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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 29, 1996 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 1-4825
WEYERHAEUSER COMPANY
A Washington Corporation (IRS Employer
Identification No.
91-0470860)
Tacoma, Washington 98477
Telephone (206) 924-2345
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
- ------------------------------- -------------------------
Common Shares ($1.25 par value) Chicago Stock Exchange
New York Stock Exchange
Pacific Stock Exchange
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No___.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ].
As of February 21, 1997, 198,549,288 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 $9,182,904,570.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year
ended December 29, 1996 are incorporated by reference into Parts I, II
and IV.
Portions of the Notice of 1997 Annual Meeting of Shareholders and
Proxy Statement are incorporated by reference into Part III.
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 12
PART II
Item 5. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Information 13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 13
PART III
Item 10. Directors and Executive Officers of the Registrant 14
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 16
Report of Independent Public Accountants on
Financial Statement Schedules 17
Schedule II Valuation and Qualifying Accounts 18
2
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 1. Business
- -----------------
Weyerhaeuser Company (the company) was incorporated in the state of
Washington in January 1900, as Weyerhaeuser Timber Company. It is
principally engaged in growing and harvesting of timber and the
manufacture, distribution and sale of forest products, real estate
development and construction, and financial services. Its principal
business segments include timberlands and wood products; pulp, paper
and packaging; real estate; and financial services.
Information with respect to the description and general development of
the company's business, included on pages 42 through 47, Description
of the Business of the Company, contained in the company's 1996 Annual
Report to Shareholders, is incorporated herein by reference.
Financial information with respect to industry segments, included in
Note 18 of Notes to Financial Statements contained in the company's
1996 Annual Report to Shareholders, is incorporated herein by
reference.
Timberlands and Wood Products
The company owns approximately 5.3 million acres of commercial
forestland in the United States (61% in the South and 39% in the
Pacific Northwest), most of it highly productive and located
extremely well to serve both domestic and international markets. The
company has, additionally, long-term license arrangements in Canada
covering approximately 22.9 million acres (of which 15 million acres
are considered to be productive forestland). The combined total
timber inventory on these U.S. and Canadian lands is approximately
266 million cunits (a cunit is 100 cubic feet of solid wood), of which
approximately 75% is softwood species. The relationship between cubic
measurement and the quantity of end products that may be produced from
timber varies according to the species, size and quality of timber,
and will change through time as the mix of these variables changes.
To sustain the timber supply from its fee timberlands, the company is
engaged in extensive planting, suppression of nonmerchantable species,
precommercial and commercial thinning, fertilization and operational
pruning, all of which increase the yield from its fee timberland
acreage.
Inventory Thousands of Acres at December 29, 1996
--------- -------------------------------------------
Millions Fee Long- term License
of Cunits Ownership Leases Arrangements Total
--------- --------- ---------- ------------ -------
Geographic Area
United States
West 57 2,077 -- -- 2,077
South 35 3,249 229 -- 3,478
--------- --------- ---------- ------------ -------
Total United
States 92 5,326 229 -- 5,555
--------- --------- ---------- ------------ -------
Canada
Alberta 91 -- -- 6,704 6,704
British
Columbia 10 38 -- 3,800 3,838
Saskatchewan 73 -- -- 12,359 12,359
--------- --------- ---------- ------------ -------
Total Canada 174 38 -- 22,863 22,901
--------- --------- ---------- ------------ -------
TOTAL 266 5,364 229 22,863 28,456
========= ========= ========== ============ =======
Thousands of Acres
Thousands of Acres Millions of -----------------------
------------------ Seedlings Stocking
Harvested Planted Planted Control Fertilization
--------- ------- ----------- -------- -------------
1996 Activity
West 38.0 42.6 21.7 4.0 48.4
South 51.9 45.2 25.5 .5 223.1
--------- ------- ----------- -------- ------------
Total United
States 89.9 87.8 47.2 4.5 271.5
========= ======= =========== ======== =============
3
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 1. Business - Continued
- -----------------------------
The company's wood products businesses produce and sell softwood
lumber, plywood and veneer; composite panels; oriented strand board;
hardwood lumber and plywood; doors; treated products; logs; chips and
timber. These products are sold primarily through the company's own
sales organizations. Building materials are sold to wholesalers,
retailers and industrial users.
Sales volumes by major product class are as follows (millions):
1996 1995 1994 1993 1992
----- ----- ----- ----- -----
Raw materials - cubic ft. 577 535 564 547 545
Softwood lumber - board ft. 4,745 4,515 4,402 4,230 3,440
Softwood plywood and veneer -
sq. ft. (3/8") 2,172 2,324 2,685 2,435 2,227
Composite panels - sq. ft. (3/4") 604 648 660 626 590
Oriented strand board -
sq. ft. (3/8") 2,083 1,931 1,803 1,672 1,484
Hardboard - sq. ft. (7/16") 193 201 167 140 133
Hardwood lumber - board ft. 349 293 254 240 218
Engineered wood products -
lineal ft. 116 128 71 47 --
Hardwood doors (thousands) 652 648 617 556 514
Selected product prices:
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
Export logs (#2 sawlog-
bark on) - $/MBF
Cascade - Douglas fir $1,330 $1,365 $1,168 $1,224 $ 930
Coastal - Hemlock 611 750 804 831 562
Coastal - Douglas fir 1,246 1,217 1,085 1,104 858
Lumber (common) - $/MBF
2x4 Douglas fir (kiln dried) 422 332 408 418 295
2x4 Douglas fir (green) 386 308 364 383 261
2x4 Southern yellow
pine (kiln dried) 422 364 419 397 285
2x4 Spruce-pine-fir
(kiln dried) 351 251 343 334 231
Plywood (1/2" CDX) - $/MSF
West 307 331 334 321 281
South 256 301 298 282 249
Oriented strand board
(7/16"-24/16) North Central
price - $/MSF 184 245 265 236 217
4
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 1. Business - Continued
- -----------------------------
Pulp, Paper and Packaging
The company's pulp, paper and packaging businesses include: Pulp,
which manufactures chemical wood pulp for world markets; Newsprint,
which manufactures newsprint at the company's North Pacific Paper
Corporation mill and markets it to West Coast and Japanese newspaper
publishers; Paper, which manufactures and markets a range of both
coated and uncoated fine papers through paper merchants and printers;
Containerboard Packaging, which manufactures linerboard and
corrugating medium, which is primarily used in the production of
corrugated packaging, and manufactures and markets industrial and
agricultural packaging; Paperboard, which manufactures and markets
bleached paperboard, used for production of liquid containers, to West
Coast and Pacific Rim customers; Recycling, which operates an
extensive wastepaper collection system and markets it to company mills
and worldwide customers; and Chemicals, which produces chlorine,
caustic and tall oil, which are used principally by the company's
pulp, paper and packaging operations. In 1993, the Personal Care
Products business, which manufactured disposable diapers marketed
under the private-label brands of many of North America's largest
retailers was sold through an initial public offering of stock.
Sales volumes by major product class are as follows (thousands):
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
Pulp - air-dry metric tons 1,868 2,060 2,068 1,886 1,238
Newsprint - metric tons 629 663 638 609 575
Paper - tons 1,007 1,006 998 990 966
Paperboard - tons 205 230 201 222 238
Containerboard - tons 346 259 254 290 318
Packaging - MSF 42,323 34,342 34,483 31,386 29,414
Recycling - tons 2,011 1,467 985 851 778
Personal care products -
standard cases -- -- -- -- 17,017
Selected product prices (per ton):
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Pulp - NBKP-air-dry metric-U.S. $579 $883 $566 $445 $551
Paper - uncoated free sheet-U.S. 745 946 617 627 630
Linerboard - 42 lb.-Eastern U.S. 367 505 367 295 343
Newsprint - metric - West Coast U.S. 636 662 460 435 433
OCC 53 128 78 27 30
ONP 18 99 46 16 13
5
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 1. Business - Continued
- -----------------------------
Real Estate
The company, through its real estate subsidiary, Weyerhaeuser Real
Estate Company, is engaged primarily in developing single-family
housing and residential lots for sale, including the development of
master-planned communities. Operations are mainly concentrated in
selected metropolitan areas in Southern California, Nevada,
Washington, Texas, Maryland and Virginia.
Volumes sold:
1996 1995 1994 1993 1992
----- ----- ----- ----- -----
Single-family units (1) 2,773 3,114 3,934 3,879 3,917
Multi-family units (1) 234 117 475 1,141 60
Lots (1) 2,522 1,628 2,157 1,372 2,762
Commercial space
(thousand sq. ft.) 569 -- 389 88 142
(1) Includes one-half of joint venture sales.
Financial Services
The company, through its financial services subsidiary, Weyerhaeuser
Financial Services, Inc., is involved in a range of financial
services. The principal operating unit is Weyerhaeuser Mortgage
Company, which has origination offices in 19 states, with a servicing
portfolio of $4.4 billion involving approximately 46,000 loans
throughout the country. Mortgages are resold in the secondary market
through mortgage-backed securities to financial institutions and
investors. Through its insurance services organization, it also
offers a broad line of property, life and disability insurances.
The company has signed an agreement for the sale of its wholly owned
subsidiary, Weyerhaeuser Mortgage Company. This sale is expected to
close in the second quarter of 1997, subject to regulatory approvals
and other contingencies. GNA Corporation, a subsidiary that
specialized in the sale of life insurance annuities and mutual funds
to the customers of financial institutions, was sold in April 1993.
Republic Federal Savings & Loan Association, a subsidiary that
operated in Southern California, was dissolved in 1992.
Volume information (millions):
1996 1995 1994 1993 1992
------- ------- ------- ------ -------
Loan servicing portfolio $ 4,354 $10,952 $11,300 $ 8,400 $ 9,800
Single-family
loan originations 3,436 2,196 2,763 4,405 3,380
6
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 2. Properties
- -------------------
Timberlands and Wood Products
Facilities and annual production are summarized by major product class
as follows (millions):
Production Number of
Capacity Facilities 1996 1995 1994 1993 1992
---------- ---------- ----- ----- ----- ----- -----
Logs - cubic ft. -- -- 912 914 671 673 749
Softwood lumber -
board ft. 3,765 28 3,695 3,419 3,249 3,135 2,782
Softwood plywood
and veneer -
sq. ft. (3/8") 1,181 7 1,243 1,292 1,249 1,188 1,125
Composite panels
- sq. ft. (3/4") 585 5 535 583 594 564 540
Oriented strand
board -
sq. ft. (3/8") 2,105 6 1,687 1,654 1,568 1,443 1,234
Hardboard - sq.
ft. -(7/16") -- -- 86 124 122 120 118
Hardwood lumber
- board ft. 409 11 333 278 229 221 210
Hardwood doors
(thousands) 717 1 646 643 597 522 469
Principal manufacturing facilities are located as follows:
Softwood lumber and plywood Hardwood lumber
Alabama, Arkansas, Georgia, Arkansas, Oklahoma, Oregon,
Louisiana, Mississippi, Pennsylvania, Washington and
North Carolina, Oklahoma, Oregon, Wisconsin
Washington and Alberta, British
Columbia and Saskatchewan, Canada Hardwood doors
Wisconsin
Composite panels
Georgia, North Carolina, Oregon
and Wisconsin
Oriented strand board
Michigan, North Carolina, West
Virginia and Alberta, Canada
7
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 2. Properties - Continued
- -------------------------------
Pulp, Paper and Packaging
Facilities and annual production are summarized by major product class
as follows (thousands):
Produc-
tion Number
Capa- of Faci-
city lities 1996 1995 1994 1993 1992
-------- -------- ------ ------ ------ ------ ------
Pulp - air-dry
metric tons 2,145 8 2,004 2,159 2,041 2,096 1,506
Newsprint -
metric tons 700 1 631 687 651 618 588
Paper - tons 1,076 5 1,034 1,060 982 1,007 971
Paperboard - tons 220 1 206 229 189 217 229
Containerboard
- tons 2,440 4 2,331 2,329 2,357 2,269 2,240
Packaging - MSF 48,000 45 44,471 36,041 36,020 32,795 31,040
Recycling - tons -- 40 3,428 2,754 2,042 1,847 1,692
Personal care
products -
standard cases -- -- -- -- -- -- 16,743
Principal manufacturing facilities are located as follows:
Pulp Containerboard
Georgia, Mississippi, North North Carolina, Oklahoma and
Carolina, Washington and Oregon
Alberta, British Columbia and
Saskatchewan, Canada Packaging
Arizona, California,
Newsprint Connecticut, Florida, Georgia,
Washington Hawaii, Illinois, Indiana, Iowa,
Kentucky, Maryland, Michigan,
Paper Minnesota, Mississippi,
Mississippi, North Carolina, Missouri, Nebraska, New Jersey,
Washington, Wisconsin and New York, North Carolina, Ohio,
Saskatchewan, Canada Oregon, Tennessee, Texas,
Virginia, Washington and
Paperboard Wisconsin
Washington
Recycling
Arizona, California, Colorado,
Florida, Georgia, Idaho,
Illinois, Indiana, Iowa, Kansas,
Maryland, Minnesota, Nebraska,
North Carolina, Oklahoma,
Oregon, Pennsylvania, Tennessee,
Texas, Utah, Virginia,
Washington, West Virginia and
Alberta and British Columbia,
Canada
Chemicals
Georgia, Mississippi, North
Carolina, Oklahoma, Washington
and Saskatchewan, Canada
8
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 2. Properties - Continued
- -------------------------------
Real Estate
The company has six primary facilities that operate in the following
product lines and locations:
Single-family housing Commercial development
California, Maryland, Nevada, California, Florida, Maryland
Texas, Virginia and Washington and Washington
Residential land development
Arkansas, California, Florida,
Georgia, Maryland, Nevada, North
Carolina, Texas, Virginia and
Washington
Financial Services
The company has four primary facilities that operate in the following
product lines and locations:
Mortgage banking and insurance Real estate investments
Branches in 19 states with major Arizona, California, Colorado,
concentrations in California, Nevada, Oregon and Washington
Hawaii, Nevada and Texas
Mortgage securities
California
9
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 3. Legal Proceedings
- --------------------------
Trial began in May 1992 in a federal income tax refund case that the
company filed in July 1989 in the United States Claims Court. The
complaint seeks a refund of federal income taxes that the company
contends it overpaid in 1977 through 1983. The alleged overpayments
are the result of the disallowance of certain timber casualty losses
and certain deductions claimed by the company arising from export
transactions. The refund sought was approximately $29 million, plus
statutory interest from the dates of the alleged overpayments. The
company settled the portion of the case relating to export
transactions and received a tax refund of approximately $10 million,
plus statutory interest. In September 1994, the United States Court
of Federal Claims issued an opinion on the casualty loss issues which
will result in the allowance of additional tax refunds of
approximately $2 million, plus statutory interest. Both the company
and the government appealed the decision. On August 2, 1996, the
Court of Appeals for the Federal Circuit issued its opinion on the
remaining timber casualty loss issues, ruling in favor of the company
on both the company's appeal and the government's appeal. The United
States Supreme Court denied the government's request for certiorari on
January 21, 1997.
On March 6, 1992, the company filed a complaint in the Superior Court
for King County, Washington, against a number of insurance companies.
The complaint seeks a declaratory judgment that the insurance
companies named as defendants are obligated under the terms and
conditions of the policies sold by them to the company to defend the
company and to pay, on the company's behalf, certain claims asserted
against the company. The claims relate to alleged environmental
damage to third-party sites and to some of the company's own property
to which allegedly toxic material was delivered or on which allegedly
toxic material was placed in the past. Since December 1992, the
company has agreed to settlements with all but one of the defendants.
The remaining defendant provided first layer excess coverage during a
three year period. That defendant's liability on groups of sites is
being tried in phases. Two trials against the remaining defendant,
affecting nine sites, began in October 1994 and February 1996 and
resulted in verdicts assigning 100 percent clean-up responsibility to
the defendant on three sites, partial responsibility on three others
and a finding of no liability as to the remaining three. The trial
court has ruled that the primary policy has been exhausted and imposed
an obligation on the remaining defendant to provide a defense on one
of the sites, a ruling that may be expanded to include other sites.
After voluntary dismissal on 6 sites, trial for the remaining 10 sites
has been set for June 1997.
The company received from the Lane County, Oregon Regional Air
Pollution Control Authority (LRAPA) a draft Notice of Violation which
seeks penalties for alleged Prevention of Significant Deterioration
(PSD) violations at the company's Springfield, Oregon, particleboard
operations. LRAPA informed the company in July 1995 that it will
withdraw its draft Notice of Violation (NOV) and will not seek fines
or penalties. On September 15, 1995, however, LRAPA issued a revised
draft NOV (the Revised Draft NOV), which alleged that the Springfield
particleboard facility had violated a condition of its Air Contaminant
Discharge Permit. The allegations in the Revised Draft NOV are based
upon the same facts and circumstances relied upon by LRAPA in the
prior draft NOV. The company has contested LRAPA's issuance of the
Revised Draft NOV. On June 8, 1996, the company and LRAPA entered
into a Stipulated Final Order (SFO) to resolve all past and ongoing
alleged PSD issues, contested matters and alleged violations
associated with extended hours of operation at the Springfield
particleboard facility. In exchange for a full resolution of all past
and ongoing contested matters, the company agreed to pay a total civil
penalty of $19.5 thousand, of which $7.5 thousand was paid directly to
LRAPA. The remaining $12 thousand civil penalty was suspended. The
company also agreed to implement a Supplemental Environmental Project
(SEP) consisting of the funding of the preparation of a nitrogen
oxides (Nox) emission inventory for Lane County. The emission
inventory will be conducted by an outside environmental consultant at
a cost not to exceed $40 thousand.
The company conducted a review of its 10 major pulp and paper
facilities to evaluate the facilities' compliance with federal PSD
regulations. The results of the reviews were disclosed to seven state
agencies and the Environmental Protection Agency (EPA) during 1994 and
1995. At the Cosmopolis, Washington, Columbus, Mississippi, and Flint
River, Georgia, facilities, the state regulatory agencies agreed with
the company's conclusions regarding the status of each facility. For
the Cosmopolis facility, the Washington Department of Ecology agreed
the changes made at the facility did not require PSD review. For the
Columbus and Flint River facilities, the states concluded the original
PSD permits issued to the facilities require updating. The company
will update emissions data for the Columbus and Flint River facilities
as part of the Title V permitting process. No penalties were assessed
for the issues identified at Columbus and Flint River. Agreements
resolving the alleged PSD issues have been reached with the states of
Washington, Oklahoma and North Carolina, as noted below. No issues
were identified at the company's Rothschild, Wisconsin, facility. In
April 1995, EPA Region X issued a NOV to the company and to North
Pacific Paper Corporation (NORPAC), a joint venture in which the
company has an 80 percent ownership interest. The NOV addresses
alleged PSD violations at NORPAC's Longview, Washington, newsprint
manufacturing facility. A settlement resolving alleged PSD issues at
the Longview/NORPAC complex was reached with the State of Washington
on January 26, 1996. On November 14, 1995, the company entered into a
settlement with the State of Oklahoma to resolve alleged PSD
violations at the company's Valliant, Oklahoma, containerboard
manufacturing facility. The company also entered into Special Orders
by Consent with the State of North Carolina to resolve alleged PSD
issues at the New Bern, North Carolina, pulp mill and the Plymouth,
North Carolina, pulp and paper complex. No decision has been made by
the LRAPA concerning alleged PSD and permit violations at the
company's Springfield, Oregon, containerboard manufacturing facility.
10
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 3. Legal Proceedings - Continued
- --------------------------------------
The Washington Department of Ecology investigated the accidental
release of chorine, chlorine dioxide and noncondensable gasses in July
1994 at the company's pulp mill in Longview, and issued a $10 thousand
penalty for the chlorine release and a $5 thousand penalty for the
noncondensable gasses release which have been paid by the company. In
June 1995, EPA issued an Administrative Complaint against the company,
seeking penalties of $225 thousand and alleging a failure to timely
report the chlorine release. The company settled the matter on
January 21, 1997, agreeing to pay a penalty of $68 thousand and to
perform supplemental environmental projects in the amount of
$110 thousand. On September 25, 1996, the company learned that the
EPA has commenced a preliminary criminal investigation of the
incident, and in late November learned that the investigation had been
discontinued.
The Washington Department of Ecology issued a $10 thousand penalty to
the company because of three accidental chlorine releases which
occurred at the company's pulp mill in Longview on March 18, 1996,
which has been paid. The EPA is also investigating.
The Washington Department of Ecology has issued a notice of violation
because of an accidental spill of an estimated 8,700 gallons of crude
sulfate turpentine on January 27, 1997, at the company's pulp and
paper operations in Longview. The EPA is also investigating.
On April 9, 1993, the company entered into a SFO with the Oregon
Department of Environmental Quality (DEQ) for alleged air emissions in
excess of permit levels and PSD noncompliance at the company's North
Bend, Oregon, containerboard facility. The SFO established a
compliance schedule for installing control technology. A Supplemental
SFO assessed a $247 thousand initial penalty and a $500 per day
stipulated penalty until compliance was demonstrated. On November 15,
1995, DEQ issued a letter, indicating that the company had satisfied
the requirements of the SFO and Supplemental SFO. No further
penalties were assessed against the company. Termination of the SFO
will occur after issuance of the federal air operating permit to the
North Bend containerboard facility. The North Bend containerboard
facility received its federal air operating permit on July 1, 1996.
On June 20, 1996, the Wisconsin Department of Natural Resources (WDNR)
issued a NOV for alleged air violations at the Marshfield, Wisconsin,
wood products manufacturing facility. No penalty was assessed in the
NOV. Since the WDNR lacks an administrative mechanism to assess
penalties for alleged regulatory non-compliance, it referred the NOV
to the Wisconsin Department of Justice for enforcement action on
July 2, 1996. The Wisconsin Department of Justice has accepted the
referral.
On October 2, 1996, the WDNR conducted an inspection of a building
demolition project at the company's Marshfield, Wisconsin facility.
The WDNR noted several potential non-compliance issues in the work
performed by the asbestos abatement subcontractor retained for the
project. Upon learning of the issues observed by WDNR, the company
removed the asbestos abatement subcontractor from the plantsite. The
WDNR and EPA Region V are reviewing the work performed to evaluate
whether an enforcement action should be brought against the asbestos
abatement subcontractor, the general contractor, and/or the company.
On November 2, 1992, an action was filed against the company in the
Circuit Court for the First Judicial District of Hinds County,
Mississippi, on behalf of a purported class of riparian property
owners in Mississippi and Alabama whose properties are located on the
Tennessee Tombigbee Waterway, Aliceville Lake, Cedar Creek and the
Magoway Creek. The complaint seeks $1 billion in compensatory and
punitive damages for diminution in property value, personal injuries
and mental anguish allegedly resulting from the discharge of purported
hazardous substances, including dioxins and furans, by the company's
pulp and paper mill in Columbus, Mississippi, and the alleged
fraudulent concealments of such discharge. The complaint also seeks
an injunction prohibiting future releases and the removal of hazardous
substances allegedly released in the past. On August 20, 1993, a
companion action was filed in Greene County, Alabama, on behalf of a
similar purported class of riparian owners with essentially the same
claims as the Mississippi case. By order dated April 5, 1995, venue
of the Alabama action was transferred to Sumter County, Alabama. On
January 20, 1995, the court in the Alabama action certified a class of
all persons who, as of the date the action commenced, were riparian
owners, lessees and licensees of properties located on the Tennessee
Tombigbee Waterway in Greene, Sumter, Pickens and Marengo counties,
Alabama, and Lowndes and Noxubee counties, Mississippi, to determine
whether the company is liable to the members of the class for
compensatory and/or punitive damages and to determine the amount of
punitive damages, if any, to be awarded to the class as a whole. By
order dated April 12, 1995, as orally amended on February 1, 1996, the
geographical boundaries of the class were amended to run from below
the Columbus mill's wastewater discharge pipe to just above the
confluence of the Black Warrior River and the Tennessee Tombigbee
Waterway. The class is estimated to range from approximately 1,000 to
1,500 members. In late July, 1996, the company reached an agreement
to settle both the Mississippi action and the Alabama action for
$2.5 million. The agreement is subject to the approval of the court
in the Alabama action.
11
Weyerhaeuser Company and Subsidiaries
PART I
- -----------------------------------------------------------------
Item 3. Legal Proceedings - Continued
- --------------------------------------
In November 1996, an action was filed against the company in Superior
Court for King County, Washington, on behalf of a purported class of
all individuals and entities that own property in the United States on
which exterior hardboard siding manufactured by the company has been
installed since 1980. The action alleges the company has manufactured
and distributed defective hardboard siding and has breached express
warranties and consumer protection statutes in its sale of hardboard
siding. The action seeks compensatory damages, including prejudgment
interest, and seeks damages for the cost of replacing siding that rots
subsequent to the entry of any judgment. In January 1997, an action
was filed, also in Superior Court for King County, Washington, on
behalf of a purported class of all individuals, proprietorships,
partnerships, corporations, and other business entities in the United
States on whose homes, condominiums, apartment complexes or commercial
buildings hardboard siding manufactured by the company has been
installed. The action alleges the company has breached express and
implied warranties in its sale of hardboard siding and also has
violated the Consumer Protection Act of the State of Washington. The
action seeks damages, prejudgment interest, costs and reasonable
attorney fees. The company is a defendant in approximately fifteen
other hardboard siding cases, one of which purports to be a class
action on behalf of purchasers of single- or multi-family residences
in Nebraska that contain the company's hardboard siding.
The company is also a party to various proceedings relating to the
clean-up of hazardous waste sites under the Comprehensive
Environmental Response Compensation and Liability Act, commonly known
as "Superfund," and similar state laws. The EPA and/or various state
agencies have notified the company that it may be a potentially
responsible party with respect to other hazardous waste sites as to
which no proceedings have been instituted against the company. The
company is also a party to other legal proceedings generally
incidental to its business. Although the final outcome of any legal
proceeding is subject to a great many variables and cannot be
predicted with any degree of certainty, the company presently believes
that any ultimate outcome resulting from the legal proceedings
discussed herein, or all of them combined, would not have a material
effect on the company's current financial position, liquidity or
results of operations; however, in any given future reporting period,
such legal proceedings could have a material effect on results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year ended December 29, 1996.
12
Weyerhaeuser Company and Subsidiaries
PART II
- -----------------------------------------------------------------
Item 5. Market Price of and Dividends on the Registrant's Common
- ----------------------------------------------------------------
Equity and Related Stockholder Matters
- --------------------------------------
Information with respect to market information, stockholders and
dividends included in Notes 19 and 20 of Notes to Financial Statements
in the company's 1996 Annual Report to Shareholders, is incorporated
herein by reference.
Item 6. Selected Financial Data
- --------------------------------
Information with respect to selected financial data included in Note
20 of Notes to Financial Statements in the company's 1996 Annual
Report to Shareholders, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
- -------------------------------------------------------------------
and Results of Operations
- -------------------------
On February 24, 1997, the company announced that it expects to take an
after-tax charge of approximately $25 million, or 12 cents per common
share, against earnings in the 1997 first quarter. This charge will
reflect the impact of closure, consolidation or disposal of recycling
facilities; the permanent closure of its corrugated medium machine at
Longview, Washington; the anticipated sale of its wholly-owned
subsidiary, Shemin Nurseries, Inc., a wholesale nursery business based
in Danbury, Connecticut; and interest income from the favorable
federal income tax decision relating to casualty losses associated
with the eruption of Mount St. Helens in 1980.
The company also expects to close the sale of its wholly-owned
subsidiary, Weyerhaeuser Mortgage Company, in the second quarter of
1997, although it is subject to regulatory approvals and other
contingencies. If this transaction closes as presently anticipated,
the company expects it to have a material favorable effect on
operating results and cash flow in the quarter in which it closes.
Additional information with respect to Management's Discussion and
Analysis included on pages 1, 8-9, 12-13, 18-19, 24-25, 28-29, 34-35
and 40-52; contained in the company's 1996 Annual Report to
Shareholders, is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Information
- -----------------------------------------------------------
Financial statements and supplementary information, contained in the
company's 1996 Annual Report to Shareholders are incorporated herein
by reference:
Page(s) in
Annual Report
to
Shareholders
------------
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 59-77
Selected Quarterly Financial Information (Unaudited) 75
Item 9. Changes in and Disagreements with Accountants on Accounting
- -------------------------------------------------------------------
and Financial Disclosure
- ------------------------
Not applicable.
13
Weyerhaeuser Company and Subsidiaries
PART III
- -----------------------------------------------------------------
Item 10. Directors and Executive Officers of the Registrant
- ------------------------------------------------------------
Information with respect to Directors of the company included on pages
1 through 4 of the Notice of 1997 Annual Meeting of Shareholders and
Proxy Statement dated March 3, 1997 is incorporated herein by
reference.
The executive officers of the company are as follows:
Name Title Age
- ---------------------- ------------------------ ---
William R. Corbin Executive Vice President 55
John W. Creighton, Jr. President 64
Richard C. Gozon Executive Vice President 58
Steven R. Hill Senior Vice President 49
Mack L. Hogans Senior Vice President 48
Norman E. Johnson Senior Vice President 63
Thomas M. Luthy Senior Vice President 59
William C. Stivers Senior Vice President 58
Item 11. Executive Compensation
- -------------------------------
Information with respect to executive compensation included on pages 5
through 13 of the Notice of 1997 Annual Meeting of Shareholders and
Proxy Statement dated March 3, 1997 is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
- ------------------------------------------------------------
Management
- ----------
Information with respect to security ownership of certain beneficial
owners and management included on pages 4 and 5 of the Notice of 1997
Annual Meeting of Shareholders and Proxy Statement dated March 3, 1997
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
Information with respect to certain relationships and related
transactions included on page 17 of the Notice of 1997 Annual Meeting
of Shareholders and Proxy Statement dated March 3, 1997 is
incorporated herein by reference.
14
Weyerhaeuser Company and Subsidiaries
PART IV
- -----------------------------------------------------------------
Item 14. Exhibits, Financial Statement Schedules and Reports on
- -----------------------------------------------------------------
Form 8-K
- --------
Financial Statements
The consolidated financial statements of the company, together with
the report of independent public accountants, contained in the
company's 1996 Annual Report to Shareholders, are incorporated in
Part II, Item 8 of this Form 10-K by reference.
Page Number(s)
Financial Statement Schedules in Form 10-K
- ----------------------------- --------------
Report of Independent Public Accountants on Financial
Statement Schedules 17
Schedule II - Valuation and Qualifying Accounts 18
All other financial statement schedules have been omitted because they
are not applicable or the required information is included in the
consolidated financial statements, or the notes thereto, contained in
the company's 1996 Annual Report to Shareholders and incorporated
herein by reference.
Exhibits:
- ---------
3 - Articles of Incorporation and Bylaws
10 - Material Contracts
(a) Agreement with N. E. Johnson
(b) Agreement with W. R. Corbin
(c) Agreement with R. C. Gozon
11 - Statement Re: Computation of Per Share Earnings
(incorporated by reference to Note 1 of the 1996
Weyerhaeuser Company Annual Report to Shareholders)
13 - Portions of the 1996 Weyerhaeuser Company Annual
Report to Shareholders specifically incorporated by
reference herein
22 - Subsidiaries of the Registrant
23 - Consent of Independent Public Accountants
27 - Financial Data Schedules
Reports on Form 8-K
- -------------------
The registrant filed reports on Form 8-K dated February 14, April 24,
July 17, July 26 and October 15, 1996, and January 22 and February 25,
1997, respectively, reporting information under Item 5, Other Events.
15
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 14, 1997.
Weyerhaeuser Company
/s/ John W. Creighton, Jr.
------------------------------
John W. Creighton, Jr.
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant in the capacities indicated on March 14, 1997.
/s/ John W. Creighton, Jr. /s/ P. M. Hawley
- -------------------------------- ---------------------------
John W. Creighton, Jr. Philip M. Hawley
President, Principal Executive Director
Officer and Director
/s/ Martha R. Ingram
---------------------------
/s/ George H. Weyerhaeuser Martha R. Ingram
- -------------------------------- Director
George H. Weyerhaeuser
Chairman of the Board and
Director /s/ John Kieckhefer
----------------------------
John I. Kieckhefer Director
/s/ William C. Stivers
- --------------------------------
William C. Stivers
Principal Financial Officer /s/ William D. Ruckelshaus
----------------------------
William D. Ruckelshaus
Director
/s/ Kenneth J. Stancato
- --------------------------------
Kenneth J. Stancato /s/ Richard H. Sinkfield
Principal Accounting Officer ----------------------------
Richard H. Sinkfield
Director
/s/ William Clapp
- --------------------------------
William H. Clapp
Director
/s/ W. John Driscoll
- --------------------------------
W. John Driscoll
Director
16
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
- -----------------------------------------------------------------
Report of Independent Public Accountants on Financial Statement
Schedules
To Weyerhaeuser Company:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Weyerhaeuser
Company's annual report to shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated February 6,
1997. Our audit was made for the purpose of forming an opinion on
those statements taken as a whole. The schedule listed on page 15
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 6, 1997
17
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
- -----------------------------------------------------------------
Schedule II - Valuation
and Qualifying Accounts
For the three years ended
December 29, 1996
Dollar amounts in
millions
Balance at Deductions Balance at
Beginning Charged from End of
Description of Period to Income Reserve Period
- ----------- ---------- --------- ---------- ----------
Weyerhaeuser
Reserve deducted from
related asset accounts:
Doubtful accounts -
Accounts receivable
1996 $ 9 $ 4 $ 6 $ 7
========== ========= =========== ==========
1995 $ 10 $ 2 $ 3 $ 9
========== ========= =========== ==========
1994 $ 10 $ 4 $ 4 $ 10
========== ========= =========== ==========
Real Estate and
Financial Services
Reserves and allowances
deducted from related
asset accounts:
Receivables
1996 $ 7 $ 3 $ 1 $ 9
========== ========= =========== ==========
1995 $ 4 $ 1 $ (2)(1) $ 7
========== ========= =========== ==========
1994 $ 7 $ 1 $ 4 $ 4
========== ========= =========== ==========
Mortgage loans receivable
1996 $ 2 $ -- $ (5)(2) $ 7
========== ========= =========== ==========
1995 $ 8 $ -- $ 6 $ 2
========== ========= =========== ==========
1994 $ 4 $ 4 $ -- $ 8
========== ========= =========== ==========
Investment in and
advances to joint
ventures and
limited partnerships
1996 $ 38 $ -- $ 11 $ 27
========== ========= =========== ==========
1995 $ 49 $ -- $ 11 $ 38
========== ========= =========== ==========
1994 $ 57 $ 2 $ 10 $ 49
========== ========= =========== ==========
(1) Includes allowances transferred in on partnership notes that were
consolidated.
(2) Includes allowances transferred in from other liabilities.
18
Weyerhaeuser Company and Subsidiaries
Exhibit 22
Subsidiaries of the Registrant
- ----------------------------------------------------------------------
Percentage
State or Ownership of
Country of Immediate
Name Incorporation Parent
---- ------------- ------------
Colonvade S.A. Uruguay 100%
Columbia & Cowlitz Railway Company Washington 100
DeQueen and Eastern Railroad Company Arkansas 100
Fisher Lumber Company California 100
Golden Triangle Railroad Mississippi 100
Green Arrow Motor Express Company Delaware 100
Gryphon Asset Management, Inc. Delaware 100
J.H. Hamlen & Son, Inc. Arkansas 100
Mississippi & Skuna Valley
Railroad Company Mississippi 100
Mountain Tree Farm Company Washington 50
North Pacific Paper Corporation Delaware 80
NORPAC Sales Corporation Guam 100
Pacific Veneer, Ltd. Washington 90
SCA Weyerhaeuser Packaging Holding British Virgin
Company Asia Limited Islands 50
Shemin Nurseries, Inc. Delaware 100
Texas, Oklahoma & Eastern
Railroad Company Oklahoma 100
United Structures, Inc. California 100
Westwood Shipping Lines, Inc. Washington 100
Weycomp Claims Management Service, Inc. Texas 100
Weyerhaeuser Construction Company Washington 100
Weyerhaeuser Financial Services, Inc. Delaware 100
CMO Finance Corp. Nevada 100
MJ Finance Corporation California 100
Mortgage Securities III Corporation Nevada 100
Mortgage Securities IV Corporation Nevada 100
R4 Participant Corporation Nevada 100
ver Bes' Insurance Company Vermont 100
de Bes' Insurance Ltd. Bermuda 100
Weyerhaeuser Financial Investments, Inc. Nevada 100
Abfall Finance Corp. California 100
Brookview, Inc. Nevada 100
The Giddings Mortgage Investment Company California 100
Gudig Abfall, Inc. California 100
Kachura Finance Corp. California 100
Laurel Real Estate Development, Inc. California 100
McGNT Finance Corp. California 100
Pass-Through Finance Corp. California 100
RFS Development Corporation California 100
RFS Finance Corp. California 100
RFS Insurance Agency California 100
RFS Service Corporation California 100
19
Weyerhaeuser Company and Subsidiaries
Exhibit 22
Subsidiaries of the Registrant - Continued
- ----------------------------------------------------------------------
Percentage
State or Ownership of
Country of Immediate
Name Incorporation Parent
---- ------------- ------------
R. J. Plaza II, Inc. Nevada 100%
Trimark Development Company California 100
Trimark Realty Advisors, Inc. California 100
Weyerhaeuser Properties, Inc. Nevada 100
Woodland Hills Properties-W., Inc. Nevada 100
Monthill, Inc. California 100
Placer Business Center, Inc. California 100
Terman Properties, Inc. California 100
WVC II, Inc. Nevada 100
Weyerhaeuser Mortgage Company California 100
Mason-McDuffie Mortgage Corporation Delaware 100
Mason-McDuffie Service Corporation California 100
Southwest Partners, Inc. California 100
Westwood Associates California 100
Westwood Insurance Agency California 100
Westwood Insurance Agency of
Arizona, Inc. Arizona 100
WMC Mortgage Co. International California 100
WMC Finance Corp. I California 100
Weyerhaeuser Venture Company Nevada 100
Las Positas Land Co. California 100
WAMCO, Inc. Nevada 100
Weyerhaeuser Realty Investors, Inc. Washington 100
Weyerhaeuser Forestlands
International, Inc. Washington 100
Weyerhaeuser International, Inc. Washington 100
Weyerhaeuser Canada Ltd. Canada 100
Saskatoon Chemicals Ltd. Canada 100
Weyerhaeuser Saskatchewan Ltd. Canada 100
Weyerhaeuser China, Ltd. Washington 100
Weyerhaeuser GMBH Germany 100
Weyerhaeuser (Asia) Limited Hong Kong 100
Weyerhaeuser Italia, S.r.l. Italy 100
Weyerhaeuser Japan Ltd. Japan & Delaware 100
Weyerhaeuser Korea Ltd. Korea 100
Weyerhaeuser, S.A. Panama 100
Weyerhaeuser 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 Real Estate Company Washington 100
Centennial Homes, Inc. Texas 100
Midway Properties, Inc. North Carolina 100
20
Weyerhaeuser Company and Subsidiaries
Exhibit 22
Subsidiaries of the Registrant - Continued
- ----------------------------------------------------------------------
Percentage
State or Ownership of
Country of Immediate
Name Incorporation Parent
---- ------------- ------------
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
Winchester Homes, Inc. Delaware 100
SC-WHI, Inc. Delaware 100
The Wray Company Arizona 100
21
Weyerhaeuser Company and Subsidiaries
Exhibit 23
Consent of Independent Public Accountants
- ----------------------------------------------------------------------
As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by reference in
this Form 10-K, into Weyerhaeuser Company's previously filed
Registration Statement No. 33-52789 on Form S-3 and Nos. 33-60527, 33-
60529, 33-60521, 33-60525, 33-25928, 33-24979, 33-47392, 33-10165, 33-
41414, 2-88109, 2-27929, 2-58498, 2-81463 and 333-01565 on Form S-8.
ARTHUR ANDERSEN LLP
Seattle, Washington,
March 14, 1997
22