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