-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N7yOVGMPgBrExB1Z5wRvHpSXb5xdwwvEQxtOBG9r9sQ662whs54jc4JvSij0TG2C LVruXe4bR6kNwEN+hS3jKw== 0000106535-01-500006.txt : 20010319 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 10-K 1 f10k2000.txt 10-K 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. 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 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.
Inventory Thousands of Acres at December 31 2000 --------- ------------------------------------------ Millions Long- of Fee term License Cunits Ownership Leases Arrangements Total --------- ----------- ------ ------------ --------- Geographic Area 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 ========= =========== ====== ============ =========
- ------------------------------------------- (1) Includes approximately 20 million acres of productive forestland. (2) Reflects Weyerhaeuser ownership only, excluding timberlands owned and managed through joint ventures. 3 Weyerhaeuser Company and Subsidiaries PART I - ------------------------------------------------------------------------- Item 1. Business - Continued - -----------------------------
Millions of Thousands of Acres ------------------------ Thousands of Acres Seedlings Stocking --------------------- Harvested(1) Planted Planted Control Fertilization ------------ ------- ----------- -------- ------------- 2000 Activity 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 ============ ======= =========== ======== =============
Sales volumes (millions): 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Raw materials - cubic ft. 640 287 259 235 254
Selected product prices: 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- 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
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 Weyerhaeuser Company and Subsidiaries PART I - ------------------------------------------------------------------------- Item 1. Business - Continued - ----------------------------- Sales volumes (millions)(1):
2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- 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
Selected product prices: 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- 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
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):
2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- 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
- ------------------------------------------- (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 Weyerhaeuser Company and Subsidiaries PART I - ------------------------------------------------------------------------- Item 1. Business - Continued - -----------------------------
Selected product prices (per ton): 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- 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
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:
2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- 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
- ------------------------------------------- (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 Weyerhaeuser Company and Subsidiaries PART I - ------------------------------------------------------------------------- Item 2. Properties - ------------------- Timberlands Timberlands annual log production (in millions):
2000 1999 1998 1997 1996 ------ ------ ------ ------ ------ Logs - cubic ft. 792 521 495 476 412 Fee harvest - cubic ft. 721 634 585 541 496
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):
Production Number of Capacity Facilities 2000 1999 1998 1997 1996 ---------- ---------- ------- ------- ------- ------- ------- 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
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 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):
Production Number of Capacity Facilities 2000 1999 1998 1997 1996 ---------- ---------- ------- ------- ------- ------- ------- 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
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 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 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 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 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.
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 59-85 Selected Quarterly Financial Information (Unaudited) 83
Item 9. Changes in and Disagreements with Accountants on Accounting and - ------------------------------------------------------------------------ Financial Disclosure - -------------------- Not applicable. 12 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:
Name Title Age ---- ----- --- 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
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 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 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.
Page Number(s) in Form Financial Statement Schedules 10-K --------- Report of Independent Public Accountants on Financial Statement Schedules 18 Schedule II - Valuation and Qualifying Accounts 19
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 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 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 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 Weyerhaeuser Company and Subsidiaries FINANCIAL STATEMENT SCHEDULES - -------------------------------------------------------------------------
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 - ----------- --------- ------- ----------- ------- 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 ========= ======= =========== =======
- -------------------------------------- (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 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 Weyerhaeuser Company and Subsidiaries Exhibit 22 Subsidiaries of the Registrant - -------------------------------------------------------------------------
Percentage State or Ownership of Country of Immediate Name Incorporation Parent ---- ------------- ------------ 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
21 Weyerhaeuser Company and Subsidiaries Exhibit 22 Subsidiaries of the Registrant-Continued - -------------------------------------------------------------------------
Percentage State or Ownership of Country of Immediate Name Incorporation Parent ---- ------------- ------------ 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
22 Weyerhaeuser Company and Subsidiaries Exhibit 22 Subsidiaries of the Registrant-Continued - -------------------------------------------------------------------------
Percentage State or Ownership of Country of Immediate Name Incorporation Parent ---- ------------- ------------ 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
23 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 EX-3 2 ex32000.txt BYLAWS 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 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 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. 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. 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 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. 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. 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. 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. 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. 10 EX-13 3 ex132000.txt PORTIONS OF ANNUAL REPT
PERCENT 2000 FINANCIAL HIGHLIGHTS 2000 1999 CHANGE - -------------------------------------------------------------------------------- Dollar amounts in millions except per-share figures 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 -
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 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 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 pulp, paper and packaging
NET SALES 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------- In millions of dollars 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 ============================================
SALES VOLUMES 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------- In thousands 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
ANNUAL PRODUCTION CAPACITY 2000 1999 1998 1997 1996 - ----------------------------------------------------------------------------- In thousands 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
PRINCIPAL MANUFACTURING FACILITIES - -------------------------------------------------------------- Pulp 9 Containerboard 7 Paper 6 Packaging 60 Paperboard 1 Recycling 24 - --------------------------------------------------------------
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 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 timberlands
NET SALES 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------- In millions of dollars 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 ============================================
SALES VOLUMES 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------- In millions Raw materials-cubic feet 640 287 259 235 254
ANNUAL PRODUCTION 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------- In millions Logs-cubic feet 792 521 495 476 412 Fee harvest-cubic feet 721 634 585 541 496
WEYERHAEUSER 32 ANNUAL REPORT 2000 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 wood products
NET SALES 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------- In millions of dollars 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 =============================================
SALES VOLUMES 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------- In millions 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
ANNUAL PRODUCTION CAPACITY 2000 1999 1998 1997 1996 - ----------------------------------------------------------------------------- In millions 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
PRINCIPAL MANUFACTURING FACILITIES - ---------------------------------------------------------------------------- Softwood lumber, plywood and veneer 46 Hardwood lumber 13 Composite panels 2 Engineered wood products 15 Oriented strand board 9
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 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 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 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
SINGLE-FAMILY HOMES SOLD 3,833 units total ================================================================================ OPERATION NUMBER OF UNITS - -------------------------------------------------------------------------------- Pardee 2,164 Quadrant 612 Trendmaker 515 Winchester 542 - --------------------------------------------------------------------------------
SINGLE-FAMILY HOMES CLOSED 3,369 units total ================================================================================ OPERATION NUMBER OF UNITS - -------------------------------------------------------------------------------- Pardee 1,888 Quadrant 460 Trendmaker 472 Winchester 549 - --------------------------------------------------------------------------------
SINGLE-FAMILY HOMES SOLD BUT NOT CLOSED 1,571 units total ================================================================================ OPERATION NUMBER OF UNITS - -------------------------------------------------------------------------------- Pardee 804 Quadrant 272 Trendmaker 147 Winchester 348 - --------------------------------------------------------------------------------
REAL ESTATE AND RELATED ASSETS - -------------------------------------------------------------------------------- OPERATIONS PRINCIPAL LOCATIONS 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
WEYERHAEUSER 37 ANNUAL REPORT 2000 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
Dollar amounts in millions 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------ 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 ============================================
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.
Dollar amounts in millions 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------ 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 ============================================
(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
Dollar amounts in millions 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------ 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 ============================================
(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.
Dollar amounts in millions 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------ 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 ============================================
(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.
Dollar amounts in millions 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------ Sales to unaffiliated customers: $ 180 $ 182 $ 151 $ 134 $ 217 ============================================ Approximate contributions to earnings(1)(2)(3) $ (321) $ (272) $ (225) $ (186) $ (183) ============================================
(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 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 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 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 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 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 $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:
Dollar amounts in millions 1998 - --------------------------------------------------- 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 =========
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 Cash flow from operations before changes in working capital by segment was as follows:
Dollar amounts in millions 2000 1999 1998 - ------------------------------------------------------ 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 ======================================================
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:
Dollar amounts in millions 2000 1999 1998 - ------------------------------------------------------ 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 ======================================================
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 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 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 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 CONSOLIDATED STATEMENT OF EARNINGS
For the three-year period ended December 31, 2000 Dollar amounts in millions except per-share figures 2000 1999 1998 ----------------------------- 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 =============================
See notes on pages 59 through 85. WEYERHAEUSER 53 ANNUAL REPORT 2000 CONSOLIDATED BALANCE SHEET
Dollar amounts in millions DECEMBER DECEMBER 31, 26, 2000 1999 ------------------- 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 ===================
See notes on pages 59 through 85. WEYERHAEUSER 54 ANNUAL REPORT 2000 CONSOLIDATED BALANCE SHEET (continued)
DECEMBER DECEMBER 31, 26, 2000 1999 ------------------- 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 ===================
WEYERHAEUSER 55 ANNUAL REPORT 2000 CONSOLIDATED STATEMENT OF CASH FLOWS
For the three-year period ended December 31, 2000 Dollar amounts in millions CONSOLIDATED -------------------------- 2000 1999 1998 -------------------------- 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 ==========================
See notes on pages 59 through 85. WEYERHAEUSER 56 ANNUAL REPORT 2000 CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
REAL ESTATE WEYERHAEUSER COMPANY AND RELATED ASSETS - ------------------------------------------------------ 2000 1999 1998 2000 1999 1998 - ------------------------------------------------------- $ 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 =======================================================
WEYERHAEUSER 57 ANNUAL REPORT 2000 CONSOLIDATED STATEMENT OF SHAREHOLDERS' INTEREST
For the three-year period ended December 31, 2000 Dollar amounts in millions 2000 1999 1998 -------------------------- 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 ==========================
See notes on pages 59 through 85. WEYERHAEUSER 58 ANNUAL REPORT 2000 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 . 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 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 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 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 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.
Dollar amounts in millions WEIGHTED AVERAGE EARNINGS except per-share figures NET EARNINGS SHARES (000) PER SHARE - -------------------------------------------------------------------------------- 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 ================================================
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:
YEAR OPTIONS TO PURCHASE EXERCISE PRICE - -------------------------------------------------------------------------------- 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 - --------------------------------------------------------------------------------
WEYERHAEUSER 64 ANNUAL REPORT 2000 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:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- Current assets $ 232 $ 525 Noncurrent assets 1,444 1,885 Current liabilities 207 275 Noncurrent liabilities 593 816 ---------------------
2000 1999 1998 - -------------------------------------------------------------------------------- Net sales and revenues $ 1,038 $ 901 $ 696 Operating income 118 110 110 Net income (loss) 84 47 52 ---------------------------------
WEYERHAEUSER 65 ANNUAL REPORT 2000 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:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- Current assets $ 11,296 $ 11,457 Noncurrent assets 271 159 Current liabilities 9,864 10,577 Noncurrent liabilities 140 115 ---------------------
2000 1999 1998 - -------------------------------------------------------------------------------- Net sales and revenues $ 1,347 $ 663 $ 244 Operating income 593 313 133 Net income 492 253 103 ----------------------------------
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 NOTE 5. INCOME TAXES - -------------------------------------------------------------------------------- Earnings before income taxes and cumulative effect of a change in an accounting principle are comprised of the following:
Dollar amounts in millions 2000 1999 1998 - -------------------------------------------------------------------------------- Domestic earnings $ 1,051 $ 778 $ 413 Foreign earnings 272 192 50 ----------------------------------- $ 1,323 $ 970 $ 463 ===================================
Provisions for income taxes include the following:
Dollar amounts in millions 2000 1999 1998 - -------------------------------------------------------------------------------- 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 ===================================
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:
2000 1999 1998 - -------------------------------------------------------------------------------- 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 % ===============================
The net deferred income tax (liabilities) assets include the following components:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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) =====================
The deferred tax assets (liabilities) are comprised of the following:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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) =====================
WEYERHAEUSER 67 ANNUAL REPORT 2000 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:
OTHER POSTRETIREMENT PENSION BENEFITS -------------------------------------- Dollar amounts in millions 2000 1999 2000 1999 - -------------------------------------------------------------------------------- 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.
WEYERHAEUSER 68 ANNUAL REPORT 2000 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:
OTHER POSTRETIREMENT PENSION BENEFITS ------------------------------------------ DECEMBER DECEMBER DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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) ====================
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:
OTHER POSTRETIREMENT PENSION BENEFITS ------------------------------------------- 2000 1999 1998 2000 1999 1998 - -------------------------------------------------------------------------------- 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% -------------------------------------------
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 The components of net periodic benefit costs/income are:
OTHER POSTRETIREMENT PENSION BENEFITS ------------------------------------------- Dollar amounts in millions 2000 1999 1998 2000 1999 1998 - -------------------------------------------------------------------------------- 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 ===========================================
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:
As of December 31, 2000 Dollar amounts in millions 1% INCREASE 1% DECREASE - -------------------------------------------------------------------------------- Effect on total of service and interest cost components $ 2 $ (2) Effect on accumulated postretirement benefit obligation 25 (20) ------------------------
NOTE 7. INVENTORIES - --------------------------------------------------------------------------------
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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 =====================
NOTE 8. PROPERTY AND EQUIPMENT - --------------------------------------------------------------------------------
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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 =====================
WEYERHAEUSER 70 ANNUAL REPORT 2000 NOTE 9. REAL ESTATE IN PROCESS OF DEVELOPMENT AND FOR SALE - -------------------------------------------------------------------------------- Properties held by the company's real estate and related assets segment include:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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 =====================
NOTE 10. ACCRUED LIABILITIES - --------------------------------------------------------------------------------
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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 =====================
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 NOTE 12. LONG-TERM DEBT - -------------------------------------------------------------------------------- DEBT Weyerhaeuser long-term debt, including the current portion, is as follows:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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 ====================
Long-term debt maturities are (millions): 2001 $ 88 2002 407 2003 211 2004 68 2005 58 Thereafter 3,230
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:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- 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 =====================
Long-term debt maturities are (millions): 2001 $ 162 2002 80 2003 79 2004 7 2005 4 Thereafter 30
WEYERHAEUSER 72 ANNUAL REPORT 2000 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 - --------------------------------------------------------------------------------
DECEMBER DECEMBER 31, 2000 26, 1999 ------------------------------------ CARRYING FAIR CARRYING FAIR Dollar amounts in millions VALUE VALUE VALUE VALUE - -------------------------------------------------------------------------------- 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 ------------------------------------
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 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 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 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:
In thousands 2000 1999 1998 - -------------------------------------------------------------------------------- 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 ==============================
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:
In thousands 2000 1999 - -------------------------------------------------------------------------------- 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 ==================
CUMULATIVE OTHER COMPREHENSIVE EXPENSE The company's cumulative other comprehensive expense includes:
DECEMBER DECEMBER Dollar amounts in millions 31, 2000 26, 1999 - -------------------------------------------------------------------------------- Foreign currency translation adjustments $ (170) $ (159) Additional minimum pension liability adjustments (8) (8) --------------------- $ (178) $ (167) =====================
WEYERHAEUSER 76 ANNUAL REPORT 2000 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:
2000 1999 1998 - -------------------------------------------------------------------------------- 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 ------------------------------
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:
2000 1999 1998 - -------------------------------------------------------------------------------- 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% -------------------------------
Changes in the number of shares subject to option are summarized as follows:
2000 1999 1998 - -------------------------------------------------------------------------------- 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 ------------------------------
The following table summarizes information about stock options outstanding at December 31, 2000:
WEIGHTED AVERAGE OPTIONS OPTIONS WEIGHTED AVERAGE REMAINING PRICE RANGE OUTSTANDING EXERCISABLE EXERCISE PRICE CONTRACTUAL LIFE - -------------------------------------------------------------------------------- $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 =========== ===========
WEYERHAEUSER 77 ANNUAL REPORT 2000 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:
Dollar amounts in millions - -------------------------------------------------------------- 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 =========
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:
Dollar amounts in millions - -------------------------------------------------------------- Property, plant and equipment $ 288 Goodwill 328 --------- Total excess costs $ 616 =========
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 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: 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 ===========
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:
Dollar amounts in millions - -------------------------------------------------------------- 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 ==========
The excess purchase price was allocated as follows:
Dollar amounts in millions - -------------------------------------------------------------- Plant, property and equipment, timber and timberlands, and investment in equity affiliates $ 1,030 Goodwill 829 ---------- Total excess costs $ 1,859 ==========
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:
PRO FORMA INFORMATION (unaudited) - -------------------------------------------------------------------------------- Dollar amounts in millions, except per-share figures 1999 1998 - -------------------------------------------------------------------------------- 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 --------------------
WEYERHAEUSER 79 ANNUAL REPORT 2000 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 An analysis and reconciliation of the company's business segment information to the respective information in the consolidated financial statements is as follows:
For the three-year period ended December 31, 2000 Dollar amounts in millions 2000 1999 1998 - -------------------------------------------------------------------------------- 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.
WEYERHAEUSER 81 ANNUAL REPORT 2000 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:
For the three-year period ended December 31, 2000 Dollar amounts in millions 2000 1999 1998 - -------------------------------------------------------------------------------- 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.
WEYERHAEUSER 82 ANNUAL REPORT 2000 NOTE 21. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - --------------------------------------------------------------------------------
Dollar amounts in millions FIRST SECOND THIRD FOURTH except per-share figures QUARTER QUARTER QUARTER QUARTER YEAR - -------------------------------------------------------------------------------- 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 ----------------------------------------------------
WEYERHAEUSER 83 ANNUAL REPORT 2000 NOTE 22. HISTORICAL SUMMARY - --------------------------------------------------------------------------------
Dollar amounts in except per-share figures 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------------- 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 --------------------------------------------------
WEYERHAEUSER 84 ANNUAL REPORT 2000
1995 1994 1993 1992 1991 1990 - ----------------------------------------------------------------------- 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.
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