For the fourth quarter 2007, Weyerhaeuser reported a net loss of 63 million, or 30 cents per diluted share, on net sales of $3.9 billion. Last year, Weyerhaeuser reported fourth quarter net earnings of $507 million, or $2.12 per diluted share, on net sales of $4.8 billion.

SIGNIFICANT FOURTH QUARTER 2007 AFTER-TAX ITEMS

Excluding these items, the company earned $90 million, or 42 cents per diluted share, in the fourth quarter 2007.

SIGNIFICANT FOURTH QUARTER 2006 AFTER-TAX ITEMS

Excluding these items, the company earned $228 million, or 95 cents per diluted share, in the fourth quarter of 2006.

“Two-thousand seven was a challenging year for our industry and another busy one for Weyerhaeuser,” said Steven R. Rogel, chairman and chief executive officer. “We continued implementing international repositioning and growth strategies in timberlands, improved our Containerboard Packaging business operating performance and focused our Cellulose Fibers business on specialty grades of pulp. In addition, we completed our Fine Paper transaction with Domtar, which created meaningful value for our shareholders.

“But the continuing erosion of the U.S. housing market created very unfavorable market conditions for our Timberlands, Wood Products and Real Estate businesses,” Rogel said. “Despite difficult market conditions, which we expect to continue through 2008, Weyerhaeuser remains focused on managing through the downturn and positioning the company to take full advantage of stronger markets once conditions improve.”

SUMMARY OF FOURTH QUARTER FINANCIAL HIGHLIGHTS

SUMMARY OF ANNUAL FINANCIAL HIGHLIGHTS

2006 sales have been recast to exclude the fine paper business and related assets of the March 2007 Domtar transaction. These results are reported as discontinued operations.

SEGMENT RESULTS FOR FOURTH QUARTER
(Contributions to Pre-Tax Earnings)

TIMBERLANDS

4Q 2007 Performance– Excluding the fourth quarter items noted below, fourth quarter contribution to earnings decreased $30 million from the third quarter.

Fourth quarter included the following pre-tax items: a gain of $27 million on the sale of a Washington log export facility; and a charge of $10 million for casualty losses resulting from a severe December wind storm on the West Coast.

In the West, log prices declined significantly in both export and domestic markets and volumes were modestly lower compared with third quarter. Prices were slightly lower in the South. Logging costs increased due to lower fee harvest and higher fuel costs. Fewer fourth quarter sales of non‑strategic timberlands also contributed to lower earnings. 

1Q 2008Outlook – Weyerhaeuser expects Timberlands earnings to be lower in the first quarter of 2008 compared with fourth quarter of 2007. The continued weakness in the housing market, particularly in California, and the effect of the December storm are expected to negatively affect Western operations. The company also anticipates fewer sales of non-strategic timberlands in the first quarter.

WOOD PRODUCTS

4Q 2007 Performance– Excluding the pre-tax items noted below, the segment’s net loss from operations increased $109 million from the third quarter.

Fourth quarter 2007 includes charges of $98 million for facility closures, asset impairments and restructuring costs.

Third quarter 2007 includes charges of $25 million for facility closures, asset impairments and restructuring costs.

U.S. single-family housing starts declined 16% in the fourth quarter and continued to negatively affect segment results.  Average prices and sales volumes for building products declined.

1Q 2008 Outlook– Weyerhaeuser expects no improvement in market conditions in first quarter 2008, and expects to incur significant losses in the Wood Products segment.  The company will continue to balance production to demand, which may result in further production curtailments and mill closures.

CELLULOSE FIBERs

4Q 2007 Performance– Average pulp price realizations increased as a result of continued high demand and the weakening U.S. dollar.  Shipment volumes were up slightly and costs for annual maintenance outages declined.  These benefits were primarily offset by higher chemical and energy costs.

1Q 2008 Outlook– Weyerhaeuser expects slightly lower earnings for the segment in the first quarter of 2008. The company anticipates market conditions for this segment will remain favorable and prices for both pulp and liquid packaging are expected to increase. However, these benefits are expected to be more than offset by higher costs and lower production associated with annual maintenance outages. In addition, the company expects higher chemical, fiber and energy costs.

CONTAINERBOARD, PACKAGING AND RECYCLING

4Q 2007 Performance– During the fourth quarter, average packaging and containerboard price realizations increased. Packaging shipments declined seasonally and containerboard production volumes decreased as the company matched its supply with customer demand. Energy costs increased due to seasonally higher consumption and higher prices for natural gas. Wood chip costs continued to increase.

1Q 2008 Outlook – Weyerhaeuser expects first quarter earnings for the segment to be lower than fourth quarter. Packaging shipments are expected to decline as a result of exiting low-margin business and from seasonally lower demand. Packaging and containerboard price realizations are expected to improve.  The company expects higher fiber and energy costs in the first quarter.

REAL ESTATE

4Q 2007 Performance – Excluding the pre-tax items noted below, the segment’s earnings increased $60 million from third quarter.

Fourth quarter 2007 includes charges of $121 million for the impairment of assets and investments.

Third quarter 2007 includes asset impairment charges of $23 million.

Gains from land sales increased $49 million. The segment’s homebuilding operations had seasonally higher closings of 1,244 units, a 9 percent increase over third quarter. Net sales (orders) for the period were 595 units, a decrease of 19 percent from third quarter. The backlog of homes sold, but not closed, was 1,224 units, a decrease of 35 percent compared to third quarter.

1Q 2008 Outlook - Weyerhaeuser expects a loss from this segment due to difficult market conditions for selling new homes, a seasonal reduction in single-family closings, and lower single-family margins. The backlog of homes sold, but not closed, represents approximately three months of single-family sales. Weyerhaeuser does not anticipate any significant land or lot sales in first quarter 2008.

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world’s largest forest products companies, was incorporated in 1900. In 2007, sales were $16.3 billion. It has offices or operations in 13 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 http://www.weyerhaeuser.com.

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