-----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, Fl8dXnPju0tdIwza37P+/utl924LSNBA/hynChN7233x2dKoJy4b0IhVkdbG+oVC yensJOyi6ut70wdoTHiGmw== 0000106535-02-000033.txt : 20021023 0000106535-02-000033.hdr.sgml : 20021023 20021023083732 ACCESSION NUMBER: 0000106535-02-000033 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020929 ITEM INFORMATION: Other events FILED AS OF DATE: 20021023 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04825 FILM NUMBER: 02795538 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 8-K 1 f8koct22.txt 8K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 October 22, 2002 ------------------------------------ (Date of earliest event report) WEYERHAEUSER COMPANY ------------------------------------ (Exact name of registrant as specified in charter) Washington 1-4825 91-0470860 ---------- ------ ---------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation or Number) organization) Federal Way, Washington 98063-9777 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (253) 924-2345 TABLE OF CONTENTS Item 9. Regulation FD Disclosure --------------------------------- SIGNATURES ---------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C., 20549 ITEM 9 - REGULATION FD DISCLOSURE (a) Earnings Release. On October 22, 2002, Weyerhaeuser Company a press release stating the following: FEDERAL WAY, Wash. - Weyerhaeuser Company (NYSE: WY) today reported net earnings for the third quarter of $13 million, or 6 cents per share, that includes unusual after-tax items of $31 million, or 14 cents per share. This compares with net earnings of $91 million, or 41 cents per share, for the same period last year. Last year's net earnings included unusual after-tax items of $9 million, or 4 cents per share, for the net effect of machine closure costs, integration costs and a reduction in the British Columbia corporate tax rate. The unusual items for third quarter 2002 are: .. $11 million after tax, or 5 cents per share, from costs associated with the acquisition and integration of Willamette Industries that were expected. Weyerhaeuser said it continues to make progress on capturing synergies following the Willamette acquisition. By the end of the third quarter, Weyerhaeuser has achieved an annualized run rate of $128 million in pre-tax synergies. The company is confident it will achieve $300 million in pre-tax annual savings within three years. In addition, Weyerhaeuser expects to capture additional savings through reductions in selling, general and administrative expenses that will result from the ongoing efforts to streamline the delivery of support services. .. $20 million after tax, or 9 cents per share, for business disruption costs following a recovery boiler explosion at the Plymouth, N.C., paper facility in the second quarter. The boiler has been repaired and the facility has resumed normal operation. The company fully expects to recover this loss through insurance proceeds in the fourth quarter. In addition to these items, Weyerhaeuser attributed most of the decrease in the 2002 third quarter earnings to a sharp decline in prices for wood products and the challenging environment created by the countervailing and anti-dumping duties on Canadian softwood lumber the company imports into the United States. During the quarter, Weyerhaeuser incurred approximately $31 million in countervailing and anti-dumping duties, and related costs. The company expects to incur $65 to $70 million in countervailing and anti-dumping duties, and related costs this year. "Our earnings reflect the challenging market conditions during the quarter," said Steven R. Rogel, chairman, president and chief executive officer. "The wood product markets continue to be a concern and we are taking steps to address the situation. "As we look to the fourth quarter, we see some modest improvement in the paper and containerboard businesses, and our real estate business is maintaining a strong backlog of sold, but undelivered, houses." Rogel said. "We are making excellent progress in capturing the synergies from the Willamette acquisition and taking other actions to accelerate reductions in overhead costs." Summary of financial highlights:
Millions (except per share data) 3Q 2002 3Q 2001 Change Net earnings $13 $91 ($78) Earnings per share (EPS) $0.06 $0.41 ($0.35) Net earnings excluding unusual items $44 $100 ($56) EPS excluding unusual items $0.20 $0.45 ($0.25) Net earnings for first nine months $115 $369 ($254) Net EPS for first nine months $0.52 $1.68 ($1.16) Net sales for third quarter $4,912 $3,752 $1,160 Net sales for first nine months $13,869 $11,147 $2,722
SEGMENT RESULTS FOR THIRD QUARTER 2002 (Contributions to Pre-Tax Earnings) Millions 3Q 2002 3Q 2001 Change Timberlands $138 $107 $31 Wood Products ($18) $47 ($65) Pulp and Paper $10 ($28) $38 Containerboard, Packaging, Recycling $88 $69 $19 Real estate and related assets $85 $75 $10
Timberlands 3Q 2002 2Q 2002 Change Contribution to earnings (millions) $138 $175 ($37) Compared with the second quarter, export log prices improved during the third quarter of 2002 while domestic log prices remained flat. Overall company sales volumes remained relatively stable. Harvest levels were down significantly from the second quarter due to seasonal fire danger. This resulted in increased costs due to higher outside log purchases. The fourth quarter outlook for Timberlands earnings from operations is expected to be unchanged from the third quarter with modestly weaker prices offset by higher harvest volumes. In addition, during the fourth quarter, Weyerhaeuser expects to close on the $211 million sale of approximately 115,000 acres of timberlands announced this morning. The company will apply the net proceeds from this sale to paying down its debt. Wood Products 3Q 2002 2Q 2002 Change Contribution to earnings (millions) ($18) $64 ($82) Changes in earnings between the second and third quarter of 2002 were due primarily to the effects of the countervailing and anti-dumping duties. Excluding countervailing and anti-dumping duties, third quarter earnings were $13 million compared with $29 million for the second quarter. A drop in lumber prices caused by an oversupplied market also contributed to the change. Lumber inventories were built up in the second quarter in anticipation of the imposition of countervailing duties and anti-dumping penalties. During the quarter, the company also announced the permanent closure of an engineered lumber product plant in Winston, Ore., and a particleboard mill in Lillie, La. The fourth quarter earnings outlook for Wood Products remains very uncertain due to continued oversupply in the market. Pulp and Paper 3Q 2002 2Q 2002 Change Contribution to earnings (millions) $10 ($15) $25 Changes in earnings between the second and third quarter of 2002 were due primarily to the improvement in pulp prices and the increased demand for uncoated freesheet. During the quarter, Weyerhaeuser announced the permanent closure of paper machines in Johnsonburg, Pa., and Kingsport, Tenn., which eliminated approximately 215,000 tons of production. Earnings for the business in the fourth quarter are expected to be higher than third quarter due to improving demand and the implementation of Weyerhaeuser's recently announced price increases. Containerboard, Packaging and Recycling 3Q 2002 2Q 2002 Change Contribution to earnings (millions) $88 $75 $13 Changes in earnings between the second and third quarter of 2002 were due primarily to higher OCC costs, which were partially recovered by price increases for linerboard and corrugating medium. Second quarter earnings also include $28 million in pre-tax costs associated with previously announced closures. As part of the company's focus on rationalizing its containerboard production, Weyerhaeuser announced the permanent closure of the Hawesville, Ky., containerboard mill during the third quarter to eliminate approximately 200,000 tons of production. Fourth quarter Containerboard, Packaging and Recycling earnings should be higher as box price increases become effective and OCC prices decline from the peak levels of the early summer. Real estate and related assets 3Q 2002 2Q 2002 Change Contribution to earnings (millions) $85 $79 $6 Changes in earnings between the second and third quarter of 2002 were due primarily to: .. A $14 million gain from the sale of two apartment complexes, which were originally expected to close in the fourth quarter of 2002 and early 2003. .. Continued strong housing market conditions. The business reported higher traffic throughout the quarter and closings were higher than the same period last year. Backlog of homes sold, but not delivered, remained steady at approximately six and a half months. Fourth quarter earnings should be slightly lower as the business does not anticipate any apartment complex sales. Overall fourth quarter outlook Weyerhaeuser expects overall earnings to improve in the fourth quarter compared with third quarter. Unusual items that likely will affect the fourth quarter 2002 results include: .. Willamette integration after-tax costs which are expected to be approximately $11 million. .. Approximately $7 million for an after-tax charge associated with the closure of the Sturgeon Falls, Ontario, containerboard facility. .. A $25 million after-tax charge associated with the termination of the former MacMillan Bloedel pension plan for U.S. employees. .. The previously discussed insurance proceeds of approximately $25 million after-tax for the boiler explosion at the Plymouth, N.C., paper facility. .. An after-tax gain on the sale of timberlands in Washington state announced earlier today. This after-tax gain is approximately $80 to $85 million net of the charges associated with the closure of the related Wood Products facilities. Weyerhaeuser also announced that it would provide more information on its pension funds through an expanded disclosure in its third quarter 10Q. The company will hold a live conference call at 8 a.m. PDT (11 a.m. EDT) on Oct. 22 to discuss the third quarter results. To access the conference call, listeners calling from within North America should dial (877) 888-3855 at least 15 minutes prior to the start of the conference call. Those wishing to access the call from outside North America should dial (416) 695-5259. Replays of the call will be available for 48 hours following completion of the live call and can be accessed at (888) 509-0081 within North America and at (416) 695-9728 from outside North America. The call may also be accessed through Weyerhaeuser's Internet site at www.weyerhaeuser.com by clicking on the "Listen to our conference call" link. Weyerhaeuser Company, one of the world's largest integrated forest products companies, was incorporated in 1900. In 2001, sales were $14.5 billion. It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. Additional information about Weyerhaeuser's businesses, products and practices is available at www.weyerhaeuser.com. - -------------------- # # # This news release contains statements concerning the company's future results and performance that are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, including the level of interest rates and housing starts; market demand for the company's products, which may be tied to the relative strength of various U.S. business segments; performance of the company's manufacturing operations; the successful execution of internal performance plans; the level of competition from foreign producers; the effect of forestry, land use, environmental and other governmental regulations; fires, floods and other natural disasters; regulatory approvals of pending timberland sales; the company's ability to successfully integrate and manage acquired businesses and to realize anticipated cost savings and synergies from these acquisition; the ability of acquired businesses to perform in accordance with the company's expectations; legal proceedings; and uncertainties affecting insurance recoveries. The company is also a large exporter and is affected by changes in economic activity in Europe and Asia, particularly Japan, and by changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Euro and the Yen; and restrictions on international trade or tariffs imposed on imports, including the countervailing and dumping duties imposed on the company's softwood lumber shipments from Canada to the United States. These and other factors that could cause or contribute to actual results differing materially from such forward looking statements are discussed in greater detail in the company's Securities and Exchange Commission filings. ### WEYERHAEUSER COMPANY STATISTICAL INFORMATION (unaudited)
CONSOLIDATED EARNINGS (1) Q1 Q2 Q3 Year-to-date ------------- ------------ ------------- --------------- (in millions) 2002 2001 2002 2001 2002 2001 2002 2001 ------------- ------------ ------------- --------------- Net sales and revenues: Weyerhaeuser (2) $3,612 $3,219 $4,528 $3,471 $4,444 $3,360 $12,584 $10,050 Real estate and related assets 396 334 421 371 468 392 1,285 1,097 ------------- ------------ ------------- --------------- Total net sales and revenues 4,008 3,553 4,949 3,842 4,912 3,752 13,869 11,147 ------------- ------------ ------------- --------------- Costs and expenses: Weyerhaeuser: Costs of products sold 2,848 2,492 3,546 2,644 3,598 2,659 9,992 7,795 Depreciation, amortization and fee stumpage (3) 264 211 311 214 304 223 879 648 Selling expenses 103 91 116 100 116 95 335 286 General and administrative expenses 186 171 231 182 201 148 618 501 Research and development expenses 12 13 13 14 11 11 36 38 Taxes other than payroll and income taxes 38 37 53 38 48 38 139 113 Other operating costs, net (4) (5) (6) 4 32 (27) 21 19 24 (4) 77 Charges for integration of facilities 2 9 23 10 17 4 42 23 Charges for closure of facilities (7) (8)27 - 28 - - 32 55 32 ------------- ------------ ------------- --------------- 3,484 3,056 4,294 3,223 4,314 3,234 12,092 9,513 ------------- ------------ ------------- --------------- Real estate and related assets: Costs and operating expenses 291 243 317 280 359 301 967 824 Depreciation and amortization 2 1 1 2 1 2 4 5 Selling expenses 21 19 24 19 23 23 68 61 General and administrative expenses 10 13 11 13 14 4 35 30 Taxes other than payroll and income taxes 1 2 1 1 1 1 3 4 Other operating costs, net (8) (1) 2 (1) 6 (2) - (4) ------------- ------------ ------------- ------------- 317 277 356 314 404 329 1,077 920 ------------- ------------ ------------- ------------- Total costs and expenses 3,801 3,333 4,650 3,537 4,718 3,563 13,169 10,433 ------------- ------------ ------------- ------------- Operating income 207 220 299 305 194 189 700 714
Interest expense and other: Weyerhaeuser: Interest expense incurred (143) (88) (222) (87) (214) (93) (579) (268) Less interest Capitalized 4 4 16 6 16 6 36 16 Equity in income (loss) of affiliates (4) 15 (2) 15 (6) 5 (12) 35 Interest income and other 5 6 6 4 9 4 20 14 Real estate and related assets: Interest expense incurred (13) (19) (13) (18) (12) (17) (38) (54) Less interest Capitalized 13 16 13 17 12 16 38 49 Equity in income of unconsolidated entities 6 14 6 3 10 4 22 21 Interest income and other 6 2 8 3 11 8 25 13 ------------- ------------ ------------- ------------- Earnings before income taxes and extraordinary item 81 170 111 248 20 122 212 540 Income taxes (9) (28) (63) (39) (77) (7) (31) (74) (171) ------------- ------------ ------------- ------------- Earnings before extraordinary item 53 107 72 171 13 91 138 369 Extraordinary item (10)(23) - - - - - (23) - ------------- ------------ ------------- ------------- Net earnings $30 $107 $72 $171 $13 $91 $115 $369 ------------- ------------ ------------- ------------- Per share: Basic net earnings before extraordinary item $0.24 $0.49 $0.32 $0.78 $0.06 $0.41 $0.62 $1.68 Extraordinary item (0.10) - - - - - (0.10) - ------------- ------------ ------------- ------------- Basic net earnings $0.14 $0.49 $0.32 $0.78 $0.06 $0.41 $0.52 $1.68 ------------- ------------ ------------- ------------- Diluted net earnings before extraordinary item $0.24 $0.49 $0.32 $0.78 $0.06 $0.41 $0.6 $1.68 Extraordinary item (0.10) - - - - - (0.10) - ------------- ------------ ------------- ------------- Diluted net earnings $0.14 $0.49 $0.32 $0.78 $0.06 $0.41 $0.52 $1.68 ------------- ------------ ------------- ------------- Dividends paid $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 $1.20 $1.20 ------------- ------------ ------------- -------------
(1) Certain reclassifications have been made to conform prior periods' data with the current presentation. (2) 2002 first quarter includes $13 million of charges for countervailing and anti-dumping duties and related costs and a credit of $18 million for the reversal of countervailing and anti-dumping duties accrued in 2001. The 2002 second quarter includes $7 million of charges for countervailing and anti-dumping duties and related costs, a credit of $29 million for the reversal of charges accrued in 2001 and a credit of $13 million for charges accrued in the first quarter of 2002. The 2002 third quarter includes charges of $31 million for countervailing and anti-dumping duties and related costs. The year-to-date impact from countervailing and anti-dumping duties and related costs is a net credit of $9 million. 2001 includes $30 million of third quarter charges for countervailing and anti-dumping duties and related costs. No costs were recognized prior to the third quarter. (3) 2001 includes $27 million of goodwill amortization through September. Goodwill amortization ceased as of the beginning of 2002. (4) 2002 year-to-date includes $19 million in net foreign exchange gains. Gains of $8 million and $27 million are included in the first and second quarters, respectively. A loss of $16 million is included in the third quarter. Net foreign exchange losses through the third quarter of 2001 were $6 million. (5) 2001 year-to-date costs include $10 million for costs associated with Westwood Shipping Line's transition to a new charter fleet. (6) 2001 year-to-date includes one-time costs of $41 million associated with information systems outsourcing. (7) 2002 includes $27 million for first quarter costs associated with the closure of three facilities and $28 million for second quarter costs associated with the closure, or impending closure, of four additional facilities. (8) 2001 year-to-date also includes $32 million for third quarter costs associated with machine closures at Springfield, Ore., and Longview, Wash. (9) 2001 year-to-date includes $29 million in benefits reflecting one-time reductions in deferred taxes. This includes a $14 million benefit due to a lower British Columbia provincial corporate tax rate that was enacted during the third quarter and a $15 million benefit due to a lower Canadian corporate tax rate that was enacted during the second quarter. (10)2002 includes $35 million extraordinary loss on the refinancing of debt in connection with the acquisition of Willamette Industries, less a $12 million tax benefit. WEYERHAEUSER COMPANY STATISTICAL INFORMATION (unaudited)
Net sales and revenues (in millions): Q1 Q2 Q3 Year-to-date ------------- ------------ ------------- --------------- 2002 2001 2002 2001 2002 2001 2002 2001 ------------- ------------ ------------- --------------- Timberlands: Raw materials (logs, timber and chips) $144 $175 $186 $155 $196 $140 $526 $470 Other products 44 37 49 39 138 44 231 120 ------------- ------------ ------------- --------------- 188 212 235 194 334 184 757 590 ------------- ------------ ------------- --------------- Wood products: Softwood lumber 692 605 901 783 845 743 2,438 2,131 Softwood plywood and veneer 135 102 173 125 169 124 477 351 Oriented strand board, composite and other panels240 159 320 195 217 210 777 564 Hardwood lumber 76 78 81 75 72 70 229 223 Engineered lumber products 253 218 315 309 324 299 892 826 Raw materials (logs, timber and chips) 106 112 129 118 120 107 355 337 Other products 199 165 228 205 210 198 637 568 ------------- ------------ ------------- --------------- 1,701 1,439 2,147 1,810 1,957 1,751 5,805 5,000 ------------- ------------ ------------- --------------- Pulp and Paper: Pulp 280 321 297 277 300 261 877 859 Paper 446 322 593 281 622 311 1,661 914 Paperboard 40 50 51 45 37 55 128 150 Other products 6 18 10 6 8 10 24 34 ------------- ------------ ------------- --------------- 772 711 951 609 967 637 2,690 1,957 ------------- ------------ ------------- --------------- Containerboard, Packaging and Recycling: Containerboard 90 92 117 87 123 88 330 267 Packaging 731 618 899 634 877 588 2,507 1,840 Recycling 48 63 51 57 67 43 166 163 Other products 47 43 90 39 82 36 219 118 ------------- ------------ ------------- --------------- 916 816 1,157 817 1,149 755 3,222 2,388 ------------- ------------ ------------- --------------- Real estate and related assets 396 334 421 371 468 392 1,285 1,097 Corporate and other 35 41 38 41 37 33 110 115 ------------- ------------ ------------- --------------- $4,008 $3,553 $4,949 $3,842 $4,912 $3,752 $13,869 $11,147 ============= ============ ============= ================
Earnings before interest expense, income taxes and extraordinary items (in millions) (1): Q1 Q2 Q3 Year-to-date ------------- ------------ ------------- --------------- 2002 2001 2002 2001 2002 2001 2002 2001 ------------- ------------ ------------- --------------- Timberlands $119 $134 $175 $137 $138 $107 $432 $378 Wood products (2)(3) 9 (26) 64 102 (18) 47 55 123 Pulp and Paper (4)(5) 1 73 (15) 27 10 (28) (4) 72 Containerboard Packaging and Recycling (6)(7) 58 94 75 68 88 69 221 231 Real estate and related assets 91 69 79 62 85 75 255 206 Corporate and other (8)(9) (58) (90) (61) (67) (85) (61) (204) (218) ------------- ------------ ------------- --------------- $220 $254 $317 $329 $218 $209 $755 $792 ============= ============ ============= ================
(1)Certain reclassifications have been made to conform prior periods' data with the current presentation. (2)2002 first quarter includes $13 million of charges for countervailing and anti-dumping duties and related costs and a credit of $18 million for the reversal of countervailing and anti-dumping duties accrued in 2001. The 2002 second quarter includes $7 million of charges for countervailing and anti-dumping duties and related costs, a credit of $29 million for the reversal of charges accrued in 2001 and a credit of $13 million for charges accrued in the first quarter of 2002. The 2002 third quarter includes charges of $31 million for countervailing and anti-dumping duties and related costs. The year-to-date impact from countervailing and anti-dumping duties and related costs is a net credit of $9 million. 2001 includes $30 million of third quarter charges for countervailing and anti-dumping duties and related costs. No costs were recognized prior to the third quarter. (3)2002 includes $17 million in first quarter costs associated with the permanent closure of an oriented strand board facility in Canada. (4)2002 year-to-date includes $52 million in business disruption costs associated with the recovery boiler explosion at the Plymouth, N.C., paper facility. Costs of $22 million and $30 million are included in the second and third quarters, respectively. (5)2001 results include $19 million of third quarter costs associated with a machine closure at Longview, Wash. (6)2002 year-to-date results include $38 million in costs associated with the closure, or impending closure of seven facilities, including $10 million of first quarter costs and $28 million of second quarter costs. (7)2001 results include $13 million of third quarter costs associated with a machine closure at Springfield, Ore. (8)2001 year-to-date costs include one-time costs of $41 million associated with information systems outsourcing and includes $10 million incurred in the second quarter for costs associated with Westwood Shipping Line's transition to a new charter fleet. (9)2002 results for corporate and other include net foreign exchange gains (losses) of $20 million in the second quarter and ($17 million) in the third quarter, for a year to date net gain of $3 million. These gains and losses result primarily from fluctuations in Canadian exchange rates. 2001 results for corporate and other include net foreign exchange gains (losses) of ($2 million) in the first quarter, $7 million in the second quarter, and ($11 million) in the third quarter, resulting primarily from fluctuations in Canadian exchange rates. WEYERHAEUSER COMPANY STATISTICAL INFORMATION (unaudited)
Third party sales volumes: Q1 Q2 Q3 Year-to-date ------------- ------------ ------------- --------------- 2002 2001 2002 2001 2002 2001 2002 2001 ------------- ------------ ------------- --------------- Timberlands (millions): Raw materials - cubic feet 76 82 99 75 104 76 279 233 Wood products (millions): Softwood lumber - board feet 1,812 1,667 2,295 1,792 2,362 1,943 6,469 5,402 Softwood plywood and veneer - square feet (3/8") 575 449 750 491 736 494 2,061 1,434 Composite panels - square feet (3/4") 308 63 445 59 95 61 848 183 Oriented strand board - square feet (3/8") 945 871 1,095 916 1,117 964 3,157 2,751 Hardwood lumber - board feet 108 106 113 106 104 99 325 311 Raw materials - cubic feet 143 163 164 150 207 154 514 467 Pulp and paper (thousands): Pulp - air-dry metric tons 563 480 618 507 561 527 1,742 1,514 Paper - tons 594 393 766 355 804 406 2,164 1,154 Paperboard - tons 53 60 61 56 47 66 161 182 Containerboard, packaging and recycling (thousands): Containerboard - tons 249 218 309 222 318 223 876 663 Packaging - MSF 14,540 12,690 18,446 11,856 17,902 13,319 50,888 37,865 Recycling - tons 604 826 552 817 539 548 1,695 2,191
Total productionvolumes: Q1 Q2 Q3 Year-to-date ------------- ------------ ------------- --------------- 2002 2001 2002 2001 2002 2001 2002 2001 ------------- ------------ ------------- --------------- Timberlands (millions): Logs - cubic feet 153 132 191 131 164 129 508 392 Wood products (millions): Softwood lumber - board feet 1,530 1,406 1,702 1,422 1,728 1,315 4,960 4,143 Softwood plywood and veneer - square feet (3/8")431 285 562 278 584 275 1,577 838 Composite panels - square feet (3/4") 218 29 128 25 200 21 546 75 Oriented strand board - square feet (3/8") 957 783 944 833 1,115 912 3,016 2,528 Hardwood lumber - board feet 96 111 99 109 107 99 302 319 Logs - cubic feet 185 174 187 137 204 166 576 477 Pulp and paper (thousands): Pulp - air-dry metric tons 607 549 492 448 630 553 1,729 1,550 Paper - tons 558 400 727 339 747 357 2,032 1,096 Paperboard - tons 63 52 67 61 31 69 161 182 Containerboard, packaging and recycling (thousands): Containerboard - tons 1,250 875 1,600 776 1,621 1,065 4,471 2,716 Packaging - MSF 16,281 13,355 20,630 13,432 20,432 13,077 57,343 39,864 Recycling - tons 1,409 1,192 1,593 1,181 1,545 1,210 4,547 3,583
WEYERHAEUSER COMPANY STATISTICAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) (in millions)
March 31, June 30, Sept. 29, Dec. 31, Assets 2002 2002 2002 2001 ------------ ----------- ------------ ----------- s> Weyerhaeuser Current assets: Cash and short-term investments$ 127 $141 $119 $202 Receivables, less allowances 1,599 1,649 1,604 1,024 Inventories 2,072 2,012 1,951 1,428 Prepaid expenses 509 550 485 407 ----------- ----------- ------------ ----------- Total current assets 4,307 4,352 4,159 3,061 Property and equipment 12,454 12,362 12,235 8,309 Construction in progress 1,169 1,360 1,338 428 Timber and timberlands at cost, less fee stumpage charged to disposals 4,457 4,472 4,436 1,789 Investments in and advances to equity affiliates 542 547 541 541 Goodwill 2,741 2,778 2,812 1,095 Deferred pension and other assets 1,170 1,239 1,239 1,053 ----------- ----------- ------------ ----------- 26,840 27,110 26,760 16,276 ----------- ----------- ------------ ----------- Real estate and related assets 2,078 2,100 2,035 2,017 ----------- ----------- ------------ ----------- Total assets $ 28,918 $ 29,210 $ 28,795 $ 18,293 ======== ======= ======= ====== Liabilities and Shareholders' Interest - -------------------------------------- Weyerhaeuser Current liabilities: Notes payable and commercial paper $ 260 $ 110 $ 231 $ 4 Current maturities of long-term debt 214 368 791 8 Accounts payable 1,072 1,125 1,059 809 Accrued liabilities 1,177 1,320 1,189 1,042 ------------- ------------ ------------ ----------- Total current liabilities 2,723 2,923 3,270 1,863 Long-term debt 12,927 12,779 12,224 5,095 Deferred income taxes, pension, other postretirement benefits and other liabilities 5,274 5,326 5,307 3,254 ------------- ------------ ------------ ----------- 20,924 21,028 20,801 10,212 ------------- ------------ ------------ ----------- Real estate and related assets Notes payable and commercial paper 262 357 80 358 Long-term debt 596 576 856 620 Other liabilities 451 467 432 408 ------------ ------------ ------------ ----------- 1,309 1,400 1,368 1,386 ------------- ------------ ------------ ---------- Total liabilities 22,233 22,428 22,169 11,598 Shareholders' interest 6,685 6,782 6,626 6,695 ------------- ------------ ------------ ----------- Total liabilities and shareholders' interest $ 28,918 $ 29,210 $ 28,795 $ 18,293 ------------- ------------ ------------ -----------
(b) Remarks of Richard Taggart, Vice President of Finance. On October 22, 2002 in a conference call to discuss Weyerhaeuser Company's earnings release, Vice President of Finance Richard Taggart delivered the following remarks: "Today I want to provide you with additional information about our current pension fund situation, for both reported earnings, and cash funding. Pension fund accounting under GAAP is relatively complicated, and as you know, is influenced by a number of variables. The four key variables are: the actual rate of return earned by the fund, the assumed future rate of return on the fund, the discount rate used to discount the liabilities of the fund, and the assumed increase in salaries and wages. In addition, changes in plan benefits or the demographics of the plan participants can affect both accounting and funding. Weyerhaeuser is using a 10.5% assumed rate of return for pension fund accounting this year, and while we have reduced this assumption each of the last two years, it remains one of the highest among publicly reporting companies. Because of this, we have received a number of questions regarding how we arrived at this assumption, how will it likely change in the future, and what will be the impact of a change in the assumption on both reported earnings, and cash flow. "As many of you know, Weyerhaeuser reviews its pension fund assumptions each year, at the end of the year, when actual returns, discount rates, and actuarial valuation changes are known. We will continue to follow that practice, and will provide guidance regarding our pension fund assumptions for next year in our fourth quarter report. In order to help analysts and investors to begin to better understand our pension fund and our assumptions, we plan to broaden our pension fund disclosure in our third quarter 10Q. "Today, I want to discuss the information we will provide. "In 1985, Weyerhaeuser began moving toward managing its U.S. pension funds using what at that time was a relatively new structure and strategy in managing investments. We utilized synthetic indexing to achieve a benchmark return of approximately 60% equities, 35% bonds, and 5% cash. We then invested the majority of the assets in the trust in a broadly diversified set of strategies and funds to add alpha (or returns above the benchmark). In 1988, we set our assumed rate of return from this strategy at 11.5%. This was arrived at that from the view that the benchmark return, which approximated the median pension fund return, would be approximately 8 to 8.5% and we would out perform the benchmark by 3 to 3.5%. "Through the 17 year period ending in 2001, our compound rate of return was over 18% compared to the median large pension fund return of just over 11%. The 700 basis point difference resulted in our performance exceeding the median fund by over 60%, and to the best of our knowledge, we had the highest performing large pension fund in the U.S., whether measured on a 5 year, 10 year, or 15 year basis. "Our U.S. fund, which makes up approximately 85% of our pension assets, was significantly overfunded at the end of 2001. In the last 3 years we increased our pension assets in Canada as a result of the acquisitions we made to approximately US$500 million, while our U.S. fund was at $3.1 billion at the end of 2001. In July of this year, we added approximately $550 million in assets to our master trust in connection with the addition of the Willamette employees. The Willamette and the Canadian plans were overfunded also, but not to the same degree as the legacy Weyerhaeuser plans. "Even though our actual rate of return has significantly exceeded our assumed rate of return since 1988, we did not change that assumption until last year. We lowered our assumption of future returns in 2001 to 11%. At the end of last year, we again lowered our assumed rate of return to 10.5%. This assumption was arrived at by assuming that the median pension fund long term return would drop to 7.5% and our alpha strategy would yield an incremental 3% as opposed to its historical 7%. We will review these assumptions again at the end of this year. "Our combined U.S. and Canadian funds are invested: 35% in Private market strategies, both equity and real estate, and 65% in Liquid strategies "We are invested with over 125 managers. "This is a highly diversified fund that includes some of the most experienced and successful alternative managers in the world. "To assist you in developing your own forecasts of how changes in pension "fund performance, and changes in key variable assumptions affect GAAP earnings, I will provide some sensitivities for the key variables that drive the GAAP accounting. I need to caution you that these variables are not linear and are somewhat inter related, but the sensitivities will provide an ability to develop approximate estimates as to what might happen to our pension credit in 2003. There are effects beyond 2003, but because of the interaction of the variables, I would caution using these sensitivities beyond one year. "As many of you know, the P&L accounting for pensions is driven by GAAP, while funding is driven by a different set of calculations set by the IRS. These sensitivities are for GAAP only. We will not be required to make any contributions to our U.S. fund this year, and it appears at this point we will not be required to make any contribution next year. We may need to make a small contribution in Canada this year and next. "Because of different funding status and pension regulations, the sensitivities are different in the U.S. and Canada. I will provide separate sensitivities for each country. "These are the sensitivities to four key variables: 1. The first, and most important, is the actual rate of return. For each 1% that the actual rate of return is lower that the assumed rate of return, the pension credit will be reduced by $1.8 million in the U.S. and $800,000 in Canada. In other words, if we had a zero return in both pension funds this year, our credit to ore-tax income would be reduced by 10.5 times both factors, or $27.3 million. 2. If we reduce the assumed rate of return by 1%, from 10.5% to 9.5%, it will reduce our pension credit by $ 17.4 million in the U.S. and $4.8 million in Canada. 3. If we reduce the discount rate by 0.5% it would reduce the credit by $ 6.3 million in the U.S. and $2.0 million in Canada. 4. If we change the assumed increase in salaries and wages by 0.5%, it would change the pension credit by $ 10.6 million in the U.S and $4.8 million in Canada. "Applying your outlook for financial markets will allow you to make reasonable estimates on the potential impacts on our GAAP earnings next year. "As we noted in our earnings release, we have elected to terminate the U.S. salaried pension fund of MacMillan Bloedel, and pay out the benefits earned by employees and retirees that were earned under those plans. This will result in an after tax charge of approximately $25 million, in the fourth quarter." # # # SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WEYERHAEUSER COMPANY By /s/ Steven J. Hillyard ---------------------------- Its: Vice President and Chief Accounting Officer Date: October 22, 2002 -----END PRIVACY-ENHANCED MESSAGE-----