Annual Report (Form 10-K), fiscal year 1994

Item 1. Business - -----------------
Weyerhaeuser Company (the company) was incorporated in the state of Washington in January 1900, as Weyerhaeuser Timber Company. It is principally engaged in growing and harvesting of timber and the manufacture, distribution and sale of forest products, real estate development and construction, and financial services. Its principal business segments include timberlands and wood products; pulp, paper and packaging; real estate; and financial services.
Information with respect to the description and general development of the company's business, included on pages 35 through 40, Description of the Business of the Company, contained in the company's 1994 Annual Report to Shareholders, is incorporated herein by reference.
Financial information with respect to industry segments, included in Note 21 of Notes to Financial Statements contained in the company's 1994 Annual Report to Shareholders, is incorporated herein by reference.
Timberlands and Wood Products
The company owns approximately 5.6 million acres of commercial forestland in the United States (51% in the South and 49% in the Pacific Northwest), most of it highly productive and located extremely well to serve both domestic and international markets. The company has, additionally, long-term license arrangements in Canada covering approximately 17.8 million acres (of which 14 million acres are considered to be productive forestland). The combined total timber inventory on these U.S. and Canadian lands is approximately 246 million cunits (a cunit is 100 cubic feet of solid wood), of which approximately 75% is softwood species. The relationship between cubic measurement and the quantity of end products that may be produced from timber varies according to the species, size and quality of timber, and will change through time as the mix of these variables changes. To sustain the timber supply from its fee timberlands, the company is engaged in extensive planting, suppression of nonmerchantable species, precommercial and commercial thinning and fertilization and operational pruning, all of which increase the yield from its fee timberland acreage.
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business - Continued - -----------------------------
The company's wood products businesses produce and sell softwood lumber, plywood and veneer; composite panels; oriented strand board; hardboard; hardwood lumber and plywood; doors; treated products; logs; chips and timber. These products are sold primarily through the company's own sales organizations. Building materials are sold to wholesalers, retailers and industrial users.
Sales by volumes by major product class are as follows (millions):
Selected product prices:
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business - Continued - -----------------------------
Pulp, Paper and Packaging
The company's pulp, paper and packaging businesses include: Pulp, which manufactures chemical wood pulp for world markets; Newsprint, which manufactures newsprint at the company's North Pacific Paper Corporation mill and markets it to West Coast and Japanese newspaper publishers; Paper, which manufactures and markets a range of both coated and uncoated fine papers through paper merchants and printers; Containerboard Packaging, which manufactures linerboard and corrugating medium, which is primarily used in the production of corrugated shipping containers, and manufactures and markets corrugated shipping containers for industrial and agricultural packaging; Paperboard, which manufactures bleached paperboard that is used for production of liquid containers and is marketed to West Coast and Pacific Rim customers; Recycling, which operates an extensive wastepaper collection system and markets it to company mills and worldwide customers; and Chemicals, which produces chlorine, caustic and tall oil, which are used principally by the company's pulp, paper and packaging operations. In February 1993, the Personal Care Products business, which manufactured disposable diapers marketed under the private-label brands of many of North America's largest retailers was sold through an initial public offering of stock.
Sales volumes by major product class are as follows (thousands):
Selected product prices (per ton):
Weyerhaeuser Company and Subsidiaries
PART I
Item 1. Business - Continued - -----------------------------
Real Estate
The company, through its real estate subsidiary, Weyerhaeuser Real Estate Company, is a builder/developer of for-sale housing and apartments, develops commercial and residential lots for sale to retail customers and other builders, builds commercial buildings for sale to institutional investors, and is an investor in joint ventures and limited partnerships.
Volumes sold:
Financial Services
The company, through its financial services subsidiary, Weyerhaeuser Financial Services, Inc., is involved in a range of financial services. The principal operating unit is Weyerhaeuser Mortgage Company, which has origination offices in 14 states, with a servicing portfolio of $11.3 billion covering approximately 139,000 loans throughout the country. Mortgages are resold in the secondary market through mortgage-backed securities to financial institutions and investors. Through its insurance services organization, it also offers a broad line of property, life and disability insurance. GNA Corporation, a subsidiary that specialized in the sale of life insurance annuities and mutual funds to the customers of financial institutions, was sold in April 1993. Republic Federal Savings & Loan Association, a subsidiary that operated in Southern California through 1991, was dissolved in 1992.
Volume information (millions):
Weyerhaeuser Company and Subsidiaries
PART I
Item 2.



Item 2. Properties - -------------------
Timberlands and Wood Products
Facilities and annual production are summarized by major product class as follows (millions):
Principal manufacturing facilities are located as follows:
Softwood lumber and plywood Hardwood lumber Alabama, Arkansas, Georgia, Idaho, Arkansas, Oklahoma, Pennsylvania, Mississippi, North Carolina, Washington, and Wisconsin Oklahoma, Oregon, Washington, and Alberta,British Columbia, and Hardwood doors Saskatchewan, Canada Wisconsin
Composite panels Georgia, North Carolina, Oregon and Wisconsin
Oriented strand board Michigan, North Carolina, and Alberta, Canada
Hardboard Oregon
Weyerhaeuser Company and Subsidiaries
PART I
Item 2. Properties - Continued - -------------------------------
Pulp, Paper and Packaging
Facilities and annual production are summarized by major product class as follows (thousands):
Principal manufacturing facilities are located as follows:
Pulp Containerboard Georgia, Mississippi, North Carolina North Carolina, Oklahoma, Washington, and Alberta, British Columbia, Oregon, and Washington and Saskatchewan, Canada
Packaging Arizona, California, Florida, Newsprint Georgia, Hawaii, Illinois, Washington Indiana, Iowa, Kentucky, Maine, Michigan, Minnesota, Paper Mississippi, Missouri, Nebraska, Mississippi, North Carolina, New Jersey, New York, North Washington, Wisconsin, and Carolina, Ohio, Oregon, Saskatchewan, Canada Tennessee, Texas, Virginia, Washington, and Wisconsin Paperboard Washington Recycling Arizona, California, Colorado, Indiana, Iowa, Kansas, Maryland, Minnesota, New Jersey, North Carolina, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia, Washington, and British Columbia, Canada
Chemicals Georgia, Mississippi, North Carolina, Oklahoma, Washington, and Saskatchewan, Canada
Weyerhaeuser Company and Subsidiaries
PART I
Item 2. Properties - Continued - -------------------------------
Real Estate
Weyerhaeuser Company and Subsidiaries
PART I
Item 3.

Item 3. Legal Proceedings - --------------------------
Trial began in May 1992 in a federal income tax refund case that the company filed in July 1989 in the United States Claims Court. The complaint seeks a refund of federal income taxes that the company contends it overpaid in 1977 through 1983. The alleged overpayments are the result of the disallowance of certain timber casualty losses and certain deductions claimed by the company arising from export transactions. The refund sought was approximately $29 million, plus statutory interest from the dates of the alleged overpayments. The company settled the portion of the case relating to export transactions and received a tax refund of approximately $10 million, plus statutory interest. In September 1994, the United States Court of Federal Claims issued an opinion on the casualty loss issues which will result in the allowance of additional tax refunds of approximately $2 million, plus statutory interest. The company currently intends to appeal the decision.
On March 6, 1992, the company filed a complaint in the Superior Court for King County, Washington against a number of insurance companies. The complaint seeks a declaratory judgment that the insurance companies named as defendants are obligated under the terms and conditions of the policies sold by them to the company to defend the company and to pay, on the company's behalf, certain claims asserted against the company. The claims relate to alleged environmental damage to third-party sites and to some of the company's own property to which allegedly toxic material was delivered or on which allegedly toxic material was placed in the past. Since December 1992, the company has agreed to settlements with all but one of the defendants. In July 1993, the trial court dismissed fourteen of the thirty-five sites named in the complaint. In May 1994, the Washington State Supreme Court reversed the trial court's dismissal of those sites. Trial on two sites against the sole remaining defendant began in October 1994 and resulted in a jury verdict which awarded damages to the company with respect to one of the sites.
The company has undertaken a review of all its wood products facilities for compliance with the Prevention of Significant Deterioration (PSD) regulations and has disclosed PSD compliance issues to certain state agencies and the Environmental Protection Agency (EPA). The company and the State of Mississippi Department of Environmental Quality have entered into a consent agreement concerning PSD regulations at company facilities in Philadelphia and Bruce, Mississippi, involving penalties of $170 thousand. The State of Alabama has issued a compliance order with penalties totaling $100 thousand for noncompliance with PSD regulations at the company's Millport facility. The company and North Carolina's Division of Environmental Management have entered into a consent agreement for its Elkin, North Carolina facility involving penalties of $140 thousand and concluded a separate consent agreement for its Moncure, North Carolina facility involving penalties of $140 thousand. The company has signed a consent agreement including penalties of $140 thousand relating to PSD issues at the company's Wright City, Oklahoma facility with the State of Oklahoma Department of Environmental Quality. The company has signed consent agreements with the State of Arkansas concerning PSD related issues for facilities in Dierks and Mountain Pine, involving $375 thousand in total penalties for both facilities. Region V of the EPA has issued a Notice of Violation for permit violations at the company's Grayling, Michigan facility. The company has negotiated a settlement of those alleged permit violations and other PSD related issues with the Michigan Department of Natural Resources that involves penalties of approximately $499 thousand. The company has entered into negotiations with the Lane County, Oregon Regional Air Pollution Control Authority concerning a draft Notice of Violation which would seek penalties for alleged PSD violations at the company's Springfield, Oregon particleboard operations. In September 1992, the EPA issued a Section 114 Request for Information concerning PSD compliance at the company's oriented strand board and medium density fiberboard mills. In June 1993, the EPA issued a similar Section 114 request for the company's plywood and particleboard mills. The EPA issued a notice of violation in August 1994 for nine company facilities (including the Plymouth, North Carolina and Adel, Georgia wood products facilities and all of the facilities mentioned above except the Grayling, Michigan, Springfield, Oregon and Bruce, Mississippi wood products facilities) as part of its national PSD enforcement action against the company and other forest product companies.
The company has also undertaken a review of its ten major pulp and paper facilities to evaluate the facilities' compliance with PSD regulations and has disclosed the potential of PSD compliance issues to six state agencies and the EPA. The company is currently working with the states to negotiate settlements for the alleged violations.
The Washington State Department of Ecology has investigated the accidental release of chlorine, chlorine dioxide and non-condensable gasses at the company's pulp mill in Longview, in July 1994 and has issued a $10 thousand penalty for the chlorine release and a $5 thousand penalty for the non-condensable gasses release. The EPA is also investigating the accidental chlorine release.
Weyerhaeuser Company and Subsidiaries
PART I
Item 3. Legal Proceedings - Continued - --------------------------------------
On April 9, 1993, the company entered into a Stipulated Final Order (SFO) with the Oregon Department of Environmental Quality for alleged air emissions in excess of permit levels and PSD noncompliance at the company's North Bend, Oregon containerboard facility. The SFO establishes a compliance schedule for installing control technology. A supplemental SFO assessed upfront penalties of $247 thousand and penalties of 500 dollars per day until compliance is demonstrated. The SFO required demonstrated compliance by December 1993 and a historical evaluation of the facility's PSD status. The company has submitted a plant site PSD review to the state and is awaiting its review.
In August 1992, the EPA issued an administrative complaint for the assessment of $215 thousand in civil penalties against the company's Longview, Washington facility. The penalties are based upon alleged violations of the record keeping and storage provisions of the polychlorinated biphenyls (PCB) rules contained in the Toxic Substances Control Act. The company and the EPA settled the complaint for a maximum penalty of $118 thousand, 50% of which was paid when the settlement was signed. Payment of the remaining 50% was deferred and will be eliminated based on the expenditure of more than $118 thousand by the company to dispose of PCB contaminated transformers.
On November 2, 1992, an action was filed against the company in the Circuit Court for the First Judicial District of Hinds County, Mississippi, on behalf of a purported class of riparian property owners in Mississippi and Alabama whose properties are located on the Tennessee Tombigbee Waterway, Aliceville Lake, Cedar Creek and the Magoway Creek. The complaint seeks $1 billion in compensatory and punitive damages for diminution in property value, personal injuries and mental anguish allegedly resulting from the discharge of purported hazardous substances, including dioxins and furans, by the company's pulp and paper mill in Columbus, Mississippi, and the alleged fraudulent concealments of such discharge. The complaint also seeks an injunction prohibiting future releases and the removal of hazardous substances allegedly released in the past. On August 20, 1993, a companion action was filed in Greene County, Alabama, on behalf of a similar purported class of riparian owners with essentially the same claims as the Mississippi case. On January 20, 1995, the court in the Alabama action certified a class of all persons who, as of the date the action commenced, were riparian owners, lessees and licensees of properties located on the Tennessee Tombigbee Waterway in Greene, Sumter, Pickens and Marengo counties, Alabama, and Lowndes and Noxubee counties, Mississippi, to determine whether the company is liable to the members of the class for compensatory and/or punitive damages and to determine the amount of punitive damages, if any, to be awarded to the class as a whole. The class is estimated to exceed 400 members and may range from 1,000 to 1,500 members. Neither the Mississippi action nor the Alabama action is presently scheduled for trial.
The company was sued in the United States District Court for the District of Alaska by two corporations with which the company had entered into financing arrangements, a marketing agreement, and a technical assistance agreement. The plaintiffs claimed the company breached contractual and common law duties by allegedly failing to adequately market and ship the plaintiffs' products, misrepresenting its marketing and shipping capabilities, and acting to further its interests at the plaintiffs' expense. The plaintiffs in the First Amended Complaint, filed in May 1992, sought an unstated amount of damages described as more than $50 million in compensatory damages plus not less than $75 million in punitive damages. The claim for punitive damages was dismissed by the trial court. In March 1994, a jury returned a verdict against the company awarding damages of $1.2 million. Both the company and the plaintiffs have appealed.
The company is also a party to various proceedings relating to the clean-up of hazardous waste sites under the Comprehensive Environmental Response Compensation and Liability Act, commonly known as "Superfund," and similar state laws. The EPA and/or various state agencies have notified the company that it may be a potentially responsible party with respect to other hazardous waste sites as to which no proceedings have been instituted against the company. The company is also a party to other legal proceedings generally incidental to its business. Although the final outcome of any legal proceeding is subject to a great many variables and cannot be predicted with any degree of certainty, the company presently believes that any ultimate outcome resulting from the legal proceedings discussed herein, or all of them combined, would not have a material effect on the company's current financial position, liquidity or results of operations; however, in any given future reporting period, such legal proceedings could have a material effect on results of operations.
Item 4.

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 25, 1994.
Weyerhaeuser Company and Subsidiaries
PART II
Item 5.

Item 5. Market Price of and Dividends on the Registrant's Common Equity - ----------------------------------------------------------------------- and Related Stockholder Matters - -------------------------------
Information with respect to market information, stockholders and dividends included in Notes 22 and 23 of Notes to Financial Statements in the company's 1994 Annual Report to Shareholders, is incorporated herein by reference.
Item 6.

Item 6. Selected Financial Data - --------------------------------
Information with respect to selected financial data included in Note 23 of Notes to Financial Statements in the company's 1994 Annual Report to Shareholders, is incorporated herein by reference.
Item 7.

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 25 through 32 and pages 35 through 45, contained in the company's 1994 Annual Report to Shareholders, is incorporated herein by reference.
Item 8.


Item 8. Financial Statements and Supplementary Information - ----------------------------------------------------------
Financial statements and supplementary information, contained in the company's 1994 Annual Report to Shareholders are incorporated herein by reference:
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and - ----------------------------------------------------------------------- Financial Disclosure - --------------------
Not applicable.
Weyerhaeuser Company and Subsidiaries
PART III
Item 10.



Item 10. Directors and Executive Officers of the Registrant - -----------------------------------------------------------
Information with respect to Directors of the company included on pages 1 through 4 of the Notice of 1995 Annual Meeting of Shareholders and Proxy Statement dated March 6, 1995 is incorporated herein by reference.
The executive officers of the company are as follows:
Item 11.

Item 11. Executive Compensation - --------------------------------
Information with respect to executive compensation included on pages 5 through 13 of the Notice of 1995 Annual Meeting of Shareholders and Proxy Statement dated March 6, 1995 is incorporated herein by reference.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management - -----------------------------------------------------------------------
Information with respect to security ownership of certain beneficial owners and management included on pages 4 and 5 of the Notice of 1995 Annual Meeting of Shareholders and Proxy Statement dated March 6, 1995 is incorporated herein by reference.
Item 13.

Item 13. Certain Relationships and Related Transactions - -------------------------------------------------------
Information with respect to certain relationships and related transactions included on pages 15 and 16 of the Notice of 1995 Annual Meeting of Shareholders and Proxy Statement dated March 6, 1995 is incorporated herein by reference.
Weyerhaeuser Company and Subsidiaries
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K - ------------------------------------------------------------------------
Financial Statements
The consolidated financial statements of the company, together with the report of independent public accountants, contained in the company's 1994 Annual Report to Shareholders, are incorporated in Part II, Item 8 of this Form 10-K by reference.
All other financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements, or the notes thereto, contained in the company's 1994 Annual Report to Shareholders and incorporated herein by reference.
Exhibits: 3 - Articles of Incorporation and Bylaws 10 - Material Contracts (a) Agreement with N. E. Johnson (b) Agreement with W. R. Corbin 11 - Statement Re: Computation of Per Share Earnings (incorporated by reference to Note 1 of the 1994 Weyerhaeuser Company Annual Report to Shareholders) 13 - Portions of the 1994 Weyerhaeuser Company Annual Report to Shareholders specifically incorporated by reference herein 22 - Subsidiaries of the Registrant 23 - Consent of Independent Public Accountants 27 - Financial Data Schedules
Reports on Form 8-K The registrant has not filed a report on Form 8-K during the last fiscal quarter of the period for which this Form 10-K is filed.
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 10, 1995.
Weyerhaeuser Company
/s/ John W. Creighton, Jr. -------------------------- John W. Creighton, Jr. President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on March 10, 1995.
/s/ John W. Creighton, Jr. /s/ Don C. Frisbee - --------------------------------- --------------------------------- John W. Creighton, Jr. Don C. Frisbee President, Principal Executive Director Officer and Director /s/ P. M. Hawley --------------------------------- /s/ George H. Weyerhaeuser Philip M. Hawley - --------------------------------- Director George H. Weyerhaeuser Chairman of the Board and Director --------------------------------- E. Bronson Ingram Director /s/ William C. Stivers - --------------------------------- William C. Stivers Principal Financial /s/ John Kieckhefer Officer --------------------------------- John I. Kieckhefer Director
/s/ Kenneth J. Stancato - --------------------------------- Kenneth J. Stancato /s/ William Ruckelshaus Principal Accounting --------------------------------- Officer William D. Ruckelshaus Director
/s/ William Clapp /s/ Richard H. Sinkfield - --------------------------------- --------------------------------- William H. Clapp Richard H. Sinkfield Director Director
/s/ W. John Driscoll - --------------------------------- W. John Driscoll Director
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
Report of Independent Public Accountants on Financial Statement Schedules
To Weyerhaeuser Company:
We have audited in accordance with generally accepted auditing standards, the financial statements included in Weyerhaeuser Company's annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 7, 1995. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed on page 14 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, 1995
Weyerhaeuser Company and Subsidiaries
FINANCIAL STATEMENT SCHEDULES
Weyerhaeuser Company and Subsidiaries FINANCIAL STATEMENT SCHEDULES
Weyerhaeuser Company and Subsidiaries
Exhibit 22 Subsidiaries of the Registrant
Weyerhaeuser Company and Subsidiaries
Exhibit 22 Subsidiaries of the Registrant - Continued
Weyerhaeuser Company and Subsidiaries
Exhibit 22 Subsidiaries of the Registrant - Continued
Weyerhaeuser Company and Subsidiaries
Exhibit 23 Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of our reports included and incorporated by reference in this Form 10-K, into Weyerhaeuser Company's previously filed Registration Statement No. 33-52789 on Form S-3 and Nos. 2-61042, 2-81463, 33-25928, 33-24385, 33-24979, 33-31622, 33-32605, 33-34460, 33-41414, 33-47392 and 2-88109 on Form S-8.
ARTHUR ANDERSEN LLP
Seattle, Washington, March 10, 1995