1999, are summarized by major
product as follows (thousands):
<TABLE>
<CAPTION>
Production Number of
Capacity Facilities 2000 1999 1998 1997 1996
---------- ---------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Pulp - air-dry
metric tons 2,334 9 2,282 2,219 1,971 2,063 2,004
Paper - tons(1) 1,639 6 1,603 1,511 1,235 1,128 1,034
Paperboard - tons 265 1 261 251 237 231 206
Containerboard -
tons 3,834 7 3,578 2,622 2,291 2,381 2,331
Packaging - MSF 72,000 60 56,694 48,758 46,410 46,488 44,471
Newsprint - metric
tons(2) - - - - 69 704 631
Recycling - tons - 24 4,448 4,287 3,833 3,655 3,428
</TABLE>
Principal manufacturing facilities are located as follows:
Pulp Packaging
Georgia, Mississippi, North Arizona, Arkansas, California,
Carolina, Washington; and Colorado, Connecticut, Florida,
Alberta, British Columbia, Georgia, Hawaii, Illinois,
Ontario and Saskatchewan, Canada Indiana, Iowa, Kentucky,
Louisiana, Maryland, Michigan,
Paper Minnesota, Mississippi,
Mississippi, North Carolina, Missouri, Nebraska, New Jersey,
Washington, Wisconsin; and New York, North Carolina, Ohio,
Ontario and Saskatchewan, Canada Oregon, Tennessee, Texas,
Virginia, Washington, Wisconsin;
Paperboard and Guanajuato, Mexico
Washington
Recycling
Containerboard Arizona, California, Colorado,
Alabama, Kentucky, North Illinois, Iowa, Kansas,
Carolina, Oklahoma, Oregon; and Maryland, Minnesota, Nebraska,
Ontario, Canada North Carolina, Oklahoma,
Oregon, Tennessee, Texas, Utah,
Virginia and Washington
- -------------------------------
(1) Reflects the acquisition of the Dryden, Ontario, Canada, fine paper facility
in October 1998.
(2) Reflects the ownership restructuring of the North Pacific Paper Corporation
(NORPAC) newsprint facility from a fully consolidated subsidiary to an equity
affiliate in February 1998.
8
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 2. Properties-Continued
- -----------------------------
Real Estate and Related Assets
Single-family housing Commercial development
California, Maryland, Nevada, California and Washington
Texas, Virginia and Washington
Residential land development Real estate investments
Arkansas, California, Georgia, Arizona, California, Colorado,
Maryland, Nevada, North Carolina, Florida, Nevada, Oregon and
Texas, Virginia and Washington Washington
Mortgage securities
Washington
9
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 3. Legal Proceedings
- --------------------------
The company conducted a review of its 10 major pulp and paper facilities to
evaluate the facilities' compliance with federal Prevention of Significant
Deterioration (PSD) regulations. The results of the reviews were disclosed to
seven state agencies and the Environmental Protection Agency (EPA) during 1994
and 1995. All PSD compliance issues identified in the review have been
resolved. This includes PSD issues at the company's Springfield, Oregon,
containerboard facility which were resolved in December 2000, at which time a
Title V permit was issued for the facility.
The company has entered into a proposed class action settlement of hardboard
siding claims against the company. The settlement class consists of all persons
who own or owned structures in the United States on which the company's
hardboard siding has been installed from January 1, 1981 through December
31,1999. The settlement was approved by the Superior Court, San Francisco
County, California in December 2000. On February 8, 2001, two named intervenors
and objectors filed a notice of appeal from the order granting final approval to
the class action settlement and an order awarding class counsel attorney fees.
They also appealed from two orders of December 13, 2000, one of which denied
their motion to intervene and the second related to the presentation of
witnesses at the final fairness hearing. The company took an after-tax charge
of $82 million in the second quarter to cover the estimated cost of the
settlement and related costs. Because the nationwide class action settlement has
been approved, the company expects that two cases in which class actions have
been claimed but not certified in Oregon and Texas will be dismissed. A similar
case in Washington was dismissed with prejudice on March 2, 2001. Cases pending
in South Carolina and Iowa in which statewide classes have been sought but not
certified may proceed as individual cases but will not be able to be certified
as class actions on behalf of any claimants included in the certified nationwide
class. At the end of the fourth quarter, the company also was a defendant in 17
non-class hardboard siding cases involving primarily multi-family structures and
residential developments.
In May 1999, two civil antitrust lawsuits were filed against the company in U.S.
District Court, Eastern District of Pennsylvania. Both suits name as defendants
several other major containerboard and packaging producers. The complaint in
the first case alleges the defendants conspired to fix the price of linerboard
and that the alleged conspiracy had the effect of increasing the price of
corrugated containers. The suit purports to be a class action on behalf of
purchasers of corrugated containers during the period October 1993 through
November 1995. The complaint in the second case alleges that the company
conspired to manipulate the price of linerboard and thereby the price of
corrugated sheets. The suit purports to be a class action on behalf of
purchasers of corrugated sheets during the period October 1993 through November
1995. Both suits seek damages, including treble damages, under the antitrust
laws. In October 2000, the court denied motions to dismiss that had been filed
by the company and the other defendants. Discovery has commenced in both suits
and the plaintiffs have filed motions to certify a class in both cases.
In May 1999, the Equity Committee ("the Committee") in the Paragon Trade Brands,
Inc. bankruptcy proceeding filed a motion in U.S. Bankruptcy Court for the
Northern District of Georgia for authority to prosecute claims against the
company in the name of the debtor's estate. Specifically, the Committee seeks
to assert that the company breached certain warranties in agreements entered
into between Paragon and the company in connection with Paragon's public
offering of common stock in January 1993. The Committee seeks to recover
damages sustained by Paragon as a result of two patent infringement cases,
one brought by Procter & Gamble and the other by Kimberly-Clark. In September
1999, the court authorized the Committee to commence an adversary proceeding
against the company. The Committee commenced this proceeding in October 1999,
seeking damages in excess of $420 million against the company.
In April 2000, the Environmental Protection Agency (Region X) (EPA) issued a
notice of violation (NOV) and proposed penalty of $194 thousand to the company's
Mountain Pine, Arkansas, manufacturing facility. The NOV alleges the facility
was in violation of its Title V operating permit because it had reported
multiple instances in which the mill's two boilers had exceeded pressure drop
and scrubber flow rate requirements in its permits. The company has appealed the
proposed penalty. Settlement negotiations have been completed and the final
documents are being drafted. The total monetary penalty assessed against the
facility will be $40,000. In addition, the facility will upgrade the
particulate controls on the boiler as a supplemental environmental project.
10
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART I
- -------------------------------------------------------------------------
Item 3. Legal Proceedings-Continued
- ------------------------------------
The company is also a party to various proceedings relating to the cleanup 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 or environmental
matter 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 these proceedings and matters, 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 proceedings or matters 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, 2000.
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 prices, stockholders and dividends included
in Notes 21 and 22 of Notes to Financial Statements in the company's 2000 Annual
Report to Shareholders, is incorporated herein by reference.
Item 6. Selected Financial Data
- --------------------------------
Information with respect to selected financial data included in Note 22 of Notes
to Financial Statements in the company's 2000 Annual Report to Shareholders is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
Information with respect to Management's Discussion and Analysis included on
pages 2, 28-37 and 40-85 of the company's 2000 Annual Report to Shareholders,
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------
Information with respect to market risk of financial instruments included on
pages 50-51 of the company's 2000 Annual Report to Shareholders is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Information
- -----------------------------------------------------------
Financial statements and supplementary information, included in the company's
2000 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 52
Consolidated Statement of Earnings 53
Consolidated Balance Sheet 54-55
Consolidated Statement of Cash Flows 56-57
Consolidated Statement of Shareholders' Interest 58
Notes to Financial Statements 59-85
Selected Quarterly Financial Information (Unaudited) 83
</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 2 through
5 of the Notice of 2001 Annual Meeting of Shareholders and Proxy Statement dated
March 8, 2001, 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 59
C. William Gaynor Senior Vice President 60
Richard C. Gozon Executive Vice President 62
Richard E. Hanson Senior Vice President 57
Steven R. Hill Senior Vice President 53
Mack L. Hogans Senior Vice President 52
Steven R. Rogel President 58
William C. Stivers Executive Vice President 62
George H. Weyerhaeuser, Jr. Senior Vice President 47
</TABLE>
William R. Corbin has been executive vice president, Wood Products, since 1999.
From 1995 to 1999, he was executive vice president, Timberlands and
Distribution, and from 1992, when he joined the company, to 1995 he was
executive vice president, Wood Products.
C. William Gaynor has been senior vice president, Canada, of Weyerhaeuser since
1999 and has been president and chief executive officer of Weyerhaeuser Company
Limited, a subsidiary of the Company, since 1998. He joined the company in
1974 and has held numerous management positions and served as vice president and
general manager - Saskatchewan Division of Weyerhaeuser Canada Ltd., the
predecessor of Weyerhaeuser Company Limited, from 1987 to 1998.
Richard C. Gozon has been executive vice president, Pulp, Paper and Packaging,
since 1994 when he joined the company. Prior to joining Weyerhaeuser, he was
president and chief operating officer of Alco Standard Corporation (a
distributor of paper and office equipment).
Richard E. Hanson has been senior vice president, Timberlands, since 1999. He
was vice president, Western Timberlands, from 1996 to 1998. He joined
Weyerhaeuser in 1970 and has held numerous management positions in the
timberlands, wood products and paper businesses.
Steven R. Hill has been senior vice president, Human Resources, since 1990 and
was vice president, Human Resources, from 1986 to 1990. He joined Weyerhaeuser
as a forester in 1968, and joined Corporate Human Resources in 1980.
Mack L. Hogans has been senior vice president, Corporate Affairs, since 1995 and
was vice president of Government Affairs from 1990 to 1995. He was the director
of Government Affairs and public policy issues management from 1986 to 1990. He
joined Weyerhaeuser in 1979 and has been a forester, branch manager for the
Building Materials business and a government affairs manager.
Steven R. Rogel's biography may be found on page 2 of the Notice of 2001 Annual
Meeting of Shareholders and Proxy Statement dated March 8, 2001, which is
incorporated herein by reference.
William C. Stivers has been executive vice president and chief financial officer
since 1998 and was senior vice president and chief financial officer from 1990
to 1998. He joined the company in 1970.
13
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART III
- -------------------------------------------------------------------------
Item 10. Directors and Executive Officers of the Registrant - Continued
- ------------------------------------------------------------------------
George H. Weyerhaeuser, Jr. has been senior vice president, Technology, since
1998 and was president and chief executive officer of Weyerhaeuser Canada Ltd.
from 1993 to 1998. From 1990 to 1993, he was vice president, Manufacturing,
Pulp, Paper and Packaging. He joined Weyerhaeuser in 1978 and has held various
positions, including sawmill supervisor, vice president and mill manager for
Containerboard, Pulp, Paper and Packaging.
Item 11. Executive Compensation
- --------------------------------
Information with respect to executive compensation included on pages 5 through
17 of the Notice of 2001 Annual Meeting of Shareholders and Proxy Statement
dated March 8, 2001, 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 6 and 7 of the Notice of 2001 Annual Meeting of
Shareholders and Proxy Statement dated March 8, 2001, is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Information with respect to certain relationships and related transactions
included on pages 25 and 26 of the Notice of 2001 Annual Meeting of Shareholders
and Proxy Statement dated March 8, 2001, is incorporated herein by reference.
14
<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, included in the company's 2000 Annual Report
to Shareholders, are incorporated in Part II, Item 8 of this Form 10-K by
reference.
<TABLE>
<CAPTION>
Page
Number(s)
in Form
Financial Statement Schedules 10-K
---------
<S> <C>
Report of Independent Public Accountants on Financial
Statement Schedules 18
Schedule II - Valuation and Qualifying Accounts 19
</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, in the company's 2000 Annual Report to
Shareholders and incorporated herein by reference.
Exhibits:
3 - (i) Articles of Incorporation (incorporated by reference to
1999 Form 10-K filed with the Securities and Exchange Commission
on March 10, 2000 - Commission File Number 1-4825)
(ii) Bylaws
10 - Material Contracts
(a) Agreement with W. R. Corbin (incorporated by reference to 1998
Form 10-K filed with the Securities and Exchange Commission on
March 12, 1999 - Commission File Number 1-4825)
(b) Agreement with R. C. Gozon (incorporated by reference to 1995 Form
10-K filed with the Securities and Exchange Commission on March
15, 1996 - Commission File Number 1-4825)
(c) Agreement with S. R. Rogel (incorporated by reference to 1997 Form
10-K filed with the Securities and Exchange Commission on March
13, 1998 - Commission File Number 1-4825)
(d) Merger Agreement dated June 20, 1999, among Weyerhaeuser Company
and Weyerhaeuser Exchangeco Limited and MacMillan Bloedel Limited,
including the Plan of Arrangement (incorporated by reference to
the Weyerhaeuser Company Registration Statement No. 333-84127)
(e) Form of Executive Severance Agreement (incorporated by reference
to 1999 Form 10-K filed with the Securities and Exchange
Commission on March 10, 2000 - Commission File Number 1-4825)
11 - Statement Re: Computation of Per Share Earnings (incorporated by
reference to Note 2 of Notes to Financial Statements in the company's
2000 Annual Report to Shareholders)
13 - Portions of the company's 2000 Annual Report to Shareholders
specifically incorporated by reference herein
22 - Subsidiaries of the Registrant
23 - Consent of Independent Public Accountants
Reports on Form 8-K
The registrant filed reports on Form 8-K dated October 23, 2000, and January 26,
2001, reporting information under Item 5, Other Events.
The registrant filed a report on Form 8-K dated November 9, 1999, as amended by
Form 8-K/A dated January 10, 2000, reporting information under Item 2,
Acquisition or Disposition of Assets, and Item 7, Financial Statements and
Exhibits.
15
<PAGE>
Weyerhaeuser Company and Subsidiaries
PART IV
- -------------------------------------------------------------------------
Item 14. Exhibits, Financial Statement Schedules and Reports on
- -----------------------------------------------------------------
Form 8-K - Continued
- --------------------
Reports on Form 8-K - Continued
The following financial statements were filed with this Form 8-K:
. The Annual Information Form and Management's Discussion and Analysis for
MacMillan Bloedel for the year ended December 31, 1998 filed with the
Securities and Exchange Commission on April 7, 1999 on Form 40-F;
. The Consolidated Financial Statements of MacMillan Bloedel for the year ended
December 31, 1998 filed with the Securities and Exchange Commission on
September 28, 1999 on Form 40-F/A; and,
. The Consolidated Financial Statements of MacMillan Bloedel for the six-month
period ended June 30, 1999 filed with the Securities and Exchange Commission
on August 11, 1999 on Form 6-K.
16
<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 16, 2001.
Weyerhaeuser Company
/s/ Steven R. Rogel
-----------------------
Steven R. Rogel
Chairman, President and
Chief Executive Officer
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 16, 2001.
/s/ Steven R. Rogel /s/ John I. Kieckhefer
- ------------------------------------- ---------------------------
Steven R. Rogel John I. Kieckhefer
President, Principal Executive Director
Officer, Director and Chairman of the
Board
/s/ William C. Stivers /s/ Arnold G. Langbo
- ------------------------------------- ---------------------------
William C. Stivers Arnold G. Langbo
Principal Financial Officer Director
/s/ Kenneth J. Stancato /s/ Donald F. Mazankowski
- ------------------------------------- ---------------------------
Kenneth J. Stancato Donald F. Mazankowski
Principal Accounting Officer Director
/s/ W. John Driscoll /s/ William D. Ruckelshaus
- ------------------------------------- ---------------------------
W. John Driscoll William D. Ruckelshaus
Director Director
/s/ Richard F. Haskayne /s/ Richard H. Sinkfield
- ------------------------------------- ---------------------------
Richard F. Haskayne Richard H. Sinkfield
Director Director
/s/ /s/ James N. Sullivan
- ------------------------------------- ---------------------------
Robert J. Herbold James N. Sullivan
Director Director
/s/ Martha R. Ingram /s/ Clayton K. Yeutter
- ------------------------------------- ---------------------------
Martha R. Ingram Clayton K. Yeutter
Director Director
17
<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 auditing standards generally accepted in the
United States, the financial statements included in Weyerhaeuser Company's
annual report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 7, 2001. Our audit was made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule shown on page 19 is the responsibility of the company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Seattle, Washington,
February 7, 2000
18
<PAGE>
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
Schedule II - Valuation and Qualifying Accounts
For the three years ended December 31, 2000
Dollar amounts in millions
Deductions
Balance from/ Balance
at Charged (Additions at
Beginning to to) End of
Description of Period Income Reserve Period
- ----------- --------- ------- ----------- -------
<S> <C> <C> <C> <C>
Weyerhaeuser
Reserve deducted from related asset
accounts:
Doubtful accounts - Accounts
receivable
2000 $ 10 $ 4 $ 9 $ 5
========= ======= =========== =======
1999 $ 5 $ 6 $ 1(1) $ 10
========= ======= =========== =======
1998 $ 6 $ 4 $ 5 $ 5
========= ======= =========== =======
Real Estate and Related Assets
Reserves and allowances deducted
from related asset accounts:
Receivables
2000 $ 7 $ - $ 2 $ 5
========= ======= =========== =======
1999 $ 6 $ 2 $ 1(2) $ 7
========= ======= =========== =======
1998 $ 6 $ 1 $ 1 $ 6
========= ======= =========== =======
Mortgage-related financial
instruments
2000 $ 3 $ - $ - $ 3
========= ======= =========== =======
1999 $ 9 $ - $ 6 $ 3
========= ======= =========== =======
1998 $ 27 $ - $ 18(3) $ 9
========= ======= =========== =======
Investments in unconsolidated
entities
2000 $ 3 $ - $ 2 $ 1
========= ======= =========== =======
1999 $ 4 $ - $ 1(4) $ 3
========= ======= =========== =======
1998 $ 6 $ 3 $ 5 $ 4
========= ======= =========== =======
</TABLE>
- --------------------------------------
(1) Includes additional allowances of $4 million in the MacMillan Bloedel
acquisition.
(2) Includes allowances transferred from partnership investments.
(3) Includes allowances transferred to other assets.
(4) Includes the net of allowances transferred to receivables and from other
assets.
19
<PAGE>
Weyerhaeuser Company and Subsidiaries
EXHIBITS INDEX
- -------------------------------------------------------------------------
Exhibits:
3 - (i) Articles of Incorporation (incorporated by reference to
1999 Form 10-K filed with the Securities and Exchange Commission
on March 10, 2000 - Commission File Number 1-4825)
(ii) Bylaws
10 - Material Contracts
(a) Agreement with W. R. Corbin (incorporated by reference to 1998
Form 10-K filed with the Securities and Exchange Commission on
March 12, 1999 - Commission File Number 1-4825)
(b) Agreement with R. C. Gozon (incorporated by reference to 1995
Form 10-K filed with the Securities and Exchange Commission on
March 15, 1996 - Commission File Number 1-4825)
(c) Agreement with S. R. Rogel (incorporated by reference to 1997
Form 10-K filed with the Securities and Exchange Commission on
March 13, 1998 - Commission File Number 1-4825)
(d) Merger Agreement dated June 20, 1999, among Weyerhaeuser Company
and Weyerhaeuser Exchangeco Limited and MacMillan Bloedel
Limited, including the Plan of Arrangement (incorporated by
reference to the Weyerhaeuser Company Registration Statement No.
333-84127)
(e) Form of Executive Severance Agreement (incorporated by reference
to 1999 Form 10-K filed with the Securities and Exchange
Commission on March 10, 2000 - Commission File Number 1-4825)
11 - Statement Re: Computation of Per Share Earnings (incorporated by
reference to Note 2 of Notes to Financial Statements in the company's
2000 Annual Report to Shareholders)
13 - Portions of the company's 2000 Annual Report to Shareholders
specifically incorporated by reference herein
22 - Subsidiaries of the Registrant
23 - Consent of Independent Public Accountants
20
<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%
Company Holdings, Inc. Washington 100
DeQueen & Eastern Railroad Company Arkansas 100
Dynetherm, Inc. Alabama 100
Fisher Lumber Company California 100
Golden Triangle Railroad Mississippi 100
Green Arrow Motor Express Company Delaware 100
Gryphon Asset Management, Inc. Delaware 100
Mississippi & Skuna Valley Railroad Company Mississippi 100
Mountain Tree Farm Company Washington 50
North Pacific Paper Corporation Delaware 50
Norpac Sales Corporation Guam 100
Norpac Resources Inc. Delaware 100
Pacific Veneer, Ltd. Washington 100
SCA Weyerhaeuser Packaging Holding Company British
Asia Limited Virgin Islands 50
Texas, Oklahoma & Eastern Railroad Company Oklahoma 100
TJM Europe Limited United Kingdom 100
Trus Joist Corporation Delaware 100
Trus Joist Japan Co., Ltd. Japan 100
United Structures, Inc. California 100
Westwood Shipping Lines, Inc. Washington 100
Weycomp Claims Management Services, Inc. Texas 100
Weyerhaeuser Company of Nevada Nevada 100
Weyerhaeuser Construction Company Washington 100
Weyerhaeuser de Mexico, S.A. de C.V. Mexico 100
Weyerhaeuser del Bajio, S.A. de C.V. Mexico 100
Weyerhaeuser Financial Services, Inc. Delaware 100
Mortgage Securities III Corporation Nevada 100
ver Bes' Insurance Company Vermont 100
de Bes' Insurance Ltd. Bermuda 100
Weyerhaeuser Financial Investments, Inc. Nevada 100
Abfall Finance Corp. California 100
The Giddings Mortgage Investment Company California 100
Trimark Development Company California 100
WFI Servicing Company Nevada 100
Weyerhaeuser Venture Company Nevada 100
Las Positas Land Co. California 100
WAMCO, Inc. Nevada 100
Weyerhaeuser Forestlands International, Inc. Washington 100
Weyerhaeuser International, Inc. Washington 100
The Capricorn Corporation Philippines 100
</TABLE>
21
<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>
Trus Joist SPRL Belgium 100%
Weyerhaeuser Holdings Limited British
Columbia 100
Weyerhaeuser Company Limited Canada 100
317298 Saskatchewan Ltd. Saskatchewan 100
486286 British Columbia Ltd. British
Columbia 50
600996 B.C. Ltd. British
Columbia 100
Altair Property and Casualty Corporation British
Columbia 100
Boom Chain Transportation Company Limited British
Columbia 40
Forest Industries Flying Tankers Limited British
Columbia 58
Forest License A49782 Holdings Ltd. British
Columbia 99
Ilsaak Forest Resource Ltd. British
Columbia 49
MacMillan Bloedel K.K. Japan 100
MacMillan Bloedel Pembroke Limited Partnership Ontario 100
MacMillan Guadiana, S.A. de C.V. Mexico 100
Marine Leasings Limited British
Columbia 27
Mid-Island Reman Inc. British
Columbia 49
Monterra Lumber Mills Limited Ontario 83
Northwest Hardwoods, Delta, B.C. Ltd. British
Columbia 100
Princeton Co-Generation (VCC) Corp. British
Columbia 90
Sturgeon Falls Repulping Limited Ontario 50
Sturgeon Falls Limited Partnership Ontario 50
Wapawekka Lumber Ltd. Saskatchewan 51
Weyerhaeuser Australia Pty. Ltd. Australia 100
Weyerhaeuser (Barbados) SRL Barbados 100
Marlborough Capital Corp. SRL Barbados 100
Weyerhaeuser (Bridgetown) Limited Barbados 100
Weyerhaeuser (UK) Limited England 100
Weyerhaeuser (BVI) Ltd. British
Virgin Islands 100
Weyerhaeuser New Zealand Holdings Inc. New Zealand 100
Nelson Forest Products Company New Zealand 100
Weyerhaeuser New Zealand Inc. New Zealand 100
Nelson Forest Joint Venture New Zealand 51
Weyerhaeuser (Carlisle) Ltd. Barbados 100
Camarin Limited Barbados 100
Weyerhaeuser (Ewen) Limited British
Columbia 100
Weyerhaeuser (Imports) Pty Limited Australia 100
Weyerhaeuser (Nanaimo) Ltd. British
Columbia 100
Weyerhaeuser Ontario Limited Ontario 100
Weyerhaeuser (Ottawa) Limited Canada 100
</TABLE>
22
<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 Saskatchewan Ltd. Saskatchewan 100%
Wapawekka Lumber Limited Partnership Saskatchewan 50
Weyerhaeuser Services Limited British
Columbia 100
Weyerhaeuser China, Ltd. Washington 100
Weyerhaeuser GMBH Germany 100
Weyerhaeuser (Asia) Limited Hong Kong 100
Weyerhaeuser Japan Ltd. Japan 100
Weyerhaeuser Japan Ltd. Delaware 100
Weyerhaeuser Korea Ltd. Korea 100
Weyerhaeuser, S.A. Panama 100
Weyerhaeuser Taiwan Ltd. Delaware 100
Weyerhaeuser International Sales Corp. Guam 100
Weyerhaeuser (Mexico) Inc. Washington 100
Weyerhaeuser Midwest, Inc. Washington 100
Weyerhaeuser Overseas Finance Co. Delaware 100
Weyerhaeuser International Finance Company Delaware 100
Weyerhaeuser Company Nova Scotia Nova Scotia 100
Weyerhaeuser Raw Materials, Inc. 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
Silverthorn Country Club, Inc. Florida 100
TMI, Inc. Texas 100
Weyerhaeuser Real Estate Company of Nevada Nevada 100
Weyerhaeuser Realty Investors, Inc. Washington 100
Winchester Homes, Inc. Delaware 100
SC - WHI, Inc. Delaware 100
Weyerhaeuser Sales Company Nevada 100
Weyerhaeuser Servicios, S.A. de C.V. Mexico 100
Weyerhaeuser USA LLC Delaware 100
American Cemwood Corporation Oregon 100
MB Administrative Services Inc. Delaware 100
The Wray Company Arizona 100
</TABLE>
23
<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 Nos. 333-36753
and 333-84127 on Form S-3 and Nos. 33-60527, 333-10165, 333-01565, 333-56673,
333-74311, 333-89925 and 333-53010 on Form S-8.
ARTHUR ANDERSEN LLP
Seattle, Washington,
March 16, 2001
24
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>2
<FILENAME>ex32000.txt
<DESCRIPTION>BYLAWS
<TEXT>
BYLAWS
OF
WEYERHAEUSER COMPANY
(as amended through February 11, 1999)
ARTICLE I
PRINCIPAL OFFICE
----------------
The principal office of this corporation, and its registered office in the
State of Washington, is the Weyerhaeuser Headquarters Building,33663
Weyerhaeuser Way South, Federal Way, Washington.
The registered agent of the corporation is the Secretary of the
corporation.
ARTICLE II
SHAREHOLDERS' MEETINGS
----------------------
1. (a) The annual meeting of shareholders at which the Directors are
elected shall be held at 9:00 a.m. on the third Tuesday in April at the
registered office of the corporation, or at such other time or place within or
without the State of Washington as may be designated by the Board of Directors,
for the purpose of electing directors, and for the transaction only of such
other business as is properly brought before the meeting, in accordance with
these bylaws.
(b) To be properly brought before the meeting, business must be of
a nature that is appropriate for consideration at an annual meeting and must be
(i) specified in the notice of meeting (or any supplement thereto) given by
or at the direction of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or
(iii) otherwise properly brought before the meeting by a shareholder. In
addition to any other applicable requirements, for business to be properly
brought before the annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary of the corporation.
To be timely, each such notice must be given, either by personal delivery or by
United States mail, postage prepaid, to the Secretary of the corporation, not
less than 90 days nor more than 120 days prior to the meeting; provided,
however, that in the event that less than 100 days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close
of business on the 10th day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure was made, whichever
first occurs. Each such notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (w) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (x) the name and
<PAGE>
1
address of record of the shareholder proposing such business, (y) the class or
series and number of shares of the corporation which are owned by the
shareholder, and (z) any material interest of the shareholder in such business.
(c) Notwithstanding anything in these bylaws to the contrary, no
business shall be transacted at the annual meeting except in accordance with the
procedures set forth in this Section; provided, however, that nothing in this
Section shall be deemed to preclude discussion by any shareholder of any
business properly brought before the annual meeting, in accordance with these
bylaws.
2. Special meetings of shareholders shall be held at such time and
place as shall be stated in the notice of special meeting solely for such
purpose or purposes as may be stated in the notice of said meeting. Except as
otherwise specifically required by law and subject to the rights of the holders
of any class or series of stock having a preference over the common shares as to
dividends or upon liquidation, special meetings of shareholders may be called
only by the Board of Directors pursuant to a resolution adopted by the
affirmative vote of a majority of the entire Board of Directors (as defined in
Section 1 of Article III).
3. The record date for the determination of shareholders entitled to
notice of and to vote at each annual or special meeting of shareholders shall be
the close of business on the eighth Friday preceding each such meeting,
provided, however, that the Board of Directors may by resolution fix a different
record date for any particular meeting of shareholders.
4. Every shareholder shall furnish in writing to the principal transfer
agent, his post office address at which notice of shareholders' meetings and any
other notices or communications pertaining to the corporation's affairs or
business may be served upon or mailed to him; and every shareholder shall
forthwith advise the principal transfer agent in writing of any change of
address.
ARTICLE III
DIRECTORS
---------
1. The business and affairs of this corporation shall be managed under
the direction of a Board of Directors consisting of not fewer than nine (9) nor
more than thirteen (13) directors, the exact number to be determined from time
to time by resolution adopted by the affirmative vote of a majority of the
entire Board of Directors, each director to hold office until his successor
shall have been elected and qualified. Whenever used in these bylaws, the
phrase "entire Board of Directors" shall mean that number of directors fixed by
the most recent resolution adopted pursuant to the preceding sentence prior to
the date as of which a determination of the number of directors then
constituting the entire Board of Directors shall be relevant for any purpose
under these bylaws. Subject to the rights of holders of any class or series of
stock having a preference over the common shares as to dividends or upon
liquidation, nominations for the election of directors may be made by the Board
of Directors or a committee appointed by the Board of Directors or by any
shareholder entitled to vote generally in the election of directors. However,
any shareholder entitled to vote generally in the election of directors may
nominate one or more persons for election as directors at a meeting only if
<PAGE>
2
written notice of such shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the corporation not less than 90 days
nor more than 120 days prior to the meeting; provided, however, that in the
event that less than 100 days' notice or prior public disclosure of the date of
the meeting is given or made to shareholders, notice by the shareholder to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of meeting was mailed or such
public disclosure was made, whichever first occurs. Each such notice to the
Secretary shall set forth: (i) the name and address of record of the
shareholder who intends to make the nomination; (ii) a representation that the
shareholder is a holder of record of shares of the corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (iii) the name, age,
business and residence addresses, and principal occupation or employment of each
nominee; (iv) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (v) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (vi)
the consent of each nominee to serve as a director of the corporation if so
elected. The corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the corporation to determine the
eligibility of such proposed nominee to serve as a director of the corporation.
The presiding officer of the meeting may, if the facts warrant, determine that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
2. Meetings of the Board of Directors, regular or special, may be held
at any place within or without the State of Washington. The times and places
for holding meetings of the Board of Directors may be fixed from time to time by
resolution of the Board of Directors or (unless contrary to a resolution of the
Board of Directors) in the notice of the meeting.
3. The annual meeting of the Board of Directors may be held immediately
following the adjournment of the annual meeting of shareholders at the place at
which the annual meeting of shareholders is held or at such other time or place
fixed by resolution of the Board of Directors.
4. Special meetings of the Board of Directors shall be held whenever
called by the Chairman of the Board, the President or the Secretary or by any
two or more directors. Notice of each special meeting of the Board shall, if
mailed, be addressed to each director at the address designated by him for that
purpose or, if none is designated, at his last known address and be mailed on or
before the third day before the date on which the meeting is to be held; or such
notice shall be sent to each director at such address by telegraph, cable,
wireless, telex or other electronic means of transmission, or be delivered to
him personally, not later than the day before the date on which such meeting is
to be held. Every such notice shall state the time and place of the meeting but
need not state the purposes of the meeting, except to the extent required by
law. If mailed, each notice shall be deemed given when deposited, with postage
thereon prepaid, in a post office or official depository under the exclusive
care and custody of the United States Postal Service. Such mailing shall be by
first class mail.
<PAGE>
3
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
------------------------------
1. (a) The Board of Directors may, by resolution passed by a majority
of the whole Board, designate three or more of their number to constitute an
Executive Committee, and shall include therein the Chairman of the Board. The
Executive Committee, except to the extent limited in the aforesaid resolution or
by law, shall have and exercise, in the interval between meetings of the Board
of Directors, the authority and powers of the Board of Directors in the
management of the business of the corporation.
(b) Meetings of the Executive Committee may be held at any time
and at any place upon call of the Chairman of the Board or the Secretary or any
two members of the Committee. Notice, which need not state the purpose of the
meeting, shall be given orally, in writing or by telegraph not less than twenty-
four hours prior to the time of the holding of said meeting, except that if a
meeting is held at a time and place fixed in a resolution of the Executive
Committee or the Board of Directors, no notice shall be required.
(c) Three of the members of the Executive Committee shall constitute a
quorum for the transaction of business and the act of three of the members of
the Executive Committee present at a meeting shall be the act of the Executive
Committee. All action taken by the Executive Committee shall be reported to the
next meeting of the Board of Directors, unless before such meeting a copy of
said minutes shall have been given to each Director.
2. (a) The Board of Directors may, by resolution passed by a majority
of the whole Board, define the powers, authority, and functions of, designate
the number of members and name the Chairmen and other members of such other
committees of the Board of Directors as the Board shall from time to time
determine.
(b) Meetings of such a committee may be had at any time and at any
place upon call of the Chairman of the committee, the Chairman of the Board or
any other two members of the committee. Notice, which need not state the
purpose of the meeting, shall be given orally, in writing or by telegraph not
less than twenty-four hours prior to the time of the holding of said meeting,
except that if a meeting is held at a time and place fixed in a resolution
of the Committee, or the Board of Directors, no notice shall be required.
(c) Two of the members of such a committee shall constitute a
quorum of the committee for the transaction of its business and the act of two
of the members of the committee present at a meeting shall be the act of the
committee. All action taken by such a committee shall be reported to the next
meeting of the Board of Directors, unless before such meeting a copy of
the minutes of the committee meeting shall have been given to each Director.
<PAGE>
4
ARTICLE V
OFFICERS
--------
1. The officers of this corporation shall include those elected by the
Board of Directors and those appointed by the chief executive officer. The
officers of this corporation to be elected by the Board of Directors shall be:
a Chairman of the Board of Directors; a President; one or more Executive Vice
Presidents; one or more Senior Vice Presidents; a Secretary; a Treasurer; a
General Counsel; a Controller; and a Director of Taxes. The officers of this
corporation which may from time to time be appointed by the chief executive
officer shall be the Vice Presidents and such additional officers and assistant
officers of this corporation as he may determine.
2. At its annual meeting the Board of Directors shall elect such of the
officers of this corporation as are to be elected by it and each such officer
shall hold office until the next such annual meeting or until a successor shall
have been duly elected and qualified or until his death, resignation, retirement
or removal by the Board of Directors. A vacancy in any such office may be
filled for the unexpired portion of the term at any meeting of the Board of
Directors. Such of the officers of this corporation as are appointed by the
chief executive officer shall serve for such periods of time as he may determine
or until a successor shall have been appointed or until his death, resignation,
retirement or removal from office.
3. Any Director or officer may resign his office at any time. Such
resignation shall be made in writing and delivered to and filed with the
Secretary, except that a resignation of the Secretary shall be delivered to and
filed with the chief executive officer. A resignation so made shall be
effective upon its delivery unless some other time be fixed in the resignation,
and then from the date so fixed.
4. The Board of Directors may appoint and remove at will such agents
and committees as the business of the corporation shall require, each of whom
shall exercise such powers and perform such duties as may from time to time be
prescribed or assigned by the chief executive officer, the Board of Directors or
by other provisions of these bylaws.
ARTICLE VI
POWERS AND DUTIES OF OFFICERS
-----------------------------
1. The Chairman of the Board of Directors shall, when present, preside
at all meetings of the Board of Directors, the Executive Committee, and the
shareholders. The Chairman shall advise with and assist the President in any
possible way, and shall perform such duties as may be assigned to him by the
Board or the President.
2. The President shall be the chief executive officer of the
corporation and shall be vested with general authority and control of its
affairs, and over the officers, agents and employees of the corporation, subject
to the Board of Directors. He shall, in the absence of the Chairman of the
Board, preside at all meetings of the Board of Directors, the Executive
Committee and the shareholders, and shall perform all the duties devolving upon
<PAGE>
5
him by law as the chief executive officer of the corporation. He shall from time
to time report to the Board of Directors any information and recommendations
concerning the business or affairs of the corporation which may be proper or
needed, and shall see that all orders and resolutions of the Board of Directors
are carried into effect, and shall perform such other duties and services, not
inconsistent with law or these bylaws, as pertain to his office, or as are
required by the Board of Directors.
3. (a) The Executive Vice Presidents, the Senior Vice Presidents and
the Vice Presidents shall have and exercise such powers and discharge such
duties as may from time to time be conferred upon and delegated to them
respectively, by the chief executive officer, or by these bylaws, or by the
Board of Directors.
(b) In the absence of the chief executive officer or in the case
of his inability to act, the President, or in the absence of the President or in
the case of his inability to act, the most senior Executive Vice President
present, or in the absence or inability to act of any Executive Vice President,
the most senior Senior Vice President present, shall be vested with all the
powers and shall perform all the duties of said chief executive officer during
his absence or inability to act, or until his successor shall have been elected.
4. (a) The Treasurer shall attend to the collection, receipt and
disbursement of all moneys belonging to the corporation. He shall have
authority to endorse, on behalf of the corporation, all checks, notes, drafts,
warrants and orders, and he shall have custody over all securities of the
corporation. He shall have such additional powers and such other duties as he
may from time to time be assigned or directed to perform by these bylaws or by
the Board of Directors or by the chief executive officer.
(b) The Assistant Treasurers, in the order of their seniority,
shall have all of the powers and shall perform the duties of the Treasurer in
case of the absence of the Treasurer or his inability to act, and shall have
such other powers and duties as they may from time to time be assigned or
directed to perform.
5. (a) The Secretary shall have the care and custody of the corporate
and stock books and the corporate seal of the corporation. He shall attend all
meetings of the shareholders, and, when possible, all meetings of the Board of
Directors and of the Executive Committee, and shall record all votes and the
minutes of all proceedings in books kept for that purpose. He shall sign such
instruments in behalf of the corporation as he may be authorized by the Board of
Directors or by law to do, and shall countersign, attest and affix the corporate
seal to all certificates and instruments where such countersigning or such
sealing and attestation are necessary to the true and proper execution thereof
He shall see that proper notice is given of all meetings of the shareholders of
which notice is required to be given, and shall have such powers and duties as
he may from time to time be assigned or directed to perform by these bylaws, by
the Board of Directors or the chief executive officer.
(b) The Assistant Secretaries, in the order of their seniority,
shall have all of the powers and shall perform the duties of the Secretary in
case of the absence of the Secretary or his inability to act, and shall have
such other powers and duties as they may from time to time be assigned or
directed to perform.
<PAGE>
6
6. The General Counsel shall attend all meetings of the shareholders
and, upon request, meetings of the Board of Directors and the Executive
Committee of the corporation, and act as advisor thereof, and shall have general
supervision of all legal matters of the corporation, and at all times be subject
to the direction of the chief executive officer and the Board of Directors of
the corporation.
7. (a) The Controller shall be the chief accounting officer of the
corporation with authority over and custody of the financial and property books
and records of the corporation. He shall maintain adequate records of all
assets, liabilities and transactions of the corporation; and shall have such
additional powers and duties as he may from time to time be assigned or directed
to perform by these bylaws or by the Board of Directors or by the chief
executive officer.
(b) The Assistant Controllers, in the order of their seniority,
shall have all of the powers and shall perform the duties of the Controller in
case of the absence of the Controller or his inability to act, and shall have
such other powers and duties as they may from time to time be assigned or
directed to perform.
ARTICLE VII
CERTIFICATES OF STOCK
---------------------
1. All certificates of stock shall be in such form as shall be approved
by the Board of Directors, shall be numbered in the order of their issue, shall
be dated, shall be signed by the Chairman of the Board, the President, an
Executive Vice President, a Senior Vice President, or a Vice President, and by
the Secretary or an Assistant Secretary, provided, that where any such
certificate is manually countersigned by a Registrar, other than the corporation
or its employee, the signatures of the Chairman of the Board, President,
Executive Vice President, Senior Vice President, Vice President, Secretary, or
Assistant Secretary, and the Transfer Agent upon such certificates may be
facsimiles. In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation, or otherwise, before such certificate or
certificates shall have been delivered by the corporation, such certificate or
certificates may nevertheless be issued and delivered by the corporation as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures were used thereon had not ceased to be
such officer or officers of the corporation.
2. The corporation shall, if and whenever the Board of Directors so
determines, maintain one or more transfer offices each in charge of a Transfer
Agent designated by the Board of Directors where the shares of the corporation
shall be directly transferable; and likewise, one or more registration offices
each in charge of a Registrar designated by the Board of Directors where such
certificates shall be registered. One person or corporation may be designated
as both Transfer Agent and Registrar. When any such transfer and registration
office or offices are maintained and the Transfer Agent or Agents and Registrar
or Registrars shall have been designated for such office or offices, no
certificate for shares of the corporation shall be valid unless countersigned by
a Transfer Agent so designated and by a Registrar so designated.
<PAGE>
7
3. Except as otherwise provided in the articles of incorporation or a
resolution of the Board of Directors of this corporation, transfer of fractional
shares shall not be made upon the records or books of the corporation, nor shall
certificates for fractional shares be issued by the corporation.
4. The corporation may issue a new certificate in place of any
certificate theretofore issued by it alleged to have been lost or destroyed
The Board of Directors shall require the owner of the lost, destroyed or
mutilated certificate, or his legal representative, to give the corporation a
bond in such sum and with such surety or sureties as it may direct, to indemnify
the corporation against any claim that shall be made against it on account of
the alleged loss or destruction of such certificate.
5. The Board of Directors may make such additional rules and regulations,
not contrary to law or these bylaws, as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of the corporation.
ARTICLE VIII
CONTRACTS
---------
The Board of Directors may authorize any officer or officers, agent or
agents, to enter into any contract or to execute and deliver any instrument in
the name and on behalf of the corporation, and such authority may be general or
confined to specific instances; and unless so authorized by the Board of
Directors or by these bylaws, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or undertaking, or to
pledge its credit or to render it liable for any purpose or on any account.
ARTICLE IX
FISCAL YEAR
-----------
The fiscal year of this corporation shall be the period beginning with the
opening of business on the first Monday following the last Sunday of the
preceding fiscal year, and ending with the close of business for the last Sunday
of the following December.
<PAGE>
8
ARTICLE X
CORPORATE SEAL
--------------
The corporate seal shall be the one of which an impression is affixed in
the left hand margin hereof, bearing the words:
"WEYERHAEUSER COMPANY
CORPORATE SEAL
STATE OF WASHINGTON"
ARTICLE XI
NOTICES AND WAIVERS
-------------------
1. Whenever notice is required under these bylaws or by statute, and
such notice is given by mail, the time of giving such notice shall be deemed to
be the time when the same is placed in the United States mail, postage prepaid,
and addressed to the party to be notified, at his last known address.
2. Any shareholder, officer, director or member of the Executive
Committee may waive at any time any notice required to be given under these
bylaws, either by separate writing or directly upon the face of the records.
ARTICLE XII
INDEMNIFICATION
---------------
1. This corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that the person is or was a director, officer or employee, or
who is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by the person in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
the Business Corporation Act of the State of Washington, and any other
applicable law, as from time to time in effect. Such right of indemnification
shall not be deemed exclusive of any other rights to which the person may be
entitled apart from the foregoing provisions. For purposes of this Article
"director, officer or employee" shall include persons who hold such positions in
this corporation or in a wholly owned subsidiary, or hold, at the written
request of an officer of this corporation, an equivalent position in another
enterprise. The rights granted by this Article shall apply whether or not the
person continues to be a director, officer or employee at the time liability or
expense is incurred.
<PAGE>
9
2. This corporation shall have power to the fullest extent permitted by
the Business Corporation Act of the State of Washington to purchase and maintain
insurance on behalf of any person who is, or was, a director, officer, employee
or agent of this corporation or is or was serving at the request of this
corporation as an officer, director, employee or agent of another corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such, whether or not this corporation
would have the power to indemnify the person against such liability under the
provisions of Section 1 of this Article XII or under the Business Corporation
Act of the State of Washington or any other provision of law.
ARTICLE XIII
1. These bylaws may be altered, amended or repealed or new bylaws enacted
by the affirmative vote of a majority of the entire Board of Directors (if
notice of the proposed alteration or amendment is contained in the notice of the
meeting at which such vote is taken or if all directors are present) or at any
regular meeting of the shareholders (or at any special meeting thereof duly
called for that purpose) by the affirmative vote of a majority of the shares
represented and entitled to vote at such meeting (if notice of the proposed
alteration or amendment is contained in the notice of such meeting).
2. Notwithstanding anything contained in Section 1 of this Article XIII
to the contrary, either (i) the affirmative vote of the holders of at least 80%
of the votes entitled to be cast by the holders of all shares of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, or (ii) the affirmative vote of a majority of the entire Board of
Directors with the concurring vote of a majority of the Continuing Directors,
voting separately and as a subclass of directors, shall be required to alter,
amend or repeal, or adopt any provision inconsistent with, Sections 1 and 2 of
Article II, Section 1 of Article III, Article XII and this Section 2 of this
Article XIII. For purposes of this Article XIII, the term "Continuing Director"
shall mean any member of the Board of Directors who was a member of the Board of
Directors on August 13, 1985 or who is elected to the Board of Directors after
August 13, 1985 upon the recommendation of a majority of the Continuing
Directors, voting separately and as a subclass of directors on such
recommendation.
<PAGE>
10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>3
<FILENAME>ex132000.txt
<DESCRIPTION>PORTIONS OF ANNUAL REPT
<TEXT>
<TABLE>
<CAPTION>
PERCENT
2000 FINANCIAL HIGHLIGHTS 2000 1999 CHANGE
- --------------------------------------------------------------------------------
Dollar amounts in millions
except per-share figures
<S> <C> <C> <C>
Net sales and revenues $ 15,980 $ 12,780 25.0%
Earnings:
Before cumulative effect of a
change in an accounting principle 840 616 36.4%
Net earnings 840 527 59.4%
Basic earnings per share:
Before cumulative effect of a
change in an accounting principle 3.72 2.99 24.4%
Net earnings 3.72 2.56 45.3%
Cash flow provided by operations
before changes in working capital 1,703 1,406 21.1%
Total assets 18,195 18,339 -0.8%
Capital expenditures
(Weyerhaeuser only, excluding
acquisitions) 852 494 72.5%
Shareholders' interest 6,832 7,173 -4.8%
Number of shares outstanding
(In thousands) 219,213 234,849 -6.7%
Book value per share $ 31.17 $ 30.54 2.1%
Return on shareholders' interest 12.0% 9.0% 33.3%
Common stock price range $ 74 1/2-36 1/16
$ 73 15/16-49 9/16
-
</TABLE>
Bar chart - Net Sales and Revenues
1996 1997 1998 1999 2000
$ 11,652 $ 11,787 $ 11,242 $ 12,780 $ 15,980
Stacked Bar chart - Net Earnings
1996 1997 1998 1999 2000
Net Earnings $ 463 $ 342 $ 294 $ 527 $ 840
Nonrecurring Items - 9 45 154 82
Bar chart - Cash Flow from operations before changes in working capital
1996 1997 1998 1999 2000
$ 1,247 $ 1,092 $ 1,018 $ 1,396 $ 1,693
Stacked Bar chart - Basic Earning per Share
1996 1997 1998 1999 2000
Basic Earnings per share $ 2.34 $ 1.72 $ 1.48 $ 2.56 $ 3.72
Nonrecurring Items - .04 .23 .75 .36
The consolidated financial statements include: (1) Weyerhaeuser Company
(Weyerhaeuser), principally engaged in the growing and harvesting of timber and
the manufacture, distribution and sale of forest products, and (2) Real estate
and related assets, principally engaged in real estate development and
construction, and other real estate related activities.
WEYERHAEUSER 2 ANNUAL REPORT 2000
<PAGE>
weyerhaeuser in 2000
one company, one vision
pulp, paper and packaging
World's largest producer of softwood market pulp, third-
largest producer of containerboard in the United States, and
one of the largest producers of uncoated free sheet and
corrugated packaging in the United States.
2000 HIGHLIGHTS . April 28-Weyerhaeuser completes a three-year project at its
Springfield, Oregon, containerboard mill to enhance product
quality, improve operating efficiency, and provide added
protection for air and water quality.
. July 11-Prince Albert, Saskatchewan, pulp and paper capital
project is completed three and one-half months ahead of
schedule, under budget and has now surpassed 2.25 million
hours without a lost-time accident. The project, one of the
first to complete PACE (Process to Achieve Capital
Excellence), is achieving industry record start-up
performance.
. August 4-SpaceKraft(R) bulk packaging plant in Salem, Oregon,
begins full operations. The plant produces proprietary
seamless corrugated bulk packages for agricultural and
industrial users in the western United States, Asia, Central
America and western South America.
. Reports operating earnings for the year of $938 million
compared with $310 million in 1999.
timberlands
World's largest private owner of merchantable softwood timber.
2000 HIGHLIGHTS . March 31-Weyerhaeuser completes the acquisition of two
sawmills and related assets from CRS Ltd. of Australia. The
sawmills have a combined annual production capacity of 171
million board feet of lumber. With the acquisition,
Weyerhaeuser also increases its ownership to 85 percent of
Pine Solutions, Australia's largest softwood timber
distributor.
. Reports operating earnings for the year of $576 million
compared with $535 million in 1999.
WEYERHAEUSER 28 ANNUAL REPORT 2000
<PAGE>
wood products
World's largest producer of softwood lumber, engineered wood
products and hardwood lumber; the world's second-largest
producer of structural panels and the second-largest North
American distributor of wood products.
2000 HIGHLIGHTS . January 21-Weyerhaeuser completes the acquisition of TJ
International, making Weyerhaeuser the world's largest
producer of engineered wood products.
. October 2-Weyerhaeuser Company Limited acquires the operations
of Coast Mountain Hardwoods in Delta, British Columbia. The
purchase includes a hardwood lumber mill producing more than
42 million board feet (MMBF) annually.
. October 26-Trus Joist announces plan to build TimberStrand(R)
laminated strand lumber (LSL) plant in Kenora, Ontario.
. December 22-Weyerhaeuser completes the sale of its door
business in Marshfield, Wisconsin, to Wind Point Partners, a
private equity investment firm based in Chicago, Illinois, and
Southfield, Michigan.
. Reports operating earnings for the year of $206 million
compared with $470 million in 1999.
real estate and related assets
One of the larger homebuilders in our selected markets:
San Diego, greater Los Angeles, Las Vegas, Houston, Puget
Sound, and the Maryland and northern Virginia suburbs of
Washington, D.C. Developer of Master Planned Communities
in Puget Sound, San Diego, greater Los Angeles, Las Vegas,
Houston and North Carolina.
2000 HIGHLIGHTS . Reports record operating earnings for the year of $259 million
compared with $190 million in 1999. This marks the third
consecutive year of increased earnings from the real estate
business.
WEYERHAEUSER 29 ANNUAL REPORT 2000
<PAGE>
pulp, paper and packaging
<TABLE>
<CAPTION>
NET SALES 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------
In millions of dollars
<S> <C> <C> <C> <C> <C>
Pulp $ 1,416 $ 1,192 $ 1,064 $ 1,107 $ 1,068
Paper 1,284 1,097 937 910 862
Paperboard and containerboard 648 397 319 323 300
Packaging 2,557 2,083 1,966 1,855 1,991
Newsprint - - 40 450 483
Recycling 370 255 204 201 151
Other products 244 151 95 100 105
--------------------------------------------
$ 6,519 $ 5,175 $ 4,625 $ 4,946 $ 4,960
============================================
</TABLE>
<TABLE>
<CAPTION>
SALES VOLUMES 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------
In thousands
<S> <C> <C> <C> <C> <C>
Pulp-air-dry metric tons 2,129 2,273 2,012 1,982 1,868
Paper-tons 1,589 1,460 1,181 1,146 1,007
Paperboard-tons 255 248 236 243 205
Containerboard-tons 1,055 576 323 389 346
Packaging-MSF 53,602 46,483 44,299 44,508 42,323
Newsprint-metric tons - - 62 684 629
Recycling-tons 3,177 2,785 2,546 2,229 2,011
</TABLE>
<TABLE>
<CAPTION>
ANNUAL PRODUCTION CAPACITY 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------
In thousands
<S> <C> <C> <C> <C> <C> <C>
Pulp-air-dry metric tons 2,290 2,282 2,219 1,971 2,063 2,004
Paper-tons 1,595 1,603 1,511 1,235 1,128 1,034
Paperboard-tons 240 261 251 237 231 206
Containerboard-tons 3,761 3,578 2,622 2,291 2,381 2,331
Packaging-MSF 72,000 56,694 48,758 46,410 46,488 44,471
Newsprint-metric tons - - - 69 704 631
Recycling-tons - 4,448 4,287 3,833 3,655 3,428
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MANUFACTURING FACILITIES
- --------------------------------------------------------------
<S> <C> <C> <C>
Pulp 9 Containerboard 7
Paper 6 Packaging 60
Paperboard 1 Recycling 24
- --------------------------------------------------------------
</TABLE>
PULP Total capacity 2.3 million metric tons
Metric tons in thousands (Shown as bar graph in document)
================================================================================
LOCATION
Columbus MS 385
Cosmopolis WA 140
Dryden ON 75
Flint River GA 330
Grande Prairie AB 310
Kamloops BC 470
New Bern NC 315
Plymouth NC 130
Prince Albert SK 135
- --------------------------------------------------------------------------------
Weyerhaeuser's Pulp business is the world leader in producing softwood market
pulp for global markets. We manufacture three major product lines: papergrade
pulp, absorbent pulp, and dissolving and specialty pulp. Customers from around
the world buy this pulp for use in products such as fine writing, office and
publication papers; diapers and absorbent personal care products;
pharmaceuticals; and photographic-base paper. We strive to produce these
products in a way that reduces unwanted byproducts and captures and reuses
all available resources during the pulping process.
WEYERHAEUSER 30 ANNUAL REPORT 2000
<PAGE>
PAPER Total capacity 1.6 million tons
Tons in thousands (Shown as bar graph in document)
================================================================================
LOCATION
Columbus MS 220
Dryden ON 395
Longview WA 160
Plymouth NC 430
Prince Albert SK 250
Rothschild WI 140
- --------------------------------------------------------------------------------
Our Fine Paper business manufactures coated and uncoated fine papers for
printing, publishing, and business and office use. Some of the most recognized
names are First Choice premium electronic imaging paper and Cougar Opaque and
Lynx Opaque printing papers. Our Newsprint business is a joint venture with
Nippon Paper Industries of Japan that makes high-quality newsprint for newspaper
publishers and commercial printers in the western United States and Japan. The
Bleached Paperboard business primarily makes paperboard used to produce
containers such as milk and juice cartons and paper cups.
- --------------------------------------------------------------------------------
MEDIUM Total capacity 1.1 million tons
Tons in thousands (Shown as bar graph in document)
================================================================================
LOCATION
North Bend OR 264
Pine Hill AL 274
Plymouth NC 199
Sturgeon Falls ON 105
Valliant OK 251
- --------------------------------------------------------------------------------
LINERBOARD Total capacity 2.7 million tons
Tons in thousands (Shown as bar graph in document)
================================================================================
LOCATION
Henderson KY 185
Pine Hill AL 506
Plymouth NC 313
Springfield OR 756
Valliant OK 908
- --------------------------------------------------------------------------------
Weyerhaeuser manufactures package-strength medium and linerboard. The medium is
used in forming the fluted (or wavy) portion of corrugated packaging that
provides package strength and extra cushioning to the products in the box.
Linerboard is a flat sheet of paper used for both the inside and outside facings
of a corrugated box. The liners provide extra stacking strength and a smooth
graphics surface for the finished box. Containerboard and corrugated packaging
are made from renewable and recyclable resources with an average recycled
content of 57 percent.
- --------------------------------------------------------------------------------
OPERATING FACILITIES
- --------------------------------------------------------------------------------
PACKAGING PLANTS
Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii,
Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota,
Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio,
Oregon, Tennessee, Texas, Virginia, Washington, Wisconsin; Guanajuato, Mexico
RECYCLING PLANTS
Arizona, California, Colorado, Illinois, Iowa, Kansas, Maryland, Minnesota,
Nebraska, North Carolina, Oklahoma, Oregon, Tennessee, Texas, Utah, Virginia,
Washington
WEYERHAEUSER 31 ANNUAL REPORT 2000
<PAGE>
timberlands
<TABLE>
<CAPTION>
NET SALES 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------
In millions of dollars
<S> <C> <C> <C> <C> <C>
To unaffiliated customers:
Raw materials (logs,
chips & timber) $ 993 $ 637 $ 614 $ 771 $ 842
Other products 98 30 37 37 37
--------------------------------------------
$ 1,091 $ 667 $ 651 $ 808 $ 879
============================================
Intersegment sales $ 924 $ 537 $ 488 $ 520 $ 513
============================================
</TABLE>
<TABLE>
<CAPTION>
SALES VOLUMES 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------
In millions
<S> <C> <C> <C> <C> <C>
Raw materials-cubic feet 640 287 259 235 254
</TABLE>
<TABLE>
<CAPTION>
ANNUAL PRODUCTION 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------
In millions
<S> <C> <C> <C> <C> <C>
Logs-cubic feet 792 521 495 476 412
Fee harvest-cubic feet 721 634 585 541 496
</TABLE>
WEYERHAEUSER 32 ANNUAL REPORT 2000
<PAGE>
U.S. OWNED AND LEASED TIMBERLANDS Total acres owned or leased 5.7 million
Acres in thousands (Shown as bar graph in document)
================================================================================
LOCATION
Alabama 590
Arkansas 714
Georgia 326
Louisiana 355
Mississippi 688
North Carolina 565
Oklahoma/Texas 510
Oregon 578
Washington 1,372
- --------------------------------------------------------------------------------
In the United States, Weyerhaeuser owns and operates 5.7 million acres of
privately managed forests in 10 states for sustainable wood production. We
manage our forests to increase the quality and volume of wood produced as
well as to protect important natural resources. Such forest practices include
planting 300 to 600 seedlings on each acre, thinning forest stands to give
remaining trees more room to grow, pruning selected trees to produce knot-free
wood, fertilizing stands to supplement natural nutrient levels, and harvesting
at sustainable rates-approximately 2 percent of our forestlands each year in the
West and 3 percent in the South where the growing cycle is faster.
- --------------------------------------------------------------------------------
CANADIAN OWNED AND Total acres owned or licensed
LICENSED TIMBERLANDS 32.3 million (13.1 million hectares)
Acres in thousands (Shown as bar graph in document)
================================================================================
LOCATION
Alberta 7,500
British Columbia 6,412
New Brunswick 177
Ontario 6,666
Saskatchewan 11,557
- --------------------------------------------------------------------------------
Forests in Canada generally are publicly owned and administered by provincial
governments. Weyerhaeuser Canada holds renewable, long-term licenses on 31.6
million acres (12.8 million hectares) of forestlands in five provinces and owns
664,000 acres (269,000 hectares). Weyerhaeuser works closely with various
stakeholder groups to achieve business improvement opportunities. This includes
working with various major universities in the area of forestry research and
development, strengthening relationships with Aboriginal peoples, and helping
establish sustainable forest management standards.
- --------------------------------------------------------------------------------
AUSTRALASIAN SAWMILLS
As a part of the company's investment in RII Weyerhaeuser World Timberfund, the
Nelson Forests Joint Venture and its wholly owned subsidiaries, Weyerhaeuser
operates four sawmills in Australia and one in New Zealand with a combined
capacity of 321 million board feet of lumber. These mills are managed and
reported by our Timberlands segment.
WEYERHAEUSER 33 ANNUAL REPORT 2000
<PAGE>
wood products
<TABLE>
<CAPTION>
NET SALES 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------
In millions of dollars
<S> <C> <C> <C> <C> <C>
Softwood lumber $ 2,996 $ 2,415 $ 1,876 $ 2,176 $ 2,068
Softwood plywood and veneer 523 546 459 510 527
Oriented strand board,
composite and other
panel products 891 839 783 609 680
Hardwood lumber 315 298 257 289 252
Engineered wood products 966 409 330 284 233
Raw materials (logs,
chips & timber) 242 211 243 248 235
Other products 880 802 675 607 517
---------------------------------------------
$ 6,813 $ 5,520 $ 4,623 $ 4,723 $ 4,512
=============================================
</TABLE>
<TABLE>
<CAPTION>
SALES VOLUMES 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------
In millions
<S> <C> <C> <C> <C> <C>
Softwood lumber-board feet 7,303 5,734 4,995 4,869 4,745
Softwood plywood and veneer
-square feet (3/8") 2,133 1,902 1,842 2,042 2,172
Composite panels-square
feet (3/4") 379 410 586 551 604
Oriented strand board
-square feet (3/8") 3,634 2,716 2,697 2,462 2,083
Hardwood lumber-board feet 423 397 339 362 349
Raw materials-cubic feet 369 305 315 325 304
</TABLE>
<TABLE>
<CAPTION>
ANNUAL PRODUCTION CAPACITY 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------
In millions
<S> <C> <C> <C> <C> <C> <C>
Softwood lumber-
board feet 5,586 5,645 4,532 4,025 3,968 3,701
Softwood plywood and
veneer-square feet (3/8") 1,511 1,340 1,065 960 1,092 1,243
Composite panels-
square feet (3/4") 137 206 281 510 478 535
Oriented strand board-
square feet (3/8") 3,780 3,438 2,452 2,179 2,041 1,687
Hardwood lumber-
board feet 424 397 376 342 345 333
Logs-cubic feet - 493 572 526 519 500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MANUFACTURING FACILITIES
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Softwood lumber, plywood and veneer 46 Hardwood lumber 13
Composite panels 2 Engineered wood products 15
Oriented strand board 9
</TABLE>
WEYERHAEUSER BUILDING MATERIALS
- ----------------------------------------------------------------------------
With 68 customer service centers across North America, Weyerhaeuser Building
Materials provides quality materials and sales, marketing, and logistics
services to lumber dealers, home improvement warehouses, industrial
manufacturers, and the manufactured housing and recreational vehicle industries.
U.S. LOCATIONS
Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Montana, Nevada, New Jersey, New York, North Carolina,
Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia,
Washington, Wisconsin
CANADIAN LOCATIONS
Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia,
Ontario, Quebec, Saskatchewan
WEYERHAEUSER 34 ANNUAL REPORT 2000
<PAGE>
SOFTWOOD LUMBER Total capacity 5.6 billion board feet
Board feet in millions (Shown as bar graphs in document)
- --------------------------------------------------------------------------------
WESTERN UNITED STATES Total capacity 1.3 billion board feet
================================================================================
LOCATION
Aberdeen WA 270
Cottage Grove OR 330
Enumclaw WA 250
Green Mountain WA 250
Raymond WA 190
- --------------------------------------------------------------------------------
SOUTHERN UNITED STATES AND MEXICO Total capacity 2.2 billion board feet
================================================================================
LOCATION
Barnesville GA 74
Bruce MS 219
Dierks AR 195
Greenville NC 199
Holden LA 124
McComb MS 218
Millport AL 101
Mt. Pine AR 127
New Bern NC 100
Philadephia MS 218
Pine Hill AL 160
Plymouth NC 175
Wright City OK 230
Durango MEXICO 24
- --------------------------------------------------------------------------------
CANADA Total capacity 2.1 billion board feet
================================================================================
LOCATION
Big River SK 92
Carrot River SK 66
Chapleau ON 78
Chemainus BC 101
Drayton Valley AB 134
Dryden ON 76
Ear Falls ON 129
Grande Cache AB 118
Grande Prairie AB 211
Kamloops BC 111
Nanaimo BC 71
New Westminster BC 136
Okanagan Falls BC 136
Port Alberni (APD) BC 177
Port Alberni (Somass) BC 82
Princeton BC 143
Vancouver BC 122
Vavenby BC 149
- --------------------------------------------------------------------------------
Weyerhaeuser is the world's largest softwood lumber producer. The company
produces its lumber in North America from a variety of species. The lumber
business works closely with our Timberlands groups and other suppliers to ensure
raw materials that meet specifications for log quality, including species,
length, diameter and cleanliness. Technological advances, such as curve sawing
that follows the natural curve of the tree, help Weyerhaeuser lumber operations
minimize waste and obtain the maximum value from each log.
WEYERHAEUSER 35 ANNUAL REPORT 2000
<PAGE>
SOFTWOOD PLYWOOD AND VENEER Total capacity 1.5 billion square feet
Square feet 3/8" in millions (Shown as bar graph in document)
================================================================================
LOCATION
Aberdeen WA (Veneer) 150
Elma WA (Veneer) 115
Dierks AR 213
Hudson Bay SK 103
Millport AL 224
Mt. Pine AR 257
Nipigon ON (Hardwood) 45
Pine Hill AL 169
Wright City OK 235
- --------------------------------------------------------------------------------
Plywood is a panel made with multiple layers of softwood veneer and is used as a
construction material and "appearance" panel by builders and home remodelers
both in North America and overseas. It also has industrial applications such as
truck-trailer linings and upholstered furniture frame stock.
- --------------------------------------------------------------------------------
ORIENTED STRAND BOARD Total capacity 3.8 billion square feet
Square feet 3/8" in millions (Shown as bar graph in document)
================================================================================
LOCATION
Drayton Valley AB 355
Edson AB 387
Elkin NC 359
Grayling MI 478
Hudson Bay SK 516
Miramichi NB 414
Slave Lake AB 236
Sutton WV 576
Wawa ON 459
- --------------------------------------------------------------------------------
Weyerhaeuser is the world's second-largest producer of oriented strand board
(OSB). OSB is a construction panel made with layers of precision-manufactured
wood "strands" that are aligned, formed into panels and pressed with an
exterior-grade adhesive resin. The resulting engineered product is a high-
quality, cost-effective panel for structural sheathing, subflooring, webstock
I-beam floor joists, furniture stock and other building components. We market
OSB as Structurwood(R) in the United States, Canada and Asia.
- --------------------------------------------------------------------------------
HARDWOOD LUMBER Total capacity 424 million board feet
Board feet in millions (Shown as bar graph in document)
================================================================================
LOCATION
Arlington WA 60
Centralia WA 60
Delta BC 38
Dorchester WI 24
Eugene OR 60
Garibaldi OR 25
Lewiston MI 7
Little Rock AR 20
Longview WA 60
Onalaska WI 12
Sedro Woolley WA 25
Titusville PA 21
Wright City OK 12
- --------------------------------------------------------------------------------
Weyerhaeuser is one of the leading producers of hardwood lumber and components
in the world. Major manufacturers of furniture, cabinet and architectural
millwork, both domestically and worldwide, purchase the lumber and component
products produced by our Hardwood Lumber business. Choicewood(TM) boards,
mouldings, panels and other specialty items are sold to retailers throughout
North America. Other products include hardwood lumber, components, pallet cants
and ties.
WEYERHAEUSER 36 ANNUAL REPORT 2000
<PAGE>
TRUS JOIST
Trus Joist manufactures and markets a variety of engineered wood products for
structural framing and industrial applications. Its unique, patented
manufacturing technologies transform wood fiber into high-performance,
consistent products. Trus Joist, the world's largest manufacturer of
engineered wood products, manufactures and sells Microllam(R), Parallam(R),
Silent Floor(R) and TimberStrand(R) products.
- --------------------------------------------------------------------------------
U.S. LOCATIONS
Alabama, California, Georgia, Kentucky, Louisiana, Minnesota, Ohio, Oregon,
West Virginia
CANADIAN LOCATIONS
Alberta, British Columbia
- --------------------------------------------------------------------------------
real estate and related assets
<TABLE>
<CAPTION>
SINGLE-FAMILY HOMES SOLD 3,833 units total
================================================================================
OPERATION NUMBER OF UNITS
- --------------------------------------------------------------------------------
<S> <C>
Pardee 2,164
Quadrant 612
Trendmaker 515
Winchester 542
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINGLE-FAMILY HOMES CLOSED 3,369 units total
================================================================================
OPERATION NUMBER OF UNITS
- --------------------------------------------------------------------------------
<S> <C>
Pardee 1,888
Quadrant 460
Trendmaker 472
Winchester 549
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINGLE-FAMILY HOMES SOLD BUT NOT CLOSED 1,571 units total
================================================================================
OPERATION NUMBER OF UNITS
- --------------------------------------------------------------------------------
<S> <C>
Pardee 804
Quadrant 272
Trendmaker 147
Winchester 348
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE AND RELATED ASSETS
- --------------------------------------------------------------------------------
OPERATIONS PRINCIPAL LOCATIONS
<S> <C>
Land Management Arkansas, Georgia, North Carolina, Washington
Pardee Construction Company Nevada, Southern California
Quadrant Corporation Washington
Trendmaker Homes Texas
Weyerhaeuser Realty Investors Arizona, California, Colorado, Washington
Winchester Homes Maryland, Virginia
</TABLE>
WEYERHAEUSER 37 ANNUAL REPORT 2000
<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 other real estate
related activities.
The company has approximately 47,200 employees, of whom 46,200 are employed in
its timber-based businesses, and of this number, approximately 23,000 are
covered by collective bargaining agreements, which generally are negotiated on a
multi-year basis.
Approximately 1,000 of the company's employees are involved in the activities
of its real estate and related assets segment.
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 company's subsidiaries in the real estate and related assets
segment operate in highly competitive markets, competing with numerous regional
and national firms in real estate development and construction and other real
estate related activities.
In 2000, the company's sales to customers outside the United States totaled
$3.3 billion (including exports of $1.5 billion from the United States and $1.8
billion of Canadian export and domestic sales), or 21 percent of total
consolidated sales and revenues, compared with 19 percent in 1999. 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.
BUSINESS SEGMENTS
- --------------------------------------------------------------------------------
TIMBERLANDS
The company is engaged in the management of 5.9 million acres of company-owned
and .5 million acres of leased commercial forestland in North America (3.8
million acres in the South and 2.6 million acres in the Pacific Northwest and
Canada), most of it highly productive and located extremely well to serve both
domestic and international markets. The company also has renewable, long-term
licenses on 31.6 million acres of forestland located in five provinces
throughout Canada that are managed by our Canadian operations. The standing
timber inventory on these lands is approximately 588 million cunits (a cunit is
100 cubic feet of solid wood). 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, through its wholly owned subsidiary, Weyerhaeuser New Zealand
Inc., is responsible for the management and marketing activities of a New
Zealand joint venture, Nelson Forests Joint Venture, located on the northern end
of the South Island. The joint venture assets consist of 151,000 acres of Crown
Forest License cutting rights, 42,000 acres of freehold land and the Kaituna
sawmill, with a capacity of 35 million board feet. This sawmill was purchased in
May 2000.
During 2000, the company acquired two sawmills and related assets in Australia
from CSR Ltd. of Australia (CSR). The acquisition includes a 70 percent stake in
Pine Solutions, Australia's largest softwood timber distributor; two sawmills
with a combined production capacity of 171 million board feet of lumber; and
16,800 acres of cutting rights.
The company, through its wholly owned subsidiary, Weyerhaeuser Forestlands
International, is a 50 percent owner and managing general partner in RII
Weyerhaeuser World Timberfund, L.P. (WTF), a limited partnership, which makes
investments outside the United States. WTF owns 62,500 acres of radiata pine
plantations, two softwood lumber mills with a capacity of 115 million board
feet, a lumber treating operation, a pine moulding remanufacturing plant, a chip
export business and a 30 percent interest in Pine Solutions. This partnership
also owns a Uruguayan venture, Colonvade, S.A., which has acquired over 239,000
acres of private grazing land that is currently being converted into plantation
forests.
WEYERHAEUSER 40 ANNUAL REPORT 2000
<PAGE>
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated
customers:
Raw materials (logs, chips
and timber) $ 993 $ 637 $ 614 $ 771 $ 842
Other products 98 30 37 37 37
--------------------------------------------
$ 1,091 $ 667 $ 651 $ 808 $ 879
============================================
Intersegment sales $ 924 $ 537 $ 488 $ 520 $ 513
============================================
Approximate contributions
to earnings $ 576 $ 535 $ 487 $ 535 $ 503
============================================
</TABLE>
WOOD PRODUCTS
The company's wood products businesses produce and sell softwood lumber, plywood
and veneer; oriented strand board, composite and other panels; hardwood lumber;
engineered wood; and treated products. These products are sold primarily through
the company's own sales organizations. Building materials are sold to
wholesalers, retailers and industrial users. The raw materials required to
produce these products are purchased from third parties, transferred at market
price from the company's timberlands, or obtained from long-term licensing
arrangements.
In January 2000, the company acquired a controlling interest in TJ
International (TJI), a 51 percent owner and managing partner of Trus Joist
MacMillan (TJM), through a successful tender offer that represented more than 90
percent of the total number of outstanding shares. The company had acquired a 49
percent interest in TJM through its acquisition of MacMillan Bloedel, completed
in November 1999.
In October 2000, the company's wholly owned Canadian subsidiary, Weyerhaeuser
Company Limited, acquired the operations of Coast Mountain Hardwoods, a
subsidiary of Advent International Corp., in British Columbia. The purchase
included a hardwood lumber mill producing more than 42 million board feet
annually; dry kilns with annual capacity of 20 million board feet; an abrasive
planer that produces more than 25 million board feet annually; and five volume-
based forest licenses dispersed in the Vancouver, B.C., forest region.
In December 2000, the company sold its custom architectural door business in
Marshfield, Wisconsin.
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated
customers:
Softwood lumber $ 2,996 $ 2,415 $ 1,876 $ 2,176 $ 2,068
Softwood plywood
and veneer 523 546 459 510 527
Oriented strand board,
composite and
other panels 891 839 783 609 680
Hardwood lumber 315 298 257 289 252
Engineered wood products 966 409 330 284 233
Raw materials (logs, chips
and timber) 242 211 243 248 235
Other products 880 802 675 607 517
--------------------------------------------
$ 6,813 $ 5,520 $ 4,623 $ 4,723 $ 4,512
============================================
Approximate contributions
to earnings(1)(2)(3)(4) $ 206 $ 470 $ 183 $ 172 $ 302
============================================
</TABLE>
(1) After nonrecurring charges of $130 million associated with the settlement
of hardboard siding claims and $34 million associated with the MacMillan Bloedel
and Trus Joist acquisitions in 2000.
(2) After nonrecurring charges totaling $99 million for facility closure costs
associated with the acquisition of MacMillan Bloedel and the disposition of the
company's Composite Products business in 1999.
(3) After nonrecurring charges totaling $25 million for changes to the British
Columbia lumber operations in 1998.
(4) After nonrecurring charges totaling $40 million associated with the closure
of a lumber mill and two plywood facilities in 1997.
PULP, PAPER AND PACKAGING
The company's pulp, paper and packaging businesses include: Pulp, which
manufactures chemical wood pulp for world markets; 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, 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; and Recycling, which
operates an extensive wastepaper collection system and markets it to company
mills and worldwide customers.
WEYERHAEUSER 41 ANNUAL REPORT 2000
<PAGE>
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated
customers:
Pulp $ 1,416 $ 1,192 $ 1,064 $ 1,107 $ 1,068
Paper 1,284 1,097 937 910 862
Paperboard and
containerboard 648 397 319 323 300
Packaging 2,557 2,083 1,966 1,855 1,991
Newsprint(1) -- -- 40 450 483
Recycling 370 255 204 201 151
Other products 244 151 95 100 105
--------------------------------------------
$ 6,519 $ 5,175 $ 4,625 $ 4,946 $ 4,960
============================================
Approximate contributions
to earnings(2)(3)(4) $ 938 $ 310 $ 150 $ 164 $ 307
============================================
</TABLE>
(1) As of February 1998, the company's ownership in its newsprint subsidiary
changed from 80 percent to 50 percent; therefore, 1998 results reflect one
month's sales.
(2) After nonrecurring charges of $15 million associated with the acquisition of
MacMillan Bloedel in 2000.
(3) After nonrecurring charges of $42 million associated with the closure of the
Longview, Washington, chlor-alkali facility and streamlining pulp and paper
operations in 1998.
(4) After the gain of $21 million on the sale of Saskatoon Chemicals, Ltd., and
charges totaling $49 million for the closure of a corrugated medium machine and
the restructuring of the recycling business in 1997.
REAL ESTATE AND RELATED ASSETS
The company, through its subsidiary, Weyerhaeuser Real Estate Company (WRECO),
is engaged in developing single-family housing and residential lots for sale,
including development of master-planned communities. Operations are concentrated
mainly in selected metropolitan areas in Southern California, Nevada,
Washington, Texas, Maryland and Virginia. Real estate and related assets
includes WRECO and the company's other real estate related activities.
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to and revenues from
unaffiliated customers:
Single-family units $ 1,071 $ 960 $ 834 $ 688 $ 573
Multi-family units 26 3 36 29 12
Residential lots 117 99 103 91 76
Commercial lots 40 58 23 57 50
Commercial buildings 42 48 100 68 43
Acreage 41 33 36 41 25
Interest(1) 7 10 18 35 70
Loan origination and
servicing fees(1) -- -- -- 35 100
Other 33 25 42 49 60
--------------------------------------------
$ 1,377 $ 1,236 $ 1,192 $ 1,093 $ 1,009
============================================
Approximate contributions
to earnings(2) $ 259 $ 190 $ 124 $ 111 $ 43
============================================
</TABLE>
(1) Interest and loan origination and servicing fees relate principally to the
company's operations in financial services through its subsidiary, Weyerhaeuser
Mortgage Company, which was sold in the second quarter of 1997.
(2) After a $45 million gain on the sale of Weyerhaeuser Mortgage Company in
1997.
CORPORATE AND OTHER
Corporate and other includes marine transportation and general corporate
expense.
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated
customers: $ 180 $ 182 $ 151 $ 134 $ 217
============================================
Approximate contributions
to earnings(1)(2)(3) $ (321) $ (272) $ (225) $ (186) $ (183)
============================================
</TABLE>
(1) After nonrecurring charges of $7 million and $3 million for costs
associated with the acquisitions of MacMillan Bloedel and Trus Joist in 2000 and
1999, respectively.
(2) After nonrecurring charges of $4 million for streamlining corporate
operations in 1998.
(3) After a $10 million gain, which is the net effect of interest income from a
favorable federal income tax decision and the loss incurred on the sale of
Shemin Nurseries in 1997.
WEYERHAEUSER 42 ANNUAL REPORT 2000
<PAGE>
NATURAL RESOURCE AND ENVIRONMENTAL MATTERS
- --------------------------------------------------------------------------------
Growing and harvesting timber are subject to numerous laws and government
policies to protect the environment, non-timber resources such as wildlife and
water, and other social values. Changes in those laws and policies can
significantly affect local or regional timber harvest levels and market values
of timber-based raw materials.
A number of fish and wildlife species that inhabit geographic areas near or
within company timberlands have been listed as threatened or endangered under
the federal Endangered Species Act (ESA) or similar state laws in the United
States. Federal ESA listings include the northern spotted owl, marbled murrelet,
a number of salmon species, bull trout and steelhead trout in the Pacific
Northwest and the red-cockaded woodpecker, gopher tortoise and American burying
beetle in the Southeast. Listings of additional species or populations may
result from pending or future citizen petitions or be initiated by federal or
state agencies. Federal and state requirements to protect habitat for threatened
and endangered species have resulted in restrictions on timber harvest on some
timberlands, including some timberlands of the company. Additional listings of
fish and wildlife species as endangered, threatened or sensitive under the ESA
and similar state laws as well as regulatory actions taken by federal or state
agencies to protect habitat for these species may, in the future, result in
additional restrictions on timber harvests and other forest management
practices, could increase operating costs, and could affect timber supply and
prices.
In the United States, federal, state and local regulations protecting wetlands
also could affect future harvest and forest management practices on some of the
company's timberlands, particularly in southeastern states. Forest practice acts
in some states in the United States increasingly affect present or future
harvest and forest management activities. For example, in some states, they
limit the size of clearcuts, require some timber to be left unharvested to
protect water quality and fish and wildlife habitat, regulate construction and
maintenance of forest roads, require reforestation following timber harvest, and
contain procedures for state agencies to review and approve proposed forest
practice activities. Some states and some local governments regulate certain
forest practices through various permit programs. Each state in which the
company owns timberlands has developed "best management practices" (BMPs) to
reduce the effects of forest practices on water quality and aquatic habitats.
Additional and more stringent regulations may be adopted by various state and
local governments to achieve water quality standards under the federal Clean
Water Act, protect fish and wildlife habitats or achieve other public policy
objectives.
In addition, the company participates in the Sustainable Forestry
Initiative(SM) sponsored by the American Forest & Paper Association, a code of
conduct designed to supplement government regulatory programs with voluntary
landowner initiatives to further protect certain public resources and values.
Compliance with the Sustainable Forestry Initiative SM may require some
increases in operating costs and curtailment of timber harvests in some areas.
The regulatory and nonregulatory forest management programs described above
have increased operating costs, resulted in changes in the value of timber and
logs from the company's timberlands, and contributed to increases in the prices
paid for wood products and wood chips during periods of high demand. These kinds
of programs also can make it more difficult to respond to rapid changes in
markets, extreme weather or other unexpected circumstances. One additional
effect may be further reductions in usage of, and some substitution of other
products for, lumber and plywood. The company does not believe that these kinds
of programs have had, or in 2001 will have, a significant effect on the
company's total harvest of timber in the United States or any major U.S. region,
although they may have such an effect in the future. Further, the company does
not expect to be disproportionately affected by these programs as compared with
typical owners of comparable timberlands. Likewise, management does not expect
that these programs will significantly disrupt its planned operations over large
areas or for extended periods.
Weyerhaeuser's Canadian forest operations are primarily carried out on public
forestlands under forest licenses, although the company also owns substantial
amounts of timberland in western British Columbia (B.C.). All forest operations
are subject to forest practices and environmental regulations, and operations
under licenses also are subject to contractual requirements, designed to protect
environmental and other social values. Many of these lands also are subject to
the constitutionally protected treaty or common law rights of the First Nations
peoples of Canada. Most of the lands in B.C. are not covered by treaties, and as
a result, the claims of B.C.'s First Nations peoples relating to forest
resources are largely unresolved although treaty discussions affecting much of
B.C. are ongoing. First Nations claims may, in the future, result in some
decrease in the lands or timber available for forest operations under the
company's licenses and, under contracts in B.C., could result in additional
restrictions on the sale and harvest of timber on B.C. timberlands, could
increase operating costs, and could affect timber supply and prices. The company
WEYERHAEUSER 43 ANNUAL REPORT 2000
<PAGE>
believes that such claims will not have a significant effect on the company's
total harvest of timber or production of forest products in 2001, 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 pollution controls (with regard to air, water and land);
solid and hazardous waste management, disposal and remediation laws and
regulations in all areas in which it has operations; as well as market demands
with respect to chemical content of some products and use of recycled fiber.
Compliance with these laws, regulations and demands usually involves capital
expenditures as well as operating costs. The company cannot easily quantify
future amounts of capital expenditures required to comply with these laws,
regulations and demands, or the effects 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 $177 million (21 percent of
total capital expenditures excluding acquisitions and real estate and related
assets) in 2000. Based on its understanding of current regulatory requirements,
the company expects that expenditures will range from $70 million to $120
million each year (9 to 16 percent of total capital expenditures) in 2001 and
2002, respectively.
The company is involved in the environmental investigation or remediation of
numerous sites. 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, others are third-party sites
involving several parties who have a joint and several obligation to remediate
the site, and some are superfund sites where the company has been named as a
potentially responsible party. 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 approximately $12 million in 2000 and expects to spend
approximately $15 million in 2001 on environmental remediation of these sites.
It is the company's policy to accrue for environmental remediation costs when it
is determined that it is probable that such an obligation exists and the amount
of the obligation can be reasonably estimated. Based on currently available
information and analysis, the company believes that it is reasonably possible
that costs associated with all identified sites may exceed current accruals by
amounts that may prove insignificant or that could range, in the aggregate, up
to approximately $100 million over several years. This estimate of the upper end
of the range of reasonably possible additional costs is much less certain than
the estimates upon which accruals are currently based and utilizes assumptions
less favorable to the company among the range of reasonably possible outcomes.
The Environmental Protection Agency (EPA) has promulgated regulations dealing
with air emissions from pulp and paper manufacturing facilities, including
regulations on hazardous air pollutants that require use of maximum achievable
control technology (MACT) and controls for pollutants that contribute to smog
and haze. In addition, the EPA is developing new regulations for air emissions
from wood product and pulp and paper facilities. The final Cluster Rule package
of regulations affecting the pulp and paper segment of the industry went into
effect in 1998. The company expects to spend approximately $50 million over the
next several years to achieve compliance with the Cluster Rules. In addition,
the company expects to spend an additional $10 million to $12 million over the
next several years to comply with other pulp and paper air emission regulations.
The company cannot quantify future capital requirements to comply with the new
regulations being developed by the EPA because final rules have not been
promulgated. However, the company does not anticipate at this time that
compliance with the new regulations will result in capital expenditures in any
year that are material in relationship to the company's annual capital
expenditures.
The EPA also promulgated regulations in 2000 requiring states to develop total
maximum daily load (TMDL) allocations for pollutants in water bodies determined
to be water quality impaired. The TMDL requirements may set limits on pollutants
that may be discharged to a body of water or set additional requirements, such
as best management practices for non-point sources, including timberland
operations, to reduce the amounts of pollutants. TMDLs will be established for
specific water bodies in many of the states in which the company operates. TMDLs
will be written to achieve water quality standards within 10 years when
practicable. It is not possible to estimate the capital expenditures that may be
required for the company to meet pollution allocations until a specific TMDL is
promulgated. The company continues to update permit applications under Title 5
of the Clean Air Act as needed and anticipates that it will be able to obtain
the necessary permits.
WEYERHAEUSER 44 ANNUAL REPORT 2000
<PAGE>
financial review
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
2000 COMPARED WITH 1999
Consolidated net sales and revenues for 2000 were a record $16.0 billion, an
increase of 25 percent when compared with $12.8 billion in 1999. Improved pulp
and paper markets and the addition of the MacMillan Bloedel and Trus Joist
operations were the principal drivers of the increase in net sales. In addition,
results for 2000 reflect 53 weeks of operations compared with 52 weeks in 1999.
Net earnings in 2000 were $840 million, or $3.72 basic earnings per share,
representing a 59 percent increase over 1999 net earnings of $527 million, or
$2.56 basic earnings per share.
2000 results include an after-tax charge of $82 million, or $0.36 per share,
recorded in the second quarter to cover estimated costs of a nationwide class
action settlement related to hardboard siding claims. See Note 14 of Notes to
Financial Statements.
The year's results before this charge were $922 million, or $4.08 basic
earnings per share.
1999 results were impacted by the following nonrecurring after-tax charges:
. $89 million, or $0.43 per share, incurred in the first quarter for the
cumulative effect of a change in an accounting principle that required the
company to write off the unamortized balance of capitalized start-up costs at
year-end 1998. This charge included $9 million for the company's interest in the
write-off of unamortized start-up costs in three of its 50 percent-owned equity
affiliates.
. A charge of $65 million, or $0.32 per share, for closure and disposition of
facilities. This included charges in the first quarter associated with the
recognition of impairment of long-lived assets to be disposed of in four of the
company's composite products facilities, a ply-veneer facility and a chip export
dock and in the fourth quarter for facility closure costs related to the
MacMillan Bloedel acquisition.
1999's results before these charges were $681 million, or $3.31 basic earnings
per share.
Operating results for 2000 include $193 million in net pension income compared
with $102 million in 1999. This pension income is attributable to high market
returns on the company's pension plan assets experienced over the last several
years. Future pension income may vary depending upon market performance of plan
assets, changes in certain actuarial assumptions, plan amendments affecting
benefit payout levels and profile changes in beneficiary populations.
Diluted earnings per share, which are based on the inclusion of outstanding
stock options and convertible debentures in the weighted average number of
shares outstanding, were $3.72 and $2.55 for 2000 and 1999, respectively.
The timberlands segment's operating earnings for 2000 were $576 million which
compares with $535 million reported in 1999. The segment's net sales for the
year were $1.1 billion, a 64 percent increase over the $667 million reported in
the previous year. This increase resulted from the addition, through
acquisition, of MacMillan Bloedel and Australian operations.
The wood products segment's operating earnings for 2000 were $370 million
before nonrecurring charges of $130 million for a nationwide class action
settlement related to hardboard siding claims and $34 million associated with
the MacMillan Bloedel and Trus Joist acquisitions. This represents a 35 percent
decrease from earnings of $569 million in 1999 before nonrecurring charges of
$94 million incurred in the disposition of the Composite Products business and
$5 million for the acquisition of MacMillan Bloedel facilities. Markets for most
of the company's wood products weakened during 2000, leading to lower earnings.
The addition of the MacMillan Bloedel and Trus Joist acquisitions contributed to
higher sales volumes for most products, but realizations were impacted by lower
prices. An exception is the market for engineered wood products for which demand
remained strong throughout the year. Wood products sales in 2000 were $6.8
billion, an increase of 23 percent over the $5.5 billion reported in the prior
year.
Operating earnings for the pulp, paper and packaging segment were $953 million
in 2000, before nonrecurring charges of $15 million for integration and closure
of facilities associated with the MacMillan Bloedel acquisition, compared with
$310 million in 1999. Sales in 2000 were a record $6.5 billion, up 26 percent
over $5.2 billion recorded in 1999. The segment's strong performance was driven
by higher prices and the addition of MacMillan Bloedel containerboard and
packaging operations.
The real estate and related assets segment produced record earnings of $259
million for the year, a 36 percent increase over earnings of $190 million in
1999. Sales and revenues were $1.4 billion in 2000, compared with $1.2 billion
in the prior year. Strong housing markets in the segment's operating areas,
along with improved margins, contributed to the increased earnings.
WEYERHAEUSER 45 ANNUAL REPORT 2000
<PAGE>
Total costs and expenses for the year increased by $2.8 billion, or 24 percent,
over the prior year. This increase is principally related to the acquisition of
MacMillan Bloedel and Trus Joist operations. Operating margin was 9 percent in
both 2000 and 1999. Nonrecurring charges for 2000, which included the settlement
of the hardboard siding claims and charges for integration and closure of
facilities related to the MacMillan Bloedel and Trus Joist acquisitions, were
$186 million. Nonrecurring charges for 1999 were $134 million, which included
charges for integration and closure of facilities related to the MacMillan
Bloedel acquisition and charges for Year 2000 remediation. Total selling,
general and administrative expenses increased by $260 million over the prior
year, consistent with the expansion of operations through acquisition. Other
operating costs, net, is an aggregation of both recurring and occasional income
and expense items and, as a result, can fluctuate from year to year. The only
significant item for Weyerhaeuser in 2000 was $13 million of foreign currency
transaction losses. There were no significant items in 1999 or 1998.
Interest expense incurred in 2000 increased $87 million, or 25 percent, over
1999. This increase reflects additional debt acquired as part of the MacMillan
Bloedel and Trus Joist acquisitions, which was outstanding throughout 2000.
Equity in income of affiliates and unconsolidated entities for 2000 increased
$64 million, or 98 percent, over 1999 levels. This increase reflects the
improved operating results of the company's equity investments.
1999 COMPARED WITH 1998
Consolidated net sales and revenues for 1999 were $12.8 billion, an increase of
14 percent when compared with $11.2 billion in 1998. Increased volumes and
higher prices over 1998 in essentially all product lines accounted for this
increase. 1999 included two months' results from operations acquired in the
MacMillan Bloedel acquisition.
1999 net earnings were $527 million, or $2.56 basic earnings per share, an
increase of 79 percent over 1998 results of $294 million, or $1.48 basic
earnings per share. The company's fourth quarter results were negatively
impacted by unanticipated effects of the lockout at some British Columbia ports,
continued cleanup in North Carolina after Hurricane Floyd and higher than normal
maintenance expenses.
1999 results were impacted by the following nonrecurring after-tax charges:
. $89 million, or $0.43 per share, incurred in the first quarter for the
cumulative effect of a change in an accounting principle that required the
company to write off the unamortized balance of capitalized start-up costs at
year-end 1998. This charge included $9 million for the company's interest in
the write-off of unamortized start-up costs in three of its 50 percent-owned
equity affiliates.
. A charge of $65 million, or $0.32 per share, for closure or disposition of
facilities. This included charges in the first quarter associated with the
recognition of impairment of long-lived assets to be disposed of in four of the
company's composite products facilities, a ply-veneer facility and a chip export
dock, and in the fourth quarter for facility closure costs related to the
MacMillan Bloedel acquisition.
The year's results before these charges were $681 million, or $3.31 basic
earnings per share.
The 1998 results reflected an after-tax charge of $45 million, or $0.23 per
share, primarily associated with streamlining pulp and paper operations, the
closure of a chemical facility and changes in the British Columbia operations.
Before these charges, the company earned $339 million, or $1.71 per share, in
1998.
During 1999, the company also incurred pretax charges of $32 million for Year
2000 remediation work compared with $42 million in the previous year.
Diluted earnings per share, which are based on the inclusion of outstanding
stock options and convertible debentures in the weighted average number of
shares outstanding, were $2.55 and $1.47 for 1999 and 1998, respectively.
Operating results for 1999 include $102 million in net pension income compared
with $60 million in 1998. This pension income is attributable to high market
returns on the company's pension plan assets experienced over the last several
years. Future pension income may vary depending upon market performance of plan
assets, changes in certain actuarial assumptions, plan amendments affecting
benefit payout levels and profile changes in beneficiary populations.
The timberlands segment's operating earnings for 1999 were $535 million, a 10
percent increase over $487 million reported in 1998. Net sales for the year were
$667 million, slightly higher than the $651 million reported in the previous
year. This increase was due to improvements in the Japanese economy, increased
WEYERHAEUSER 46 ANNUAL REPORT 2000
<PAGE>
harvest levels in the U.S. South and overall demand for wood. The year ended
with volumes and prices for both domestic and foreign log markets at levels
higher than 1998.
The wood products segment produced record operating earnings of $569 million in
1999 before nonrecurring charges of $94 million incurred in the disposition of
the Composite Products business and $5 million for the acquisition of MacMillan
Bloedel facilities. This compares favorably with earnings of $208 million before
nonrecurring pretax charges of $25 million in 1998. Sales were $5.5 billion, an
increase of 19 percent over the $4.6 billion reported in the prior year. New
home construction and remodeling created a very strong demand for lumber and
panels in 1999. The demand reached its height in the second and third quarters,
achieving record earnings for both periods. The market cooled in the fourth
quarter as a result of the traditional seasonal slowdown; however, prices
remained above 1998 fourth-quarter levels.
The 1999 operating earnings for the pulp, paper and packaging segment were $310
million compared with $192 million before nonrecurring pretax charges of $42
million in 1998, an increase of 61 percent. 1999 sales were $5.2 billion, up 12
percent over $4.6 billion recorded in 1998. Market conditions for pulp,
containerboard and paper began improving during the second quarter due to the
recovery of the global market for these products. This trend continued into the
third and fourth quarters, which allowed the company to implement several price
increases for pulp, containerboard and paper. At year-end, prices for all major
product lines in this segment were at their highest levels of the year.
The real estate and related assets segment produced record earnings of $190
million in 1999 compared with $124 million in 1998. Sales and revenues were $1.2
billion, comparable to 1998. The strength of the housing markets in which the
company operates-especially California-contributed to this 53 percent increase
in earnings over the prior year. As the year ended, the real estate market was
weakening; however, the segment's performance was helped by improved margins.
Total costs and expenses in 1999 increased by $1 billion, or 10 percent, over
1998. When considering the 14 percent increase in sales, operating margin was 9
percent for the year compared with 6 percent in 1998. Nonrecurring charges for
the year, which included charges for acquisition and closure or disposition of
facilities, impairment of long-lived assets to be disposed of, and Year 2000
remediation costs, were $134 million compared with $113 million in 1998. Total
selling, general and administrative expenses increased by $148 million over the
prior year, primarily from an increase in accruals for employee performance
incentives related to higher earnings.
Other operating costs, net, is an aggregation of both recurring and occasional
income and expense items and, as a result, can fluctuate from year to year.
There were no significant items in 1999 or 1998.
CHARGES FOR INTEGRATION AND CLOSURE OF FACILITIES
In 2000, 1999 and 1998, the company took pretax charges of $56 million, $102
million and $71 million, respectively, for the integration and closure of
facilities. These costs were based on plans that identified each of the
facilities that would be closed or disposed of and the number of employees to be
involuntarily terminated, their functions and their locations. These charges
were related to the following facilities or activities:
2000:
. $48 million for the transition and integration of activities related to
the MacMillan Bloedel and Trus Joist acquisitions.
. $8 million for the closure of a Weyerhaeuser containerboard packaging
plant that was duplicative in the same geographical area as a result of the
MacMillan Bloedel acquisition. Approximately $2 million of this amount is for
the termination of 150 employees, while the balance of $6 million is for
property-related items.
1999:
. $91 million for the impairment of long-lived assets to be disposed of
related to the company's decision to sell its Composite Products business and
ply-veneer facility and close a chip export facility. These facilities, with a
net book value of $160 million, were located in Springfield, Oregon; Moncure,
North Carolina; Adel, Georgia; and Coos Bay, Oregon. The Composite Products
business and ply-veneer facility were sold in the second quarter. The chip
export facility was closed in the fourth quarter.
. $3 million for costs incurred in the disposition of the composite products
facilities and ply-veneer facility and closure of the chip export facility.
. $4 million for exit activities related to the planned closure of existing
Building Materials Distribution centers that became duplicative in the same
geographical area as a result of the acquisition of MacMillan Bloedel. $2
million of this amount is for the termination of 64 employees, and another
WEYERHAEUSER 47 ANNUAL REPORT 2000
<PAGE>
$2 million is for property-related items, primarily the termination of operating
leases. The company completed these closures during 2000.
. $4 million for integration costs related to the MacMillan Bloedel business
combination.
1998:
. $25 million for changes in the British Columbia lumber operations-Due to
increased costs, the market impact of U.S. lumber quotas and the effect of the
size and location of the mills on the business' competitiveness, the company
consolidated its British Columbia lumber operations. This included permanently
closing a sawmill in Lumby, converting the Merritt mill to a planer-only
operation, and reconfiguring the company's remaining four sawmills in the
province to achieve improved production capacity. Two hundred jobs were affected
by these changes.
. $22 million for closure of the Longview, Washington, chlor-alkali facility-
The company closed this facility in 1999 because of market conditions and the
need to invest significant capital to ensure continued safe operation of the
plant. This closure completed the company's exit from chemical manufacturing.
One hundred jobs were affected by this closure.
. $20 million for pulp and paper operations reorganization-Streamlining
efforts in these businesses affected 460 employees.
. $4 million for corporate operations streamlining-The company outsourced
its employee benefits administration and closed its urban waste recovery
business, which affected 80 positions.
These costs are categorized in the aggregate as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 1998
- ---------------------------------------------------
<S> <C>
Termination and other employee-
related costs $ 39
Dispositions of property and equipment 16
Write-off of inventories 1
Environmental cleanup 8
Other exit activities 7
---------
$ 71
=========
</TABLE>
Of the $229 million in charges taken during these periods, approximately 49
percent of the total charges will not require cash outflows, while the remaining
51 percent require cash outflows. The operating results of these facilities
prior to our exit activities were not material to the company's results of
operations. At year-end 2000, the company had $26 million reserved to complete
these exit activities in 2001. Once fully implemented, the company expects these
activities to improve annual operating costs by approximately $45 million by:
. Lowering our labor costs due to downsizing our work force in the facilities
and businesses affected.
. Lowering depreciation and amortization costs for the net book value of
property and equipment disposed of or closed and goodwill written off.
. Increasing productivity in our mill systems through a revised configuration
of operating facilities with improved manufacturing logistics and costs.
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------
GENERAL
The company is committed to the maintenance of a sound capital structure. This
commitment is based upon two considerations: the obligation to protect the
underlying interests of its shareholders and lenders, and the desire to have
access, at all times, to major financial markets.
The important elements of the policy governing the company's capital structure
are as follows:
. To view separately the capital structures of Weyerhaeuser Company,
Weyerhaeuser Real Estate Company and related assets, 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 12 of Notes to Financial Statements.
OPERATIONS
Consolidated net cash provided by operations was $1.4 billion, a decrease of 5
percent from the $1.5 billion provided in 1999. Of the 2000 amount, $1.7 billion
was provided by cash flow from operations before changes in working capital,
while increases in working capital used $274 million. In 1999, cash flow from
operations before working capital provided $1.4 billion with decreases in
working capital providing $95 million.
WEYERHAEUSER 48 ANNUAL REPORT 2000
<PAGE>
Cash flow from operations before changes in working capital by segment was as
follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998
- ------------------------------------------------------
<S> <C> <C> <C>
Timberlands $ 683 $ 577 $ 533
Wood products 476 705 373
Pulp, paper and
packaging 1,288 621 528
Real estate and
related assets 100 91 22
Corporate and other (844) (588) (438)
- ------------------------------------------------------
$ 1,703 $ 1,406 $ 1,018
======================================================
</TABLE>
The increase of $297 million in cash flow from operations before changes in
working capital comes primarily from an increase of $313 million in net
earnings. Depreciation, amortization and fee stumpage for 2000 was $219 million
greater than in 1999 as a result of the additional assets acquired in the
MacMillan Bloedel and Trus Joist acquisitions. This increase in noncash charges
was partially offset by an $84 million increase in the credit for noncash
pension and other postretirement benefits due to favorable investment returns
and a $64 million increase in equity earnings of affiliates and unconsolidated
entities. In 2000, the company recognized $186 million in nonrecurring charges
for the settlement of hardboard siding claims and integration and closure of
facilities. In 1999, the company incurred a total of $191 million in
nonrecurring charges for the write-off of capitalized start-up costs, impairment
of long-lived assets to be disposed of, and integration and closure of
facilities.
Net of the effects of acquisitions and the sale of the door business,
Weyerhaeuser's working capital for 2000 increased $255 million over 1999 levels.
Cash was consumed through decreases in accounts payable and accrued liabilities
and increases in inventories and prepaid expenses. This consumption was
partially offset by cash provided by decreases in accounts receivable for a net
use of cash for working capital. The product inventory turnover rate was 10.3
times in 2000 compared with 12.5 times in 1999.
Net of the effects of the acquisition of MacMillan Bloedel and the disposition
of the Composite Products business, the company's working capital decreased by
$53 million in 1999. Cash provided by increases in accounts payable and accrued
liabilities and a decrease in prepaid expenses was offset, in part, by cash used
for receivables and inventories. The product inventory turnover rate was 12.5
times in 1999 compared with 11.8 times in 1998.
Changes in net working capital in the real estate and related assets segment
resulted in a cash use of $19 million in 2000 compared with providing cash of
$42 million in 1999. 2000 acquisitions of land and residential lots for
continuing operations were offset, in part, by increases in accounts payable and
the current year's tax accrual.
INVESTING
Capital expenditures in 2000, excluding acquisitions and real estate and related
assets, were $852 million, up 72 percent from the $494 million spent in 1999.
The increase results from the addition of MacMillan Bloedel and Trus Joist
facilities plus the completion of an oriented strand board mill in Saskatchewan
that was under construction when acquired. Capital expenditures are currently
expected to approximate $765 million, excluding acquisitions and real estate and
related assets, in 2001; however, these expenditures could be increased or
decreased as a consequence of future economic conditions.
Capital spending by segment, excluding acquisitions and real estate and related
assets, over the past three years was as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998
- ------------------------------------------------------
<S> <C> <C> <C>
Timberlands $ 65 $ 43 $ 51
Wood products 339 143 169
Pulp, paper and
packaging 418 279 325
Corporate and other 30 29 32
- ------------------------------------------------------
$ 852 $ 494 $ 577
======================================================
</TABLE>
During 2000, the company expended $774 million, net of cash acquired, to
complete its tender offer for the stock of TJ International, acquire two
sawmills and distribution capabilities in Australia, acquire a Canadian hardwood
lumber facility and purchase timberlands. Cash was provided by sales of property
and equipment and proceeds from the sale of the Marshfield Door business.
Cash in the amount of $247 million was acquired in the MacMillan Bloedel
business combination in 1999. Also, in 1999, the company increased its
investment in equity affiliates by $52 million, primarily in the RII
Weyerhaeuser World Timberfund, L.P., joint venture that acquired timber,
sawmills and other facilities in Southeast Australia.
The cash required to meet 2000 capital expenditures, investments and other
requirements was provided by internal cash flows and the redemption of short-
term securities held at year-end 1999. The real estate and related assets
segment met its cash needs through internal cash flow and the sale of mortgage-
related financial instruments.
WEYERHAEUSER 49 ANNUAL REPORT 2000
<PAGE>
FINANCING
Weyerhaeuser decreased its interest-bearing debt by $291 million during the
year, net of $149 million of debt assumed in the acquisitions of TJ
International and facilities in Australia. Payments of $924 million, which
included the redemption of $750 million in notes payable, were offset by
increases in commercial paper and interest-bearing debt of $633 million.
In 1999, the company increased its interest-bearing debt by $661 million, net
of $703 million of debt assumed in the MacMillan Bloedel business combination.
New third-party debt borrowings of $807 million, and a net increase in notes and
commercial paper of $237 million were offset by debt payments of $383 million.
Payments included approximately $101 million for the redemption of convertible
subordinated debentures assumed in the MacMillan Bloedel business combination.
The company's debt to total capital ratio was 35 percent at the end of 2000
compared with 36 percent at the prior year-end.
At the end of 1999, the company's cash and short-term investments reflected
$1.6 billion in marketable securities. These liquid investments were used to
meet cash requirements to complete the tender offer for the shares of TJ
International and redeem $750 million in notes payable.
In 2000, issuances of debt and increases in commercial paper totaled $103
million for the real estate and related assets segment, while long-term debt
decreased $120 million. During 1999, the segment reduced its long-term debt by
$224 million while increasing notes and commercial paper by $113 million.
Sales of common stock driven by the exercise of employee stock options provided
$13 million in 2000 compared with $98 million in 1999. The decreased activity
reflected the decline in the market price of the company's common stock during
the year.
Cash dividends of $363 million were paid during the year, an increase of $42
million over 1999. This reflects the additional common and exchangeable shares
issued as part of the MacMillan Bloedel acquisition. Although common share
dividends have exceeded the company's target ratio in recent years, the intent,
over time, is to pay dividends to common shareholders in the range of 35 to 45
percent of common share earnings. Weyerhaeuser also received a $100 million
intercompany return of capital in 2000 and $100 million in intercompany
dividends in 1999 from Weyerhaeuser Real Estate Company. The return of capital
and dividends are eliminated on a consolidated basis.
During the year, the company expended $808 million to purchase 16.2 million
shares of its common stock. This completed the 12 million-share repurchase
program authorized by the board of directors at the beginning of the year and
commenced a second program authorized during the year to repurchase an
additional 10 million shares.
To ensure its ability to meet future commitments, Weyerhaeuser Company and
Weyerhaeuser Real Estate Company have established unused bank lines of credit in
the maximum aggregate sum of $1.97 billion. Neither of the entities is a
guarantor of the borrowings of the other under any of these credit facilities.
MARKET RISK OF FINANCIAL INSTRUMENTS
As part of the company's financing activity, derivative securities are sometimes
used to achieve the desired mix of fixed versus floating rate debt and to manage
the timing of finance opportunities. The company also utilizes well-defined
financial contracts in the normal course of its operations as means to manage
its foreign exchange and commodity price risks. For those limited number of
contracts that are considered derivative instruments, the company has formally
designated each as a hedge of specific and well-defined risks. These include:
. Foreign exchange contracts, which the company has designated as cash flow
hedges-the objective of which is to hedge the variability of future cash flows
associated with foreign denominated sales and purchases due to changes in
foreign currency exchange rates. These contracts generate gains or losses that
are currently recognized at the contracts' respective settlement dates. At
December 31, 2000, the company had a long position in Canadian dollars, the fair
value of which approximated $11 million. The notional amount of the
corresponding contract was also $11 million.
. Variable-to-fixed interest rate swap agreement entered into with a major
financial institution in which the company pays a fixed rate and receives a
floating rate with the interest payments being calculated on a notional amount.
The company has designated this swap as a cash flow hedge-the objective of which
is to hedge the variability of future cash flows associated with changes in
LIBOR. At December 31, 2000, the company had one interest rate swap with a
maturity date of November 6, 2001, and a notional amount of $75 million with a
fixed interest rate of 6.85 percent. The variable rate at December 31, 2000,
based on the 30-day LIBOR, was 6.56 percent, with the fair value of the swap
being a loss of $.7 million. The
WEYERHAEUSER 50 ANNUAL REPORT 2000
<PAGE>
amount of the obligation under this swap is based on the assumption that it had
terminated at the end of the fiscal period and provides for the netting of
amounts payable by and to the counterparty. In each case, the amount of such
obligation is the net amount so determined.
. Commodity swap agreements designed to hedge against the variability of future
cash flows arising from changes in natural gas spot rates. The company has
designated these agreements as cash flow hedges. These agreements generate gains
or losses that are currently recognized at the contracts' respective settlement
dates. As of December 31, 2000, the company had open positions in connection
with four natural gas swap agreements, extending through October 2003. The
notional amount of these contracts was $14 million, with a fair value
representing a gain of $11 million.
. Foreign currency futures contracts entered into in conjunction with the
company's agreement to purchase equipment in a foreign denominated currency. The
objective of the contracts, which have been designated as fair value hedges, is
to fix the company's U.S. dollar value of the Eurodollar denominated equipment
purchase. At December 31, 2000, the company had a long position in Eurodollars,
with contracts extending through October 2001. The notional amount of the
contracts was $15 million, with a fair value of $16 million.
The company is exposed to credit-related gains or losses in the event of
nonperformance by counterparties to financial instruments but does not expect
any counterparties to fail to meet their obligations.
In addition to the contracts described above, the company is also involved in a
very limited number of trading transactions designed to capitalize on the
company's knowledge and understanding of the commodity lumber market. The
company's open trading positions are marked to market at each reporting date,
and all unrealized gains and losses are recognized in income. Trading activities
to date have not had a material effect on the company's financial position,
results of operations or cash flows. As of December 31, 2000, the company's net
open position within its trading operations was $61,000.
HARDBOARD SIDING CASES
- --------------------------------------------------------------------------------
In the 2000 second quarter, the company took a pretax charge of $130 million
($82 million net of income taxes) to cover estimated costs of a nationwide class
action settlement and other claims related to hardboard siding. On December 22,
2000, the Superior Court, San Francisco County, California, approved the
settlement. Objectors have until February 21, 2001, to appeal the settlement.
This is a claims-based settlement, which means that the claims will be paid as
submitted over a nine-year period with no minimum or maximum amount. An
independent adjuster will review each claim submitted and determine if it
qualifies for payment under the terms of the settlement agreement.
ENVIRONMENTAL MATTERS
- --------------------------------------------------------------------------------
The company has established reserves for remediation costs on all of the
approximately 133 active sites across our operations as of the end of 2000 in
the aggregate amount of $67 million, up from $45 million at the end of 1999.
This increase reflects the incorporation of new information on all sites
concerning remediation alternatives, updates on prior cost estimates and new
sites (none of which were significant) less the costs incurred to remediate
these sites during this period. The company has accrued remediation costs into
this reserve as follows: $34 million, $9 million and $28 million in 2000, 1999
and 1998, respectively. The company incurred remediation costs as follows: $12
million, $14 million and $14 million in 2000, 1999 and 1998, respectively, and
charged these costs against the reserve.
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.
(See Note 14 of Notes to Financial Statements.)
WEYERHAEUSER 51 ANNUAL REPORT 2000
<PAGE>
SUPPORT ALIGNMENT
- --------------------------------------------------------------------------------
In the fourth quarter of 1999, the company announced an initiative to streamline
and improve delivery of internal support services that is expected to result in
$150 million to $200 million in annual savings. The company began implementation
of these plans during the first quarter of 2000, a process that may take up to
three years to complete. Because implementation plans are still under review,
the specific number of employees affected, exact timing of the implementation
and associated costs have not been finalized.
ACCOUNTING MATTERS
- --------------------------------------------------------------------------------
PROSPECTIVE PRONOUNCEMENTS
In 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. The issuance of SFAS No. 137 in June 1999
delayed the effective date of SFAS No. 133 to the first quarter of the company's
fiscal year 2001. In June 2000, the FASB issued SFAS No. 138, which amends
certain provisions of SFAS No. 133 and which will also be effective as of the
first quarter of the company's fiscal year 2001.
This pronouncement is described in "Note 1. Summary of Significant Accounting
Policies" of Notes to Financial Statements.
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.
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, 2000, and
December 26, 1999, and the related consolidated statements of earnings, cash
flows and shareholders' interest for each of the three years in the period ended
December 31, 2000. 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 auditing standards generally
accepted in the United States. 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, 2000, and December 26, 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States.
As explained in Note 1 of Notes to Financial Statements, effective December 28,
1998, the company changed its method of accounting for start-up activities.
Seattle, Washington,
February 7, 2001 ARTHUR ANDERSEN LLP
WEYERHAEUSER 52 ANNUAL REPORT 2000
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
For the three-year period ended December 31, 2000
Dollar amounts in millions
except per-share figures
2000 1999 1998
-----------------------------
<S> <C> <C> <C>
Net sales and revenues:
Weyerhaeuser $ 14,603 $ 11,544 $ 10,050
Real estate and related assets 1,377 1,236 1,192
-----------------------------
Total net sales and revenues 15,980 12,780 11,242
-----------------------------
Costs and expenses:
Weyerhaeuser:
Costs of products sold 10,947 8,822 7,944
Depreciation, amortization and fee stumpage 853 634 611
Selling, general and administrative expenses 1,050 791 649
Research and development expenses 56 55 57
Taxes other than payroll and income taxes 149 131 130
Other operating costs, net (Note 4) 57 (5) 6
Charges for integration and closure of
facilities (Note 15) 56 102 71
Charge for settlement of hardboard siding
claims (Note 14) 130 - -
Charge for Year 2000 remediation - 32 42
-----------------------------
13,298 10,562 9,510
-----------------------------
Real estate and related assets:
Costs and operating expenses 1,088 978 982
Depreciation and amortization 6 6 5
Selling, general and administrative expenses 94 93 87
Taxes other than payroll and income taxes 7 8 8
Other operating costs, net (Note 4) (4) (6) -
-----------------------------
1,191 1,079 1,082
-----------------------------
Total costs and expenses 14,489 11,641 10,592
-----------------------------
Operating income 1,491 1,139 650
Interest expense and other:
Weyerhaeuser:
Interest expense incurred 356 279 264
Less interest capitalized 20 16 7
Interest income and other 41 33 21
Equity in income of affiliates (Note 3) 53 26 28
Real estate and related assets:
Interest expense incurred 82 72 77
Less interest capitalized 67 58 61
Interest income and other 13 10 7
Equity in income of unconsolidated
entities (Note 3) 76 39 30
-----------------------------
Earnings before income taxes and cumulative
effect of a change in an accounting principle 1,323 970 463
Income taxes (Note 5) 483 354 169
-----------------------------
Earnings before cumulative effect of a change
in an accounting principle 840 616 294
Cumulative effect of a change in an accounting
principle (Note 1) - 89 -
-----------------------------
Net earnings $ 840 $ 527 $ 294
=============================
Per share (Note 2):
Basic net earnings before cumulative effect
of a change in an accounting principle $ 3.72 $ 2.99 $ 1.48
Cumulative effect of a change in an
accounting principle - (.43) -
-----------------------------
$ 3.72 $ 2.56 $ 1.48
=============================
Diluted net earnings before cumulative effect
of a change in an accounting principle $ 3.72 $ 2.98 $ 1.47
Cumulative effect of a change in an
accounting principle - (.43) -
-----------------------------
$ 3.72 $ 2.55 $ 1.47
=============================
Dividends paid per share $ 1.60 $ 1.60 $ 1.60
=============================
</TABLE>
See notes on pages 59 through 85.
WEYERHAEUSER 53 ANNUAL REPORT 2000
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Dollar amounts in millions
DECEMBER DECEMBER
31, 26,
2000 1999
-------------------
<S> <C> <C>
ASSETS
Weyerhaeuser
Current assets:
Cash and short-term investments (Note 1) $ 115 $ 1,640
Receivables, less allowances of $5 and $10 1,247 1,296
Inventories (Note 7) 1,499 1,329
Prepaid expenses 427 278
-------------------
Total current assets 3,288 4,543
Property and equipment (Note 8) 8,157 7,560
Construction in progress 574 355
Timber and timberlands at cost, less fee stumpage
charged to disposals 1,696 1,667
Investments in and advances to equity
affiliates (Note 3) 579 950
Goodwill, net of accumulated amortization of
$37 and $6 1,150 811
Other assets and deferred charges 716 514
-------------------
16,160 16,400
-------------------
Real estate and related assets
Cash and short-term investments 8 3
Receivables, less discounts and allowances of
$5 and $7 81 94
Mortgage-related financial instruments, less
discounts and allowances of $3 and $3
(Notes 1 and 13) 73 84
Real estate in process of development and for
sale (Note 9) 621 556
Land being processed for development 917 956
Investments in unconsolidated entities, less
reserves of $1 and $3 (Note 3) 205 124
Other assets 130 122
-------------------
2,035 1,939
-------------------
Total assets $ 18,195 $ 18,339
===================
</TABLE>
See notes on pages 59 through 85.
WEYERHAEUSER 54 ANNUAL REPORT 2000
<PAGE>
CONSOLIDATED BALANCE SHEET
(continued)
<TABLE>
<CAPTION>
DECEMBER DECEMBER
31, 26,
2000 1999
-------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' INTEREST
Weyerhaeuser
Current liabilities:
Notes payable and commercial paper (Note 11) $ 645 $ 54
Current maturities of long-term debt (Note 12) 88 855
Accounts payable (Note 1) 921 961
Accrued liabilities (Note 10) 1,050 1,083
-------------------
Total current liabilities 2,704 2,953
Long-term debt (Notes 12 and 13) 3,974 3,945
Deferred income taxes (Note 5) 2,377 1,985
Deferred pension, other postretirement benefits
and other liabilities (Note 6) 784 783
Commitments and contingencies (Note 14)
-------------------
9,839 9,666
-------------------
Real estate and related assets
Notes payable and commercial paper (Note 11) 778 676
Long-term debt (Notes 12 and 13) 362 479
Other liabilities 384 345
Commitments and contingencies (Note 14)
-------------------
1,524 1,500
-------------------
Total liabilities 11,363 11,166
-------------------
Shareholders' interest (Note 16):
Common shares: $1.25 par value; authorized
400,000,000 shares; issued and outstanding:
213,897,744 and 226,039,188 shares 268 283
Exchangeable shares: no par value; unlimited
shares authorized; issued and held by
nonaffiliates: 5,315,471 and 8,809,994 361 598
Other capital 2,532 2,443
Retained earnings 3,849 4,016
Cumulative other comprehensive expense (178) (167)
-------------------
Total shareholders' interest 6,832 7,173
-------------------
Total liabilities and shareholders' interest $ 18,195 $ 18,339
===================
</TABLE>
WEYERHAEUSER 55 ANNUAL REPORT 2000
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the three-year period ended December 31, 2000
Dollar amounts in millions
CONSOLIDATED
--------------------------
2000 1999 1998
--------------------------
<S> <C> <C> <C>
Cash provided by (used for) operations:
Net earnings $ 840 $ 527 $ 294
Noncash charges (credits) to income:
Depreciation, amortization and fee stumpage 859 640 616
Deferred income taxes, net 193 185 160
Pension and other postretirement benefits (159) (75) (37)
Equity in income of affiliates and
unconsolidated entities (129) (65) (58)
Effect of a change in accounting principle-net
of taxes (Note 1) - 89 -
Charge for settlement of hardboard siding
claims (Note 14) 130 - -
Charges for integration and closure of
facilities (Note 15) 56 102 71
Decrease (increase) in working capital:
Receivables 189 (113) 1
Inventories, real estate and land (145) (68) 56
Prepaid expenses (58) 65 16
Mortgage-related financial instruments 4 21 28
Accounts payable and accrued liabilities (264) 190 3
(Gain) loss on disposition of assets (5) 6 (2)
Other (82) (3) (26)
--------------------------
Cash provided by (used for) operations 1,429 1,501 1,122
--------------------------
Cash provided by (used for) investing activities:
Property and equipment (848) (487) (562)
Timberlands reforestation (21) (18) (17)
Acquisition of timberlands (81) (61) (36)
Acquisition of businesses and facilities,
net of cash acquired (Note 18) (693) - (543)
Cash and short-term investments acquired in
a business combination (Note 18) - 247 -
Investments in and advances to equity affiliates 64 (20) 6
Proceeds from sale of:
Property and equipment 41 16 66
Businesses 43 81 -
Mortgage-related financial instruments 12 18 66
Restructuring the ownership of a subsidiary - - 218
Intercompany advances - - -
Other 23 18 (15)
--------------------------
Cash provided by (used for) investing activities (1,460) (206) (817)
--------------------------
Cash provided by (used for) financing activities:
Issuances of debt 18 809 165
Sale of industrial revenue bonds - - 48
Notes and commercial paper borrowings, net 718 348 328
Cash dividends (363) (321) (319)
Intercompany return of capital and cash dividends - - -
Payments on debt (1,044) (607) (577)
Repurchase of common shares (808) - (42)
Exercise of stock options 13 98 19
Other (23) (14) (14)
--------------------------
Cash provided by (used for) financing activities (1,489) 313 (392)
--------------------------
Net increase (decrease) in cash and
short-term investments (1,520) 1,608 (87)
Cash and short-term investments at
beginning of year 1,643 35 122
--------------------------
Cash and short-term investments at end of year $ 123 $ 1,643 $ 35
==========================
Cash paid (received) during the year for:
Interest, net of amount capitalized $ 340 $ 264 $ 282
==========================
Income taxes $ 324 $ 81 $ 66
==========================
</TABLE>
See notes on pages 59 through 85.
WEYERHAEUSER 56 ANNUAL REPORT 2000
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(continued)
<TABLE>
<CAPTION>
REAL ESTATE
WEYERHAEUSER COMPANY AND RELATED ASSETS
- ------------------------------------------------------
2000 1999 1998 2000 1999 1998
- -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 676 $ 406 $ 214 $ 164 $ 121 $ 80
853 634 611 6 6 5
172 175 149 21 10 11
(154) (74) (37) (5) (1) -
(53) (26) (28) (76) (39) (30)
- 89 - - - -
130 - - - - -
56 102 71 - - -
176 (101) 30 13 (12) (29)
(83) (20) 40 (62) (48) 16
(58) 65 16 - - -
- - - 4 21 28
(290) 109 - 26 81 3
(5) 6 8 - - (10)
(72) 3 8 (10) (6) (34)
- -------------------------------------------------------
1,348 1,368 1,082 81 133 40
- -------------------------------------------------------
(831) (476) (560) (17) (11) (2)
(21) (18) (17) - - -
(81) (61) (36) - - -
(693) - (543) - - -
- 247 - - - -
27 (52) (41) 37 32 47
35 15 42 6 1 24
43 81 - - - -
- - - 12 18 66
- - 218 - - -
(3) (33) (3) 3 33 3
23 17 (13) - 1 (2)
- -------------------------------------------------------
(1,501) (280) (953) 41 74 136
- -------------------------------------------------------
17 807 6 1 2 159
- - 48 - - -
616 237 (2) 102 111 330
(363) (321) (319) - - -
100 100 190 (100) (100) (190)
(924) (383) (87) (120) (224) (490)
(808) - (42) - - -
13 98 19 - - -
(23) (14) (14) - - -
- -------------------------------------------------------
(1,372) 524 (201) (117) (211) (191)
- -------------------------------------------------------
(1,525) 1,612 (72) 5 (4) (15)
1,640 28 100 3 7 22
- -------------------------------------------------------
$ 115 $ 1,640 $ 28 $ 8 $ 3 $ 7
=======================================================
$ 325 $ 246 $ 261 $ 15 $ 18 $ 21
=======================================================
$ 269 $ 77 $ (4) $ 55 $ 4 $ 70
=======================================================
</TABLE>
WEYERHAEUSER 57 ANNUAL REPORT 2000
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INTEREST
<TABLE>
<CAPTION>
For the three-year period ended December 31, 2000
Dollar amounts in millions
2000 1999 1998
--------------------------
<S> <C> <C> <C>
Common stock:
Balance at beginning of year $ 283 $ 249 $ 249
New issuance - 25 -
Issued for exercise of stock options - 3 1
Issued in retraction of exchangeable shares 5 6 -
Repurchase of common shares (20) - (1)
--------------------------
Balance at end of year $ 268 $ 283 $ 249
==========================
Exchangeable shares:
Balance at beginning of year $ 598 $ - $ -
New issuance 14 909 -
Retraction (251) (311) -
--------------------------
Balance at end of year $ 361 $ 598 $ -
==========================
Other capital-common and exchangeable:
Balance at beginning of year $ 2,443 $ 675 $ 648
Stock options exercised 13 95 18
New issuance - 1,344 -
Repurchase of common shares (144) - (2)
Retraction of exchangeable shares 246 305 -
Other transactions, net (26) 24 11
--------------------------
Balance at end of year $ 2,532 $ 2,443 $ 675
==========================
Retained earnings:
Balance at beginning of year $ 4,016 $ 3,810 $ 3,874
Net earnings 840 527 294
Cash dividends on common shares (363) (321) (319)
Repurchase of common shares (644) - (39)
--------------------------
Balance at end of year $ 3,849 $ 4,016 $ 3,810
==========================
Cumulative other comprehensive expense:
Balance at beginning of year $ (167) $ (208) $ (123)
Annual changes-net of tax:
Foreign currency translation adjustments (11) 41 (77)
Additional minimum pension
liability adjustments - - (8)
--------------------------
Balance at end of year $ (178) $ (167) $ (208)
==========================
Total shareholders' interest:
Balance at end of year $ 6,832 $ 7,173 $ 4,526
==========================
Comprehensive income:
Net earnings $ 840 $ 527 $ 294
Foreign currency translation adjustments (20) 60 (90)
Income tax benefit (expense) on foreign currency
translation adjustments 9 (19) 13
Additional minimum pension liability adjustments - - (13)
Income tax benefit (expense) on minimum
pension liability adjustments - - 5
--------------------------
$ 829 $ 568 $ 209
==========================
</TABLE>
See notes on pages 59 through 85.
WEYERHAEUSER 58 ANNUAL REPORT 2000
<PAGE>
notes to financial statements
For the three-year period ended December 31, 2000
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. Investments
in and advances to equity affiliates that are not majority owned or controlled
are accounted for using the equity method with taxes provided on undistributed
earnings.
Certain of the consolidated financial statements and notes to financial
statements are presented in two groupings: (1) Weyerhaeuser (the company),
principally engaged in the growing and harvesting of timber and the manufacture,
distribution and sale of forest products, and (2) Real estate and related
assets, principally engaged in real estate development and construction and
other real estate related activities.
NATURE OF OPERATIONS
The company's principal business segments, which account for the majority of
sales, earnings and the asset base, are:
. Timberlands, which is engaged in the management of 5.9 million acres of
company-owned and .5 million acres of leased commercial forestland in North
America (3.8 million acres in the South and 2.6 million acres in the Pacific
Northwest and Canada). The company also has renewable long-term licenses on 31.6
million acres of forestland located in five provinces throughout Canada that are
managed by our Canadian operations.
. Wood products, which produces 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. It
is also engaged in the management of forestland in Canada under long-term
licensing arrangements.
. Pulp, paper and packaging, which manufactures and sells pulp, 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 2000
had 53 weeks; fiscal years 1999 and 1998 each had 52 weeks.
ACCOUNTING PRONOUNCEMENTS IMPLEMENTED
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition, to provide guidance on
the recognition, presentation and disclosure of revenue in financial statements.
The company's revenue recognition policy effectively complies with this
guidance; therefore, there was no impact on the company's financial position,
results of operations or cash flow.
In September 2000, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board (FASB) reached a consensus on EITF Issue No. 00-10,
Accounting for Shipping and Handling Fees and Costs. This consensus requires
that all shipping and handling fees charged to customers be reported as revenue
and all shipping and handling costs incurred by a seller be reported as
operating expenses. Compliance with the EITF consensus is applicable for the
fourth quarter of fiscal years beginning after December 15, 1999, and was
implemented by the company in the 2000 fourth quarter. Compliance with the EITF
consensus required reclassification of certain shipping and handling costs
that had historically been recorded as a reduction of gross sales, in accordance
with standard industry practices. These costs are now included in costs of
products sold in the accompanying consolidated statement of earnings for all
periods presented. Compliance with this consensus had no impact on the company's
financial position, results of operations or cash flow.
In the 1999 first quarter, the company implemented the following Statements of
Position (SOP) issued by the American Institute of Certified Public Accountants
Accounting Standards Executive Committee:
. SOP 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use, which provided guidelines on the accounting for
internally developed computer software. The adoption of this SOP did not have a
significant impact on the company's results of operations or financial position.
WEYERHAEUSER 59 ANNUAL REPORT 2000
<PAGE>
. SOP 98-5, Reporting on the Costs of Start-up Activities, which required that
the costs of start-up activities be expensed as incurred. In addition, this
pronouncement required that all unamortized start-up costs on the balance sheet
at the implementation date be written off as a cumulative effect of a change in
an accounting principle. The company recorded an after-tax charge of $89
million, or 43 cents per share, in the first quarter to reflect this write-off.
This charge included $9 million for the company's interest in the write-off of
unamortized start-up costs in three of its 50 percent-owned equity affiliates.
PROSPECTIVE ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. In June 1999, the FASB issued Statement No. 137,
Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No. 133. In June 2000, the FASB issued
Statement 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of FASB Statement No. 133. Statement 133, as amended,
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes in the
derivative instrument's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. Special accounting for qualifying
hedges allows a derivative instrument's gains and losses to offset related
results on the hedged item in the income statement, to the extent effective, and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. Statement 133, as
amended, is effective for fiscal years beginning after June 15, 2000, and will
be adopted by the company on January 1, 2001.
The company utilizes well-defined financial contracts in the normal course of
its operations as means to manage its foreign exchange, interest rate and
commodity price risks. The vast majority of these contracts are fixed-price
contracts for future purchases and sales of various commodities that meet the
definition of "normal purchases or normal sales" and, therefore, will not be
considered derivative instruments under Statement 133 as amended. Likewise,
several of the company's financial and commodity contracts do not provide for
net settlement and, therefore, will not be considered derivative instruments
under Statement 133 as amended.
As of December 31, 2000, the company has identified and designated the
following items as derivatives that qualify as hedges under Statement 133 as
amended: a variable-to-fixed interest rate swap, fixed-price contracts for
future purchases of a certain commodity and forward contracts to buy foreign
currencies. Because the company has only a limited number of contracts that
qualify as derivatives under Statement 133, as amended, the effects of
implementation of this statement as of January 1, 2001, are not expected to have
a material impact on the company's financial position, results of operations or
cash flows. If Statement 133 were applied to the company's derivative contracts
in place at December 31, 2000, recording of the fair value of the contracts
would increase assets by approximately $37 million and increase liabilities by
approximately $17 million, with a net offsetting amount of $20 million recorded
in accumulated other comprehensive income.
USE OF 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.
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.
Financial instruments that potentially subject the company to concentrations of
credit risk consist of real estate and related assets receivables and mortgage-
related financial instruments, of which $45 million and $46 million are in the
western geographical region of the United States at December 31, 2000, and
December 26, 1999, respectively.
WEYERHAEUSER 60 ANNUAL REPORT 2000
<PAGE>
DERIVATIVES
The company utilizes well-defined financial contracts in the normal course of
its operations as means to manage its foreign exchange, interest rate and
commodity price risks. For those limited number of contracts that are considered
derivative instruments, the company has formally designated each as a hedge of
specific and well-defined risks. These contracts and the company's current
accounting treatment for such are as follows:
. Foreign exchange contracts, which the company has designated as cash flow
hedges-the objective of which is to hedge the variability of future cash flows
associated with foreign denominated sales and purchases due to changes in
foreign currency exchange rates. These contracts generate gains or losses that
are currently recognized at the contracts' respective settlement dates.
. Variable-to-fixed interest rate swap agreement entered into with a major
financial institution in which the company pays a fixed rate and receives a
floating rate with the interest payments being calculated on a notional amount.
The company has designated this swap as a cash flow hedge-the objective of which
is to hedge the variability of future cash flows associated with changes in
LIBOR. The premiums received by the company on the sale of its swaps are treated
as deferred income and amortized against interest expense over the term of the
agreements.
. Commodity swap agreements designed to hedge against the variability of
future cash flows arising from changes in natural gas spot rates. The company
has designated these agreements as cash flow hedges. These agreements generate
gains or losses that are currently recognized at the contracts' respective
settlement dates.
. Foreign currency forward contracts entered into in conjunction with the
company's agreement to purchase equipment in a foreign denominated currency. The
objective of the contracts, which have been designated as fair value hedges, is
to hedge the company's future foreign denominated payments for the equipment
purchase.
The company is exposed to credit-related gains or losses in the event of
nonperformance by counterparties to financial instruments but does not expect
any counterparties to fail to meet their obligations. The notional amounts of
these derivative financial instruments are $115 million and $385 million at
December 31, 2000, and December 26, 1999, respectively. These notional amounts
do not represent amounts exchanged by the parties and, thus, are not a measure
of exposure to the company through its use of derivatives. The exposure in a
derivative contract is the net difference between what each party is required to
pay based on the contractual terms against the notional amount of the contract,
such as interest rates or exchange rates. The company's use of derivatives does
not have a significant effect on the company's results of operations or its
financial position.
In addition to the contracts described above, the company is also involved in a
very limited number of trading transactions designed to capitalize on the
company's knowledge and understanding of the commodity lumber market. The
company's open trading positions are marked to market at each reporting
date, and all unrealized gains and losses are recognized in income. Trading
activities to date have not had a material effect on the company's financial
position, results of operations or cash flows.
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.
At the end of 1999, the company's cash and short-term investments reflected
$1.6 billion in marketable securities. These liquid investments were being held
to meet cash requirements in early January to complete the tender offer for
the shares of TJ International and redeem $750 million in notes payable.
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 approximately half of domestic raw materials, in process and finished
goods inventories. LIFO inventories were $417 million and $358 million at
December 31, 2000, and December 26, 1999, respectively. The balance of domestic
raw material and product inventories, all materials and supplies inventories,
and all foreign inventories is costed at either the first-in, first-out (FIFO)
or moving average cost methods. Had the FIFO method been used to cost all
inventories, the amounts at which product inventories are stated would have been
$227 million greater at December 31, 2000, and December 26, 1999.
WEYERHAEUSER 61 ANNUAL REPORT 2000
<PAGE>
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. Depletion rates used to relieve timber inventory are determined with
reference to the net carrying value of timber and the related volume of timber
estimated to be available over the growth cycle. Timber carrying costs are
expensed as incurred. The cost of timber harvested is included in the carrying
values of raw material and product inventories, and in the cost of products sold
as these inventories are disposed of.
GOODWILL
Goodwill, which represents the excess of purchase price over fair value of net
assets acquired, is amortized on a straight-line basis over 40 years, which is
the expected period to be benefited. The unamortized carrying balance of
goodwill is assessed for recoverability on a periodic basis. The measurement of
possible impairment is based on the ability to recover the balance of goodwill
from expected future operating cash flows.
ACCOUNTS PAYABLE
The company's banking system provides for the daily replenishment of major bank
accounts as checks are presented for payment. Accordingly, there were negative
book cash balances of $121 million and $185 million at December 31, 2000, and
December 26, 1999, 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 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.
SHAREHOLDERS' INTEREST
The company has revised its presentation of repurchased company shares to more
closely reflect legal treatment of equity. As a result, prior-year presentations
of common shares, other capital and retained earnings have been restated. There
was no change to total shareholders' interest.
REVENUE RECOGNITION
The company's forest products-based operations recognize revenue from product
sales upon shipment to their customers, except for those export sales where
revenue is recognized when title transfers at the foreign port. The company's
real estate operations recognize income from the sales of single-family housing
units when construction has been completed, required down payments have been
received and title has passed to the customer. Income from multi-family and
commercial properties, developed lots and undeveloped land is recognized when
required down payments are received and other income recognition criteria has
been satisfied.
WEYERHAEUSER 62 ANNUAL REPORT 2000
<PAGE>
IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF
The company accounts for long-lived assets in accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of. This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be
recoverable. Assets to be disposed of are reported at the lower of the carrying
value or fair value less cost to sell.
FOREIGN CURRENCY TRANSLATION
Local currencies are considered the functional currencies for most of the
company's operations outside the United States. Assets and liabilities are
translated into U.S. dollars at the rate of exchange in effect at the balance
sheet date. Revenues and expenses are translated into U.S. dollars at average
monthly exchange rates prevailing during the year.
COMPREHENSIVE INCOME
Comprehensive income consists of net income, foreign currency translation
adjustments and additional minimum pension liability adjustments. It is
presented in the Consolidated Statement of Shareholders' Interest.
RECLASSIFICATIONS
Certain reclassifications have been made to conform prior years' data to the
current format.
REAL ESTATE AND RELATED ASSETS
Real estate held for sale is stated at the lower of cost or fair value, less
costs to sell. The determination of fair value is based on appraisals and market
pricing of comparable assets, when available, or the discounted value of
estimated future cash flows from these assets. Real estate held for development
is stated at cost to the extent it does not exceed the estimated undiscounted
future net cash flows, in which case it is carried at fair value.
Mortgage-related financial instruments include mortgage loans receivable,
mortgage-backed certificates and other financial instruments. Mortgage-backed
certificates (see Note 13) are carried at par value. These certificates and
other financial instruments are pledged as collateral for the collateralized
mortgage obligation (CMO) bonds and are held by banks as trustees. Principal and
interest collections are used to meet the interest payments and reduce the
outstanding principal balance of the bonds. Related 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.
WEYERHAEUSER 63 ANNUAL REPORT 2000
<PAGE>
NOTE 2. NET EARNINGS PER SHARE
- --------------------------------------------------------------------------------
Basic net earnings per share are based on the weighted average number of common
and exchangeable shares outstanding during the respective periods. Diluted net
earnings per share are based on the weighted average number of common and
exchangeable shares, convertible debentures and stock options outstanding at the
beginning of or granted during the respective periods.
<TABLE>
<CAPTION>
Dollar amounts in millions WEIGHTED AVERAGE EARNINGS
except per-share figures NET EARNINGS SHARES (000) PER SHARE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2000:
Basic $ 840 225,419 $ 3.72
Stock options granted - 189
--------------------------------
Diluted $ 840 225,608 $ 3.72
================================================
1999:
Basic $ 527 205,599 $ 2.56
Convertible debentures - 141
Stock options granted - 886
--------------------------------
Diluted $ 527 206,626 $ 2.55
================================================
1998:
Basic $ 294 198,914 $ 1.48
Stock options granted - 336
--------------------------------
Diluted $ 294 199,250 $ 1.47
================================================
</TABLE>
Options for which the exercise price was greater than the average market price
of common shares for the period were not included in the computation of diluted
earnings per share. These options to purchase shares were as follows:
<TABLE>
<CAPTION>
YEAR OPTIONS TO PURCHASE EXERCISE PRICE
- --------------------------------------------------------------------------------
<S> <C> <C>
2000 1,210,686 $51.09
40,770 52.66
1,670,545 53.03
150,000 53.06
1,509,550 53.75
45,760 54.06
107,200 55.56
534,958 56.78
205,900 65.56
2,500 68.41
- --------------------------------------------------------------------------------
1999 2,500 68.41
212,150 65.56
- --------------------------------------------------------------------------------
1998 1,332,080 51.09
586,539 56.78
150,000 53.06
- --------------------------------------------------------------------------------
</TABLE>
WEYERHAEUSER 64 ANNUAL REPORT 2000
<PAGE>
NOTE 3. EQUITY AFFILIATES
- --------------------------------------------------------------------------------
WEYERHAEUSER
The company's investments in affiliated companies that are not majority owned or
controlled are accounted for using the equity method. The company's significant
equity affiliates are:
. Cedar River Paper Company-A 50 percent owned joint venture in Cedar Rapids,
Iowa, that manufactures liner and medium containerboard from recycled fiber.
. ForestExpress, LLC-A 28 percent owned joint venture formed during 2000 to
develop and operate a global, web-enabled, business-to-business marketplace for
the forest products industry. Other equity members of the joint venture, which
is headquartered in Atlanta, Georgia, include Boise Cascade Corporation,
Georgia-Pacific Corp., International Paper, The Mead Corporation, Morgan Stanley
Dean Witter and Willamette Industries.
. MAS Capital Management Partners, L.P.-A 50 percent owned limited partnership
formed during 2000 for the purpose of providing investment management services
to institutional and individual investors in the area of alternative
investments. The company's pension plan assets are managed by this equity
affiliate.
. Nelson Forests Joint Venture-An investment in which the company owns a 51
percent financial interest and has a 50 percent voting interest, which holds
Crown Forest License cutting rights and freehold land on the South Island of
New Zealand.
. North Pacific Paper Corporation-A 50 percent owned joint venture that has
a newsprint manufacturing facility in Longview, Washington. This venture was
formed in 1998 through a restructuring of the company's 80 percent ownership,
which was fully consolidated, to 50-50 ownership with Nippon Paper Industries
Co., Ltd.
. RII Weyerhaeuser World Timberfund, L.P.-A 50 percent owned limited
partnership with institutional investors to make investments in timberlands and
related assets outside the United States. The primary focus of this partnership
is in pine forests in the Southern Hemisphere.
During the 1999 second quarter, this joint venture paid approximately $142
million to acquire 62,500 acres of radiata pine plantations, two softwood lumber
mills with a capacity of 115 million board feet, a lumber treating operation, a
pine moulding remanufacturing plant, a chip export business, and a 30 percent
interest in a sales and distribution business in Australia.
Weyerhaeuser Company, through a subsidiary, has the responsibility for all
management and marketing activities of this acquisition.
. SCA Weyerhaeuser Packaging Holding Company Asia Ltd.-A 50 percent owned
joint venture formed to build or buy containerboard packaging facilities to
serve manufacturers of consumer and industrial products in Asia. Two facilities
are in operation in China.
. Wapawekka Lumber LP-A 51 percent owned limited partnership in Saskatchewan,
Canada, that commenced operation of a sawmill during 1999. Substantive
participating rights by the minority partner preclude the consolidation of this
partnership by the company.
. Wilton Connor LLC-A 50 percent owned joint venture in Charlotte, North
Carolina, formed in 1998. This venture supplies full-service, value-added
turnkey packaging solutions that assist product manufacturers in the areas of
retail marketing and distribution.
Unconsolidated financial information for affiliated companies that are accounted
for by the equity method is as follows:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 232 $ 525
Noncurrent assets 1,444 1,885
Current liabilities 207 275
Noncurrent liabilities 593 816
---------------------
</TABLE>
<TABLE>
<CAPTION>
2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and revenues $ 1,038 $ 901 $ 696
Operating income 118 110 110
Net income (loss) 84 47 52
---------------------------------
</TABLE>
WEYERHAEUSER 65 ANNUAL REPORT 2000
<PAGE>
The company provides goods and services to these affiliates, which vary by
entity, in the form of raw materials, management and marketing services, support
services and shipping services. Additionally, the company purchases finished
product from certain of these entities. The aggregate total of these
transactions is not material to the results of operations of the company.
REAL ESTATE AND RELATED ASSETS
Investments in unconsolidated entities that are not majority owned or controlled
are accounted for using the equity method with taxes provided on undistributed
earnings as appropriate. These investments include minor holdings in non-real
estate partnerships that have significant assets and income.
Unconsolidated financial information for unconsolidated entities that are
accounted for by the equity method is as follows:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 11,296 $ 11,457
Noncurrent assets 271 159
Current liabilities 9,864 10,577
Noncurrent liabilities 140 115
---------------------
</TABLE>
<TABLE>
<CAPTION>
2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and revenues $ 1,347 $ 663 $ 244
Operating income 593 313 133
Net income 492 253 103
----------------------------------
</TABLE>
The company may charge management and/or development fees to these
unconsolidated entities. The aggregate total of these transactions is not
material to the results of operations of the company.
NOTE 4. OTHER OPERATING COSTS, NET
- --------------------------------------------------------------------------------
Other operating costs, net, is an aggregation of both recurring and occasional
income and expense items and, as a result, can fluctuate from year to year. In
2000, the only significant item for Weyerhaeuser was $13 million of foreign
currency transaction losses. There were no significant individual items in 1999
or 1998.
WEYERHAEUSER 66 ANNUAL REPORT 2000
<PAGE>
NOTE 5. INCOME TAXES
- --------------------------------------------------------------------------------
Earnings before income taxes and cumulative effect of a change in an accounting
principle are comprised of the following:
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic earnings $ 1,051 $ 778 $ 413
Foreign earnings 272 192 50
-----------------------------------
$ 1,323 $ 970 $ 463
===================================
</TABLE>
Provisions for income taxes include the following:
<TABLE>
<CAPTION>
Dollar amounts in millions 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $ 191 $ 103 $ (7)
Deferred 150 150 138
-----------------------------------
341 253 131
-----------------------------------
State:
Current 22 13 8
Deferred 8 7 10
-----------------------------------
30 20 18
-----------------------------------
Foreign:
Current 77 53 8
Deferred 35 28 12
-----------------------------------
112 81 20
-----------------------------------
Income taxes before cumulative effect
of a change in an accounting principle 483 354 169
Deferred taxes applicable to
cumulative effect of a change in an
accounting principle - (52) -
-----------------------------------
$ 483 $ 302 $ 169
===================================
</TABLE>
A reconciliation between the federal statutory tax rate and the company's
effective tax rate before cumulative effect of a change in an accounting
principle is as follows:
<TABLE>
<CAPTION>
2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory tax on income 35.0 % 35.0 % 35.0 %
State income taxes, net of federal tax benefit 1.7 1.7 2.8
All other, net (.2) (.2) (1.3)
-------------------------------
Effective income tax rate 36.5 % 36.5 % 36.5 %
===============================
</TABLE>
The net deferred income tax (liabilities) assets include the following
components:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Current (included in prepaid expenses) $ 234 $ 138
Noncurrent (2,377) (1,985)
Real estate and related assets (included in
other liabilities/assets) (14) 7
---------------------
Total $ (2,157) $ (1,840)
=====================
</TABLE>
The deferred tax assets (liabilities) are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Depreciation $ (1,996) $ (1,557)
Depletion (343) (406)
Other (468) (520)
---------------------
Total deferred tax liabilities (2,807) (2,483)
---------------------
Postretirement benefits 136 130
Net operating loss carryforwards 44 67
Other 470 446
---------------------
Total deferred tax assets 650 643
---------------------
$ (2,157) $ (1,840)
=====================
</TABLE>
WEYERHAEUSER 67 ANNUAL REPORT 2000
<PAGE>
As of December 31, 2000, the company and its subsidiaries have $118 million of
U.S. net operating loss carryforwards, which expire from 2012 through 2018; $34
million of Canadian investment tax credits, which expire from 2001 through 2009;
and $4 million of U.S. foreign tax credits, which expire in 2004. In addition,
the subsidiaries of the company have $18 million of alternative minimum tax
credit carryforwards which do not expire.
The company intends to reinvest undistributed earnings of certain foreign
subsidiaries; therefore, no U.S. taxes have been provided. These earnings
totaled approximately $1,259 million at the end of 2000. Determination of the
income tax liability that would result from repatriation is not practicable.
NOTE 6. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
- --------------------------------------------------------------------------------
The company sponsors several qualified and nonqualified pension and other
postretirement benefit plans for its employees. The following table provides a
reconciliation of the changes in the plans' benefit obligations and fair value
of plan assets over the two-year period ending December 31, 2000:
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION BENEFITS
--------------------------------------
Dollar amounts in millions 2000 1999 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reconciliation of benefit obligation:
Benefit obligation as of prior
year-end $ 2,419(1) $ 2,022 $ 361 $ 277
Service cost 62 61 8 7
Interest cost 183 149 27 21
Plan participants' contributions 3 2 4 3
Actuarial (gain)/loss 95 (123) 8 (22)
Foreign currency exchange
rate changes (10) 10 (1) 1
Benefits paid (191) (184) (36) (27)
Plan amendments 4 12 (3) 5
Acquisitions - 495 - 96
--------------------------------------
Benefit obligation at end
of year $ 2,565 $ 2,444 $ 368 $ 361
======================================
Reconciliation of fair value of
plan assets:
Fair value of plan assets at
beginning of year (actual) $ 4,133 $ 2,893 $ 2 $ 2
Actual return on plan assets 466 831 - -
Foreign currency exchange
rate changes (12) 10 - -
Employer contributions 18 6 6 1
Plan participants' contributions 2 1 - -
Benefits paid (191) (178) (6) (1)
Acquisitions - 525 - -
--------------------------------------
Fair value of plan assets at end
of year (estimated) $ 4,416 $ 4,088 $ 2 $ 2
======================================
(1) The 1999 year-end balance was adjusted to reflect a change in the actuarial
assumption to exclude the obligation for potential future cost-of-living
adjustments for retirees under certain Canadian pension plans.
</TABLE>
WEYERHAEUSER 68 ANNUAL REPORT 2000
<PAGE>
The company funds its qualified pension plans and accrues for nonqualified
pension benefits and health and life postretirement benefits. The funded status
of these plans at December 31, 2000, and December 26, 1999, is as follows:
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION BENEFITS
------------------------------------------
DECEMBER DECEMBER DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Funded status $ 1,852 $ 1,645 $ (365) $ (360)
Unrecognized prior
service cost 130 140 4 5
Unrecognized net gain (1,633) (1,666) (16) (22)
Unrecognized net
transition asset (5) (10) - -
------------------------------------------
Prepaid/(accrued)
benefit cost $ 344 $ 109 $ (377) $ (377)
==========================================
Amounts recognized in balance
sheet consist of:
Prepaid benefit cost $ 417 $ 22
Accrued benefit/(liability) (91) (76)
Intangible asset 5 4
Cumulative other
comprehensive expense 13 -
--------------------
Net amount recognized $ 344 $ (50)
====================
</TABLE>
The assets of the U.S. and Canadian pension plans, as of December 31, 2000, and
December 26, 1999, consist of a highly diversified mix of equity, fixed income
and real estate securities and alternative investments.
Approximately 5,480 employees are covered by union-administered multi-employer
pension plans to which the company makes negotiated contributions based
generally on fixed amounts per hour per employee. Contributions to these plans
were $13 million in 2000, $10 million in 1999 and $5 million in 1998.
The company sponsors multiple defined benefit postretirement plans for its U.S.
employees. Medical plans have various levels of coverage and plan participant
contributions. Life insurance plans are noncontributory. Canadian employees are
covered under multiple defined benefit postretirement plans that provide medical
and life insurance benefits.
Weyerhaeuser sponsors various defined contribution plans for U.S. salaried and
hourly employees. The basis for determining plan contribution varies by plan.
The amounts contributed to the plans for participating employees were $52
million, $36 million and $37 million in 2000, 1999 and 1998, respectively.
The assumptions used in the measurement of the company's benefit obligations
are as follows:
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION BENEFITS
-------------------------------------------
2000 1999 1998 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Discount rate 7.75% 7.75% 7.25% 7.75% 7.75% 7.25%
Expected return on plan assets 11.50% 11.50% 11.50% 5.75% 5.75% 5.75%
Rate of compensation increase:
Salaried 3.50% 3.50% 4.50% 3.50% 3.50% 4.50%
Hourly 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
-------------------------------------------
</TABLE>
For measurement purposes, a 6.5 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2000. Beginning in
2001, the rate is assumed to decrease by .5 percent annually to a level of 4.5
percent for the year 2004 and all years thereafter.
WEYERHAEUSER 69 ANNUAL REPORT 2000
<PAGE>
The components of net periodic benefit costs/income are:
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION BENEFITS
-------------------------------------------
Dollar amounts in millions 2000 1999 1998 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 62 $ 61 $ 54 $ 8 $ 7 $ 4
Interest cost 183 149 134 27 21 18
Expected return on plan assets (383) (297) (236) - - -
Amortization of gain (64) (22) (23) (1) (1) (1)
Amortization of prior service cost 14 12 14 - - -
Amortization of unrecognized
transition asset (5) (5) (4) - - -
Loss due to closure, sale and other - - 1 - - -
-------------------------------------------
$(193) $(102) $ (60) $ 34 $ 27 $ 21
===========================================
</TABLE>
The accrued (prepaid) pension costs for the projected benefit obligation,
accumulated benefit obligation and fair value of plan assets for pension plan(s)
with accumulated benefit obligations in excess of plan assets were $101 million,
$95 million and $4 million, respectively, as of December 31, 2000, and $87
million, $82 million and $8 million, respectively, as of December 26, 1999.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one percent change in assumed health care
cost trend rates would have the following effects:
<TABLE>
<CAPTION>
As of December 31, 2000
Dollar amounts in millions 1% INCREASE 1% DECREASE
- --------------------------------------------------------------------------------
<S> <C> <C>
Effect on total of service and interest cost components $ 2 $ (2)
Effect on accumulated postretirement benefit obligation 25 (20)
------------------------
</TABLE>
NOTE 7. INVENTORIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Logs and chips $ 216 $ 197
Lumber, plywood, panels and engineered wood 415 297
Pulp and paper 205 161
Containerboard, paperboard and packaging 166 160
Other products 177 207
Materials and supplies 320 307
---------------------
$ 1,499 $ 1,329
=====================
</TABLE>
NOTE 8. PROPERTY AND EQUIPMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Property and equipment, at cost:
Land $ 235 $ 219
Buildings and improvements 2,172 1,933
Machinery and equipment 11,391 10,499
Rail and truck roads 661 577
Other 181 149
---------------------
14,640 13,377
Less allowance for depreciation and amortization 6,483 5,817
---------------------
$ 8,157 $ 7,560
=====================
</TABLE>
WEYERHAEUSER 70 ANNUAL REPORT 2000
<PAGE>
NOTE 9. REAL ESTATE IN PROCESS OF DEVELOPMENT AND FOR SALE
- --------------------------------------------------------------------------------
Properties held by the company's real estate and related assets segment include:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Dwelling units $ 241 $ 198
Residential lots 283 232
Commercial lots 64 84
Commercial projects 9 15
Acreage 23 25
Other inventories 1 2
---------------------
$ 621 $ 556
=====================
</TABLE>
NOTE 10. ACCRUED LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Payroll-wages and salaries, incentive awards, retirement
and vacation pay $ 418 $ 403
Taxes-Social Security and real and personal property 51 48
Product warranties 12 83
Interest 104 105
Income taxes - 58
Other 465 386
---------------------
$ 1,050 $ 1,083
=====================
</TABLE>
NOTE 11. SHORT-TERM DEBT
- --------------------------------------------------------------------------------
BORROWINGS
At December 31, 2000, the company had short-term borrowings of $645 million with
a weighted average interest rate of 6.82 percent. In 1999, short-term borrowings
included $29 million with a weighted average interest rate of 6.11 percent and
$18 million of borrowings denominated in Japanese yen with a weighted average
interest rate of 1.27 percent.
The real estate and related assets segment short-term borrowings were $778
million with a weighted average interest rate of 7.2 percent at December 31,
2000, and $676 million with a weighted average interest rate of 6.2 percent at
December 26, 1999.
LINES OF CREDIT
The company has short-term bank credit lines of $865 million and $515 million,
all of which could be availed of by the company and Weyerhaeuser Real Estate
Company (WRECO) at December 31, 2000, and December 26, 1999, respectively. No
portions of these lines have been availed of by the company or WRECO at December
31, 2000, or December 26, 1999. None of the entities referred to above is a
guarantor of the borrowing of the other. The company also has short-term bank
credit lines of $700 million, all of which could be availed of by the company at
December 31, 2000. No portions of these lines have been availed of by the
company. In addition, the company's wholly owned Canadian subsidiary had short-
term bank credit lines that provided for the borrowings of up to $745 million at
December 26, 1999. No portions of these lines were availed of by the company's
subsidiary. These credit lines were terminated in 2000.
The company has received funding commitments from banks in connection with its
cash tender offer for all of the outstanding shares of common stock of
Willamette Industries, Inc. The funding commitments, which are sufficient to
cover the approximate $5.4 billion equity value of the tender offer, are subject
to certain conditions and expire in October 2001.
WEYERHAEUSER 71 ANNUAL REPORT 2000
<PAGE>
NOTE 12. LONG-TERM DEBT
- --------------------------------------------------------------------------------
DEBT
Weyerhaeuser long-term debt, including the current portion, is as follows:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
9.05% notes due 2003 $ 200 $ 200
8.50% debentures due 2004 55 55
Floating rate senior notes due 2004 - 750
6.75% notes due 2006 150 150
8.375% debentures due 2007 150 150
7.50% debentures due 2013 250 250
7.25% debentures due 2013 250 250
6.95% debentures due 2017 300 300
7.125% debentures due 2023 250 250
8.50% debentures due 2025 300 300
7.95% debentures due 2025 250 250
7.70% debentures due 2026 150 150
6.95% debentures due 2027 300 300
Industrial revenue bonds, rates from 2.5% (variable)
to 9.25% (fixed), due 2001-2029 923 838
Medium-term notes, rates from 6.43% to 8.91%,
due 2001-2005 114 184
Commercial paper/credit agreements 400 400
Other 20 23
--------------------
$ 4,062 $ 4,800
====================
Portion due within one year $ 88 $ 855
====================
</TABLE>
Long-term debt maturities are (millions):
<TABLE>
<S> <C>
2001 $ 88
2002 407
2003 211
2004 68
2005 58
Thereafter 3,230
</TABLE>
In December 1999, the company redeemed approximately $101 million in
outstanding adjustable rate convertible subordinated debentures due May 1, 2007,
originally issued by MacMillan Bloedel. Holders received the principal amount
plus unpaid interest up to December 5, 1999.
Real estate and related assets segment long-term debt, including the current
portion, is as follows:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Notes payable, unsecured; weighted average interest rates
are approximately 6.8% and 6.5% $ 318 $ 430
Notes payable, secured; weighted average interest rates
are approximately 7.9% and 8.0% 12 10
Collateralized mortgage obligation bonds 32 39
---------------------
$ 362 $ 479
=====================
Portion due within one year $ 162 $ 122
=====================
</TABLE>
Long-term debt maturities are (millions):
<TABLE>
<S> <C>
2001 $ 162
2002 80
2003 79
2004 7
2005 4
Thereafter 30
</TABLE>
WEYERHAEUSER 72 ANNUAL REPORT 2000
<PAGE>
LINES OF CREDIT
The company's lines of credit include a five-year revolving credit facility
agreement entered into in 1997 with a group of banks that provides for
borrowings of up to the total amount of $400 million, all of which is available
to the company. Borrowings are at LIBOR plus a spread or other such interest
rates mutually agreed to between the borrower and lending banks.
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 at December 31,
2000, or December 26, 1999, except as noted above.
The company's compensating balance agreements were not significant.
NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER DECEMBER
31, 2000 26, 1999
------------------------------------
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) $ 4,062 $ 4,144 $ 4,800 $ 4,816
Real estate and related assets:
Financial assets:
Mortgage loans receivable 32 33 37 33
Mortgage-backed certificates
and other pledged
financial instruments 41 41 47 48
------------------------------------
Total financial assets 73 74 84 81
------------------------------------
Financial liabilities:
Long-term debt (including
current maturities) 362 363 479 477
------------------------------------
</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 the real estate and related assets segment, 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 loans receivable are estimated based on the discounted value of
estimated future cash flows using current rates for loans with similar terms and
risks.
. Mortgage-backed certificates and other pledged financial instruments (pledged
to secure collateralized mortgage obligations) are estimated using the quoted
market prices for securities backed by similar loans and restricted deposits
held at cost.
WEYERHAEUSER 73 ANNUAL REPORT 2000
<PAGE>
NOTE 14. LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
The company conducted a review of its 10 major pulp and paper facilities to
evaluate the facilities' compliance with federal Prevention of Significant
Deterioration (PSD) regulations. The results of the reviews were disclosed to
seven state agencies and the Environmental Protection Agency (EPA) during 1994
and 1995. All PSD compliance issues identified in the review have been resolved.
This includes PSD issues at the company's Springfield, Oregon, containerboard
facility, which were resolved in December 2000, at which time a Title V permit
was issued for the facility.
The company has entered into a proposed class action settlement of hardboard
siding claims against the company. The settlement class consists of all persons
who own or owned structures in the United States on which the company's
hardboard siding has been installed from January 1, 1981, through December 31,
1999. The settlement was approved by the Superior Court, San Francisco County,
California, in December 2000. Objectors have until February 21, 2001, to appeal
approval of the settlement. The company took an after-tax charge of $82 million
in the second quarter to cover the estimated cost of the settlement and related
costs. Because the nationwide class action settlement has been approved, the
company expects that two cases in which class actions have been claimed but not
certified in Oregon and Texas and one case in Washington claiming a class that
has been dismissed and is now on appeal will be dismissed. Cases pending in
South Carolina and Iowa in which statewide classes have been sought but not
certified may proceed as individual cases but will not be able to be certified
as class actions on behalf of any claimants included in the certified nationwide
class. At the end of the fourth quarter, the company also was a defendant in 17
non-class hardboard siding cases involving primarily multi-family structures and
residential developments.
In May 1999, two civil antitrust lawsuits were filed against the company in
U.S. District Court, Eastern District of Pennsylvania. Both suits name as
defendants several other major containerboard and packaging producers. The
complaint in the first case alleges the defendants conspired to fix the price of
linerboard and that the alleged conspiracy had the effect of increasing the
price of corrugated containers. The suit purports to be a class action on behalf
of purchasers of corrugated containers during the period October 1993 through
November 1995. The complaint in the second case alleges that the company
conspired to manipulate the price of linerboard and thereby the price of
corrugated sheets. The suit purports to be a class action on behalf of
purchasers of corrugated sheets during the period October 1993 through November
1995. Both suits seek damages, including treble damages, under the antitrust
laws. In October 2000, the court denied motions to dismiss that had been filed
by the company and the other defendants. Discovery has commenced in both suits
and the plaintiffs have filed motions to certify a class in both cases.
In May 1999, the Equity Committee ("the Committee") in the Paragon Trade
Brands, Inc., bankruptcy proceeding filed a motion in U.S. Bankruptcy Court for
the Northern District of Georgia for authority to prosecute claims against the
company in the name of the debtor's estate. Specifically, the Committee seeks to
assert that the company breached certain warranties in agreements entered into
between Paragon and the company in connection with Paragon's public offering of
common stock in January 1993. The Committee seeks to recover damages sustained
by Paragon as a result of two patent infringement cases, one brought by Procter
& Gamble and the other by Kimberly-Clark. In September 1999, the court
authorized the Committee to commence an adversary proceeding against the
company. The Committee commenced this proceeding in October 1999, seeking
damages in excess of $420 million against the company.
The company is also a party to various proceedings relating to the cleanup 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 or environmental
matter 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 these proceedings and matters, 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
proceedings or matters could have a material effect on results of operations.
WEYERHAEUSER 74 ANNUAL REPORT 2000
<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 $100 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 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, including those
described in this note, 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 2000 capital expenditures, excluding acquisitions and real estate
and related assets, were $852 million and are expected to approximate $765
million in 2001; however, the 2001 expenditure level could be increased or
decreased as a consequence of future economic conditions.
During the normal course of business, the company's subsidiaries included in
its real estate and related assets segment have entered into certain financial
commitments comprised primarily of guarantees made on $37 million of partnership
borrowings and limited recourse obligations associated with $80 million of sold
mortgage loans. The fair value of the recourse on these loans is estimated to be
$7 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.
NOTE 15. CHARGES FOR INTEGRATION AND CLOSURE OF FACILITIES
- --------------------------------------------------------------------------------
During 2000, the company incurred $56 million of pretax charges related to the
MacMillan Bloedel and Trus Joist acquisitions. These charges included an $8
million accrual recorded in the first quarter for the closure of a Weyerhaeuser
containerboard packaging plant and $48 million of costs incurred throughout the
year for the transition and integration of activities.
During the 1999 first quarter, the company recorded a pretax charge of $94
million for the impairment and disposition of certain long-lived assets. This
charge was related to the company's decision to sell its composite products
business and ply-veneer facility and close a chip export facility. These
facilities, with a net book value of $160 million, were located in Springfield,
Oregon; Moncure, North Carolina; Adel, Georgia; and Coos Bay, Oregon. The
composite products business and ply-veneer facility were sold in the second
quarter of 1999. The export chip facility was closed in the fourth quarter of
1999.
Also in the fourth quarter of 1999, the company incurred $8 million for
integration costs related to the MacMillan Bloedel acquisition.
In 1998, the company took a pretax charge of $71 million for streamlining pulp
and paper operations, the closure of the Longview chlor-alkali facility and
changes to the British Columbia Lumber operations.
WEYERHAEUSER 75 ANNUAL REPORT 2000
<PAGE>
NOTE 16. 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, 2000, and December 26, 1999;
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, 2000, and December 26,
1999.
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.
COMMON SHARES
During 2000, the company repurchased 16,181,600 shares of outstanding common
stock. This completed the repurchase of 12 million shares authorized by the
company's board of directors in February 2000 and began the repurchase of an
additional 10 million shares authorized by the board in June 2000. Also during
2000, the company issued 3,687,745 common shares to the holders of Exchangeable
Shares (described below) who exercised their rights to exchange the shares.
On November 1, 1999, the company issued 20,156,809 common shares to common
shareholders of MacMillan Bloedel as part of the purchase price of that company.
During the months of November and December 1999, the company issued an
additional 4,567,837 common shares to the holders of Exchangeable Shares who
exercised their right to exchange the shares.
A reconciliation of common share activity for the three years ended December 31,
2000, is as follows:
<TABLE>
<CAPTION>
In thousands 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year 226,039 199,009 199,486
New issuance 45 20,157 -
Retraction of exchangeable shares 3,688 4,568 -
Repurchase of common shares (16,182) - (925)
Stock options exercised 308 2,305 448
------------------------------
Balance at end of year 213,898 226,039 199,009
==============================
</TABLE>
EXCHANGEABLE SHARES
Through December 31, 2000, Weyerhaeuser Company Ltd., a wholly owned Canadian
subsidiary of the company, issued 13,565,802 Exchangeable Shares to common
shareholders of MacMillan Bloedel as part of the purchase price of that company.
These Exchangeable Shares are, as nearly as practicable, the economic equivalent
of the company's common shares, i.e., they have the following rights:
. The right to exchange such shares for Weyerhaeuser common shares on a one-
to-one basis.
. The right to receive dividends, on a per-share basis, in amounts that are
the same as, and are payable at the same time as, dividends declared on
Weyerhaeuser common shares.
. The right to vote at all shareholder meetings at which Weyerhaeuser
shareholders are entitled to vote on the basis of one vote per Exchangeable
Share.
. The right to participate upon a Weyerhaeuser liquidation event on a pro-
rata basis with the holders of Weyerhaeuser common shares in the distribution of
assets of Weyerhaeuser.
A reconciliation of Exchangeable Share activity for the years ended December 31,
2000, and December 26, 1999, is as follows:
<TABLE>
<CAPTION>
In thousands 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of year 8,810 -
New issuance 193 13,373
Debentures converted to
exchangeable shares - 5
Retraction (3,688) (4,568)
------------------
Balance at end of year 5,315 8,810
==================
</TABLE>
CUMULATIVE OTHER COMPREHENSIVE EXPENSE
The company's cumulative other comprehensive expense includes:
<TABLE>
<CAPTION>
DECEMBER DECEMBER
Dollar amounts in millions 31, 2000 26, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Foreign currency translation adjustments $ (170) $ (159)
Additional minimum pension liability adjustments (8) (8)
---------------------
$ (178) $ (167)
=====================
</TABLE>
WEYERHAEUSER 76 ANNUAL REPORT 2000
<PAGE>
NOTE 17. STOCK-BASED COMPENSATION PLAN
- --------------------------------------------------------------------------------
The company's Long-Term Incentive Compensation Plan (the "Plan") was approved at
the 1992 Annual Meeting of Shareholders. The Plan provides for the purchase of
the company's common stock at its market price on the date of grant by certain
key officers and other employees of the company and its subsidiaries who are
selected from time to time by the Compensation Committee of the Board of
Directors. No more than 10 million shares may be issued under the Plan. The term
of options granted under the Plan may not exceed 10 years from the grant date.
Grantees are 25 percent vested after one year, 50 percent after two years, 75
percent after three years, and 100 percent after four years.
The company accounts for all options under APB Opinion No. 25 and related
interpretations, under which no compensation has been recognized. Had
compensation costs for the Plan been determined consistent with SFAS No.
123, Accounting for Stock-Based Compensation, net income and earnings per share
would have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income
(in millions):
As reported $ 840 $ 527 $ 294
Pro forma 825 513 279
Basic earnings
per share:
As reported $ 3.72 $ 2.56 $ 1.48
Pro forma 3.66 2.49 1.40
Diluted earnings
per share:
As reported $ 3.72 $ 2.55 $ 1.47
Pro forma 3.65 2.48 1.40
------------------------------
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to options
granted prior to fiscal year 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants:
<TABLE>
<CAPTION>
2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Risk-free interest rate 6.52% 5.00% 5.60%
Expected life 3.8 years 4.5 years 4.3 years
Expected volatility 29.00% 28.19% 27.08%
Expected dividend yield 3.02% 2.90% 3.03%
-------------------------------
</TABLE>
Changes in the number of shares subject to option are summarized as follows:
<TABLE>
<CAPTION>
2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares (in thousands):
Outstanding, beginning of year 7,275 7,230 5,848
Granted 1,945 1,786 1,981
Exercised 366 2,620 512
Forfeited 132 93 87
Expired 1 - -
Acquired - 972 -
------------------------------
Outstanding, end of year 8,721 7,275 7,230
------------------------------
Exercisable, end of year 6,827 5,515 5,312
------------------------------
Weighted average exercise price:
Outstanding, beginning of year $ 49.56 $ 46.15 $ 43.32
Granted 53.00 55.12 52.85
Exercised 44.31 41.96 38.98
Forfeited 52.45 50.03 50.85
Expired 20.56 - 50.85
Outstanding, end of year 50.51 49.56 46.15
Weighted average grant date fair
value of options 12.99 13.14 12.34
------------------------------
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 2000:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTIONS OPTIONS WEIGHTED AVERAGE REMAINING
PRICE RANGE OUTSTANDING EXERCISABLE EXERCISE PRICE CONTRACTUAL LIFE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$25-$39 356 334 $38.19 3.96 years
$40-$49 2,887 2,880 45.98 4.93 years
$50-$69 5,478 3,613 53.70 8.15 years
----------- -----------
8,721 6,827
=========== ===========
</TABLE>
WEYERHAEUSER 77 ANNUAL REPORT 2000
<PAGE>
NOTE 18. ACQUISITIONS
- --------------------------------------------------------------------------------
TJ INTERNATIONAL
On January 6, 2000, the company acquired a controlling interest in TJ
International (TJI), a 51 percent owner and managing partner of Trus Joist
MacMillan (TJM), through a successful tender offer that represented more than 90
percent of the total number of outstanding shares. The company had acquired a 49
percent interest in TJM through its acquisition of MacMillan Bloedel, completed
in November 1999. This acquisition was completed under the terms of an offer by
the company to purchase all outstanding shares of TJI for $42 per share and
stock option cash-outs of certain TJI management personnel. The total purchase
price, including assumed debt of $142 million, was $874 million.
The company accounted for the transaction using the purchase method of
accounting. Accordingly, the assets and liabilities of the acquired company were
included in the Consolidated Balance Sheet and the operating results were
included in the Consolidated Statement of Earnings beginning January 6, 2000.
The purchase price, plus estimated direct transaction costs and expenses, and
the deferred tax effect of applying purchase accounting as of December 31, 2000,
was calculated as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions
- --------------------------------------------------------------
<S> <C>
Purchase price of tender offer and
stock option cash-out $ 732
Direct transaction costs and expenses 20
Deferred tax effect of applying
purchase accounting 117
Less: historical net assets (253)
---------
Total excess costs $ 616
=========
</TABLE>
This calculation of excess purchase price was finalized in January 2001, with
no material adjustments. As of December 31, 2000, the excess purchase price was
allocated as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions
- --------------------------------------------------------------
<S> <C>
Property, plant and equipment $ 288
Goodwill 328
---------
Total excess costs $ 616
=========
</TABLE>
Property, plant and equipment are being depreciated over not more than 20
years. Goodwill is being amortized on a straight-line basis over 40 years.
AUSTRALIAN SAWMILLS AND DISTRIBUTION CAPABILITIES
During the 2000 second quarter, the company completed its acquisition of two
sawmills and related assets in Australia from CSR Ltd. of Australia (CSR).
Weyerhaeuser paid approximately U.S. $48 million in cash and assumed $7 million
in debt to acquire:
. Two sawmills with a combined annual production capacity of 171 million
board feet of lumber. The mills are located in Tumut, New South Wales, and
Caboolture, Queensland.
. CSR's 70 percent stake in Pine Solutions, Australia's largest softwood
timber distributor. RII Weyerhaeuser World Timberfund L.P., a partnership
between Weyerhaeuser and UBS Brinson, acquired a 30 percent ownership of Pine
Solutions last year.
COAST MOUNTAIN HARDWOODS
During the 2000 fourth quarter, the company's wholly owned Canadian subsidiary,
Weyerhaeuser Company Limited, acquired the operations of Coast Mountain
Hardwoods, a subsidiary of Advent International Corp., in British Columbia
for $26 million in cash. The purchase includes a hardwood lumber mill producing
more than 42 million board feet annually; dry kilns with annual capacity of 20
million board feet; an abrasive planer that produces more than 25 million board
feet annually; and five volume-based forest licenses dispersed in the Vancouver,
B.C., forest region.
MACMILLAN BLOEDEL LIMITED
In November 1999, the company completed its acquisition of MacMillan Bloedel
Limited (MB) following the approval of the transaction by the shareholders of MB
and securing all regulatory approvals in the United States, Canada and other
jurisdictions. The total purchase price, including assumed debt of $703 million,
totaled $3,026 million. The company issued 20 million common shares, and its
wholly owned Canadian subsidiary, Weyerhaeuser Company Ltd., issued 14 million
Exchangeable Shares to fund the transaction. At the option of the holder, the
Exchangeable Shares may be exchanged for Weyerhaeuser common shares on a one-
for-one basis. In addition, the company issued replacement options in exchange
for outstanding MB options with the number of
WEYERHAEUSER 78 ANNUAL REPORT 2000
<PAGE>
shares and the exercise price appropriately adjusted by the exchange ratio.
With the exception of $247 million of cash and short-term investments acquired,
this transaction was a noncash investing activity in which the company acquired
assets and assumed liabilities in exchange for common and exchangeable shares as
described above.
The company accounted for the transaction using the purchase method of
accounting. Accordingly, the assets and liabilities of the acquired company were
included in the Consolidated Balance Sheets at December 26, 1999, and December
31, 2000. In addition, the operating results of MB for the period November 1,
1999, through December 26, 1999, and the 2000 fiscal year were included in the
company's Consolidated Statement of Earnings for the periods ended December 26,
1999, and December 31, 2000, respectively.
The purchase price to MB shareholders of $2,323 million was calculated as
follows:
<TABLE>
<S> <C>
Weyerhaeuser common and
exchangeable shares issued
through December 31, 2000 33,767,088
Multiplied by the average
market price (U.S.) $ 67.953
-----------
Value of common and
exchangeable shares issued $ 2,295
Value of outstanding MB
shares not exchanged as of
December 31, 2000 3
Value of replacement options
issued for MB stock options 25
-----------
Total purchase price $ 2,323
===========
</TABLE>
The purchase price to MB shareholders, plus direct transaction costs and
expenses, additional accrued liabilities and the deferred tax effect of applying
purchase accounting over the historical net assets of MB, was calculated as
follows:
<TABLE>
<CAPTION>
Dollar amounts in millions
- --------------------------------------------------------------
<S> <C>
Purchase price to MB shareholders $ 2,323
Direct transaction costs and expenses 18
Additional accrued liabilities 64
Deferred tax effect of applying purchase accounting 381
Less: historical net assets (927)
----------
Total excess costs $ 1,859
==========
</TABLE>
The excess purchase price was allocated as follows:
<TABLE>
<CAPTION>
Dollar amounts in millions
- --------------------------------------------------------------
<S> <C>
Plant, property and equipment,
timber and timberlands, and
investment in equity affiliates $ 1,030
Goodwill 829
----------
Total excess costs $ 1,859
==========
</TABLE>
Property, plant and equipment are being depreciated over not more than 20
years, and timber and timberlands are being amortized over 25 to 40 years.
Goodwill is being amortized on a straight-line basis over 40 years.
The following summarized unaudited pro forma information, assuming this
acquisition occurred at the beginning of the respective fiscal years, is as
follows:
<TABLE>
<CAPTION>
PRO FORMA INFORMATION (unaudited)
- --------------------------------------------------------------------------------
Dollar amounts in millions, except per-share figures 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales and revenues $ 15,259 $ 14,098
Net earnings before the cumulative effect of a change
in an accounting principle and extraordinary items 691 271
Net earnings 599 254
Earnings per share:
Basic 2.56 1.09
Diluted 2.55 1.08
--------------------
</TABLE>
WEYERHAEUSER 79 ANNUAL REPORT 2000
<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 business segments
are timberlands (including logs, chips and timber); wood products (including
softwood lumber, plywood and veneer; composite panels; oriented strand board;
hardwood lumber; treated products; engineered wood; raw materials; and building
materials distribution); pulp, paper and packaging (including pulp, paper,
containerboard, packaging, paperboard and recycling); and real estate and
related assets.
The timber-based businesses involve a high degree of integration among timber
operations; building materials conversion facilities; and pulp, paper,
containerboard and paperboard primary manufacturing and secondary conversion
facilities. This integration includes extensive transfers of raw materials,
semi-finished materials and end products between and among these groups. The
company's accounting policies for segments are the same as those described in
"Note 1. Summary of Significant Accounting Policies." Management evaluates
segment performance based on the contributions to earnings of the respective
segments. Accounting for segment profitability in integrated manufacturing
sites involves allocation of joint conversion and common facility costs based
upon the extent of usage by the respective product lines at that facility.
Transfer of products between segments is accounted for at current market values.
WEYERHAEUSER 80 ANNUAL REPORT 2000
<PAGE>
An analysis and reconciliation of the company's business segment information to
the respective information in the consolidated financial statements is as
follows:
<TABLE>
<CAPTION>
For the three-year period ended
December 31, 2000
Dollar amounts in millions 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to and revenues from unaffiliated
customers:
Timberlands $ 1,091 $ 667 $ 651
Wood products 6,813 5,520 4,623
Pulp, paper and packaging 6,519 5,175 4,625
Real estate and related assets 1,377 1,236 1,192
Corporate and other 180 182 151
-------------------------------
$ 15,980 $ 12,780 $ 11,242
===============================
Intersegment sales:
Timberlands $ 924 $ 537 $ 488
Wood products 277 249 200
Pulp, paper and packaging 152 122 75
Corporate and other 20 11 13
-------------------------------
1,373 919 776
-------------------------------
Total sales and revenues 17,353 13,699 12,018
Intersegment eliminations (1,373) (919) (776)
-------------------------------
$ 15,980 $ 12,780 $ 11,242
===============================
Approximate contribution (charge) to earnings:(1)
Timberlands $ 576 $ 535 $ 487
Wood products 206 470 183
Pulp, paper and packaging 938 310 150
Real estate and related assets 259 190 124
Corporate and other (321) (272) (225)
-------------------------------
1,658 1,233 719
Interest expense(1) (422) (337) (324)
Less capitalized interest 87 74 68
-------------------------------
Earnings before income taxes and the cumulative
effect of a change in an accounting principle 1,323 970 463
Income taxes (483) (354) (169)
-------------------------------
Earnings before the cumulative effect of a
change in an accounting principle 840 616 294
Cumulative effect of a change in an
accounting principle - (89) -
-------------------------------
$ 840 $ 527 $ 294
===============================
Depreciation, amortization and fee stumpage:
Timberlands $ 84 $ 51 $ 55
Wood products 263 181 188
Pulp, paper and packaging 452 373 348
Real estate and related assets 6 6 5
Corporate and other 54 29 20
-------------------------------
$ 859 $ 640 $ 616
===============================
Noncash charges for integration and closure
of facilities:
Wood products $ 34 $ 99 $ 25
Pulp, paper and packaging 15 - 42
Corporate and other 7 3 4
-------------------------------
$ 56 $ 102 $ 71
===============================
Equity in income/(loss) from equity affiliates
and unconsolidated entities:
Timberlands $ 11 $ 3 $ 1
Wood products - 4 -
Pulp, paper and packaging 48 19 27
Real estate and related assets 76 39 30
Corporate and other (6) - -
-------------------------------
$ 129 $ 65 $ 58
===============================
Capital expenditures (including acquisitions):
Timberlands $ 174 $ 104 $ 87
Wood products 1,139 143 212
Pulp, paper and packaging 418 279 776
Real estate and related assets 17 11 2
Corporate and other 30 29 32
-------------------------------
$ 1,778 $ 566 $ 1,109
===============================
Investments in and advances to equity affiliates
and unconsolidated entities:
Timberlands $ 280 $ 270 $ 218
Wood products 3 406 -
Pulp, paper and packaging 285 274 264
Real estate and related assets (less reserves) 205 124 120
Corporate and other 11 - -
-------------------------------
$ 784 $ 1,074 $ 602
===============================
Assets:
Timberlands $ 2,751 $ 2,212 $ 1,675
Wood products 4,839 3,788 2,129
Pulp, paper and packaging 7,164 7,198 6,346
Real estate and related assets 2,035 1,939 1,900
Corporate and other 1,910 3,641 1,164
-------------------------------
18,699 18,778 13,214
Less: Intersegment eliminations (504) (439) (380)
-------------------------------
$ 18,195 $ 18,339 $ 12,834
===============================
(1) Interest expense of $16 million, $14 million and $17 million in 2000, 1999
and 1998, respectively, is included in the determination of "approximate
contribution to earnings" and excluded from "interest expense" for financial
services businesses.
</TABLE>
WEYERHAEUSER 81 ANNUAL REPORT 2000
<PAGE>
NOTE 20. GEOGRAPHICAL AREAS
- --------------------------------------------------------------------------------
The company attributes sales to and revenues from unaffiliated customers in
different geographical areas on the basis of the location of the customer.
Export sales from the United States consist principally of pulp, paperboard,
logs, lumber and wood chips to Japan; containerboard, pulp, lumber and recycling
material to other Pacific Rim countries; and pulp and hardwood lumber to Europe.
Long-lived assets consist of goodwill, timber and timberlands and property and
equipment used in the generation of revenues in the different geographical
areas.
Selected information related to the company's operations by geographical area is
as follows:
<TABLE>
<CAPTION>
For the three-year period ended December 31, 2000
Dollar amounts in millions 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to and revenues from unaffiliated
customers:
United States $ 12,679 $ 10,365 $ 9,322
Japan(1) 770 688 652
Canada 1,648 823 526
Europe 533 457 413
Other foreign countries 350 447 329
-------------------------------
$ 15,980 $ 12,780 $ 11,242
===============================
Export sales from the United States:
Japan(1) $ 585 $ 548 $ 539
Other 928 744 661
-------------------------------
$ 1,513 $ 1,292 $ 1,200
===============================
Earnings before income taxes and cumulative
effect of a change in an accounting principle:
United States $ 1,051 $ 778 $ 413
Foreign entities 272 192 50
-------------------------------
$ 1,323 $ 970 $ 463
===============================
Long-lived assets:
United States $ 8,247 $ 7,081 $ 6,663
Canada 3,221 3,247 1,353
Other foreign countries 109 65 26
-------------------------------
$ 11,577 $ 10,393 $ 8,042
===============================
(1) 1998 export sales to Japan include only one month's sales of newsprint due
to the company's change in ownership of its newsprint subsidiary from 80 percent
to 50 percent in February.
</TABLE>
WEYERHAEUSER 82 ANNUAL REPORT 2000
<PAGE>
NOTE 21. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollar amounts in millions FIRST SECOND THIRD FOURTH
except per-share figures QUARTER QUARTER QUARTER QUARTER YEAR
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales:
2000 $ 3,925 $ 4,189 $ 3,824 $ 4,042 $15,980
1999 2,787 3,171 3,240 3,582 12,780
Operating income:
2000 433 337 363 358 1,491
1999 119 304 409 307 1,139
Earnings before income taxes
and cumulative effect of a
change in an accounting
principle:
2000 387 317 313 306 1,323
1999 65 258 373 274 970
Net earnings:
2000 244 203 199 194 840
1999 (48) 164 237 174 527
Net earnings per share:
Basic
2000 1.04 .89 .90 .88 3.72
1999 (.24) .82 1.18 .79 2.56
Diluted
2000 1.04 .89 .90 .88 3.72
1999 (.24) .81 1.18 .78 2.55
Dividends per share:
2000 .40 .40 .40 .40 1.60
1999 .40 .40 .40 .40 1.60
Market prices-high/low:
2000 74 1/2-47 7/16
64 3/4-42 5/8
51 11/16-37 1/4
52 3/8-36 1/16
74 1/2-36 1/16
1999 62-49 9/16
73 15/16-55 9/16
69 3/4-54 13/16
72 15/16-54 9/16
73 15/16-49 9/16
----------------------------------------------------
</TABLE>
WEYERHAEUSER 83 ANNUAL REPORT 2000
<PAGE>
NOTE 22. HISTORICAL SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollar amounts in
except per-share figures 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE:
Basic net earnings (loss)
from continuing operations,
before extraordinary item
and effect of accounting
changes $ 3.72 2.99 1.48 1.72 2.34
Extraordinary item $ - - - - -
Effect of accounting changes $ - (.43)(2) - - -
--------------------------------------------------
Basic net earnings (loss) $ 3.72 2.56 1.48 1.72 2.34
==================================================
Diluted net earnings (loss)
from continuing operations,
before extraordinary item
and effect of accounting
changes $ 3.72 2.98 1.47 1.72 2.33
Extraordinary item $ - - - - -
Effect of accounting changes $ - (.43)(2) - - -
--------------------------------------------------
Diluted net earnings (loss) $ 3.72 2.55 1.47 1.72 2.33
==================================================
Dividends paid $ 1.60 1.60 1.60 1.60 1.60
Shareholders' interest
(end of year) $ 31.17 30.54 22.74 23.30 23.21
FINANCIAL POSITION:
Total assets:
Weyerhaeuser $ 16,160 16,400 10,934 11,071 10,968
Real estate and related
assets $ 2,035 1,939 1,900 2,004 2,628
--------------------------------------------------
$ 18,195 18,339 12,834 13,075 13,596
==================================================
Long-term debt (net of
current portion):
Weyerhaeuser:
Long-term debt $ 3,974 3,945 3,397 3,483 3,546
Capital lease obligations $ 2 1 2 2 2
Convertible
subordinated debentures $ - - - - -
Limited recourse
income debenture $ - - - - -
--------------------------------------------------
$ 3,976 3,946 3,399 3,485 3,548
==================================================
Real estate and related
assets:
Long-term debt $ 200 357 580 682 814
==================================================
Shareholders' interest $ 6,832 7,173 4,526 4,649 4,604
Percent earned on
shareholders' interest 12.0% 9.0% 6.4% 7.4% 10.2%
OPERATING RESULTS:
Net sales and revenues:
Weyerhaeuser $ 14,603 11,544 10,050 10,611 10,568
Real estate and related
assets $ 1,377 1,236 1,192 1,093 1,009
--------------------------------------------------
$ 15,980 12,780 11,242 11,704 11,577
==================================================
Net earnings (loss) from
continuing operations before
extraordinary item and effect
of accounting changes:
Weyerhaeuser $ 676(1) 495 214(3) 271(4) 434
Real estate and related
assets $ 164 121 80 71 29
--------------------------------------------------
$ 840 616 294 342 463
Extraordinary item $ - - - - -
Effect of accounting changes $ - (89)(2) - - -
--------------------------------------------------
Net earnings (loss) $ 840 527 294 342 463
==================================================
STATISTICS (UNAUDITED):
Number of employees 47,244 44,770 36,309 35,778 39,020
Salaries and wages $ 2,142 1,895 1,695 1,706 1,781
Employee benefits $ 503 392 351 355 370
Total taxes $ 823 579 437 478 557
Timberlands (thousands of
acres):
U.S. and Canadian fee
ownership 5,938 5,914 5,099 5,171 5,326
Long-term license
arrangements 31,648 32,786 27,002 23,715 22,863
Number of shareholder
accounts at year-end:
Common 17,437 18,732 19,559 20,981 22,528
Exchangeable 1,736 1,590 - - -
Weighted average shares
outstanding (thousands) 225,419 205,599 198,914 198,967 198,318
--------------------------------------------------
</TABLE>
WEYERHAEUSER 84 ANNUAL REPORT 2000
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3.93 2.86 2.58 1.83 (.50) 1.87
- - .25(6) - - -
- - - - (.30)(8) -
- -----------------------------------------------------------------------
3.93 2.86 2.83 1.83 (.80) 1.87
=======================================================================
3.92 2.86 2.56 1.82 (.50) 1.87
- - .25(6) - - -
- - - - (.30)(8) -
- -----------------------------------------------------------------------
3.92 2.86 2.81 1.82 (.80) 1.87
=======================================================================
1.50 1.20 1.20 1.20 1.20 1.20
22.57 20.86 19.34 17.85 17.25 19.21
10,359 9,750 9,087 8,566 7,551 7,556
2,894 3,408 3,670 9,720 9,435 8,800
- -----------------------------------------------------------------------
13,253 13,158 12,757 18,286 16,986 16,356
=======================================================================
2,983 2,713 2,998 2,659 2,195 2,168
2 - - - - 7
- - - 193 193 193
- - - 188 204 204
- -----------------------------------------------------------------------
2,985 2,713 2,998 3,040 2,592 2,572
=======================================================================
1,608 1,873 2,086 2,411 2,421 2,637
=======================================================================
4,486 4,290 3,966 3,646 3,489 3,864
18.2% 14.3% 15.2% 10.4% (4.4)% 9.8%
11,318 9,714 8,726 8,101 7,516 7,784
919 1,117 1,230 1,522 1,606 1,619
- -----------------------------------------------------------------------
12,237 10,831 9,956 9,623 9,122 9,403
=======================================================================
981 576 459 332 (25) 340
(182)(5) 13 68 40 (76) 54
- -----------------------------------------------------------------------
799 589 527 372 (101)(7) 394
- - 52(6) - - -
- - - - (61)(8) -
- -----------------------------------------------------------------------
799 589 579 372 (162) 394
=======================================================================
39,558 36,665 36,748 39,022 38,669 40,621
1,779 1,610 1,585 1,580 1,476 1,531
408 357 347 323 321 318
736 618 577 443 173 446
5,302 5,587 5,512 5,592 5,488 5,592
22,866 17,849 17,845 18,828 13,491 13,491
23,446 24,131 25,282 26,334 26,937 28,187
- - - - - -
203,525 205,543 204,866 203,373 201,578 203,673
- -----------------------------------------------------------------------
(1) 2000 results reflect charges of $130 million less related tax effect of $48
million, or $82 million, for settlement of hardboard siding claims.
(2) 1999 results reflect charges of $244 million less related tax effect of $90
million, or $154 million, for the cumulative effect of a change in an accounting
principle, impairment of long-lived assets to be disposed of and closure costs
related to the MB acquisition.
(3) 1998 results reflect nonrecurring charges of $71 million less related tax
effect of $26 million, or $45 million.
(4) 1997 results reflect net nonrecurring charges of $13 million less related
tax effect of $4 million, or $9 million.
(5) 1995 results reflect a charge for disposal of certain real estate assets of
$290 million less related tax effect of $106 million, or $184 million.
(6) 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.
(7) 1991 results reflect restructuring and other charges of $445 million less
related tax effect of $162 million, or $283 million.
(8) 1991 effects of accounting changes include a net after-tax charge of $61
million resulting from implementation of two financial accounting standards.
</TABLE>
WEYERHAEUSER 85 ANNUAL REPORT 2000
<PAGE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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